Q3 2023 Marsh & McLennan Companies Inc Earnings Call
Yeah.
Okay.
Speaker 1: Welcome to Marshall McLennan's earnings conference call. Today's call is being recorded.
Welcome to Marsh Mclennan as earnings Conference call today's call is being recorded.
Speaker 1: Third quarter 2023 financial results and supplemental information were issued earlier this morning. They are available on the company's website at marshmcclenon.com. Please note that remarks made today may...
Third quarter 2023 financial results and supplemental information were issued earlier this morning.
Are available on the company's website at Marsh Mcclennan Dot com.
Please note that remarks made today may include forward looking statements forward looking statements are subject to risks and uncertainties.
Speaker 1: Forward-looking statements are subject to risks and uncertainties, and a variety of factors may cause actual results to differ materially from those contemplated by such states.
Factors that may cause actual results to differ materially from those contemplated by such statements.
Speaker 1: For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, including our most recent Form 10-K , all of which are available on the Marsh McLennan website.
For a more detailed discussion of those factors. Please refer to our earnings release for this quarter and to our most recent SEC filings, including our most recent Form 10-K, all of which are available on the Marsh Mclennan website.
Speaker 1: During the call today, we may also discuss certain non-GAAP financial measures. For a reconciliation of these measures to the most closely comparable GAAP measures, please refer to the schedule in today's earnings release.
During the call today, we may also discuss certain non-GAAP financial measures for a reconciliation of these measures to the most closely comparable GAAP measures. Please refer to the schedule in today's earnings release.
Speaker 1: If you have a question, please press star 1 1 on your touch tone phone.
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If youre using a speakerphone you may need to pick up the handset before pressing the numbers once again, if you'd have a question. Please press star one one on your Touchtone phone.
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Speaker 1: I'll now turn this over to John Doyle, President and CEO of Marsh McGlennan.
I'll now turn this over to John Doyle, President and CEO of Marsh <unk> Mclennan.
Speaker 2: Good morning and thank you for joining us to discuss our third quarter results reported earlier today. I'm John Doyle, President and CEO of Marsh & McLennan.
Good morning, and thank you for joining us to discuss our third quarter results reported earlier today I'm, John Doyle, President and CEO of Marsh Mclennan.
Speaker 2: Joining me on the call is Mark McGivney, our CFO and the CEOs of our business.
Joining me on the call is Mark Mcgivney, our CFO and the Ceos of our businesses.
Speaker 2: Martin South of Marsh, Dean Klasoor of Guy Carpenter, Martin Furlan of Mercer, and Nick Studer of Oliver One. Also with us this morning is Sarah DeWitt, Head of Investor Relief.
South Marsh <unk> of Guy Carpenter Martine for lot of Mercer and mixed Studer of Oliver Wyman.
Also with US. This morning is Sarah Dewitt head of Investor Relations.
Speaker 2: Before I get into our results, I'd like to take a moment to comment on the violent attacks on Israel and the tragic events unfolding in Israel and Gaza. We, along with our colleagues, condemn all acts of terror and violence and reject hatred.
Before I get into our results I'd like to take a moment to comment on the violent attacks on Israel and the tragic events unfolding in Israel in Gaza.
We along with our colleagues condemn all acts of terror and violence and reject hatred.
Speaker 2: Our primary focus is on ensuring the safety and well-being of our colleagues in Tel Aviv.
Our primary focus is on ensuring the safety and wellbeing of our colleagues in Tel Aviv and supporting colleagues around the world, who have family and friends in Israel and Gaza well.
Speaker 2: colleagues around the world who have family and friends in Israel and Gaza.
Speaker 2: We're also supporting our clients as they grapple with the challenges of this conflict.
We're also supporting our clients as they grapple with the challenges of this conflict.
Speaker 2: Turning to our third quarter results, I'm very pleased with our performance. We extended our best run of quarterly underlying revenue growth in over two decades and reported significant growth in adjusted EPS.
Turning to our third quarter results I'm very pleased with our performance we extended our best run of quarterly underlying revenue growth in over two decades and reported significant growth in adjusted EPS.
Speaker 2: Top line momentum continued with 10% underlying revenue growth on top of 8% growth in the third quarter of last year.
Top line momentum continued with 10% underlying revenue growth on top of 8% growth in the third quarter of last year.
Speaker 2: Adjusted operating income grew 24% versus a year ago.
Adjusted operating income grew 24% versus a year ago.
Speaker 2: Our adjusted operating margin expanded 170 basis points compared to the third quarter of 2022. Adjusted EPS grew 33%. And we completed $300 million of share repurchases during the pandemic.
Our adjusted operating margin expanded 170 basis points compared to the third quarter of 2022, adjusted EPS grew 33%.
And we completed $300 million of share repurchases during the quarter.
Speaker 2: These results reflect our consistent focus on delivering in the near term while investing for sustained growth over the long term.
These results reflect our consistent focus on delivering in the near term while investing for sustained growth over the long term.
Speaker 2: We are seeing the benefit of investments we've made in our talent and capabilities, and we continue to see opportunities to add high-quality acquisitions. During the third quarter, we announced...
We are seeing the benefit of investments we've made in our talent and capabilities and we continue to see opportunities to add high quality acquisitions.
During the third quarter, we announced two significant transactions in early August Marsh <unk> Mclennan Agency acquired Graham Company, a top 100 U S insurance and benefits broker and risk management consultancy with 215 employees and over $70 million in revenue ramp.
Speaker 2: In early August , Marsh McLennan Agency acquired Graham Company.
Speaker 2: top 100 US insurance and benefits broker and risk management consultancy with 215 employees and over $70 million in revenue.
Speaker 2: RAM will provide significant business insurance and employee benefits expertise for MMA's clients in the mid-Atlantic.
Graham will provide significant business insurance and employee benefits expertise for MMA as clients in the mid Atlantic.
Speaker 2: This acquisition is another example of us attracting the best agencies in the U.S. MMA is now a $3 billion revenue business.
This acquisition is another example of us attracting the best agencies in the U S. MMA is now a $3 billion revenue business.
And the same month Marsh announced an agreement to acquire <unk> insurance group. This deal expands our Australia and middle market business and our position across the Pacific region, and Asia Conant and specializes in corporate risk in employee benefits and serves over 30000 clients.
Speaker 2: In the same month, Marsh announced an agreement to acquire Honan Insurance.
Speaker 2: This deal expands our Australian middle market business and our position across the Pacific region and Asia.
Speaker 2: PONIN specializes in corporate risk and employee benefits and serves over 30,000 clients.
Operator: Welcome to Marsh & McLennan's earnings conference call. Today's call is being recorded. Third quarter, 2023 financial results and supplemental information were issued earlier this morning. They are available on the company's website at Marsh & McLennan.com. Please note that remarks made today may include forward-lifting statements. Forward-looking statements are subject to risks and uncertainties, and a variety of factors may cause actual results to differ materially from those contemplated by such statements. For more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, including our most recent form 10K, all of which are available on the Marsh & McLennan website.
Speaker 2: Beyond acquisitions, we continue to make targeted investments in talent, sales operations, and go-to-market strategy.
Beyond acquisitions, we continue to make targeted investments in talent sales operations and go to market strategies.
Speaker 2: We are also investing in new technologies and solutions to bring the best of Marsh Mclennan to our clients.
We are also investing in new technologies and solutions to bring the best of Marsh Mclennan to our clients.
Speaker 2: For example, Guy Carpenter recently launched the next generation of our Catastrophe Analytics platform, GC Advantage Point. The new platform is a critical tool to help clients drive profitable risk selection and manage catastrophe exposure in a quickly evolving risk lens.
For example, Guy Carpenter recently launched the next generation of our catastrophe analytics platform GC advantage point.
The new platform is a critical tool to help clients drive profitable risk selection and managed catastrophe exposure in a quickly evolving risk landscape.
Speaker 2: Earlier this year, Marsh announced the launch of CyberPathway, an integrated cybersecurity platform that made it possible to store information on the infrastructure and readines from Alt Nebul.
Earlier, this year Marsh announced the launch of Ciber pathway and.
An integrated cyber security and insurance solution.
Operator: During the call today, we may also discuss certain non-gap financial measures. For a reconciliation of these measures to the most closely comparable gap measures, please refer to the schedule in today's earnings release. If you have a question, please press star-1-1 on your touch-tone phone. If you wish to be removed from the queue, please press star-1-1 again. If you are using a speaker phone, you may need to pick up the handset before pressing the numbers. Once again, if you have a question, please press star-1-1 on your touch-tone phone.
Speaker 2: for U.S. small and mid-sized businesses that helps enhance their resilience in a volatile threat environment.
For U S small and mid size businesses that helps enhance the resilience in a volatile threat environment.
Speaker 2: The program provides access to key security tools and capabilities, as well as insurance coverage, that can grow as our clients evolve.
The program provides access to key security tools and capabilities as well as insurance coverage that can grow as our clients evolve.
Speaker 2: And we are investing in technologies that enhance our internal productivity, insights for clients, and improve colleague experience. One example is LenAI, Marshall McLennan's internal AI assist...
And we are investing in technologies that enhance our internal productivity insights for our clients.
And improve colleague experience. One example is learn AI.
Mclennan as internal AI assistant Linda.
Speaker 2: LenAI offers the power of ChatGPT in a safe and data secure environment and is available to all colleges.
<unk> offers the power of chat GPT in a safe and data secure environment and is available to all colleagues.
John Doyle: I'll now turn this over to John Doyle, president and CEO of Marsh McLennan. Good morning, and thank you for joining us to discuss our third quarter results reported earlier today. I'm John Doyle, president and CEO of Marsh McLennan. Joining me on the call is Mark McGibney, our CFO, and the CEOs of our businesses. Martin South of Marsh, Dean Clasor of Guy Carpenter, Martin Falon of Mercer, and Nick Studer of Oliver 1. Also with us, this morning is Sarah DeWitt, head of investor relations.
Speaker 2: Developed by our Innovation Center, it's also helping Oliver Wyman support clients in developing their own AI capabilities.
They'll buy our innovation center, it's also helping Oliver Wyman support clients and developing their own AI capabilities.
Our approach to balancing investment in growth drives consistent exceptional performance for shareholders and positions us well to deliver new solutions and insights for our clients.
Speaker 2: Our approach to balancing investment and growth drives consistent, exceptional performance for shareholders and positions us well to deliver new solutions and insights for our clients.
Okay.
Turning to our strategic initiatives.
Speaker 2: The combined value proposition of our businesses continues to gain traction with clients, especially in certain industries and lines of...
The combined value proposition of our businesses continues to gain traction with clients, especially in certain industries and lines of business for example.
John Doyle: Before I get into our results, I'd like to take a moment to comment on the violent attacks on Israel and the tragic events unfolding in Israel and Gaza. We, along with our colleagues, condemn all acts of terror and violence and reject hatred. Our primary focus is on ensuring the safety and well-being of our colleagues in Tel Aviv and supporting colleagues around the world who have family and friends in Israel and Gaza. We're also supporting our clients as they grapple with the challenges of this conflict.
Speaker 2: We are focused on enterprise risks for healthcare clients. Our Marsh and Mercer teams are coming together to respond to emerging challenges, such as health and safety, labor actions, and workforce and liability risks from AI.
We are focused on enterprise risks for health care clients are marsh and Mercer teams are coming together to respond to emerging challenges such as health and safety labor actions and workforce and liability risks from AI.
Speaker 2: In the private equity and M&A space, Bursar, Marsh, and Oliver Wyman are combining capabilities to help clients close deals and create post-transaction value.
In the private equity and M&A space Mercer Marsh and Oliver Wyman are combining capabilities to help clients closed deals and create post transaction value.
Speaker 2: This can include due diligence, advisory on large transformation.
This can include due diligence advisory on large transformations health.
John Doyle: Turning to our third quarter results, I'm very pleased with our performance. We extended our best run of quarterly underlying revenue growth in over two decades and reported significant growth in adjusted EPS. Top line momentum continued with 10 percent underlying revenue growth on top of 8 percent growth in the third quarter of last year. Adjusted operating income grew 24 percent versus a year ago. Our adjusted operating margin expanded 170 basis points compared to the third quarter of 2022.
Speaker 2: health and benefits carve-out transactions, and providing stop-loss solutions.
Health and benefits carve out transactions.
And providing stop loss solutions.
Speaker 2: And in the insurance sector, Guy Carpenter is partnering with Mercer to provide portfolio management solutions to insurance clients. One example is our...
And then the insurance sector Guy Carpenter is partnering with Mercer to provide portfolio management solutions to insurance clients.
One example is our advanced balance sheet solution.
Speaker 2: which is a collaborative approach that aligns risk and return across an insurer's balance.
Which is a collaborative approach that aligns risk and return across an insurer's balance sheet. This offering has already resulted in several regional insurers choosing to partner with Mercer for <unk>.
Speaker 2: This offering has already resulted in several regional insurers choosing to partner with Mercer for OCIO.
Speaker 2: We are also finding new ways to operate, reduce complexity, and organize for impact.
We are also finding new ways to operate reduced complexity and organized for impact.
John Doyle: Adjusted EPS grew 33 percent and we completed $300 million of share repurchases during the quarter. These results reflect our consistent focus on delivering in the near term while investing for sustained growth over the long term. We are seeing the benefit of investments we've made in our talent and capabilities and we continue to see opportunities to add high-quality acquisition, positions.
Speaker 2: As we continue to execute on our restructuring actions, we've identified additional opportunities to rationalize technology, reduce our real estate footprint, and realign our workforce.
As we continue to execute on our restructuring actions, we've identified additional opportunities to rationalize technology reduce our real estate footprint and realign our workforce.
Speaker 2: We now expect to achieve total savings of roughly $400 million by 2024, with total costs to achieve these savings of $425 to $475 million.
We now expect to achieve total savings of roughly $400 million by 2024.
With total cost to achieve these savings of $425 million to $475 million.
John Doyle: During the third quarter, we announced two significant transactions. In early August, Marsh McLennan Agency acquired Graham Company, a top 100 US insurance and benefits broker and risk management consultancy with 215 employees and over $70 million in revenue. Graham will provide significant business insurance and employee benefits expertise for MMA's clients in the Mid-Atlantic. This acquisition is another example of us attracting the best agencies in the US. MMA is now a $3 billion revenue business.
Speaker 2: Overall, the momentum we are seeing as our businesses increasingly serve clients together, combined with our restructuring efforts, offers opportunities to deliver enhanced value for clients, drive higher growth, and be more efficient and connected.
Overall, the momentum we are seeing as our businesses increasingly serve clients together combined with our restructuring efforts offers opportunities to deliver enhanced value for clients drive higher growth and be more efficient and connected.
Yes.
Now, let me turn to the macro environment.
Speaker 2: The outlook remains uncertain. Capital market volatility is returned with the continued rise in interest rates.
The outlook remains uncertain <unk>.
Capital market volatility has returned with the continued rise in interest rates.
Speaker 2: The trajectory of inflation and further central bank tightening remain an open question, and the geopolitical situation remains volatile.
The trajectory of inflation and further central Bank tightening remain an open question and the geopolitical situation remains volatile.
Speaker 2: Despite the environment, we continue to perform well, and we have a track record of resilience.
Despite the environment, we continue to perform well and we have a track record of resilience. We believe we are well positioned to perform across economic cycles and manage our business to grow revenues faster than expenses in good as well as challenging periods.
John Doyle: In the same month, Marsh announced an agreement to acquire a Honon Insurance Group. This deal expands our Australian middle market business and our position across the Pacific region and Asia. Honon specializes in corporate risk and employee benefits and serves over 30,000 clients.
Speaker 2: We believe we are well positioned to perform across economic cycles and manage our business to grow revenues faster than expenses in good as well as challenging periods.
Now, let me turn to insurance and reinsurance market conditions.
John Doyle: Beyond acquisitions, we continue to make targeted investments in talent, sales operations and go-to-market strategies. We are also investing in new technologies and solutions to bring the best of Marsh McLennan to our clients. For example, Guy Carpenter recently launched the next generation of our catastrophe analytics platform, GC Advantage Point. The managed catastrophe exposure in a quickly evolving risk landscape.
