Q2 2021 Arthur J Gallagher & Co Earnings Call
And then.
[music].
Good afternoon, and welcome to Arthur J, Gallagher and co 's second quarter 2021earnings.
Conference call.
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And uncertainties that could cause actual results to differ materially please refer to the cautionary statements and risk factors can.
And the company's 10-K, 10-Q, and 8-K filings for more details on its forward looking statements. In addition for reconciliations of the non-GAAP measures discussed on this call as well as other information regarding these measures. Please refer to the earnings release and other materials and Investor Relations.
<unk> section of the company's website.
It is now my pleasure to introduce J, Patrick Gallagher, Chairman, President and CEO of Arthur J Gallagher and co. Mr. Gallagher you may begin.
Thank you Laura good afternoon, and thank you for joining us for our second quarter 2021 and earnings call.
On the call with me today is Doug on all our Chief financial Officer, as well as the heads of our operating divisions.
We had an excellent second quarter.
And we delivered on all 4 of our long term operating priorities to drive shareholder value. We grew organically, we grew through acquisitions and improved our productivity all while raising our.
Quality and maintaining our unique Gallagher culture.
For our combined brokerage and risk management segments, we posted 17% growth and revenue 8.6% organic growth, but it's over 10% when adjusted for timing, which Doug will spend some time on and a few minutes.
Net earnings.
Margin expansion of 107 basis points adjusted EBITDA margin expansion of 30 basis points, and we completed 8 new mergers and the quarter with more than $70 million of estimated annualized revenue.
Most importantly, our Gallagher culture continues to thrive just a fantastic quarter.
More on all measures.
Now before I discuss how each of our businesses performed in more detail. Let me comment briefly about the termination of our agreement to purchase certain Willis towers Watson brokerage operations.
We were excited about the opportunity I would've loved to complete the transaction.
A lot.
Lot of great people and Willis and they would have been a great addition to our team.
Here's the key point with or without this we remain very well positioned to support our clients and compete for new ones and ultimately drive value for all of our stakeholders, we are and the greatest business on Earth, our culture is stronger.
Bigger than ever and I am excited about our future.
Okay back to our quarterly results, starting with our brokerage segment.
<unk> revenue growth was strong at 16%.
Of that 6.8 was organic revenue growth a little better than our June IR day expectation and closer to 9%.
Adjusted for timing.
Our net earnings margin moved higher by 53 basis points and our adjusted EBITDA margin expanded by 23 basis points, highlighting our continued expense discipline another excellent quarter from the brokerage team.
Let me walk you around the world and breakdown.
Organization by geography.
Starting with our PC operations.
First our domestic retail operations were very strong with more than 8% organic new business was excellent nicely above second quarter 2020 levels.
Risk placement services are domestic.
<expletive> wholesale operations grew 12%.
This includes nearly 25% organic and open brokerage and 6% organic and our MGA programs and binding businesses, new business and retention were both better than 2020 levels.
Outside the U S. Our U K operations.
And more than 9% organic specialty was 10% and retail was excellent at 9% bolstered by new business production.
Pardon me, Canada was up and outstanding 16% fueled by rate and exposure growth on top of solid new business and retention and finally, Australia.
And New Zealand combined grew nearly 4% benefiting from good new business and stable retention.
Moving to our employee benefit brokerage and consulting business second quarter organic was up about 4%, which is also ahead of our June IR day commentary and another sequential step up over first quarter 2000.
And it's probably 1 and the second half of 2020.
As business activity improves we are seeing more favorable growth and our core health and welfare fee for service and retirement consulting businesses, which is encouraging and it's an encouraging sign for the second half of the year.
So when I combine PC at 9 plus.
Percent and benefits around 4% total brokerage segment organic was pushing 9%.
But with timing.
Reported 6.8% either way another really strong performance.
Next I'd like to make a few comments on the PC market.
Global PC.
'twenty remained firm overall and at the same time, we are seeing increased economic activity across our client base customers are adding coverages and exposures to their existing policies and monthly positive policy endorsements are trending higher than pre pandemic levels.
And overall second quarter renewal premium increases.
Increases were similar with the first quarter.
And moving around the World U S retail was up about 8%, including double digit increases and professional liability.
