Q3 2023 Willis Towers Watson Public Ltd Co Earnings Call

[music].

Good morning, welcome to the W. W. <unk> third quarter 2023 earnings conference call.

Please refer to WCW C O dot com for the press release and supplemental information that was issued earlier today today's call is being recorded and will be available for the next three months on Wcw's website.

Some of the comments in today's call may constitute forward looking statements within the meaning of the private Securities Reform Act of 1995.

These forward looking statements are subject to risks and uncertainties.

Our results may differ materially from those discussed today and the company undertakes no obligation to update these statements unless required by law.

For a more detailed discussion of these and other risk factors investors should review before it looking statements section of the earnings press release issued this morning as well as other disclosures in our most recent Form 10-K and in other Willis towers Watson's SEC filings.

During the call certain non-GAAP financial measures may be discussed for reconciliations of the non-GAAP measures as well as other information regarding these measures. Please refer to the most recent earnings release and other materials in the Investor Relations section of the company's website.

I'll now turn the call over to Carl first W. Gw's Chief Executive Officer. Please go ahead.

Yeah.

Good morning, everyone. Thank you for joining us for W. TWD third quarter 2023 earnings call.

Joining me today is Andrew <unk>, our Chief Financial Officer.

We had a strong third quarter, delivering 9% organic revenue growth and adjusted diluted earnings per share of $2 24.

Maintaining our top line momentum as we continue to execute on our strategic priorities.

Excluding book of business activity organic revenue growth at the enterprise level would have been 10%.

I would result was fueled by the great efforts of our colleagues our strength of our global client model. The investments we've made in talent and technology and the resiliency of our business.

Notably our bottom line performance this quarter was driven by 170 basis points of year over year adjusted operating margin expansion.

Positive impacts of both our recent cost saving measures and a growing productivity of our new hires led to a strong finish for the quarter.

Additionally, we realized 23 million of incremental annualized savings from our transformation program during the third quarter.

This brings the total to $300 million in cumulative annualized savings since the program's inception.

We are well positioned for further adjusted operating margin expansion over the long term driven by organic revenue growth from our unique offerings and strategic hires.

Continued progress of our transformation program and a strengthened focus on cost discipline.

In the near term, we expect year over year margin expansion for the fourth quarter and the full year as a result of operating leverage and increasing contributions from our expense management initiatives.

We're pleased with our third quarter performance and our progress gives us confidence in our ability to drive profitable growth and create value over the long term.

As I touched on last quarter, our focus on specialization in our risk and broking segment has been one of the key drivers of our strong organic growth.

We generate substantial momentum by developing innovative products and services engaging in strategic partnerships and building platforms like MGH MGE use and affinity products.

For example, one of our major client wins for the quarter included an infinity solution that delivers compelling insurance products.

Digital channels to customers of a major manufacturer of luxury vehicles.

This showcased our specialized expertise in the automotive industry and high net worth personal lines of business as well as our successful track record in global affinity insurance programs.

Our strategic focus on specialization continues to drive strong growth in our specialty lines, which continue to grow much faster than our average R&D growth.

As we mentioned last quarter based on the strong market response, we've seen to date, we're expanding our pursuit of these initiatives.

For example, we recently announced that <unk> will launch <unk>.

Our new <unk> focused on select industries, which will further advance our specialization strategy and briskin broking in North America.

<unk> will initially focus on industry verticals of real estate, hospitality and leisure financial institutions and professional services.

Our deep knowledge of these industry together with our insurance expertise will enable veritas to have a comprehensive understanding of our clients' risks.

This will allow us to offer best in class holistic insurance solutions, while maintaining underwriting discipline.

Target customers for <unk> are growing companies seeking more flexible tailored insurance solutions.

Time, we aim to expand into more industries as we grow the platform.

Our analytic tools and expertise in insurance advisory and brokerage give our clients confidence that they're getting the best value for their premium dollars. This.

This quarter our portfolio has expanded to include the global actuarial review for a leading P&C insurer and a brokerage of our global renewal energy program by a world class player in the energy sector.

Data analytics and specialty expertise are also key growth drivers for our health wealth and career segment.

For example, we've had record success for our compensation benchmarking participation in sales with more than 43000 companies participating in our survey at the end of September.

And we've introduced new talent intelligence reports, which examine hot skills and high demand jobs across industries to help our clients make better informed decisions on working rewards issues.

<unk> also continued to build our healthcare benchmarking and specialty services earlier this year, we enhanced our pharmacy offering with an expansion of our Rx collaborative and a new product for mid market organizations.

This past quarter, we launched two new pharmacy partnerships to help plan members save on costs.

Another key or HW see success as the differentiated smart connections, we are making across businesses and geographies.

Client simple request for data can lead to additional consulting opportunities for us.

It is also done to enhance our solution systematically.

Our updated workforce management, offering which combines financial analysis health assessments and communication tools is but one example that led to millions of dollars of incremental revenue this past quarter.

Another example is our lifestyle solution, our defined contribution pooled employer plan.

We've expanded lifestyle to the U S earlier this year and are pleased to report that we've contracted with our first U S client.

While we added clients with $2 5 billion of asset value and Great Britain, Ireland and Belgium.

Across WCW, the confluence of innovation and collaboration is driving consistent sustainable growth.

I am energized by how our journey to one wdw is increasingly delivering new opportunities made possible by bringing together our diverse capabilities.

Finally, I wanted to touch on capital allocation as.

As we said in the past we will continue to take a balanced approach with a focus on allocating our capital to the highest return opportunities.