Speaker 2: Primary insurance rates continued to increase with the marsh global insurance market index up 3% overall in line with the second quarter. Property rates increased 7%, compared to 10% in the second quarter. Casually pricing was up in the low-
Primary insurance rates continued to increase with the Marsh global insurance market index up 3% overall in line with the second quarter.
Property rates increased 7% compared to 10% in the second quarter.
Casualty pricing was up in the low single digit range.
Speaker 2: Workers' compensation increased slightly, while financial and professional liability insurance rates were down mid-single digits.
Workers' compensation increased slightly while financial and professional liability insurance rates were down mid single digits.
Speaker 2: Cyber insurance pricing decreased modestly after several years of increase.
Insurance pricing decreased modestly after several years of increases.
John Doyle: Earlier this year, Marsh announced the launch of Cyber Pathway, an integrated cybersecurity and insurance solution for US small and mid-sized businesses that helps enhance the resilience in a volatile threat environment. The program provides access to key security tools and capabilities as well as insurance coverage that can grow as our clients evolve. We are investing in technologies that enhance our internal productivity, insights for clients and improve colleague experience.
Speaker 2: In reinsurance, our clients have faced consistent challenges throughout 2023.
In reinsurance our clients are faced consistent challenges throughout 2023.
Speaker 2: This includes elevated cat losses, core and social inflation, and continued political instability.
This includes elevated cat losses core and social inflation and continued political instability.
Speaker 2: As we look to January 1st, the market appears to be more orderly than last year, but we expect underwriting discipline to continue.
As we look to January one the market appears to be more orderly than last year, but we expect underwriting discipline to continue.
Speaker 2: On the property side, we expect firm pricing, but a more stable market with adequate capacity and increased reinsurer appetite.
On the property side, we expect firm pricing, but a more stable market with adequate capacity and increase reinsurer appetite.
Speaker 2: In casualty, the market is more cautious, with reinsurers assessing prior year loss development and inflation. We expect capacity.
In casualty the market is more cautious with reinsurers assessing prior year loss development and inflation.
John Doyle: One example is LENAI, Marsh McLennan's internal AI assistant. LENAI offers the power of chat GPT in a safe and data secure environment and is available to all colleagues. Developed by our Innovation Center, it's also helping Oliver Weinmann support clients in developing their own AI capabilities.
We expect capacity to remain stable.
Speaker 2: Overall, clients will need thorough preparation and a proactive strategy to achieve desired outcomes.
Overall clients will need thorough preparation and a proactive strategy to achieve desired outcomes we.
Speaker 2: We are well positioned to help our clients navigate these dynamic market conditions.
We are well positioned to help our clients navigate these dynamic market conditions.
John Doyle: Our approach to a balancing investment and growth drives consistent, exceptional performance for shareholders and positions us well to deliver new solutions and insights for our clients. Turning to our strategic initiatives, the combined value proposition of our businesses continues to gain traction with clients, especially in certain industries and lines of business. For example, we are focused on enterprise risks for healthcare clients. Our Marsh and Mercer teams are coming together to respond to emerging challenges such as health and safety, labor actions and workforce and liability risks from AI.
Speaker 2: Now let me turn to our third quarter financial performance. We generated adjusted EPS of $1.57, which is up 33% from a year ago. On an underlying basis, revenue grew 10%.
Now, let me turn to our third quarter financial performance, we generated adjusted EPS of $1 57.
Which is up 33% from a year ago.
On an underlying basis revenue grew 10%.
Speaker 2: Underlying revenue grew 11% in RIS and 9% in consulting.
Underlying revenue grew 11% in RIS and 9% in consulting.
Marsh was up 8%.
Speaker 2: Dicarpandary percent, Mercer 8% and Oliver Wymne and Grue 12%
Guy Carpenter, 8%, Mercer, 8% and Oliver Wyman grew 12%.
Speaker 2: Overall, the third quarter saw adjusted operating income growth of 24% and our adjusted operating margin expanded 170 basis points year over year.
Overall, the third quarter saw adjusted operating income growth of 24% and our adjusted operating margin expanded 170 basis points year over year.
John Doyle: In the private equity and M&A space, Mercer, Marsh and Oliver Weinmann are combining capabilities to help clients close deals and create post-transaction value. This can include due diligence, advisory on large transformations, health and benefits carve out transactions and providing stop loss solutions. And in the insurance sector, Guy Carpenter is partnering with Mercer to provide portfolio management solutions to insurance clients. One example is our advanced balance sheet solution, which is a collaborative approach that aligns risk and return across an insurers balance sheet. This offering has already resulted in several regional insurers choosing to partner with Mercer for OCIO.
For the nine months consolidated revenue grew 10% on an underlying basis.
Speaker 2: For the nine months, consolidated revenue grew 10% on an underlying basis.
Speaker 2: adjusted operating income grew 17% and our adjusted operating margin expanded 130 bases.
Adjusted operating income grew 17% and our adjusted operating margin expanded 130 basis points.
Adjusted EPS was $6 31 up 17% from a year ago.
Speaker 2: Adjusted EPS was $6.31, up 17% from a year ago.
Speaker 2: With our outstanding results in the third quarter and year-to-date, we remain on track for a terrific year. Based on our outlook today and assuming current market conditions persist, we now expect full-year underlying revenue growth to be 9-10%.
With our outstanding results in the third quarter and year to date, we remain on track for a terrific year based on our outlook today and assuming current market conditions persist. We now expect full year underlying revenue growth to be 9% to 10%.
Speaker 2: We also continue to expect margin expansion for the full year and strong growth in adjusted EPS.
We also continue to expect margin expansion for the full year and strong growth in adjusted EPS.
Speaker 2: Finally, I want to provide an update on our recently announced leadership changes. Martin Ferlan, CEO of Mercer, will retire on March 31 of next year.
Finally, I want to provide an update on our recently announced leadership changes Martin for Lon CEO of Mercer will retire on March 31 of next year.
John Doyle: We are also finding new ways to operate, reduce compliance flexibility and organize for impact. As we continue to execute on our restructuring actions, we've identified additional opportunities to rationalize technology, reduce our real estate footprint, and realign our workforce. We now expect to achieve total savings of roughly $400 million by 2024 with total cost to achieve these savings of $425 to $475 million.
Speaker 2: Pat Tomlinson has been appointed president of Mercer, where he will work closely with Martin through a transition period and have responsibility for Mercer's global health, wealth, and career practices.
Pat Tomlinson has been appointed President of Mercer, where he will work closely with Martin through a transition period and have responsibility for <unk> global health wealth and career practices, Pat will succeed Martin as president and CEO of Mercer upon her retirement.
Speaker 2: Pat will succeed Martin as President and CEO of Mercer upon her retirement.
Speaker 2: I'm excited to work with Pat in his new role. He brings an outstanding track record as a leader and strong knowledge of our business.
I'm excited to work with patent his new role he brings an outstanding track record as a leader and strong knowledge of our business.
John Doyle: Overall, the momentum we are seeing as our businesses increasingly serve clients together, combined with our restructuring efforts offers opportunities to deliver enhanced value for clients, drive higher growth, and be more efficient and connected.
Speaker 2: He currently serves as Marshall McLennan, US and Canada CEO , and Mercer president of US and Canada. Pat has 26 years of industry experience, including the last nine years in leadership roles at Mercer.
He currently serves as Marsh Mclennan in U S and Canada, CEO and Mercer President of U S and Canada had his 26 years of industry experience, including the last nine years in leadership roles at Mercer.
John Doyle: Now let me turn to the macro environment. The outlook remains uncertain. Capital market volatility is returned with the continued rise in interest rates. The trajectory of inflation and further central bank tightening remain an open question, and the geopolitical situation remains volatile. Despite the environment, we continue to perform well, and we have a track record of resilience. We believe we are well positioned to perform across economic cycles and manage our business to grow revenues faster than expenses in good as well as challenging periods.
Speaker 2: I also want to thank Martin for her leadership. In her five years as CEO of Mercer, she delivered strong growth, built and cultivated our talent, and delivered impact for our clients.
I also want to thank Martyn for her leadership and our five years as CEO of Mercer She delivered strong growth.
Built and cultivated our talent and delivered impact for our clients.
Speaker 2: This announcement is another example of our depth of exceptional talent and focus on succession planning.
This announcement is another example of our depth of exceptional talent and focus on succession planning.
Speaker 2: Overall, I am proud of our third quarter performance, which demonstrates continued execution of our strategy and continued momentum across our business.
Overall, I am proud of our third quarter performance, which demonstrates continued execution of our strategy and continued momentum across our business and grateful to our colleagues for their focus and determination and the value they deliver to our clients shareholders and communities.
Speaker 2: grateful to our colleagues for their focus and determination and the value they deliver to our clients, shareholders, and communities. With that, let me turn it over to Mark for a more detailed review of our results.
John Doyle: Now let me turn to insurance and re-insurance market conditions. Primary insurance rates continue to increase with the marsh global insurance market index up 3% overall in line with the second quarter. Property rates increased 7%, compared to 10% in the second quarter. Casually pricing was up in a low single-digit range. Workers' compensation increased slightly, while financial and professional liability insurance rates were down mid-single digits. Cyber insurance pricing decreased modestly after several years of increases.
With that let me turn it over to Mark for a more detailed review of our results.
Thank you John and good morning.
Speaker 3: Our third quarter results were outstanding. Continued momentum and underlying growth, strong double digit adjusted EPS growth, and significant margin.
Our third quarter results were outstanding continued momentum in underlying growth strong double digit adjusted EPS growth and significant margin expansion.
Speaker 3: Our consolidated revenue increased 13% to $5.4 billion. Underline growth of 10.
Our consolidated revenue increased 13% to five 4 billion with underlying growth of 10%.
Operating income was $996 million and adjusted operating income was $1 1 billion up 24% from a year.
Speaker 3: Operating income was $996 million and adjusted operating income was $1.1 billion, up 24% from a year ago.
Speaker 3: Adjusted operating margin increased 170 basis points to 21.3
Our adjusted operating margin increased 170 basis points to 21, 3%.
John Doyle: In re-insurance, our clients have faced consistent challenges throughout 2023. This includes elevated cat losses, core and social inflation, and continued political instability. As we look to January 1st, the market appears to be more orderly than last year, but we expect underwriting discipline to continue. On the property side, we expect firm pricing, but a more stable market with adequate capacity and increased reinsurer appetite. In casualty, the market is more cautious with reinsurers assessing prior-year loss development and inflation. We expect capacity to remain stable. Overall, clients will need thorough preparation and a proactive strategy to achieve desired outcomes.
Speaker 3: Gap EPS was $1.47, and adjusted EPS was $1.57, up 33% over last year.
GAAP EPS was $1 47.
And adjusted EPS was $1 57 up 33% over last year.
Note that adjusted EPS in the third quarter included a 10 discrete tax benefit from the release of valuation allowance on foreign deferred tax assets.
Speaker 3: Note that adjusted EPS in the third quarter included a 10-cent discrete tax benefit from the release of evaluation allowance on foreign deferred tax at $2.5 million.
Speaker 3: Even without this benefit, our adjusted EPS grew 25% in a quarter.
Even without this benefit our adjusted EPS grew 25% in the quarter.
For the first nine months of 2023 underlying revenue growth was 10% adjusted operating income grew 17% to $4 4 billion. Our adjusted operating margin increased 130 basis points and adjusted EPS increased 17% to $6 31.
Speaker 3: The first nine months of 2023, underlying revenue growth was 10%. Adjusted operating income grew 17% to $4.4 billion. Our adjusted operating margin increased 130 basis points. Adjusted EPS increased 17% to $6.31.
John Doyle: We are well positioned to help our clients navigate these dynamic market conditions.
Speaker 3: Looking at risk and insurance services, third quarter revenue was $3.2 billion, up 12% from a year ago, or 11% on an underlying basis.
Looking at risk and insurance services third quarter revenue was $3 2 billion up 12% from a year ago or 11% on an underlying basis.
John Doyle: Now let me turn to our third quarter financial performance. We generated adjusted EPS of $1.57, which is up 33% from a year ago. On an underlying basis, revenue grew 10%. Underlying revenue grew 11% in RIS and 9% in consulting. Marsh was up 8%, Guy Carpenter 8%, Mercer 8%, and Oliver Wyman grew 12%. Overall, the third quarter saw adjusted operating income growth of 24% and our adjusted operating margin expanded 170 basis points year over year.
Speaker 3: This result marks the 10th consecutive quarter of 8% or higher underlying growth in RIS and continues the best stretch of growth in the United States.
This result marks the 10th consecutive quarter of 8% or higher underlying growth in RIS and continues the best stretch of growth nearly two decades.
Operating income increased 21% to $640 million.
Speaker 3: Operating income increased 21% to 640 million.
Speaker 3: Just it operating income increased 19% to 671.
Adjusted operating income increased 19% to $671 million and.
Speaker 3: And our adjusted operating margin expanded 100 basis points to 23.4.
And our adjusted operating margin expanded 100 basis points to 23, 4%.
With the first nine months of the year revenue in RIS was $10 8 billion with underlying growth of 12% adjusted operating income increased 18% to $3 3 billion.
Speaker 3: The first nine months of the year, revenue in RIS was $10.8 billion. The underlying growth of 12%, adjusted operating income increased 18% to $3.3 billion. Margin increased 150 basis points to 30...
John Doyle: For the nine months, consolidated revenue grew 10% on an underlying basis. Adjusted operating income grew 17%, and our adjusted operating margin expanded 130 basis points. Adjusted EPS was $6.31 up 17% from a year ago.
Margin increased 150 basis points to 32, 6%.
At Marsh revenue in the quarter was $2 7 billion up 9% from a year ago or 8% on an underlying basis.
Speaker 3: At March, revenue in the quarter was 2.7 billion, up 9% from a year ago or 8% on an underlying basis. This comes on top of each...
John Doyle: With our outstanding results in the third quarter and year-to-date, we remain on track for a terrific year. Based on our outlook today and assuming current market conditions persist, we now expect full year underlying revenue growth to be 9% to 10%. We also continue to expect margin expansion for the full year and strong growth in adjusted EPS.
This comes on top of 8% growth in the third quarter of last year.
Speaker 3: Growth in the third quarter reflected solid new business and strong...
Growth in the third quarter reflected solid new business and strong retention.
Speaker 3: In US and Canada, underlying growth was 6% for the quarter led by strong growth in MMA. In international, underlying growth was 10% and comes on top of the
In U S and Canada underlying growth was 6% for the quarter led by strong growth in MMA.
In international underlying growth was 10% and it comes on top of 11% in the third quarter of last year.
John Doyle: Finally, I want to provide an update on our recently announced leadership changes.
Latin America was up 14% Asia Pacific was up 10% and EMEA grew 9%.
Speaker 3: Asia Pacific was up 10%, and EMEA grew 9%.
John Doyle: Martin Ferland, CEO of Mercer, will retire on March 31st of next year. Pat Tomlinson has been appointed president of Mercer, where he will work closely with Martin through a transition period and have responsibility for Mercer's global health, wealth, and career practices. Pat will succeed, Martin, as president and CEO of Mercer upon her retirement. I'm excited to work with Pat in his new role. He brings an outstanding track record as a leader and strong knowledge of our business. He currently serves as Marsha McClendon, US and Canada CEO and Mercer president of US and Canada. Pat has 26 years of industry experience, including the last nine years in leadership roles at Mercer.
Speaker 3: First nine months of the year, Marsha's revenue was $8.5 billion with underlying growth of $9.5 billion.
First nine months of the year Marsh's revenue was $8 5 billion with underlying growth of 9%.
Speaker 3: US and Canada grew 7% and international was up 10%.
U S and Canada grew 7% and international was up 10%.
Guy Carpenter's revenue was $359 million in the quarter up 9% or 8% on an underlying basis, driven by strong growth across our global specialties and regions.
Speaker 3: Dicarpenter's revenue was $359 million in the quarter, up 9% or 8% on an underlying basis, driven by strong growth across our global specialties and regions.