Canada was up 9% driven by increases in professional liability and package, New Zealand is flat and Australia up 6% moving.
Rates to the U K retail was up about 8% with most classes of specialty business over 10%.
And finally within Rps wholesale opened brokerage was up 12%, while our binding operations were up 4%. So clearly premiums are still increasing across nearly all geographies.
Moving.
Looking forward it feels that the current renewal environment will persist for some time carriers that cut back capacity and some of the less profitable lines of business like property professional liability umbrella and cyber have yet to budge on terms of conditions or havent reverted back to offer.
And for a more limits for lower attachment points.
And elevated natural catastrophes and continued impacts of the pandemic social inflation and low investment returns are all continuing to pressure rates debt.
And on top of this the potential for increased claim frequency as economies recover and carriers are making a strong case.
Fees increases are likely to persist for some time.
We need to see the global PC environment remains difficult for our clients and that is likely to remain for the foreseeable future.
Moving to our benefits business, our customer base is returning towards pre pandemic levels, a little more slowly than headline grabbing sectors like.
Our ratings leisure and hospitality, so we're expecting even better organic and the second half.
Further our HR consulting units are very well positioned to deliver solutions as clients and prospects pivot away from controlling costs to growing their businesses and attracting motivating and retaining their workforce.
<unk> thousand 21 and beyond.
So as I sit here today, I think second half brokerage organic will be better than the first half and could take full year 2020 organic towards 8% that would be a terrific step up from the 3.2% organic we reported in 2020.
Moving on to <unk>.
And <unk> acquisitions, we completed 7 brokerage and 1 risk management merger during the second quarter, representing over $70 million of estimated annualized revenues.
To thank all of our new partners for joining us and I extend a very warm welcome to our growing Gallagher family of professionals.
As.
<unk> and our tuck in merger and acquisition pipeline, we have more than 40 term sheets signed or being prepared representing around $300 million of annualized revenues.
Our platform continues to attract entrepreneurial owners looking to leverage our data expertise tools and market relationships to grow their business.
And I look at it and.
And we expect that our U S pipeline will grow and the second half of the year, given the potential changes and capital gains taxes.
So 2021 is setting up to be another successful year for our merger strategy.
Next I'd like to move to our risk management segment Gallagher Bassett.
Business quarter organic growth was pushing 20%.
Better than our June and IR day expectations of mid teens, and our adjusted EBITDAX margin exceeded 19%, we benefited from a revenue lift related to our 2020 and new business wins increased new arising claims within core workers' compensation.
And and easier pandemic your comparison.
Looking forward, the rebound and employment economic activity and are solid and new business should lead to third and fourth quarter organic nicely and double digits for the year, we expect to again to be just over 10% and our EBITDA margin to remain above 19%.
So what and exciting time to be part of Gallagher.
And that's because of our 35000 plus employees and our unique Gallagher culture.
It's our culture that keeps us together during the depths of the pandemic and as we opened offices around the globe yet preserving the flexibility we mastered over the last 16 months I'm hearing the excitement about being back together.
Ultimately, it's our employees to wake up every day and decided to do things the right way to Gallagher way, that's what makes us different.
It makes us special as a franchise it attracts the very best people and merger partners and ultimately clients I believe our culture has never been stronger.
So 2 quarters and the books 2021 is shaping up to be and excellent year, Okay, I'll stop now and turn it over to Doug Doug.
Thanks, Pat and Hello, everyone, and Pat sat and excellent quarter and first half of the year.
Today I'll spend a little extra time on organic and then give you our current thinking on expenses and market.
And then I'll walk you through some of the items on our CFO commentary document and I'll finish up with some comments on cash liquidity and capital management.
Okay, let's move to page 4 of the earnings release, and the brokerage segment organic table.
Headline all and organic of 6.8% excellent on its own but as Pat sad really running closer to 9%. There's 2 reasons for that first recall that we add some favorable timing and our first quarter related to contingent commissions that caused a little unfavorable timing here and the second quarter call that 70 basis.
Points.
And also recall that that we took our 606 revenue accounting adjustment and the first quarter of 2021.
And then adjusted that and the second quarter of 2020, so that creates on more difficult compare this year second quarter called out about 150 basis points. These.