Speaker 3: First nine months of the year, Guy Carpenter generated two billion of revenue, 10% underlying.
For the first nine months of the year Guy Carpenter generated $2 billion of revenue, 10% underlying growth.
Okay.
In the consulting segment third quarter revenue was $2 2 billion up 13% from a year ago or 9% on an underlying basis.
Speaker 3: In the consulting segment, third quarter revenue was $2.2 billion, up 13% from a year ago, or 9% on an underlying basis. us.
John Doyle: I also want to thank Martin for her leadership. In her five years as CEO of Mercer, she delivered strong growth, built and cultivated our talent and delivered impact for our clients. This announcement is another example of our depth of exceptional talent and focus on succession planning.
Consulting operating income was $424 million.
Speaker 3: Adjusted operating income increased 24% to $447 million. And the adjusted operating margin expanded 170 basis points to 20.8%.
Adjusted operating income increased 24% to $447 million and the adjusted operating margin expanded 170 basis points to 28%.
Speaker 3: first nine months of 2023 consulting revenue was 6.4 billion with underlying growth of seven.
For the first nine months of 2023 consulting revenue was $6 4 billion with underlying growth of 7%.
John Doyle: Overall, I'm proud of our third quarter performance, which demonstrates continued execution of our strategy and continued momentum across our business. I'm grateful to our colleagues for their focus and determination and the value they deliver to our clients, shareholders, and communities.
Speaker 3: Adjusted operating income increased 11% to $1.3 billion. The adjusted operating margin expanded 50...
Adjusted operating income increased 11% to $1 3 billion.
Adjusted operating margin expanded 50 basis points to 21%.
Mark Mcgivney: With that, let me turn it over to Mark for a more detailed review of our results. Thank you, Johnny. Good morning. Our third quarter results were outstanding, continued momentum and underlying growth, strong double digit adjusted EPS growth, and significant margin expansion. Our consolidated revenue increased 13 percent to 5.4 billion, with underlying growth 10 percent. Operating income was 996 million, and adjusted operating income was 1.1 billion, up 24 percent from a year ago.
Speaker 3: Mercer's revenue was 1.4 billion in the quarter, up 8% on an underlying basis.
<unk> revenue was $1 4 billion in the quarter up 8% on an underlying basis.
Speaker 3: This was Mercer's best quarter of underlying growth in 15 years.
This was mercury's best quarter of underlying growth in 15 years.
Mark Mcgivney: Our adjusted operating margin increased 170 basis points to 21.3 percent. Gap EPS was $1.47, and adjusted EPS was $1.57, up 33 percent over the last- Last year. Note that adjusted EPS in the third quarter included a 10-cent discrete tax benefit from the release of evaluation allowance on foreign deferred tax assets. Even without this benefit, our adjusted EPS grew 25% in the quarter. For the first nine months of 2023 underlying revenue growth was 10%, adjusted operating income grew 17% to 4.4 billion, our adjusted operating margin increased 130 basis points, and adjusted EPS increased 17% to $6.31.
Speaker 3: Wealth grew 7%, driven by continued demand and defined benefits consulting, and higher growth in investment management.
Wealth grew 7% driven by continued demand in defined benefit consulting and higher growth in investment management.
Speaker 3: Our assets under management were $379 billion at the end of the third quarter, up 19% compared to the third quarter of last year, and down 4% sequentially.
Our assets under management were 379 billion at the end of the third quarter up 19% compared to the third quarter of last year and down 4% sequentially.
Speaker 3: year over year growth was driven by our transaction with Westpac, rebounding capital markets and positive net flows.
Year over year growth was driven by our transaction with Westpac a rebound in capital markets and positive net flows.
Speaker 3: Health underlying growth was 8% and reflected strength in all segments
Health underlying growth was 8% reflected strength in all segments and regions.
Speaker 3: Career revenue increased 7% on top of 15% growth in the third quarter of last year. We continue to see growth in
Career revenue increased 7% on top of 15% growth in the third quarter of last year.
We continue to see growth in rewards and talent strategy.
Speaker 3: For the first nine months of the year, revenue at Mercer was $4.1 billion, with 7% underlying
For the first nine months of the year revenue at Mercer was $4 1 billion with 7% underlying growth.
Oliver Wyman revenue in the quarter was $781 million, an increase of 12% on an underlying basis that reflected strength in the middle East and Europe .
Speaker 3: Oliver Wyman's revenue in the quarter was $781 million, an increase of 12% on an underlying basis that reflected strength in the Middle East and Europe .
Speaker 3: First nine months of the year, revenue at Olive Rewimen was 2.3 billion, an increase of 8% on an underlying day.
For the first nine months of the year revenue at Oliver Wyman was $2 3 billion, an increase of 8% on an underlying basis.
Speaker 3: Foreign exchange was a one cent headwind to EPS in the third quarter. Assuming exchange rates remain at current levels, we expect FX will have an immaterial effect on fourth quarter.
Foreign exchange was a <unk> <unk> headwind to EPS in the third quarter.
Mark Mcgivney: Looking at risk and insurance services, third quarter revenue was 3.2 billion, up 12% from a year ago or 11% on an underlying basis. This result marks the 10th consecutive quarter of 8% or higher underlying growth in RIS. It continues the best stretch of growth in nearly two decades. Operating income increased 21% to 640 million. Adjusted operating income increased 19% to 671 million, and our adjusted operating margin extended 100 basis points to 23.4%.
Assuming exchange rates remain at current levels, we expect FX will have an immaterial effect on fourth quarter earnings.
Speaker 3: We reported 52 million of total restructuring costs in the quarter, approximately 37 million of which relates to the program we announced in the fourth quarter last year. These charges include costs related to severance and cost
We reported $52 million of total restructuring costs in the quarter, approximately 37 million, which relates to the program, we announced in the fourth quarter last year.
Yes.
These charges include costs related to severance lease exits and streamlining our technology environment.
Speaker 3: We've continued to pursue efficiencies under this program and our outlook for saving????????????????????????????????????????????????????????????????????????????????????????????????????????????????
We've continued to pursue efficiencies under this program and our outlook for savings has increased.
Mark Mcgivney: For the first nine months of the year, revenue in RIS was 10.8 billion with underlying growth 12%, adjusted operating income increased 18% to 3.3 billion. Margin increased 150 basis points to 32.6%. At March, revenue in the quarter was 2.7 billion, up 9% from a year ago or 8% on an underlying basis. This comes on top of 8% growth in the third quarter of last year. Growth in the third quarter reflected solid new business and strong retention.
Speaker 3: John noted, we now expect total charges of 425 to 475 million. And expect total savings of...
As John noted, we now expect total charges of $425 million to $475 million and expect total savings of roughly 400 million.
Speaker 3: Of which approximately 225M will be realized in 2023.
Of which approximately $225 million will be realized in 2023.
To date, we've incurred approximately $325 million of charges under this program.
Speaker 3: date we have incurred approximately 325 million of charges under this program.
Speaker 3: currently expect to incur the majority of the remaining charges by the end of 2023 and realize the bulk of the remaining savings in 2024.
We currently expect to incur the majority of the remaining charges by the end of 2023 and to realize the bulk of the remaining savings in 2024.
Our other net benefit credit was $62 million in the quarter.
Mark Mcgivney: The US and Canada underlying growth was 6% for the quarter, led by strong growth in MMA. An international underlying growth was 10% and comes on top of 11% in the third quarter of last year. Latin America was up 14%. Asia Pacific was up 10%, and EMEA grew 9%. For the first nine months of the year, March's revenue was 8.5 billion with underlying growth of 9%. US and Canada grew 7% and international was up 10%.
Speaker 3: full year 2023. We expect our other net benefit credit will be about $240 million.
For the full year 2023, we expect our other net benefit credit will be about $240 million.
Speaker 3: investment income was 1 million in the third quarter on a gap basis and 2 million on an adjustment.
Investment income was $1 million in the third quarter on a GAAP basis and $2 million on an adjusted basis.
Interest expense in the third quarter was $145 million up from $118 million in the third quarter of 2022, reflecting higher levels of debt and higher interest rates.
Speaker 3: Interest expense in the third quarter was 145 million up from 118 million in the third quarter of 2022 reflecting higher levels of debt and higher in
Speaker 3: They send our current forecast. We expect approximately 157 million of interest expense in the fourth quarter.
Based on our current forecast, we expect approximately 157 million of interest expense in the fourth quarter.
Mark Mcgivney: Guy Carpenter's revenue was 359 million in the quarter, up 9% or 8% on an underlying basis driven by strong growth across our global specialties and regions. For the first nine months of the year, Guy Carpenter generated 2 billion of revenue 10% underlying growth. In the consulting segment, third quarter revenue was 2.2 billion, up 13% from a year ago or 9% on an underlying basis. Consulting operating income was 424 million. Adjusted operating income increased 24% to 447 million, and the adjusted operating margin expanded 170 basis points to 20.8%.
Speaker 3: Our effective adjusted tax rate in the third quarter was 20.5% compared with 24.6% in the third quarter of last year. Our tax rate in both periods.
Our effective adjusted tax rate in the third quarter was 25% compared with 24, 6% in the third quarter of last year.
Our tax rate in both periods benefited from favorable discrete items.
Speaker 3: The largest discrete item this quarter was a $48 million release of evaluation allowance on foreign deferred tax assets.
The largest discrete item this quarter was a $48 million release of the valuation allowance on foreign deferred tax assets.
Excluding discrete items, our effective adjusted tax rate was approximately 25, 5%.
Speaker 3: Excluding discreet items, our effective adjusted tax rate was approximately 25.5%.
Speaker 3: When we give forward guidance around our tax rate, we do not project discrete items, which can be positive or negative.
When we give forward guidance around our tax rate, we do not project discrete items, which can be positive or negative.
Speaker 3: Based on the current environment, it is reasonable to assume a tax rate of around 25.5% for 2023.
Based on the current environment. It is reasonable to assume a tax rate of around 25, 5% for 2023.
Mark Mcgivney: For the first nine months of 2023, consulting revenue was 6.4 billion with underlying growth of 7%. Adjusted operating income increased 11% to 1.3 billion, and the adjusted operating margin expanded 50 basis points to 20.1%. Mercer's revenue was 1.4 billion in the quarter, up 8% on an underlying basis. This was Mercer's best quarter of underlying growth in 15 years, wealth grew 7%, driven by continued demand and defined benefits consulting, and higher growth in investment management.
Turning to capital management, our balance sheet.
Speaker 3: We ended the quarter with total debt $13.6 billion.
We ended the quarter with total debt $13 6 billion.
Speaker 3: This includes the 1.6 billion of senior notes we issued in September .
This includes the $1 6 billion of senior notes, we issued in September .
Speaker 3: Our next scheduled debt maturities are in March 2024, when 1 billion of senior notes mature, and in May, when another 600 million of senior notes mature.
Our next scheduled debt maturities are in March 2024, 1 billion of senior notes mature and in May when another $600 million of senior notes come due.
Speaker 3: We also recently took the opportunity to increase borrowing capacity under our credit.
We also recently took the opportunity to increase borrowing capacity under our credit facility.
Speaker 3: increasing the size of the facility to 3.5 billion from 2.8 billion, and extending the term of the facility by two and a half years to 2028.
Increasing size of the facility to three 5 billion from $2 8 billion and extending the term of the facility by two and a half years to 2028.
Mark Mcgivney: Our assets under management was 379 billion at the end of the third quarter, up 19% compared to the third quarter of last year and down 4% sequentially. Year over year growth was driven by our transaction with Westpac, rebounding capital markets, and positive net flows. Health underlying growth was 8% and reflected strength in all segments and regions. Career revenue increased 7% on top of 15% growth in the third quarter of last year.
Speaker 3: This was a prudent step to increase our access to short-term funding, given the significant growth in our business since we last renewed the facility in April 20th.
This was a prudent step to increase our access to short term funding given the significant growth in our business since we last renewed the facility in April 2021.
Speaker 3: We are also pleased that Moody's upgraded our senior unsecured debt rating to A3 in September .
We are also pleased that Moody's upgraded our senior unsecured debt rating to <unk> in September .
Speaker 3: We continue to expect to deploy approximately $4 billion of capital in 2023 across dividends, acquisitions, and share repurchase.
We continue to expect to deploy approximately $4 billion of capital in 2023 across dividends acquisitions and share repurchases.
Mark Mcgivney: We continue to see growth in rewards and talent strategy. For the first 9 months of the year, revenue at Mercer was 4.1 billion with 7% underlying growth. All of the Wyman's revenue in the quarter was 781 million and increased 12% on an underlying basis that reflected strength in the Middle East and Europe. The first 9 months of the year, revenue at Oliver Lyman was 2.3 billion and increased of 8% on an underlying basis.
Speaker 3: Our cash position at the end of third quarter was $2.9 billion.
Our cash position at the end of the third quarter was $2 9 billion.
Speaker 3: Uses of cash in the quarter totaled $1 billion and included $353 million for dividends, $368 million for acquisitions, and $300 million for share repurchase.
Uses of cash in the quarter totaled 1 billion included 353 million for dividends $368 million for acquisitions and 300 million for share repurchases.
For the first nine months uses of cash totaled $2 9 billion and included $944 million for dividends and $1 1 billion for acquisitions and 900 million for share repurchases.
Speaker 3: The first nine months' uses of cash totaled $2.9 billion and included $944 million for dividends, $1.1 billion for acquisitions, and $940 million for dividends.
Speaker 3: Overall, we remain on track for a terrific 2023.
Overall, we remain on track for a terrific 2023.
Mark Mcgivney: Foreign exchange was a 1 cent headwind of EPS in the third quarter. Assuming exchange rates remain at current levels, we expect FX will have an immaterial effect on fourth quarter earnings. We reported 52 million of total restructuring costs in the quarter, approximately 37 million of which relates to the program we announced in the fourth quarter last year. These charges include costs related to severance, lease exits, and streetlining our technology environment. We've continued to pursue efficiencies under this program and our outlook for saving has increased.
Speaker 3: Based on our outlook today and assuming current conditions persist, we expect to generate 9 to 10% full year underlying revenue growth, strong growth and adjusted EPS, and to report margin expansion for the 16th consecutive year.
Based on our outlook today, and assuming current conditions persist, we expect to generate 9% to 10% full year underlying revenue growth strong growth in adjusted EPS and to report margin expansion for the 16th consecutive year and with that I'm happy to turn it back to John .
Speaker 4: Thank you, Mark. Operator, we are ready to begin Q&A.
Thank you Mark operator, we're ready to begin Q&A.
Thank you.
Speaker 1: We'll now begin the question and answer session. If you have a question, please press star one one on your touchtone phone.
I will begin the question and answer session. If you have a question. Please press star one one on your Touchtone phone if you wish to be removed from the queue. Please press star one again.
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Mark Mcgivney: As John noted, we now expect total charges of 425 to 475 million and expect total savings of roughly 400 million, of which approximately 225 million will be realized in 2023. To date, we have incurred approximately 325 million of charges under this program. We currently expect to incur the majority of the remaining charges by the end of 2023 and to realize the bulk of the remaining savings in 2024. Our other net benefit credit was 62 million in the quarter.
Speaker 1: If you are using a speaker phone, you may need to pick up the handset before pressing the numbers. Once again, if you have a question, please press star 1-1 on your touchtone phone.
We are using a speakerphone you may need to pick up the handset before pressing the numbers. Once again, if you have a question. Please press star one on your Touchtone phone.
Speaker 1: In the interest of addressing questions from as many participants as possible, we ask that participants limit themselves to one question and one follow-up question. One more.
In the interest of addressing questions from as many participants as possible, we ask that participants limit themselves to one question and one follow up question.
One moment please for our first question.
Speaker 1: And our first question comes from the line of Elise Greenspan with Wells Fargo.
And our first question comes from the line of Elyse Greenspan with Wells Fargo.
Speaker 5: Hi, thanks, good morning. My first question is on the U.S., Canada within Marsh. Organic of 6%, but that is, you know, a slowdown from where you guys were in the first part of the year. Can you just give a little bit more color on what's causing the slowdown? And then I think in the introductory comments, you guys mentioned that MMA saw strong growth. So could you give us a sense of the growth within MMA and the growth outside of MMA, MMA within that segment?
Hi, Thanks, Good morning, My first question.
Is on the U S Canada within Marsh.
Mark Mcgivney: For the full year 2023, we expect our other net benefit credit will be about 240 million. Investment income was 1 million in the third quarter on a gap basis and 2 million on an adjusted basis. Interest expense in the third quarter was 145 million up from 118 million in the third quarter of 2022, reflecting higher levels of debt and higher interest rates. Based on our current forecast, we expect approximately 157 million of interest expense in the fourth quarter.
Organic of 6%, but that is.
A slowdown from where you guys were in the first part of the year can you just give a little bit more color on what's causing the slowdown and then I think in the introductory comments you guys mentioned that MMA saw strong growth. So can you give us a sense of the growth within MMA in the growth outside of M&A MMA within that segment.
Speaker 2: Sure, at least good morning and thanks for the question again. Overall is quite pleased with the growth, the revenue growth in the quarter. We had good growth at Marsh.
Sure Lisa good morning, and thanks for the question again overall, we're quite pleased with the growth the revenue growth in the quarter, we had good growth at Marsh.
Speaker 2: best growth at Mercer in 15 years and again strong performance at Guy Carpenter and Oliver Wyman.
Mark Mcgivney: Our effective adjusted tax rate in the third quarter was 20.5 percent compared to 24.6 percent in the third quarter of last year. Jr. Our tax rate in both periods benefited from favorable discrete items. The largest discrete item this quarter was a $48 million release of the valuation allowance on foreign deferred tax assets. Excluding discrete items, our effective adjusted tax rate was approximately 25.5%. When we give forward guidance around our tax rate, we do not project discrete items which can be positive or negative.
Okay best growth at Mercer in 15 years, and again strong performance at Guy Carpenter and Oliver Wyman.
Speaker 4: Marsh U.S., inclusive of MMA, and I would also note, you know, our MGA operation had a good quarter as well, you know, growth was strong. Marsh U.S. was up 6% versus 5% a year ago. Again, you know, caution to look at growth at any one, you know, at any one quarter. You know, we think we're well positioned and, you know, our team is executing well. Martin, do you have any other color on what impacted growth at Marsh this quarter? Yeah, thank you.
Marsh U S inclusive of MMA and I would also note.
Our MGA operation had a good quarter as well.
Growth was strong.
Marsh U S was up 6% versus 5% a year ago again caution I look at growth anyone at any one quarter.
We think we're well positioned and our team is executing well Martin do you have any other color on what impacted growth at Marsh. This quarter, yes. Thank you John .
Mark Mcgivney: Based on the current environment, it is reasonable to assume a tax rate of around 25.5% for 2023. Turning to capital management are balance sheets. We ended the quarter with total debt of 13.6 billion. This includes the 1.6 billion of senior notes we issued in September. Our next and in May, when another 600 million of senior notes come due. We also recently took the opportunity to increase borrowing capacity under our credit facility.
Speaker 6: As you said, very strong growth for March across the board in international and North America. As you said, we don't comment on specifically on MMA, but they've had a good quarter. The growth in their NGA business was strong. There's partially some impact from the capital markets and some moderating growth in financial construction. Cyber lines are reflecting some pricing pressures, but as you say, we don't look at this on a quarter over quarter basis.
As you said very strong growth across the board in international and North America.
As you said, we don't comment on specific came on MMA, but they've had a good quarter.
The growth in the MGA business was strong as possibly some impact from the capital markets and some moderating growth in financial construction sidelines, reflecting some some pricing pressures.
As you say, we don't look at.
At this on a quarter over quarter basis, we know that over a longer period of time, and we feel very positive about the U S business in the Canadian business. Thanks, Martin at least you have a follow up.
Speaker 6: here at a time and we feel very close to the US business and the Canadian business. Thanks, Barton.
Mark Mcgivney: Increasing the size of the facility to 3.5 billion from 2.8 billion and extending the term of the facility by 2.5 years to 2028. This was a prudent step to increase our access to short term funding given the significant growth in our business since we last renewed the facility in April 2021. We are also pleased that Moody's upgraded our senior unsecured debt rating to A3 in September. We continue to expect to deploy approximately 4 billion of capital in 2023 across dividends, acquisitions, and sharey purchases.
Speaker 5: Yeah, and then my second question, so on the revised savings program, is there a way to give us a sense? You mentioned John , it came from rationalizing tech, real estate, and realigning the workforce. How much each of those buckets are contributing to the extra savings? And then if it's still fair to assume that most of the savings that you're expecting, this year should be falling to the bottom line.
And then my second question so on the revised savings program.
Is there a way to give us a sense you mentioned John It came from rationalizing Tech real estate and realigning the work for us on how much each of those buckets are contributing to the extra savings and then is it still fair to assume that most of the savings that you're expecting.
This year should be.
Following to the bottom line.
Speaker 4: So, you know, really backing up a little bit.
So.
Really backing up a little bit.
Speaker 2: at least, you know, as our business has operated more closely together, we've just identified additional opportunities.
At least as our business has operated more closely together, we've just identified additional opportunities. They are largely in the same areas right. It's around realigning, our workforce and mostly and functions I would say as opposed to market facing.
Speaker 2: They're largely in the same areas, right? It's around realigning our workforce and mostly in functions, you know, I would say, as opposed to market-facing workforce talent, real estate, and technology. But not broken it out, you know, by group. But, you know, the costs are severance, lease terminations, and streamlining technology. So, again, we're excited about, you know, some of the opportunities that we've uncovered. And, you know, I'm proud of the team we're executing against them.
Mark Mcgivney: Our cash position at the end of the third quarter was 2.9 billion. Uses of cash in the quarter totaled 1 billion and included 353 million for dividends, 368 million for acquisitions, and 300 million for sharey purchases. At first nine months, uses of cash totaled 2.9 billion and included 924 million for dividends, 1.1 billion for acquisitions, and 900 million for sharey purchases. Overall, we remain on track for a terrific 2023.
Workforce.
Talent real estate and technology, but not broken it out.
By group, but the cluster severance lease terminations.
And streamlining technology. So again, we're excited about.
Some of the opportunities that we've uncovered and.
I'm proud of the team we're executing against them.
Mark Mcgivney: Based on our outlook today and assuming current conditions persist, we expect to generate 9 to 10 percent full-year underlying revenue growth, strong growth and adjusted EPS, and to report margin expansion for the 16th consecutive year.
Thanks Elise operator next question please.
Speaker 1: Thank you. And our next question comes from the line of Jimmy Bueller with JP Morgan.
Thank you and our next question comes from the line of Jimmy Mueller with JP Morgan.
Hey, good morning, So first a question on the reinsurance market I think you mentioned the word firm in terms of pricing and are you expecting prices to be up further from.
Speaker 6: Hey, good morning. So first question on the reinsurance market. I think you mentioned the word firm in terms of pricing. And are you expecting prices to be up further from from these current levels or firm just means that they'll be somewhat stable. And then how do you think that'll affect your growth at Guy Carpenter? You've grown double digits this year. Not sure how much of that is because of the tailwind from pricing.
John Doyle: With that, I'm happy to turn it back to John. Thank you, Mark.
Operator: Operator, we are ready to begin Q&A. Thank you.
From these current levels or firm just means that there'll be somewhat stable and then how do you think that will affect your growth.
Operator: We'll now begin the question and answer session. If you have a question, please press star 11 on your touch-tone phone. If you wish to be removed from the queue, please press star 11 again. If you are using a speaker phone, you may need to pick up the handset before pressing the numbers. Once again, if you have a question, please press star 11 on your touch-tone phone.
At Guy Carpenter.
You have grown double digits. This year not sure how much of that is because of the tailwind from pricing.
Speaker 2: Yeah, thanks, Jimmy. I did use the word firm. There's no question. Our team at Guy Carpenter's done a terrific job this year helping our clients navigate what's a challenging market. As I said, I.
Yes, Thanks, Jimmy I did use the word firm there's no question.
The team at Guy Carpenter has done a terrific job this year, helping our clients navigate would say whats a challenging market as I said.
Elyse Greenspan: In the interest of addressing questions from as many participants as possible, we ask that participants limit themselves to one question and one follow-up question. One moment, please, for our first question.
Speaker 2: I expect that the market on January 1 will certainly be more orderly than last year, but there are concerns both in the insurance and reinsurance market about rising loss costs. And so we don't want to project and can't really project with accuracy, and there's still a quarter to run. We expect underwriting discipline to remain. But with that, maybe, Dean, you could offer some thoughts on...
I expect that the market on January one will certainly be more orderly than last year.
But there are concerns both in the insurance and reinsurance market about rising loss costs and so.
John Doyle: And our first question comes from the line of Elyse Greenspan with Wells Fargo. Hi, thanks. Good morning. My first question is on the U.S. Canada within March, organic of 6%, but that is a slowdown from where you guys were on the first part of the year. Can you just give a little bit more color on what's causing the slowdown? And then I think in the introductory comments you guys mentioned that MMA saw a strong growth. So can you give us a sense of the growth within MMA and the growth outside of MMA MMA within that segment?
We don't want to project and can't really project with accuracy and Theres still a.
Quarter to run.
We expect underwriting discipline to remain but with that maybe Dan you could offer some thoughts on.
Speaker 3: on Guy Carpenter and what we think of the market. Thanks, John . And Jimmy, maybe I'll give you a little color.
Guy Carpenter and what we think of the market. Thanks, John and Jimmy maybe I'll give you a little color between property cat and casualty as John mentioned.
Speaker 7: property cat and casualty as John mentioned.
Speaker 7: You know, as John noted, we expect challenging market conditions to persist.
As John noted, we expect challenging market conditions to persist for property cat at the upcoming January one renewal as John noted driven by inflation.
Speaker 7: For property cat at the upcoming January 1 renewal. As John noted, driven by.
Speaker 7: As you're reading about, I mean, cat losses continue to be very elevated. You know, many attritional losses, you know, many billion dollar plus events this year. Political instability continues. We do expect...
As you are reading about immune cat losses continue to be very elevated many attritional losses.
Martin South: Sure, Elyse, good morning, and thanks for the question. You know, again, overall is quite pleased with the growth, the revenue growth in the quarter. We had good growth at March. Best growth at Mercer in 15 years. And again, strong performance at Guy Carpenter and Oliver Wyman. Marsh U.S. Inclusive of MMA and I would also note, you know, our MGA operation had a good quarter as well. You know, growth was strong. Marsh U.S, was up to 6% versus 5% a year ago.
Many billion dollar plus events this year political.
Stability continues.
We do expect pricing to remain firm in property cat.
Speaker 7: and property cat, you know, it'll vary region by region. It won't be what we saw last year as an example in the US and Europe , but we do think that firmness will.
Vary region by region.
It won't be what we saw last year as an example in the U S and Europe , but we do think that firmness will be there.
Speaker 7: We do expect additional capacity and an increased appetite from reinsurers to write more business.
We do expect additional capacity and an increased appetite from reinsurers to write more business, particularly at higher attaching property cat layers.
Martin South: Again, you know, it cost you to look at growth at anyone, you know, at any one quarter. You know, we think we're well positioned and, you know, our team is executing well. Martin, do you have any other color on what impacted growth at Marsh on this quarter?
Speaker 7: particularly at higher attaching property cat layers.
Speaker 7: But I think the key is we expect reinsurers to continue to exhibit that discipline on attachment points, pricing and terms. And I don't see anything going back.
But I think the key is we expect reinsurers to continued to exhibit that discipline on attachment points pricing in terms and I don't see anything going backwards.
Elyse Greenspan: Yeah, thank you, John. You know, as you said, very strong growth for Marsh across the board and international and North America. You know, she said we don't comment on specifically on MMA, but they've had a good quarter. The growth in their NJ business was strong as partially some impact from the capital markets and some moderating growth in financial construction, cyber lines reflecting some pricing pressures. But as you said, we don't look at this on a quarter of a quarter basis.
Speaker 7: As John noted, we think property capacity in the market will remain adequate. As John noted, we think it'll be a more manageable renewal for our clients without that significant supply demand imbalance and dislocation that we saw last year. We do expect increased demand for our clients to buy more reinsurance, and particularly key regions like Europe .
John noted, we think property cat capacity in the market will remain adequate and as John noted, we think it'll be a more manageable renewal for our clients without that significant supply demand imbalance in dislocation that we saw last year and we do expect increased demand for our clients to buy more reinsurance.
And particularly key regions like Europe .
Speaker 7: On the casualty side, for US casualty, as John noted, the market is trending very cautiously.
On the casualty side for U S casualty as John noted the market is trending very cautiously and all of our meetings with reinsurers. This fall everybody Express concern with prior year loss development in U S casualty and certain lines again, driven by economic and social inflation.
Elyse Greenspan: We don't have our longer period of time and we feel very positive about the U.S, business and the Canadian business. Thanks, Martin. At least do you have a follow-up? Yeah, and then my second question. So on the revised savings program, is there a way to give us a sense? You mentioned John, it came from rationalizing tech, real estate and realigning the workforce. How much each of those buckets are contributing to the extra savings?
Speaker 7: And all of our meetings with reinsures this fall, everybody expressed concern with prior year loss development and US casualty and certain lines, you know, again, driven by economic and social inflation. And we do expect some downward pressure from reinsures on seating commission.
Elyse Greenspan: And then if it's still fair to assume that most of the savings that you're expecting, you know, this here should be falling to the bottom line. So, you know, really backing up a little bit at least, you know, as our businesses operated more closely together, we've just identified additional opportunities. They're largely in the same areas, right? It's around realigning our workforce and mostly in functions, you know, I would say as opposed to market-facing workforce talent, real estate and technology.
And we do expect some downward pressure from reinsurers on ceding commissions for our clients with quota share contracts in certain casualty lines, but in casually, we do expect capacity to remain adequate but.
Speaker 7: For our clients with quarter share contracts and certain casualty line.
Speaker 7: But in casually, we do expect capacity to remain out.
Speaker 2: The cost of risk, Jimmy, is rising and it's up to us to find the best solutions in the market for both our insurance and reinsurance clients. I think we're well positioned to do that.
Cost of risk Jimmy is rising and it's up to us to find the best solutions in the market for both our insurance and reinsurance clients and so I think we're well positioned to do that do you have a follow up just on Oliver Wyman I think typically you think of all of our environment as being sensitive to economic uncertainty.
Speaker 6: Do you have a follow up? Yeah, just on Oliver Viman, I think typically you think of Oliver Viman as being sensitive to economic uncertainty. And this year, the business has shown a lot of momentum. So, maybe I know you won the UBS, I don't know UBS credit series integration contract, but I'm not sure how material that is, but what's really driving Oliver Viman and what's your sort of. Pipeline look like and how do you.
And this year the business has shown a lot of momentum. So maybe I know you won the UBS.
UBS credit Suisse integration contract, but I'm not sure how material that is but what's really driving all of their volume and what's your sort of pipeline look like and how do you think about it performing.
Elyse Greenspan: But not broken it out, you know, by group, but you know, the cost are severance, lease terminations and streamlining technology. So again, we're excited about, you know, some of the opportunities that we've uncovered and, you know, I'm proud of the team we're executing against them. Thanks, Elise.
Speaker 6: it performing if the economy does in fact slow down.
Operator: Operator, next question, please.
If the economy does in fact slowed down yes.
Speaker 2: Yeah, thanks. Thanks, Jimmy. Oliver Wyman has been more sensitive to GDP over time, but it's also been a faster growing part of our business over time as well. And after a relatively slow start to the year, Oliver Wyman's had a terrific run, is now having strong growth year to date and a very, very strong quarter. So Nick, maybe you can share with Jimmy some color on how things look at Oliver Wyman.
Thanks, Thanks, Jamie Oliver Wyman has been more sensitive to GBP GDP over time, but it's also been a faster growing part of our business over time as well and after a relatively slow start to the year.