These 2 items combined for about 220 basis points of a headwind here and the second quarter, we don't expect similar headwinds and the second half.
Okay, and let's go to page 6 to the brokerage adjusted EBITDA table.
You'll see that we expanded our EBIT margin by 23 basis points here and the second quarter.
Considering last year second quarter was and the depth of the pandemic and our brokerage segment faith $16 million and that quarter to post any expansion out all this quarter is terrific work by the team shows we are indeed, holding a lot of our savings.
So the natural question as when you're Levelized from the $60 million, a pandemic savings last year second quarter and about $15 million of costs that came back. This second quarter. What was the underlying margin expansion answer to that is about 125 basis points, which on and 58% organic feels about right.
That $15 million, mostly relates to hire utilization of our self insurance medical plan, a modest modest pick up and TNA expenses and incentive.
So we held $45 million of cost savings this quarter and that's really terrific.
Looking forward, we continue to think we can hold a lot of our pandemic periods savings, perhaps more than half, but naturally some of those costs will come back.
As of now, we think about $20 million and cost return and the third quarter and $30 million return on the fourth quarter. Both of those numbers are relative to last year same quarters. So again and the natural question might be what organic do you need to post third and fourth quarter.
To overcome those expensive and still have margin expansion.
Matthew and say about 7%.
Which is really the real story recall at the beginning of the year after expanding margins 420 basis points and 2020, we're looking at just holding margins flat.
Now we're looking at a full year margin expansion story.
So even with the return of the expenses and again and let's say assuming for illustration, a full year organic of 7% Maverick show and another 4 point of margin expansion and 2021 that would mean are cumulative 2 year margin expansion will be well over 500 basis points.
That really highlights the improvements and productivity that are now ingrained and how we do business and how we operate on a great story.
Let's move on to the risk management segment EBIT table on page 7 adjusted EBITDA margin of $19 and 7% and a quarter is fantastic.
And we continue to expect the team deliver margins about 19% for the full year showing on our risk management segment can also hold and some of the pandemic induced cost savings.
2020, and step and step up and margin can be sustained and 2021.
Let's move now to page 4 of the CFO commentary document that we post on our website.
Comparing second quarter results and the Blue section.
To our June IR day estimate and the Grace action interest and banking.
And then line clean energy came and better than our estimate thanks to a hot late June less wind energy production and certain areas of the country and higher natural gas prices. Accordingly, we are increasing our full year net earnings range to $75 and $85 million on the back of the second quarter upside.
And you'll also notice to non-GAAP adjustments Wanda related to the costs associated with the terminated well as towers Watson and acquisition and the other is a 1 time deferred tax revaluation charge related to the statutory increase in the UK 22, and 3 corporate tax rate.
And when you control for those 2 items and show that adjusted M&A and corporate lines were both pretty close to our June 17 fast on.
Looking ahead to the third quarter, and that's and the pinkish section you'll see non-GAAP after tax adjustment for $12 million to $14 million. This charge is mostly related to redeeming $650 million of debt. That's the 10 year senior notes, we issued and mid May still read that also on page 3 of the earnings release so.
It should also leads and lower third and fourth quarter adjusted interest and banking expense savings, maybe on $2 million to $3 million after tax each quarter.
And your turn now to page 5 the CFO commentary go to the Peach colored section.
Just another reminder of what we've been discussing and these calls and during our IR days for the last couple of years 2021 is the last year or clean energy investments will show GAAP P&L earnings.
Rather beginning in 2022, and we will show substantial cash flow through our cash or cash flow statement call at a $125 million to $150 million a year for say 6 to 7 years I'd know I've highlighted this a lot, but I just want to make sure you consider this as you build your 2022 models and beyond.
So next let's go to the balance sheet on page 14, the top line cash.
At June 3rd June 30, cash on hand was $3.2 billion and we have no outstanding borrowings on our credit facility will use that first to redeem the $650 million of debt I just discussed and also today, we announced on $1.5 billion a share repurchase program.
That would leave us with about $1 billion of cash and add to that about $650 million of net cash generation and the second half and half after dividends capex interest taxes et cetera, and we would also have another $6 million to $700 million of borrowing capacity named.
It means we have upwards of $2.5 billion for M&A right look at the pipeline and if a capital gains tax rate change and gets momentum I think we'll have plenty of opportunities to put that capital to work out really fair multiples.
Okay. Those are my comments and excellent quarter and excellent first half a bright outlook for the second half and a really terrific cash position back to your path.
Thanks, Doug a lot I think we'd take some questions now.
Thank you for calling now open for questions. If you have a question please pick up on.
On style 1 on your.
Thoughts on this time.
If you on speaker phone, please disable that function prior to price and saw 1 temperature.
<unk>.
Oh yourself from the queue at any point that's awesome. Thank you again that is star 1 for a question.
First question comes on line.
Well look classify though you may proceed with your question.
Hi, Thank net evening.
<unk>.
My first question is on on on.
Danny grilled comment on.
And thank you mentioned that you guys like.
From here, 8%.
And my Matthew.
Hitting at 6.4% for the first half of the year that would imply didn't glad you're expecting them back have to come from.
10% is there something wrong with that thinking are you thinking even the timing and packed and the second quarter and we get close to double check and in the second half of the year within brokerage yes.
I'll leave I think it might be a little strong on that based on the map and.
So just take a look at it again, I think wire mass produced and more like towards 9%.
And second half the ninth.
Okay.
And then my.
Second question on you guys and bounced and $1.5 million, Gary Puckett program to effectively Hibaaq package from.
A root deal so I just wanted and it's been.
Timing on the bypass is that something.
And complete the here and then.
Oh on.
Feedback on <unk> or is that also a little bit depending upon on India.
And then comes together pretty quickly.
No I think if we kept right now are intended to repurchase the 1.5 billion. We think we can get that done and short order also and certainly by the end of the year and the point here is that where we won't let excess capital set idle by any means.
Okay. That's helpful and then on on the margins by now.
And that's been helpful information and you and give me an example, like and if you guys debt.
For your panic, and 70% and he could show.
Point of margin improvement.
On the same coming back with that and then after that.
From the impact the same price.
Will be about 100 point margin and both groups this year.
Think I'll go and I was doing is using the illustration of say and if we post 7% for the 4 year you'd see about 100 basis points of margin expansion, even with those costs coming back into our structure.
And clearly if we better 7%, we should build a better that too.
Okay. That's helpful. Thank you for the color share.
And thanks loose.
Our next question comes from the line of David Modem model with Evercore I inside and you May proceed with your question.
Hi, good evening.
I had a question just on the on the expense side.
If I if I just looking brokerage at the operating expenses.
Non top non DNA opex fine if I take out the 15 million incremental costs.
And it looks like expenses were roughly flat year over year.
Doug I think you spoke about this a little bit and your comments, but I guess I'm, just wondering and and that sort of right that the underlying expand teams in the day, we're we're sort of flat.
Year over year and would you expect that to continue.
For the rest of this year.
But did you take the entire $15 million on a opex or did you.
The spread some of that into comp and then also digit factor and M&A, but you're not far off of it being pretty close to flat when you factor and M&A.
Yeah, I was just looking purely on Opex. So it was it was roughly flat, but that's that's something that you think and continue for the rest of the year just given some of the changes you guys made.
Over the course of last year.
Yes, I think that works and like I said, I think that $20 million will come back and the third quarter of expensive and I think $30 million will come back and the fourth quarter and that will be spread some between opex and some and be trained.
Compensation, but by and large our underlying cause other than maybe and the key areas. We're starting to see savings and real estate, we're starting to see savings and professional fees.
We are seeing increasing then travel and entertainment expenses, because some of our clients are expecting us to be there and we're happy to be there for it but you are seeing some good.
Ex learnings from the pandemic, we and we.
Pretty well taken care of all of our incoming and outgoing mail and saving and some some costs. There. So we can and centralized that so we can deploy mail anywhere around the world with the touch of a button.
So there are some good projects that have been going on to tick that we're continuing to harvest on the operating expense line.
Got it yeah that continues to come in a bit better than I would have thought.
I guess any sort of update on the thinking and in terms of the sustainable expense Dave's.