Jimmy Bueller: Thank you. And our next question comes from the line of Jimmy Bueller with JP Morgan. Hey, good morning.
Oliver Wyman had a terrific run is now having strong growth year to date and a very very strong quarter. So Nick maybe you can.
John Doyle: So, first question on the reinsurance market. I think you mentioned the word firm in terms of pricing and are you expecting prices to be up further from from these current levels or firm just means that they'll be somewhat stable. And then how do you think that'll affect your growth. At guy Carpenter, you've grown double digits this year, not sure how much of that is because of the tailoring from pricing. Yeah, you know, thanks Jimmy.
Sure with Jimmy some color on the on.
On how things look at Oliver Wyman.
Speaker 8: Thank you, John . And thank you, Jimmy. Let me enlarge on that a little bit. It's definitely not an easy environment for discretionary spending in our clients. I still see a fairly wide range of possible economic paths.
Thank you John Thank you Jimmy.
Large on Thats, a little bit it's definitely not an easy environment for discretionary spending.
So I still see a fairly wide range of possible economic pause.
But John called out our wider resilience with Marsh Mcclennan and I'm proud to Oliver Wyman has demonstrated that resilience and coring all the way back from a flat Q1 and as Martin said is what we do.
Speaker 8: our wider resilience as Marshall McLennan and I'm proud that Oliver Wyman has demonstrated that resilience in clawing our way back from a flat Q1 and as Martin said as well we do.
John Doyle: I did use the word firm. There's no question. You know, our team at Guy Carpenter has done a terrific job this year helping our clients navigate what's a, you know, what's a challenging market. You know, as I said, I expect that the market on January 1 will certainly be more orderly than last year, you know, but there are concerns both in the insurance and reinsurance market about rising loss costs. And so, you know, we don't want to project and can't really project with with accuracy.
Speaker 8: try to look at the business on a year-over-year basis, more than a quarter-over-quarter basis, but it does matter.
Try to look at the business on a year over year basis more than a quarter over quarter basis, but it does matter.
Speaker 8: We're quite a diverse business now and we've been becoming more diverse.
We're quite a diverse business now when we've been becoming more diverse. So if you think about the sectors that are driving our growth in the regions.
Speaker 8: So if you think about the sectors that are driving our growth and the regions, our India, Middle East and Africa region has been the biggest contributor to our regional growth with Europe also contributing strongly.
India Middle East and Africa region has been the biggest contributor to our regional growth with Europe also contributing strongly.
Speaker 8: on the sectoral side, public sector, which is quite present in the Middle East, our communications, media, and technology practice, followed by banking, followed by transportation services. So again, quite a wide array of industry sectors there. And maybe just an interesting case study on the industry side would be our private equity, private capital practice. Clearly, it's not been a great deal environment, but that practice has been doing quite well, driven by portfolio company work.
The sectoral side public sector, which is quite presence in the middle East.
John Doyle: And there's still, you know, a quarter to run, you know, we expect underwriting discipline to remain. But, you know, with that, maybe Dean, you could offer some thoughts on on Guy Carpenter and what we think at the market. Thanks, John. And Jimmy, maybe I'll give you a little color between property cat and casualty. As John mentioned, you know, as John noted, we expect challenging market conditions to persist for property cat at the upcoming January 1 renewal.
Our communications media and technology practice, followed by banking followed by transportation services, So again quite a wide array of industry sectors.
And maybe just an interesting case study on the industry side would be all private equity private capital practiced clearly has not been a great deal environment.
John Doyle: As John noted, driven by inflation, as you're reading about, I mean, cat losses continue to be very elevated, you know, many attritional losses, you know, many billion dollar plus events this year. Political instability continues. We do expect pricing to remain firm and property cat, you know, it'll vary region by region. It won't be what we saw last year as an example in the US and Europe, but we do think that firmness will be there.
This has been doing quite well driven by portfolio company work.
Speaker 8: And over the last few years, I've said a few times and have been asked questions about our offerings through the cycle, which we've been seeking to broaden. Our economic research practices grew strongly. Our digital team, our restructuring practice, which is nascent, grew very strongly. Our work on performance transformation with clients, which is more of a tough economic environment offering, as well as our people in organizational performance work, where we do a lot of collaboration with MRSA.
For the last few years I've said, a few times and I've been asked questions about our offerings through the cycle, which we have been seeking to broaden.
Our economic research practices grew strongly our digital team our restructuring practice, which is nascent grew very strongly work on performance transformation with clients, which is more of a tough economic environment.
<unk> as well as our people and organizational performance work, where we do a lot of collaboration with MRSA.
John Doyle: We do expect additional capacity and an increased appetite from reinsurance to write more business, particularly higher attaching property cat layers. But I think the key is we expect reinsurance to continue to exhibit that discipline on attachment points pricing in terms. And I don't see anything going backwards. As John noted, we think property cat capacity in the market will remain adequate. And as John noted, we think it'll be a more manageable renewal for our clients without that significant supply demand imbalance and dislocation that we saw last year.
Speaker 8: So, ultimately, I'm optimistic in our long-term growth prospects, but we continue to plan for mid-to-high single-digit growth over the longer term, and our pipeline is looking in line with that at this moment.
So ultimately I am optimistic in our long term growth prospects, but we continue to plan for a mid to high single digit growth over the longer term.
And our pipeline is looking in line with that at this moment.
Thanks, Nick and thank you Jimmy Operator next question.
Speaker 1: Thank you. And our next question comes from the line of Mike Zaremski with BMO Capital Market.
Thank you and our next question comes from the line of Mike <unk> with BMO capital markets.
Speaker 9: Hey, good morning. Thanks. I guess just a follow up to the to the last question about kind of global growth. So, you know, Marsha's, you know, growth clearly record high levels. I feel like historically there's been more of a correlation between
Hey, good morning, Thanks, I guess just.
A follow up to that to the last question about kind of.
John Doyle: And we do expect increased demand for clients to buy more reinsurance and particularly key regions like Europe. You know, on the casually side for US casually is John noted, the market is training very cautiously. And all of our meetings with reinsurance this fall, everybody expressed concern with prior year loss development and US casualty and certain lines, you know, again, driven by economic and social inflation. And we do expect some downward pressure from reinsurers on seating commissions for our clients with quarter share contracts and certain casually lines.
Global growth so marches.
Growth clearly record high levels.
I feel like historically, there has been more of a correlation between.
Speaker 9: growth and nominal GDP. If you do agree with that, it just feels like there's been a decoupling of that relationship recently in a good way for you, obviously. I'm just curious if there's anything structurally permanently that's changed or are there kind of temporary phenomenons with hires or anything you want to call out if you agree with the premise of my question.
Growth and nominal GDP, if you do agree with that and it just feels like there's been a decoupling of that relationship recently and a good way for you obviously and just curious if there is anything structurally permanently thats changed or is it are there kind of temporary phenomenon with hires or anything you want to call out if you agree.
The premise of my question.
Speaker 4: Sure Mike, you know what I would say is, you know, it is a volatile macro environment, certainly both the economy and geophilically, as I mentioned before, but I do believe nominal GDP is a better indicator of demand. I'm over time and with inflation, tight labor markets, you know, and pricing.
Sure Mike.
What I would say is.
John Doyle: But in casually, we do expect capacity to remain adequate. The cost of risk Jimmy is rising and you know, it's up to us to find the best solutions in the market for both our insurance and re insurance clients. And so, you know, I think we're well positioned to do that. Do you have a follow up?
As a volatile macro environment, certainly both the economy and geopolitically as I mentioned before but I do believe nominal GDP is a better indicator of demand them overtime and with inflation tight labor markets and pricing.
Speaker 2: you know, positive in the PNC market, those macro factors are certainly supportive of growth. But, you know, what I would also say is we've been working very hard to shift our mix of business to better growth markets over time. You know, a handful of examples. MMA, of course, the middle market at both Marsh and Mercer. Um, our O. C. I. O. Business. We've been investing
Positive in the P&C market.
Dean Klisura: Yeah, just on all the environment, I think typically you think of all the environment as being sensitive to economic uncertainty. And this year the business has shown a lot of momentum. So maybe I know you won the UBS, I don't know, UBS Credit Suisse integration contract, but I'm not sure how material that is, but what's really driving all the environment and what's your sort of pipeline look like? And how do you think about it performing if the economy does in fact slow down?
Are those macro factors are certainly supportive of growth, but what I would also say is we've been working very hard to shift our mix of business to better growth markets over time, a handful of examples MMA of course, the middle market at both Marsh and Mercer.
Our <unk> business, we've been investing in we have.
Speaker 2: We have invested organically and in organically throughout Asia. And then more broadly, we've invested in talent, sales operations and our client engagement models. So we believe we're a better growth business and better positioned. And while again, that macro environment is quite volatile, we're confident in our ability to perform over economic cycle.
Invested organically and inorganically throughout throughout Asia.
And then more broadly we have invested in talent sales operations and our client engagement model. So.
Dean Klisura: Yeah, thanks, Jimmy. Oliver Weimann has been more sensitive to GDP over time, but it's also been a faster growing part of our business over time as well. And, you know, after a relatively slow start to the year, you know, Oliver Weimann said, you know, a terrific run is now having a strong growth year to date and a very, very strong quarter. So Nick, maybe you can share with Jimmy some color on how things look at Oliver Weimann.
We believe we are a better growth business and better positioned and while again that macro environment is quite volatile.
We're confident in our ability to perform over economic cycles.
Okay. That's helpful and then if I.
Speaker 9: I hope that's helpful. If I could ask a follow-up, and hopefully it's not out of the left field, but there's been a shatter in the media and at a recent wholesale conference about potentially some of the larger brokers.
If I could.
Ask a follow up and hopefully it's not out of left field, but theres been chatter in the media and Ed.
Dean Klisura: Thank you, John. And thank you. Jimmy, you know, let me enlarge on that a little bit. It's definitely not an easy environment for discretionary spending in our clients. I still see a fairly wide range of possible economic pods. But John called out our wider resilience as much and I'm proud that Oliver Weimann has demonstrated that resilience and clawing our way back from a flat Q1 and as Martin said as well, we do try to look at the business on a year over year basis more than a quarter of a quarter basis.
Recent wholesale conference about about potentially some of the larger brokers.
Speaker 9: getting back into the wholesale business. I'm not sure if you...
Getting back into the wholesale business I'm not sure. If you want to comment on that or can but maybe you can at least offer some perspective on why Marsha Marsh doesn't have us.
Speaker 9: want to comment on that or can, but maybe you can at least offer some perspective on why Marsh doesn't have as...
Speaker 9: as big of a wholesale presence as, you know, relative to just, it's, it's.
A big of our wholesale presence is relative to just it's.
<unk> market share of non wholesale.
Speaker 9: market share of non wholesale insurance.
Insurance.
Speaker 4: Yeah, sure, Mark, Mike, excuse me. I'm, you know, happy to, you know, happy to comment. I mean, you know, first of all, I would say, you know, that.
Yes, sure Mark Mike excuse me I'm happy to happy to comment I mean first of all I would say.
Dean Klisura: But it does matter. We're quite diverse business now and we've been becoming more diverse. So if you think about the sectors that are driving our growth and the regions, our Indian Middle East and Africa region has been the biggest contributed to our regional growth with Europe also contributing strongly on the sectoral side public sector, which is quite present in the Middle East, our communications media and technology practice followed by banking followed by transportation and services.
Speaker 2: The E&S market volumes historically have moved with pricing cycles. I think given the volatile risk environment,
E&S E&S E&S market volumes, historically have moved with pricing cycles.
Given the volatile risk environment.
Speaker 2: I suspect that E&S market volumes will be more durable than they've been historically. Underwriters are looking for flexibility.
I suspect that E&S market volumes will be more durable than they've been.
Historically underwriters or are looking for flexibility.
Speaker 2: And third-party wholesalers can give us access to, you know, to certain markets. At the same time, we access some ENS markets directly today. And so fine.
Third party wholesalers can give us access to certain markets at the same time, we access some E&S markets directly today.
Dean Klisura: So again, quite a wide array of industry sectors there. And maybe it's just an interesting case study on the industry side would be our private equity private capital practice. Clearly it's not been a great deal environment. But that practice has been doing quite well driven by portfolio company work. And over the last few years, I've said a few times and have been asked questions about our offerings through the cycle which we've been seeking to broaden our economic research practices grew strongly our digital team our restructuring practice, which is nascent grew very strongly.
So.
Speaker 4: uh... in terms of third-party wholesale you know i think you know we have to be uh... thoughtful about
In terms of third party wholesale I think we'd have to be thoughtful about.
Speaker 2: whether or not we would be a good owner. We do have a business in Victor that does a lot of business with independent, really small commercial Main Street agents. That's a marketplace we can serve.
Whether or not we would be a good owner, we do have a business and Victor that does a lot of business with independent.
Really small commercial mainstreet.
Agents, that's a marketplace we can serve.
Speaker 2: and do serve today with solutions. But our focus again, broadly speaking, in Marsh's business is about bringing the entirety of the market, all solutions that are out there, whether they're standard market or admitted market solution.
And do serve today with with solutions, but.
Our focus again broadly speaking and march's business is about <unk>.
<unk> of the entirety of the market all solutions that are out there, whether they're standard market or admitted market solutions.
Dean Klisura: We work on performance transformation with clients, which is more of a tough economic environment offering as well as our people and organizational performance work where we do a lot of collaboration with Mercer. So ultimately, I'm optimistic in our long term growth prospects, but we continue to plan for in mid to high single digit growth over the longer term. And you know, our pipeline is looking in line with that at this moment.
Speaker 2: or non-admitted solutions. We want to have the flexibility to do that and that's what we do to make sure that we can protect and bring the best solutions to our client.
We're not admitted solutions, we want to have the flexibility to do that and that's what we do to make sure that we can protect and bringing the best solutions to our clients.
Nick Studer: Thanks Nick and thank you Jimmy operator next question.
Hopefully that was helpful.
Operator next question.
Speaker 1: And our next question comes from the line of David Motamadin with Evercore ISI.
And our next question comes from the line of David <unk> with Evercore ISI.
Thanks, Good morning, John in the press release, you mentioned continuing to make investments for the future in this quarter.
Speaker 10: Thanks, good morning. John , in the press release you mentioned continuing to make investments for the future in this quarter. I'm just wondering if there was an acceleration in some of those investments this quarter, particularly in RIS.
Mike Zaremsky: Thank you. And our next question comes from the line of Mike Zoremsky with BMO capital markets. Good morning, thanks. I guess just follow up to the last question about global growth. So, you know, March's growth really record high levels. I feel like historically there's been more of a correlation between growth and nominal GDP. If you do agree with that, it just feels like there's been a decoupling of that relationship recently in a good way for you obviously. And just curious if there's anything structurally permanently that's changed or are there kind of temporary phenomenons with hires or anything you want to call out if you agree with the premise of my question.
I'm just wondering if there was an acceleration in some of those investments.
This quarter, particularly in RIS.
Speaker 10: And if so, if you could walk through the nature of them and how we can think about the future revenue contribution. No, I don't.
And if so if you could walk through the nature of them and how we can think about the future revenue contribution.
No I don't thanks, David I don't see it as an acceleration in the quarter certainly on a GAAP basis.
Speaker 2: see it as an acceleration in the quarter, certainly on a gap basis.
Speaker 2: In the quarter, expense growth was impacted by M&A, restructuring, but also FX. And even on an adjusted basis, obviously FX played a role there. But as I said earlier, we're trying to balance delivering today and investing for the future. We're not trying to optimize margin.
In the quarter expense growth was impacted by M&A restructuring.
But also FX an EBIT on an adjusted basis, obviously FX played a role there but as.
As I said earlier, we're trying to balance delivering today and investing for the future. We're not trying to optimize margins in a particular quarter or for that matter in a year and we've got a track record of disciplined track record of growing revenue faster than expense, but we're not going to do it in every quarter.
Speaker 2: in a particular quarter, or for that matter, in a year. We've got a track record, a disciplined track record of growing revenue faster than expense. But we're not gonna do it in every quarter, in every business in every quarter. And so we see right opportunities to make investments that we think are gonna create opportunities for us to deliver value for our clients.
John Doyle: Sure Mike, you know, what I would say is, you know, it is a volatile macro environment, certainly both the economy and geopolitically, as I mentioned before, but I do believe nominal GDP is a better indicator of demand over time and with inflation, tight labor markets, you know, and pricing, you know, positive in the P&C market, those macro factors are certainly supportive of growth, but, you know, what it would also say is, we've been working very hard to shift our mix of business to better growth markets over time, you know, a handful of examples, MMA of course, the middle market at both Marsh and Mercer, ROCIO business, we've been investing in, we have invested organically and in organically throughout Asia, and then more broadly we've invested in talent, sales operations and our client engagement models. So, we believe we're a better growth business and better positioned, and while again, you know, that macro environment is quite volatile, you know, we're confident in our ability to perform over economic cycles. Okay, that's helpful.
And every business and every quarter and so.
We see right opportunities to make investments that we think are going to.
Create opportunities for us to deliver value for our clients, we're going to make them.
Speaker 10: Got it. Thanks. And then just on the Marsh Global Pricing Index, I guess I'm wondering, you know, just if we're seeing an acceleration in some of the casualty lines,
Got it thanks and then.
Just on the on the Marsh global pricing index.
I guess I'm wondering.
Just if we're seeing an acceleration in some of the casualty lines.
Speaker 10: including workers' comp and excluding financial lines.
Excluding workers' comp and excluding financial lines.
Speaker 10: If you're seeing an acceleration there, it sounded like on the reinsurance side.
If youre seeing an acceleration there it sounded like on the reinsurance side.
There is a bit more discipline, that's entering the market and given some social inflation concerns I'm wondering if you're seeing any signs of that in the primary market.
Speaker 10: you know, a bit more discipline that's entering the market and given some social inflation concerns. I'm wondering if you're seeing any signs of that in the primary market.
Yes.
<unk>.
Speaker 2: You know, it's not a market, you know, I would I would suggest it's really, you know, a collection of markets and, you know, what we saw.
It's not a market I would I would suggest it is really a collection of markets and what we saw.
John Doyle: If I could ask a follow-up, and hopefully it's not out of the left field, but, you know, there's been a shadow in the media and at a recent wholesale conference about potentially some of the larger brokers getting back into the wholesale business, I'm not sure if you can't really want to comment on it or can, but maybe you can at least offer some perspective on why Marsh doesn't have as as big of a wholesale presence as, you know, relative to just its market share of non-hoseil insurance. Sure, Mark.
Speaker 2: in the third quarter was on average pretty similar to what we experienced in the second quarter. As it relates to our income statement, we have
In the third quarter was on average pretty similar to what.
What we experienced in the second quarter I would note as it relates to our income statement.
Speaker 2: different levels of commission exposure to different products, right? So it doesn't always add up to to the same the same amount. But but it's a mixed market. And, you know, maybe I'll ask Martin to share some thoughts and, you know, just remind everyone, it's our role is to get the best solution.
Have different levels of commission exposure to different products right. So it doesn't always add up to the same the same amount, but but it's a mixed market and maybe I'll ask Martin to.
To share some thoughts.
Just remind everyone. It's our role is to get the best solution.
Speaker 6: you know, for our retail clients in the marketplace. And we have a role as a market maker, too. And so, you know, we've done a few things, you know, as a as a market maker to try to bring, you know, more efficient financing solutions to to our clients. Martin. Yeah, I am. I agree with that, John . That's that's our job.
For our retail clients in the marketplace.
John Doyle: Mike, excuse me, I'm, you know, happy to, you know, happy to comment. I mean, you know, first of all, I would say, you know, the ENS market volumes, historically, I've moved with pricing cycles. I think given the volatile risk environment, I suspect that ENS market volumes will be, you know, more durable than they've been, you know, historically, underwriters are looking for flexibility. And third-party wholesale is can give us access to, you know, to certain markets.
And we have a role as a market maker to and so we've done a few things.
A market maker to try to bring more.
Morris efficient financing solutions to our clients Martin.
I agree with that John .
Speaker 6: Just to level set, we're in the 24th consecutive quarter of rate increases, so we'll release our survey in a couple of weeks' time, and I don't think we're at an inflection point when it comes to pricing, the pricing cycles we're seeing across the different geographies and bullet lines.
Sure.
Just to level set.
The 24th consecutive quarter of rate increases that we will release our survey in a couple of weeks' time.
I don't think we're at an inflection point when it comes to pricing the pricing cycles, we're seeing across the different geographies and product lines.
John Doyle: At the same time, we access some ENS markets directly today. And so, in terms of third-party wholesale, you know, I think, you know, we'd have to be thoughtful about, you know, whether or not we would be a good owner. We do have a business in Victor that does a lot of business with independent, really small commercial, main street agents. That's a marketplace, you know, we can serve and do serve today with, you know, with solutions.
Speaker 11: beginning to show a mix of strengths and weaknesses depending on the combination.
But beginning to showcase the strengths and weaknesses, depending on the combination.
Speaker 11: The third-quarty casualty grew at 3%, it grew in 3% the quarter before, and the quarter before, and the quarter before. So we're not seeing an acceleration, but I would say we're hearing a lot more talk from carriers about pressures on pricing and social facing and some of the nuclear verdicts that are out there. And we're, you know, keeping our clients closely posted on those.
The <unk> casualty grew at 3% <unk>, 3% the critical pool and the critical full and liquidity before so we're not seeing an acceleration but I.
I would say we're hearing a lot more talk from carriers about pressures on pricing in social spacing in some of the UK verdicts that are out there.
And we're keeping our clients closely posted on those.
John Doyle: But our focus, again, broadly speaking in March's business is a rub, bringing the entirety of the market, all solutions that are out there, whether they're standard market or admitted market solutions, or not admitted solutions. We want to have the flexibility to do that. And that's what we do to make sure that we can protect and bring the best solutions to our client. Hopefully, that was helpful.
Speaker 11: Property was at 7%. These rates were roughly in line with the prior course. We saw some softness in pimpo line.
Property was was at 7%.
These rates were roughly in line with the prior quarter, we saw some softness in <unk> lines.
Speaker 11: Simpro lines came down by 6% in third quarter. They were down 8% in the quarter before. So I don't know if that's a trend yet, but it's certainly less. And as you mentioned in the introduction, John , our cyber index came down by 2% and it was up by 1%.
Temporary lines came down by 6%.
The third quarter, they were down 8% in the quarter before.
I don't think Thats, a trend yet, but its certainly less than as you mentioned in the introduction Jonah cyber.
David Motamaden: Operator, next question. And our next question comes from the line of David Motamaden with Evercore ISI. Thanks, good morning.
The index came down by 2% and it was up by 1% to 3%.
Speaker 11: point delta between the courses. So it's a relatively calm market, but we'll see on time.
At this point Delta.
Between the quarters so it's.
Rather to become market.
John Doyle: John, in the press release you mentioned continuing to make investments for the future in this quarter. I'm just wondering if there was an acceleration in some of those investments this quarter, particularly in RIS, and if so, if you could walk through the nature of them and how we can think about the future revenue contribution. No, I don't, thanks, David. I don't see it as an acceleration in the quarter, certainly on a gap basis, you know, in the quarter, you know, expense growth was impacted by M&A of restructuring, but also at facts, and, you know, even on it, just the basis, you know, obviously Fx played a role there.
We'll see.
Speaker 2: Yeah, thanks, Martin. You know, what I would also say, David, and, you know, I mentioned this to Jimmy, but clearly the cost of risk is rising, right? So whether it's a frequency of cat events, including extreme weather, casually lost costs, whether it's core inflation, social inflation, you know, some of the underwriting community referring to as legal system abuse, the growth and litigation funding,
Good morning.
What I would also say, David and I mentioned this to Jimmy but clearly the cost of risk is rising right. So whether it's the frequency of cat events, including extreme weather.
Loss costs, whether its core inflation social inflation.
Some of the underwriting community referring.
Referring to his legal system abuse the growth in litigation funding.
Speaker 2: You know, you know, concerns for our clients for sure and the underwriting community as well. Thanks, David.
Yes.
Concerns for our clients for sure and the underwriting community as well.
Thanks, David Operator next question.
Thank you and our next question comes from the line of Rob Cox with Goldman Sachs.
Speaker 1: Thank you. And our next question comes from the line of Rob Cox with Goldman Sachs.
John Doyle: But, you know, as I said earlier, we're trying to balance delivering today and investing for the future. We're not trying to optimize margins in a particular quarter, or for that matter, in a year. You know, we've got a track record, a discipline track record of growing revenue faster than expense, but we're not going to do it in every quarter, in every business, in every quarter. And so, we see right opportunities to make investments that we think are going to create opportunities for us to deliver value for our clients.
Speaker 10: Hey, thanks for taking my question. So I think last quarter, there were some comments that I interpreted as expectations for the level of margin expansion to accelerate an RIS in the second half, but it was just a bit lower. So just curious if you could talk about the puts and takes with respect to the margin relative to 2Q and whether it's still fair to assume that the second half of the year will have stronger margin expansion than 2Q.
Hey, Thanks for taking my question. So I think last quarter. There were some comments that I interpreted as expectations for the level of margin expansion to accelerate in RIS in the second half, but it was just a bit lower.
Just curious if you could talk about the puts and takes with respect to the margin relative to <unk> and whether it's still fair to assume that the second half of the year, we will have stronger margin expansion in <unk>.
Speaker 4: Yeah, you know, sure, Rob. Again, you know, margins and outcome. It's not our primary objective. Our focus is on growing earnings and free cash flow over time.
Yes sure.
Sure Rob again margins an outcome, it's not our primary objective our focus is on growing earnings and free cash flow over time, we're not trying to optimize margin expansion in any period.
John Doyle: We're going to make them. Got it. Thanks. And then on just on the on the marsh global pricing index, I guess I'm wondering, you know, just if we're seeing an acceleration in some of the casual T lines. You know, excluding workers' cop and excluding financial lines. If you're seeing an acceleration there, it sounded like on the reinsurance side. There's, you know, a bit more discipline that's entering the market and given some social inflation concerns, a monitoring.
Speaker 2: We're not trying to optimize margin expansion in any period, you know, certainly in any business in any period. We do expect solid margin expansion in 2023, which will be our 16th consecutive year of margin expansion.
And any business in any period, we do expect solid margin expansion in 2023, which will be our 16th.
Consecutive year of margin expansion.
Speaker 2: There were FX headwinds in our asses margins in.
There were FX headwinds.
In RFS is.
Margins in.
Speaker 2: in the third quarter. But again, I'm pleased with the progress that we've made there. And, you know, as I mentioned in my prepared remarks, again, we expect good solid margin expansion.
In the third quarter, but again I am pleased with the progress that we've made there and.
As I mentioned in my prepared remarks again, we expect good solid margin expansion in 2023.
John Doyle: If you're seeing any signs of that in the primary market. Yeah, you know, it's, you know, it's not a market, you know, I would suggest it's really, you know, a collection of markets and, you know, what we saw, you know, in the third quarter was, you know, on average pretty similar to what, you know, what we experienced in the second quarter, you know, we would note, you know, as it relates to our income statement, we, you know, we have different levels of commission exposure to different products, right, so it doesn't always add up to the same the same amount.
Speaker 12: Got it. Thank you. And maybe just to follow up, I think some peers have highlighted expectations for medical costs to increase.
Got it thank you.
And maybe just a follow up I think some peers have highlighted expectations for medical cost to increase.
Speaker 12: So I was hoping if you could discuss the trends you're seeing in the health and benefits space and expectations as we look into 2024.
So I was hoping if you could discuss the trends youre seeing in the health and benefits space and expectations as we look into 2024.
Speaker 2: You know, sure, Robin, I'll ask Martin to comment in a second. But, you know, we've had good growth in our health and benefits business at Mercer, in our business internationally, which is Mercer Marsh Benefits, and at MMA. It is a pressure point, clearly, you know, for our clients in this economy. And so clients more and more looking to us for solutions there. Martin, maybe share some.
Sure Rob I'll ask Martin to comment in a second but we've had.
Good growth in our health and benefits business set at Mercer.
R R.
Business and internationally, which is Mercer marsh benefits at MMA it.
John Doyle: But, but it's a mixed market and, you know, maybe I'll ask Martin to share some thoughts and, you know, just remind everyone, it's our role is to get the best solution, you know, for our retail clients in the marketplace. And we have a role as a market maker too, and so, you know, we've done a few things, you know, as a, as a market maker to try to bring, you know, more efficient financing solutions to our clients. Martin. Yeah, I agree with that, John, that's a, that's a job.
It is a pressure point clearly for our clients.
In this economy, and so clients more and more looking to us for solutions, there Martin maybe share some insights.
Speaker 13: Yeah, thank you, Robert, for the question. Thank you, John .
Thank you Robert for the question. Thank you John .
Speaker 13: Indeed, medical inflation is increasing and as John just said, it's a challenge for our clients. At the same time, it's...
Indeed medical inflation is increasing and is.
John just said, it's a challenge for our clients at the same time.
Martin South: Just, just a level set, we're in the 24th consecutive quarter of rain increases. We'll release our survey in a couple of weeks time. I don't think we're in an infection point when it comes to pricing, the pricing cycles were seen across the different geographies and bullet lines. I beginning to share a mix of strengths and weaknesses, depending on the combination. The third quarter casualty grew at 3% agree in 3% the quarter before and the quarter before and the quarter before.
Speaker 13: it's not a big part of our revenue sources because lots of our clients are on T-Base or those kinds of things. And we're also working a lot with clients to try to control those costs, control those increases, because as you may know, in the health benefits space,
It's not a big part of.
That our revenue.
<unk> because most of our clients.
Based on those kind of things.
When.
And we're also working with clients to try to.
So all of those cost controls those increases because as you may know in the health benefit space.
Speaker 13: very, very often the employers would share the cost with the employee base. So in this time of high inflation, they're pretty concerned about passing on those costs. So we're looking at design of the plant, access in a different way, leveraging technology.
Very very often the employers with share the cost with the employee base. So at this time of high inflation that pretty concerned about passing on those cost. So we're looking at design of the planned access in a different way leveraging technology.
Martin South: So, we're not seeing an acceleration, but I would, I would say we're hearing a lot more talk from carriers about pressures on pricing and social facing and some of the new clear verdicts that are out there. And we're, you know, keeping our clients closely posted on those. Probably was was at 7% these rates were roughly in line with the prior quarter. We saw some softness in simple lines. Simple lines came down by 6% in third quarter, maybe down 8% in the quarter before.
Speaker 13: etc. So there's there's many different ways that our client that we can help our clients address those those increasing costs and it's it's impacting revenue a little bit but it honestly it's a small part for us given all of the counter points.
Et cetera.
There's many different ways that our clients that we can help our clients addressed as does increase in cost.
And it's.
It's impacting revenue little bit.
Honestly, it's a small part for us given all of the counter.
<unk>.
Martin South: So, I don't know, that's a trend yet, but it's certainly less. And as you mentioned in the introduction, John, our cyber index came down by 2% and it was up by one, at the center of the court is a three percentage point delta between McCourses. So it's rather to become a, we'll see on how to say it. Thanks, Martin. You know, what I would also say, David, and you know, I mentioned this to Jimmy, but clearly the cost of risk is rising, right?
Thanks Martin.
Operator next question.
Speaker 14: Thank you. And our next question comes from the line of Meyers Ingalls with KBW. Great. Good morning. So, two quick questions, if I can. First, John , you talked about macroeconomic uncertainty. And I'm wondering how that impacts near-term visibility, simply for Mercer, in terms of the revenue plan.
Thank you.
Question comes from the line of Meyer steel with K B W.
Great. Good morning, So two quick questions. If I can first John you talked about macro economic uncertainty.
I'm wondering how that impacted near term visibility civil fleet for Mercer.
In terms of the revenue.