That you that you are getting from from Covid and Ah I think it was 150 to 175 is that is that still a good sort of level to think about or.
Yeah, and you sort of changes to net Dallas levels that were saved and let's say, let's call it simply $5 million a quarter during the pandemic and we think that we can hold $30 million of that $35 million of that so again back to I don't know where you are 150 came from unless it was 60 times and.
4 or 5.4 and a half and then divide by Tabor or J for 150 from.
I was using more of a range.
That you guys have given.
And you know that.
That makes sense.
Okay that makes sense and thanks for that.
I guess also maybe just on the on the growth side I guess could you just breakdown if we sort of look at the organic.
The 9% and brokerage on sort of a clean basis.
Could you just talk about some of the different components of that.
Whether that is yo.
Versus exposure mercy versus new business and share gains and how you expect each of those and try and over and of course and this year.
Okay, so new businesses stronger than where we were.
Same second quarter or for ol favorites, and a year new business ranked stronger and retention is about the same day.
And and left from right and exposure that when we combine that together right now I think it's about 50.50.
Great and 50% exposure.
[noise] got it thank you.
Our next question comes from the line of my teams that you May proceed with your question.
Yes. Thank you very much and have good afternoon. Thank you and thanks for taking some of your ooh from here and market and been a little slower getting rammed may be compared to other more cyclical and.
And market could you expand on that and <unk>.
What do you mean and markets.
Why don't you tell me about your customers if I heard the properly belly button.
John and your customers are and.
Employee benefit business.
Yeah, and you see a lot of headlined.
Recovery and employment staff that generally are citing retail hospitality transferred.
Travel.
Related industries.
Our customer base is not concentrated and those industries, it's more diverse and that and then took the return to work and our customer base isn't quite at those headline returning to work numbers. They say there is and what you're asking about mark nothing nothing just a mix of business down on that and our benefits business.
Right.
Yes.
My question and Pat on the pricing and might not have heard all your commentary, but it seems like Ah looking 18 from your specific numbers compared to last and then there is bigger and better.
Q1, and it seems like there's some broader discussion of dental deceleration.
Why do you think you may be seeing a little.
Little more optimistically than others.
And I, just stood from where I should mark.
And I'm talking to people and the field and.
And I'm trying to do our underwriting partners there's just.
Doesn't seem to be any appetite for cutting the rate of increase is down.
But I am not.
Not too and people say Oh gosh, we got this thing right, let's open the floodgates.
And we're seeing it a little bit and and I think there's a little bit I think the larger account market or larger size.
Market, we saw increases and premiums there.
And we're a little higher than let's say, the mid market and a smaller market and.
Throughout the and a 2020 and here and the first half and half of 21. So we're just not seeing if a larger count market is not growing rates quite as fast as they were and the path.
Or not really seeing and that as much in the mid market or seen it.
More consistent with first quarter and fourth quarter.
And those are there are.
Oh no here on back on.
This day.
Curiosity and a public forum any any and all that you'd care to share on potential or.
And.
Adding some staff in light of the Willis tower is once a day on break up.
You're seeing anything out on the market.
And the people moving the is noteworthy.
No we don't but there's you know Marty so long time organic hiring is a big part of our strategy and there is no doubt that we're going to continue to hire production fell on across all lines of business that we've got and.
And.
Our doors of all even and the depth of the stock market you followed US you know the doors open for production Joan.
Very good thank you.
Thanks, Thanks Mark.
I'd like to question comes on as Mayor He has with J V. W. And you May proceed with your question.
Thanks.
It's a little bit on capital management, and they get it and.
50 million of the raise debt that you're keeping.
And the tour to interpret dug your comments about and the potential.
And being able to utilize that 850.
Yeah, absolutely that's that's cash and the bank right now we think that that.
And we might have to borrow a little bit more towards the end of the year first part of next year, depending on how and how they M&A pipeline and looks at but the 650. There is a a special mandatory redemption feature and they're so what we'll pay that back.
And then we're happy with the 50 that we raised along with that and and that will get that to work here and the second half of the year.
Okay and might be trying too hard with this 1 but if you are expecting an increase in potential.
Potential sellers each of those canceled debt.
Capital gains tax rate and then likely to depressed pricing on these assets at all.