Speaker 2: Yeah, thanks, Meyer. You know, I would say, you know, as I said, obviously, the macro economy remains uncertain. And, you know, there is, you know, a fair amount of questions about it. What I would say is mature markets have remained relatively resilient, but inflation of cost persists. You know, central banks are, you know, their primary mission is to reduce inflation. But, you know, we do see, you know, meaningful risk of recession. And, you know, we're, we're prepared for that.
Yes, Thanks Meyer.
I would say as I said, obviously <unk>.
Martin South: So whether it's a frequency of cat events, including extreme weather, casualty loss costs, whether core inflation, social inflation, you know, some of the underwriting community referring to as legal system abuse, the growth and litigation funding, you know, you know, concerns for our clients for sure, and the underwriting community as well. Thanks, David. Operator, next question? Thank you. Our next question comes from the line of Rob Cox with Goldman Sach. Hey, thanks for taking my question.
The macro economy remains uncertain and there is.
A fair amount of questions about it.
What I would say it's mature markets.
<unk> relatively resilient, but inflation across persists.
Central banks are their primary mission is to reduce inflation, but we do see.
Meaningful risk of recession, and we're prepared for that for sure.
Speaker 2: for sure. And some markets are in recession now, but you know, I'll ask Nick, you know, Martin, you know.
Some markets are in recession, now, but I'll ask Nick.
<unk> again, I think Oliver Wyman historically, it's been a bit more sensitive to GDP and Mercer career business has as well, but Nick maybe you could share some thoughts on the economy and what you think that might mean to our business.
Speaker 4: Oliver Wyman historically has been a bit more sensitive to GDP and Mercer's career business has as well. But Nick, maybe you could share some thoughts on the economy and what you think that might mean to our business.
Martin South: So I think last quarter there were some comments that I interpreted as expectations for the level of margin expansion to accelerate an RIS in the second half, but it was just a bit lower. So just curious if you could talk about the puts and takes with respect to the margin relative to 2Q, and whether it's still fair to assume that the second half of the year will have stronger margin expansion than 2Q.
Speaker 8: Yeah, thank you, John . Thank you, Maya. It's, as I said earlier on, I think it is a wide range of economic paths that I see, different of our
Yes. Thank you John Thank you Mike.
Said earlier on I think it is a wide range of economic pubs that I see the difference of Iowa.
Speaker 8: sectors do react differently. And some of our industries have been having a pretty tough time since sort of through and since the pandemic. Some have seen little spurts of growth. We've been growing in some sectors, for example, aerospace and defense, where we made a significant acquisition last year, which we see as being more robust through the cycle. I do think that a tough economic outlook.
Second to react differently.
And some of our industries have been having a pretty tough time since sort of threw him since the pandemic. Some have seen little spurts of growth we've been growing in some sectors. For example, aerospace and defense, where we made a significant acquisition last year, which we see as being more robust through the cycle.
Martin South: Yeah, I'm sure Rob, again, you know, margins and outcome, it's not our primary objective. Our focus is on growing earnings and free cash flow over time. We're not trying to optimize margin expansion in any period, you know, certainly in any business and in any period. We do expect solid margin expansion in 2023, which will be our 16th consecutive year of margin expansion. You know, there were effects headwinds in RIS's margins in the third quarter, but again, I'm pleased with the progress that we've made there.
I do think that a tough economic outlook.
Speaker 8: tends to result in slow growth for the Lyman, but as I said earlier, we've been trying to develop a wider set of through the cycle offerings. And sometimes when the questions all change, people need help answering them. So it's definitely not a correlation anymore. I think that correlation has declined over time and it's pretty low now.
It tends to result in slower growth for over women, but as I said earlier, we've been trying to develop.
Why does that flow through the cycle offerings.
And sometimes when the questions will change.
Martin South: And as I mentioned in my prepared remarks, again, we expect good solid margin expansion in 2023. Got it. Thank you. And maybe just to follow up, I think some peers have highlighted expectations for medical costs to increase. So I was hoping if you could discuss the trends you're seeing in the health and benefits space and expectations as we look into 2024. You know, sure Rob, and I'll ask more to end the comment in a second, but you know, we've had good growth in our health and benefits business at Mercer and in our business in internationally, which is Mercer, Marsh, benefits, and at MMA.
People need help answering them.
It's definitely not.
A correlation anymore I think it properly that correlation has declined over time are pretty low now.
Speaker 13: Thank you, Nick. Martin, maybe you can share some thoughts on MercerCareer. Yes, yes, absolutely. And over the over the last few years, we have focused also on diversifying our portfolio of businesses, and we've improved our business mix a little bit away from the more discretionary nature of the business, in particular in career with more recurring type of work. And I would add to that that.
Thank you Nick Martin, maybe you could share some thoughts on Mercer career, yes, yes, absolutely.
And over the last few years.
We are focused also on diversifying our portfolio of businesses and we've improved our business mix a little bit away from the more discretionary nature of the business, particularly in Korea.
With more recurring type of work and I would add to that.
Speaker 13: With the current environment, there's also lots of demand as Nick just said. You look at volatile capital markets, for example, drives demand for advice in our defined benefits and our different confusion business.
Martin South: It is a pressure point clearly, you know, for our clients in this economy. And so clients more and more are looking to us for solutions that are more than maybe share some insights. Yes. Yeah. Thank you. Robert, for the questions. Thank you, John. Indeed medical inflation is increasing, and as John just said, it's a trend for our clients. At the same time, it's not a big part of our revenue sources because lots of our clients are on fee bays or those kind of things.
With our with the current environment is also lots of demand as Nick just said.
You look at <unk>.
Capital markets for example drives demand for advice.
And benefit and I do think efficient businesses.
Speaker 13: well-funded defined benefit plan on the back of high interest rates, also creating demand for pension risk transfer. We talked about tight labor markets, the change in the ways of working, the upcoming of digital health.
Well funded defined benefit plan on the back of high interest rates and also creating demand for.
Pension risk transfer, we talked about tightened labor markets the different.
Changes in the ways of working.
The upcoming of digital health and.
Speaker 13: technology in the workplace. It's all driving them in, encountering the more traditional, I would say, of previous years' impact of direct correlation to GDP.
Technology in the workplace, it's all driving demand.
Martin South: And when we're also working a lot with clients to try to control those costs, control those increases, because as you may know, in the health benefits space, very, very often the employers would share the costs with the employee bays. So in this time of inflation, they're pretty concerned about passing on those costs. So we're looking at design of the plan, access in a different way, leveraging technology. Technology, etc. So there's there's many different ways of our client that we can help our clients address those those increase in cost and it's it's impacting revenue a little bit, but it honestly it's a small part for us given all the counter points.
Encountering.
More traditional I would say our previous year's impact of direct correlation to GDP as we discussed earlier.
Speaker 2: Thanks Martin. So we of course, Meyer, are not immune to economic growth, but we're a resilient business. And again, we have a track record of performing across economic cycles and at the moment demand remains strong.
Martin So we of course my are not immune to economic growth, but we're a resilient business and again, we have a track record of performing across economic cycles and at the moment demand remains strong.
Speaker 14: Do you have a follow-up? Okay. I do, yeah. Just a quick one, and thanks so much. That was very helpful. With regard to Oliver Wyman, in the past, I guess, you've communicated that Oliver Wyman, when you have strong growth, there could be some pressure on consulting margins just because of the nature of that business, and we didn't see that in this quarter. I'm wondering, is that concept of lower margins of Oliver Wyman less true now?
Do you have a follow up.
I'll give you just a quick one and thanks, so much that was very helpful.
Oliver Wyman in the past I guess.
You've communicated that Oliver Wyman when you have strong growth there could be some pressure on consulting margins just because of the nature of that business and we didn't see that in this quarter I am wondering is that content lower margin valve Hawaiian less true now.
Speaker 2: No, it's not it's not less true, but you know again keep in mind Mercer had its best Quarter of growth. It's a bigger business than Then I'll rewind it and it has best quarter of growth in 15 years. So so that's the reason you didn't see anything there
No it's not it's not less true, but again keep in mind Mercer had its best quarter of growth, it's a bigger business than than Oliver Wyman and it had its best quarter of growth in 15 years. So so that's the reason you didn't see anything there.
Martin South: Thanks, Martin operator next question. Thank you. And our next question goes to the line of my here is KVW. Great. Good morning. So two quick questions that I can first. John, you talked about macroeconomic uncertainty and wondering how that impact near term visibility is complete from us in terms of your client. Yeah, thanks, Meyer. You know, I would say, you know, as I said, obviously, the macroeconomy remains uncertain and you know, there is, you know, a fair amount of questions about it.
Thank you Meyer operator next question.
Speaker 1: And our next question comes from the line of Scott Helaniak with RBC Capital Markets.
And our next question comes from the line of Scott <unk> with RBC capital markets.
Speaker 10: Yes, good morning. Just at Marsh, just wondering if you could comment what's driving the double-digit growth there at EMEA and Latin America. I know that's been strong for a few quarters, but can you get more detail on that? If not, is there any new areas we're seeing growth, and is there much of a benefit from rate increases there?
Yes. Good morning, just at Marsh, just wondering if you could comment on what's driving the double digit growth there that EMEA and Latin America, I know thats been strong for a few quarters, but can you give more detail on that is there any any new areas were seeing growth and is there much of a benefit from.
Martin South: What I would say is mature markets have remained relatively resilient, but inflation across persists, you know, central banks are, you know, their primary mission is to reduce inflation, but you know, we do see, you know, meaningful risk of recession. And you know, we're prepared for that for sure. And some markets are in recession now, but you know, I'll ask Nick, you know, Martin, you know, again, I think Oliver Wyman historically has been a bit more sensitive to GDP and Mercer's career business has as well.
Rate increases there.
Speaker 4: Yeah, sure. You know, happy to talk about that. Scott, again, very pleased with our growth at Mars. It was particularly strong in the international segment in the quarter. And, you know, despite of, you know, mixed economic outcomes in Europe are...
Yes sure.
To talk about that Scott again, very pleased with our growth of Marcia was particularly strong in the international segment in the quarter.
And in spite of.
Mixed.
Economic.
Outcomes in Europe ours are.
Speaker 11: Our business is performing exceptionally well there, and we've had good growth over a long period of time in Latin America. Martin, maybe you could share some color on growth in both of those markets. I'd be thrilled to. As you say, great growth in international 10%, Latin America up 14%, APAC 10, EMEA at 9. So really, really pleasing growth. I'd say there are a few areas that are outstanding at the moment. The energy and power business.
Our business is performing exceptionally well there and we've had good growth over a long period of time in Latin America, Martin maybe you could share some color on growth in both of those markets would be thrilled to now as you say great growth in international 10% Latin America, 14%, APAC and EMEA nine.
Martin South: But Nick, maybe you could share some thoughts on on the economy and what you think that might mean to our business. Yeah, thank you. John, thank you. It's, as I said earlier on, I think it is a wide range of economic paths that I see different of our sectors do react differently. And you know, some of our industries have been having a pretty tough time since sort of through and since the pandemic, some have seen a little spurts of growth.
So really really pleasing growth I'd say there are a few areas.
Outstanding at the moment, the MGM power business that transition is fueling growth credit specialties had a terrific closer in aviation.
Speaker 11: fueling growth, credit specialties, had a terrific course in aviation.
Speaker 11: As well as MMB, which is a big part of our business in Europe , delivers strong double-digit growth. And our advisory business, our value proposition is to go to market through a lens to help our clients think through the cost of risk. And so that's been a big growth area for us as we think that, and we think that will continue to broaden our opportunities. That's been great growth. It's been good growth between renewal and new business across the business, and we've had less loss.
As well as <unk>, which is a big part of our business in Europe delivered strong double digit growth in our.
Martin South: We've been growing in some sectors, for example, aerospace and defense, where we made a significant acquisition last year, which we see as being more robust through the cycle. I do think that a tough economic outlook tends to result in slow growth for the Wyman, but as I said earlier, we've been trying to develop a wider set of through the cycle offerings. And, you know, sometimes when the questions all change, people need help answering them.
Our advisory business, our value proposition is to go to market through.
<unk> lens to help our clients think through the cost of risk and so that's been a big growth area for us as we think that we think that will continue to broaden our opportunities thats been great growth.
Being good growth between renewal and new business across the business and we've had less loss business. The clients are staying with us longer as they see the value in <unk>.
Speaker 11: The clients are staying with us longer as they see the value in an organization like ours that has such broad capabilities. So we feel very good about that across the board and of course you've got the fundamentals in Latin America with protection gaps and somewhat emerging markets in Eastern Europe as well that have had a very strong impact.
Organization like ours that has such broad capabilities. So we feel very good about that.
Martin South: So it's definitely not a correlation anymore. I think it probably, that correlation has declined over time and it's pretty low now. Thank you, Nick. Martin, maybe you could share some thoughts on Mercer career. Yes, yes, absolutely. Over the last few years, we have focused also on diversifying our portfolio of businesses. And we've improved our business mix a little bit away from the more discretionary nature of the business, particularly in career, with more recurring type of work.
Across the board and of course, you've got the fundamentals in Latin America with protection gap and.
And somewhat emerging markets in eastern Europe , as well very strong growth as well.
Speaker 11: We feel well positioned and very positive about the trajectory.
We feel well positioned and very positive about.
The trajectory of that.
Speaker 10: Thanks Martin, Scott, do you have a thought? Yeah, just one other quick follow up here. Just on M&A, you did those couple bigger size deals in the quarter. Just wondering if you could just comment on your M&A pipeline versus where it was maybe six to nine months ago, you're feeling a bit better about those opportunities as you go into 2024 and maybe some area that you're looking at in particular with the focus areas.
Thanks, Martin Scott do you have a follow up.
Just one other quick follow up here just on M&A you did those couple of the bigger size deals in the quarter I'm. Just wondering if you could just comment on your M&A pipeline versus where it was maybe six to nine months ago, Youre feeling a bit better about those opportunities as you go into 2024, and maybe some areas that youre that youre looking at in particular with.
Martin South: And I would add to that that with the current environment is also lots of demand as Nick just said, you look at volatile capital markets, for example, drives demand for advice in our defined benefits and our different confusion businesses. Well-funded defined benefits plan on the back of our interest rates is also creating demand for pension risk transfer. We talked about tight labor markets, the different the changes in the ways of working, the upcoming of digital health, and Technology in the workplace.
Our focus areas.
Speaker 2: Sure, you know, we remain quite active in the market and the pipeline remains solid for sure, you know.
Sure.
We remain quite active in the market and the pipeline remains solid.
Solid for sure.
Speaker 2: Again, I just want to emphasize how pleased we were to to welcome grant to the family in the 3rd quarter and we expect to close hone in relatively soon. They're too well led businesses. Well, position.
Again, I want to emphasize how pleased we were to to welcome grant to the family and the third quarter and we expect to close relatively soon there too well led business is well positioned for solid growth fundamentals in both of them expanding our presence in the middle market, which gets back to the mix.
Speaker 2: solid growth fundamentals in both of them, expanding our presence in the middle market.
Speaker 2: gets back to the mix point that I was making earlier. So, you know, overall, we closed five deals in the quarter. Those were the two bigger ones. We're very excited about it. You know, we're we're certainly you know, it's an active marketplace. While there's fewer transactions, you know, there's a lot.
Point that I was making earlier so overall, we closed five deals in the quarter and those were the two bigger ones. We're very excited about it.
Martin South: It's all driving them in and countering the more traditional, I would say, of previous years impact of direct correlation to GDP as we discussed earlier. Thanks, Martin. So, we, of course, Meyer are not immune to economic growth, but we're resilient business. And again, we have a track record of performing across economic cycles. And at the moment, demand remains strong. Do you have a follow-up? Okay, I do, yeah, just a quick one.
We're certainly it is an active marketplace, while theres fewer transactions as a lot.
There is a lot.
That is at play and so.
We're wide eyed about an unclear on what we're looking for valuations remain elevated for for strong businesses that are in the market, but we know we're looking for and we know how to manage the risk of M&A and so we're going to be selective and disciplined but but we expect to continue to deploy capital inorganically.
Martin South: And thanks so much that was very helpful. We'll talk about the Oliver Wyman. In the past, I guess, you've communicated that Oliver Wyman, when you have strong growth, there could be some pressure on consulting margins just because of the nature of that business. And we didn't see that in this quarter. I'm wondering, is that concept of lower margin-developed Wyman less true now? No, it's not, it's not less true, but you know, again, keep in mind, Mercer had its best quarter of growth. It's a bigger business than then Oliver Wyman and it has best quarter of growth in 15 years. So, so that's the reason you didn't see anything there. Thank you, Meyer.
Thank you Scott Operator next question.
Thank you.
Speaker 1: And our next question comes from the line of Bob Hwang with Morgan Stanley .
Our next question comes from the line of Bob <unk> with Morgan Stanley .
Speaker 15: Hi, thank you. So maybe if we can just go back to Oliver Wyman a little bit. Previously, you mentioned that regarding the UBS and Credit Suisse merger deal, that happened in second quarter. Just curious if that was a meaningful driver of organic growth for Oliver Wyman in second quarter and third quarter, and also on top of that, do you expect any residual from that deal to come through in the fourth quarter and going forward for Oliver Wyman?
Alright. Thank you. So maybe if we can just go back to Oliver Wyman, a little bit previously you mentioned that regarding the UBS and credit Suisse merger deal that happened in the second quarter.
Just curious if that wasn't a meaningful driver of organic growth for Oliver Wyman in second quarter and third quarter and also on top of that do you expect any residual from that deal to come through in the fourth quarter and going forward for Oliver Wyman.
Operator: Operator, next question. And our next question comes from the line of Scott Hellaniac with RBC capital markets. Yes, good morning. Just at Marsh, just wondering if you could comment what's driving the double digit growth there at Amia and Latin America. I know that's been strong for a few quarters, but can you get more detail on that? Is there any any new areas we're seeing growth? And is there much of a benefit from rate increases there?
Speaker 2: Yeah, thanks, Bob. We're not gonna comment on, you know, on individual clients and, you know,
Yes, thanks, Bob we're not going to comment on individual clients.
Speaker 2: the work that we do for individual clients. So as Nick talked about a couple of different times on this call, we have an increasingly diverse set of offerings that we think is more...
The work that we do for for individual clients. So.
As Nick talked about a couple of different times on this call.
We have a an increasingly diverse set of offerings that we think is more resilient and we're very very pleased with the growth at Oliver Wyman through three quarters again quarter to quarter, we could see more volatility and expect to see more volatility.
Operator: Yes, sure. You know, happy to talk about that. Scott, you know, again, very pleased with our growth at Marsh. It was particularly strong in the international segment in the quarter. And, you know, despite of, you know, mixed economic outcomes in Europe are businesses performing exceptionally well there. And we've had good growth over a long period of time in Latin America. Martin, maybe you could share some some color on growth in both of those markets.
Speaker 2: We're very, very pleased with the growth at Oliver Wyman through three quarters. Again, quarter to quarter, we could see more volatility and expect to see more volatility at Oliver Wyman's top line than our other businesses. But we also expect Oliver Wyman to grow faster over a medium term and longer term, and that's certainly been the case in this year. And we expect it to be the case over the longer term.
Oliver Wyman topline than than our other businesses, but we also expect Oliver Wyman to grow faster.
Over over a medium term and longer term and that's certainly been the case, both and that's been the case in this year and we expect it to be the case over the longer term.
Do you have a follow up.
Operator: I'll be thrilled to. Yeah. Now, as you say, great growth in international 10% that in America, 14% APAC 10 near nine. So, really, really pleasing growth. I think there are a few areas that are outstanding at the moment. The energy and power business, the transition. It's feeling growth credit specialties had a terrific cause and aviation. As well as MNB, which is a big part of our business in Europe delivered strong double digit growth.
Speaker 15: Yes, sure. So one more thing very quickly regarding your cyber insurance practice. I know you mentioned that a cyber insurance pricing growth is slowing down a little bit. There had been a few relatively large headline cyber incidents as well as some cyber claims namely in the casino gaming area as well as the government and other areas. Do you expect the current slowdown in cyber pricing maybe just
Yeah sure. So one more thing very quickly regarding your cyber insurance practice I know that you mentioned that it's library insurance.
Pricing growth is slowing down a little bit there had been a few relatively large headline.
<unk> incidents as well as some cyber claims.
Namely in the casino gaming area as well as the government and other area do you expect the current.
Slowdown in cyber pricing maybe just.
Speaker 15: sort of in a soft patch, but do you expect that pricing growth to rebound back, or do you think the cyber insurance pricing will just kind of stay where it is right now?
Sort of in a soft patch, but do you expect that pricing growth to rebound back where do you think the cyber insurance pricing or just kind of stay where it is right now.
Operator: And our advisory business, how many proposition is to go to market through a lens to help our clients think through the cost of risk. And so that's been a big growth area for us as we think that and we think that will continue to broaden our opportunities. That's been great growth. It's been good growth between renewal and new business across the business. And we've had less loss business. The clients are staying with us longer as they see the value in an organization like ours that has such broad capability.
Speaker 2: You know, Bob, what I, you know, again, the most important point to make here is it's our job to
Bob what I.
Again, the most important point to make here is it's our job to.
Speaker 2: Find efficient risk financing solutions for our clients. So.
Find efficient risk financing solutions for our clients so.
Speaker 2: What I would say is, yes, there's been, you know, some, you know, major breaches that, you know, will drive some insured losses in the marketplace. There's also been an increase again in the number of ransomware claims. That's, you know, that have happened during the course of of this year, but I would also note that the underwriting community.
What I would say is yes, there's been some.
Major breaches that will drive some insured losses in the marketplace. There's also been an increase again in the number of ransomware claims thats.
Operator: So we feel very good about that across the board. And of course you've got fundamentals in Latin America with protection, yeah. And somewhat emerging markets in Eastern Europe as well that have had a very strong growth as well. We feel well positioned and very positive about the today. Thanks, Martin. Scott, do you have a thought? Yeah, just just one other quick follow up here. Just on M&A, you did those couple bigger size deals in the quarter.
That have happened during the course of this year, but I would also note that the underwriting community has reacted to growing ransomware claims over the course of the last couple of years through higher attachment points.
Speaker 2: has, you know, reacted to growing ransomware claims over the course of the last couple of years through higher attachment.
Speaker 2: The market is also, the underwriting market, is also reacting to possible systemic events that could aggregate losses in their portfolios. We're, of course, helping them at Guy Carpenter, and at the same time, you know, working with Marsh to build better solutions for that. But the market's been restricting coverage for systemic-type events.
Market is also the underwriting market is also.
Reacting to.
Possible systemic events that could aggregate losses in their portfolios where of course, helping them at Guy Carpenter and at the same time working with March to build better solutions for that but the market's been restricting coverage for systemic type events.
Operator: Just wonder if you could just comment on the, you know, your M&A pipeline verse where it was maybe six to nine months ago, you're feeling a bit better about those opportunities as you go into 2024 and maybe some area that you're looking at in particular with the focus areas. Sure, you know, we remain quite active in the market and the pipe line remains solid for sure, you know, again, I just want to emphasize how pleased we were to welcome Grant to the family in the third quarter.
Speaker 2: And so, that's a factor, you know, in that marketplace as well. And so, I don't think the market will move meaningfully based on a couple of losses. But we have some work to do collectively to help in a digital economy. When I say collectively, I mean the royal we, the entire marketplace in coming up with better solutions to help clients manage the risks, cyber-related risks in a digital economy.
And so that's a factor.
In that marketplace as well and so I don't think the market will move meaningfully based on a couple of a couple of losses.
But we have some work to do collectively to help.
In a digital economy, when I say collectively the Royal we want the entire marketplace and coming up with better solutions to help clients manage the risks cyber related risks in a digital economy.
Operator: And, you know, we expect to close home and relatively soon they're too well led businesses well positioned the solid growth fundamentals in both of them, expanding our presence in the middle market, which gets back to the mix point that I was making earlier. So, you know, overall we close five deals in the quarter. Those were the two bigger ones. We're very excited about it. You know, we're certainly, you know, it's an active marketplace while there's fewer transactions, you know, there's a lot, you know, there's a lot, you know, that is that play.
So thank you.
Speaker 1: Underwriter? Underwriter. Operator? Sorry. Andrew? Our next question comes from the line of Ryan Tunis with Autonomous...
Underwriter under air operator, sorry.
Andrew.
Do you have another turn negative.
Our next question comes from the line of Ryan Tunis with Autonomous research.
Speaker 16: I think so I'll just ask 1 here and then we're probably our.
Hey, Thanks, I'll just ask one here.
Our.
Speaker 16: So some competitors have very specifically highlighted.
Operator: And so, you know, we're, we're wide out about and clear on, you know, what we're looking for. Our valuations remain elevated for, you know, for strong businesses that are in the market, but we know we're looking for and we know how to manage the risk of MNA. And so we're going to be selective and disciplined, but, but we expect to continue to play capital in organically.
Some competitors have like very specifically highlighted.
Speaker 16: pressures, organic growth pressures in the US from the VNO capital markets related to action. You mentioned it briefly.
<unk> organic growth pressures in the U S D&O capital markets related transactions you mentioned it briefly.
Speaker 16: Just curious, when we look at your U.S., Canada within March, is there any reason to believe that you guys wouldn't be wearing a head wing of similar magnitude?
Just curious when we look at.
Your U S. Canada within March is there any reason to believe that you guys wouldn't be.
Wearing a headwind similar magnitude.
Scott Hellaniac: Thank you Scott operator next question. Thank you. And our next question comes from the line of Bob playing with Morgan Stanley. Hi, thank you. So maybe if we can just go back to Oliver Wyman a little bit, previously you mentioned that regarding the UBS and credits with merger deal, that happened in a second quarter. Just curious if that was a meaningful driver of organic growth for Oliver Wyman into second quarter and third quarter. And also on top of that, really exciting residual from that deal to come through in the fourth quarter and going forward for Oliver Wyman. Yeah, you know, thanks Bob.
Speaker 2: Yeah, thanks. Thanks Ryan for the question. Yes, you know, I think Martin, you know, pointed this out. There's, you know, I can't talk about relative exposure, you know, but but clearly, you know, capital market volatility rising cost of capital. Yes, M and A activities down IPO activity is down.
Yeah. Thanks, Thanks, Brian for the question yes.
I think Martin pointed this out there is I cant talk about relative exposure.
But but clearly.
Capital market volatility.
Rising cost of capital is M&A.
M&A activity is down IPO activity is down specs are down the specs down all of those kinds of things that drive risk and create opportunities for us to.
Speaker 2: SPACs are down, DSPACs down, all those kinds of things that drive risk and create opportunities for us to offer advice and solutions are under some pressure. And somewhat related to that, as Martin also noted earlier, Dino pricing is down as well. And so those are headwinds. But again, we have a well-diversified business in the United States. We help our clients manage a wide range of risk.
Offer advice and solutions are under some pressure and somewhat related to that as Martin also noted earlier.
John Doyle: We're not going to comment on, you know, on individual clients and, you know, and the work that we do for, you know, for individual clients. So, you know, as Nick talked about, you know, a couple of different times on this call. We have a increasingly diverse set of offerings that we think is more resilient and we're very, very pleased with the growth at Oliver Wyman through three quarters. Again, quarter to quarter, you know, we could see more volatility and expect to see more volatility at Oliver Wyman's top line than, you know, than our other businesses.
D&O pricing is down as well and so those are headwinds, but again, we have a well diversified business in the United States, we help our clients manage a wide range of risks.
Speaker 2: And broadly speaking, again, the cost of risk continues to rise for the factors that I mentioned earlier on the call.
And broadly speaking again the cost of risk continues to rise for the factors that I mentioned earlier on the call.
Speaker 2: So, thank you, Ryan. I appreciate that. And I want to thank you all for joining us on the call in closing. I want to thank our over 85,000 colleagues for their hard work and dedication. I also want to thank our clients for their continued support. Thank you all very much and we look forward to speaking with you again next quarter.
Thank you Ryan I appreciate that.
Thank you all for joining us on the call in closing I want to thank our over 85000 colleagues for their hard work and dedication I also want to thank our clients for their continued support. Thank you all very much and we look forward to speaking with you again next quarter.
John Doyle: But we also expect Oliver Wyman to grow faster over, you know, over a medium term and longer term. And that's certainly been the case, you know, both it's been the case in this year. And we expect to be the case over the longer term.
Speaker 1: Ladies and gentlemen, this concludes today's program. Thank you for participating and you may now disconnect.
Ladies and gentlemen. This concludes today's program. Thank you for participating and you may now disconnect.
John Doyle: Do you have a follow up? Yeah, sure. So one more thing very quickly regarding your cyber insurance practice. I know you mentioned that a cyber insurance pricing growth is slowing down a little bit. There had been a few relatively large headline cyber incidents as well as some cyber claims, namely in the casino gaming area as well as the government and other areas. Do you expect the current flowdown in cyber pricing, maybe just sort of in a soft patch, but they do expect that pricing growth to rebound backward.
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John Doyle: You think the cyber insurance pricing will just kind of stay where it is right now. Bob, what I, again the most important point to make here is it's our job to find efficient risk financing solutions for our clients. So what I would say is yes, there's been some major breaches that will drive some insured losses in the marketplace. There's also been an increase again in the number of ransomware claims that have happened during the course of this year.
Okay.
John Doyle: But I would also note that the underwriting community has you know reacted to growing ransomware claims over the course of the last couple of years through higher attachment points. The market is also the underwriting market is also reacting to possible systemic events that could aggregate losses in their portfolios. We're of course helping them at Guy Carpenter and at the same time, you know working with Marsh to build better solutions for that.
Okay.
Yes.
John Doyle: But the market's been restricting coverage for systemic type events. And so that's a factor in that marketplace as well. And so I don't think the market will move meaningfully based on a couple of a couple of losses. But we have some work to do collectively to help in a digital economy when I say collectively, I mean the royal we the entire marketplace and coming up with better solutions to help clients manage the risks cyber related risks in it in a digital economy.
Operator: So thank you.
Operator: Underwriter, underwriter operator sorry, Andrew.
Ryan Tunis: Our next question comes from the line of Ryan Tunis with autonomous research.
John Doyle: I think I'll just ask one here in a couple of hours. So some competitors have like very specifically highlighted pressures organic growth pressures in the US from VNO capital markets related transactions. You mentioned it briefly. Just serious when we look at your US Canada within Mars, is there any reason to believe that you guys wouldn't be wearing a headwind of similar magnitude? Yeah, thanks. Thanks Ryan for the question. Yes, you know, I think Martin pointed this out.
John Doyle: There's, you know, I can't talk about relative exposure, you know, but, but clearly, you know capital market volatility rising cost of capital. You know, M&A activities down IPO activity is down spacks are down D spacks, you know, down all those kinds of things that, you know, drive risk and create opportunities for us to offer advice and solutions are under some pressure. And you know, somewhat related to that as Martin also noted earlier, you know, pricing is down, you know, as well.
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John Doyle: And so, you know, those are headwinds, but again, we have a well diversified business in the United States. We help our clients manage a wide range of risks and broadly speaking, again, the cost of risk continues to rise for the factors that I mentioned earlier on the call. So, thank you Ryan. I appreciate that.
John Doyle: And I want to thank you all for joining us on the call. In closing, I want to thank our over 85,000 colleagues for their hard work and dedication. I also want to thank our clients for their continued support. Thank you all very much. And we look forward to speaking with you again next quarter.
Operator: Ladies and gentlemen, this concludes today's program. Thank you for participating and you may now disconnect. Thank you. [inaudible] John Doyle, John Doyle, John Doyle, John Doyle, John Doyle, John Doyle, John Doyle,[inaudible] Michael Zaremski, John Doyle, John Doyle, John Doyle, John Doyle John Doyle, John Doyle, John Doyle, John Doyle John Doyle, John Doyle, John Doyle, John Doyle, John Doyle, John Doyle,[inaudible] John Doyle, John Doyle, John Doyle, John Doyle, John Doyle, John Doyle, John Doyle, John Doyle, John Doyle, John Doyle, John Doyle, John Doyle, John Doyle,
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