Oh, and you might have a little debt and but I think I think that will put truthfully I think that that might put pricing might stay the same and I actually might pull forward.
A little bit less on and and earn out and more upfront and so you put it here and this year you might be on that is.
Is it a full turn on the multiple and maybe 2 accelerated and not have as much on on that earn out but I wouldn't say, it's it's going to cause a big.
Decrease and pricing on.
And are there is a lot of competition for deals out there.
No fair enough. Okay. Thank you so much.
As a reminder, if you would like to ask a question. Please pass star 1 I need a telephone keypad.
And last question comes on of alcohol and was Raymond James J May proceed with your question.
And Conan on behalf of Greg Peters.
Maybe kind of sticking with him and a.
And the cat and conversation.
When you are talking on again to potential.
Ex campaign coming up within the conversation Mazzo now or is that.
A thought.
It's coming up every time.
Okay and then.
When.
1 looking on I guess, M&A and I guess.
What is the size of acquisitions, you're considering that changed at all.
Milk with good and tuck ins, but it looks also a Greg nose is very well actually.
If in fact, there's 39000 and agents and brokers and America votes remember that business insurance that just brought out it's July.
Addition, this month number 100 was 25 million and and revenue.
So.
The playing field is full of really really good tuck and players.
Okay that makes sense and then.
When talk when thinking about margin expansion and.
He and he has.
Maybe he can touch on you know your thoughts around deployment and <unk> and.
That might be changed.
Compared to you know 2019.
All right, let me see if I can understand that again I thought you asked a question about India and there or did I hear your word rock.
No I guess [laughter].
[laughter] No I went ahead and.
And on India.
It was.
The effects of.
Lower tier knee on margin expansion and then how you are considering deploying TNA.
And the future and may be compared.
2019, right, great well first of all day.
We have no hold on and if somebody wants to travel this either clients, where they're more than welcome to go do it we have no restrictions on that and people are self governing on that we will meet our clients wherever they would like us to meet them and.
<unk> to conduct business with them. So we are there and on how they want to do it and how much is that we probably have maybe $5 million a quarter of step up from where we were in the past. So maybe there is an extra $5 million and our first quarter and other 5 maybe we're at 10 million and this quarter of $15 million and.
$20 million next quarter relative to the depth of the pandemic. So we're doing the good thing about this though is that we are actually being able to bring our experts to the point of sale virtually and much more now than we were before so remember the advantage that we have and then.
That is we have experts and every single.
Aspect of insurance around the world, we can now drop that person into.
Into our customers officer at even if they want to do it from home virtually and.
International Force, there's lots of theirs conservative less international travel, but now we can bring our experts from London right into our our terrific client or prospect and des Moines, Iowa.
With a click of about so that's really the competitive advantage that we have and 90% of the time, we compete with somebody smaller than us and.
And then you just don't have the expert so when we can drop our expert in and.
And bring those capabilities and it's going to leave and more wins and the future and the past and travel somebody and for a half hour meeting that might be a 2 or 3 day affair. So think about even though expenses.
Return to a certain extent, it's the ability to get our expert at the point of sale.
The point of the prospect virtually that really is the terrific outcome from the pandemic.
Okay that makes sense I appreciate and dancers.
Thanks. Thanks.
Our next question comes from the line of mine too much.
Economists research and May proceed with your question.
And then just getting and guys.
From your question.
On the second half of the year.
9% again, and I think you mentioned this call you get 4% and employee benefits.
You said a lot of visibility on how that's supposed to try and I mean, how are you guys thinking about.
And and the 9% on the back.
I think there's a sequential stepped up continuing and employee benefits like we've seen as people come back to where we are really starting to just even and the last few weeks are HR consulting units are starting to get more calls we're starting to get.
As covered lives increase.
The number of participants and medical plans and dental plans and stepping up so if that 4 went to sex and then went to to 8 over the next couple of quarters and it wouldn't surprise me and our employee benefit on it.
Okay, and and then on.
And from Pat.
Could you just remind us why and when you see you guys do and $40 a year, but very few of them seem to be wholesale related.
And we knew about wholesale M&A why don't we see.
More of those.
We're very active they are running and things just opportunistic.
We've built Rps over the last 20, plus years and large fry with acquisitions and we've done some nice acquisitions over the last 12 months and Rps 1 of the 1 of the areas. We built out of course, where the country's largest M. J.
We also have.
A program business, that's really strong but open market brokerage, we built the typical Gallagher way, we recruited on her own and built around young people out of virtue chip and we've done some very nice acquisitions, there. So those they'll hold back there and.
Actually there is no real shortage of opportunities lot of competition.
1 of which and a very successful ipos month.
And.
Got Ya, Okay cool thanks, guys. Thank.
Sure.
Our last question comes from the line that sounds to find out.
This is a good question.
Yeah. Thanks.
And congrats on on the corner.
On top.
I think I'm not sure how to put this in and I hope it from Amazon and I noticed a complaint I'm gonna get Tonight and into Tomorrow and.
Be organic growth seems to be lagging tears and.
I understand the timing issue and.
With the contingency and the 6 O 6 but even at 9 percentage feels like.
People are going and I suspect people are going to complain.
How do you want me to respond to this.
As I needed conversations over the next day.
Well I think it's less they'll.
And they'll give you the technical side filled because he is good at that but let's put it. This way if you drop in the room and here's what I would say I'm really proud of our team and we had a great quarter and.
And so did our competitors God bless them and if you take a look at our and our results over the past number of years.
Versus anyone else you want to put up into that our team gets up every morning, and aggressively sells a lot of insurance and and so I take no second.
Stance too too.
And that this quarter was there anything but outstanding and.
And 1 quarter Comparables and <unk>.
Doesn't get my dander up.
Going to give you more technical answer, but I think our people did a great job is so on insurance and holding on to our clients and.
I'm really happy with the quarter on a comparable basis, there's others that.
And it looks stronger and look at it.
Think fell.
1 of the things you might want to do is take last year second quarter and this year second quarter for all of us.
Adam off and I think you might find that the.
And the Delta and and all that much different and like Pat said so.
So so over 2 years were up about 10% organically and aggregate and our brokerage segment and again I think that if you do the math on on those that are reported and worth wherever your other insights are coming from and their second quarter and their second last year and this quarter.
Add up to about the same number.
I think that they are running towards 9 percentage of first quarter since we've posted since fourth quarter of 2003.
And like that set this level of organic growth is it and an aberration just to 1 of us are 2 of us or whatever and the entire industry is showing excellent organic growth industry is growing and a much higher clipped and GP and I guess, what I would say is our outlook for the second half of the year is is pretty bullish. So that's that's how I would answer but.
Mathematically take the 2 quarters together and we won't be all that far apart when you have like for like.
Business.
I guess my leg as part of a part of this come back and you're going to think about the 2 years back that you're suggesting it comes back to the idea that your clients.
And we're more business persistent and so we don't get the ebb and the flow that we've seen in the recovery last year I guess.
And then and fairways and try the commentary and to the numbers and the other.
And where it might put it fills we're doing a better job and our competition and mitigate the impact of rates on for our clients.
Yeah, Okay. So I.
When I think about the you can get the door is always open for talent.
As part of the agreement will be and Willis.
Potential businesses that we're going to be acquired was there any noncompete or no shop for talent provision within that that would.
And keep you on the sideline from certain talent that might be why are you looking around.
We have some limitations.
We've agreed of course that we intend to honor those.
And they're not extensive.
But but generally speaking, we're not limited and and our ability to hire general production talent, but of course and that and that discussion on that transaction and there are some limitations, which we intend on it.
Okay perfect. Thanks, slumped congrats and.
Look I think the margin expansion story over the past few years has been.
Probably second to none so.
Hopefully that that's particularly that you get from me and my comments Tonight and I can do I appreciate it all right. Thanks. So.
And and thanks, Laura let me just to make a few comments here we delivered.
Obviously excellent second quarter and extremely proud of our team I believe that we are and the best business and the world and we're delivering significant value for our clients are on the globe day to day out. Thank you all for being with US. This evening and we will talk to you. The next quarter. Thanks very much. Thank you Laura.
Does that conclude today's conference and my disconnect Joe and at this time. Thank you for your participation day, Nevada.
Of your evening.
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