In the third quarter, we bought back $350 million of stock and expanded our repurchase authorization demonstrating that share repurchases remain our top priority.

As we enter the fourth quarter I am encouraged by the strong client response to the hard work, we've done growing simplifying and transforming our business.

We continue to see momentum building as our unique offerings help clients evaluate and manage their risks and opportunities in a complex macro environment.

We are committed to harnessing this momentum to drive greater operating leverage over time.

We believe that our transformation program and disciplined expense management combined with consistent and sustainable growth opportunities will support near term and long term margin expansion.

I want to thank our colleagues for their performance this quarter.

Truly appreciative of their dedication service and continued commitment to our vision.

Now before turning it over to Andrew I'd also like to acknowledge the escalating conflict in the middle East.

The violet devastation lots of life and impact on innocent civilians.

Only Saturday.

Our primary focus in times of tragedy is on the safety of our colleagues and their families thankfully our colleagues who work in the region continued to be safe, we remain in regular contact and are providing the assistance they need.

We support all of our colleagues and clients as well as their friends and family in the region as they cope with its difficult situations.

And with that I'll turn the call over to Andrew.

Thanks, Carl Good morning, everyone. Thanks for joining us today as Carl mentioned, our third quarter revenue was up 9% on an organic basis and excluding book of business activity organic revenue growth would have been 10% but.

This growth reflects the increasing productivity of our new hires and the impact of our strategic focus on specialization and risking broking and increased demand from clients seeking solutions to manage the impact of inflation on healthcare costs pensions retirement plans and human capital in Swc.

Are you pleased with the progress of our transformation program, which delivered $23 million of incremental annualized savings during the third quarter. This brings the total to $151 million in cumulative annualized savings. This year, our progress on the transformation program and our strength and focus on cost management will help us.

It's continued operating leverage.

I will now discuss our detailed segment results note that to provide comparability with prior periods all commentary regarding the results of our segments will be on an organic basis, unless specifically stated otherwise.

Health wealth and career generated revenue growth of 9% on an organic basis and 8% on a constant currency basis compared to the third quarter of last year we.

We feel confident in our pipeline and anticipate that this segment will finish off the year with good results and in line with historical trends.

Revenue for health increased 7% for the quarter were 8% without considering the impact of book of business activity, we delivered solid growth across all regions driven by the continued expansion of our global benefits management client portfolio, new local clients expanding consulting work for existing clients.

Increased brokerage income.

Well grew 7% in the third quarter. The growth was primarily attributable to strong momentum in retired with increased derisking activity in consulting work in North America.

Retirement also grew in Europe as a result of the Derisking work regulatory compliance support and pension brokerage.

Investments grew as a result of new client acquisitions, and higher fees, which more than offset headwinds from the negative impact of capital market performance.

Career delivered 8% growth in the quarter driven by increased compensation survey sales executive compensation work in other word based advisory services, including Patriots currency work and change communication services.

Benefits delivery and outsourcing generated 14% growth in the quarter. The increase was driven by strength in outsourcing for new clients and increased compliance and other project activity in the individual marketplace with growth from higher volumes and placements of life in Medicare advantage policies.

As a reminder, we typically generate about 50% of the revenue for our individual marketplace business during the fourth quarter and we expect the growth next quarter to be relatively in line with historical trends.

<unk> operating margin increased 350 basis points from the prior year third quarter to 23, 8%.

This margin increase was attributable to both improved operating leverage and transformation savings operating leverage was driven by a positive spread with revenue outpacing expense growth and some timing between quarters.

Riskin Broking revenue was up 10% on both an organic and constant currency basis compared to the prior year third quarter.

Excluding the $10 million year over year impact from book of business activity Riskin broken grew at an exceptional 12%.

As a reminder, there were about $10 million of book of business sales in RMB in the fourth quarter of 2022. We currently expect a similar amount of book of business settlements next quarter, and therefore do not expect a meaningful year over year impact from book of business activity in Q4, However, the timing for <unk>.

Elements can be difficult to predict and may drag into the following year.

Corporate risk and broking had another strong quarter, delivering organic revenue growth of 10% and continuing the positive growth trajectory, we have seen over recent quarters.

Excluding book of business activity CRB grew at 12%. This result was primarily driven by strong new business growth and improved client retention.

Pricing had a moderate positive impact on the quarter.

Interest income was up $19 million for the quarter due to higher rates and the reclassification of interest income previously recorded in corporate.

As noted last quarter due to the cessation of the co broker agreement with Gallagher interest income directly associated with risk and brocade fiduciary funds is now allocated to this segment.

The exceptional growth in Q3 was also driven by continued strong return on their investment in our specialty lines globally. The strongest growth came from our facultative financial solutions natural resources surety and construction lines of business.

Europe had an exceptional quarter with double digit growth in a number of countries led by our P&C retail and direct business as well as construction aerospace and financial solutions International also contributed to strong organic growth led by Latin America.

North America benefited from strong new business and increased client retention across most lines of business. Despite headwinds in our M&A business and from the impact of book of business activity.

In the insurance consulting and technology business revenue was up 9% over the prior year period, driven by increased sales in technology solutions, including strong new business and higher project activity.

<unk> operating margin was 15, 7% for the third quarter, an increase of 200 basis points compared to the prior year third quarter.

The expected ramp up in production from our strategic hiring efforts drove greater operating leverage while tailwind from increased interest income were offset by headwinds from gain on sale activity and foreign currency.

Increased contribution from transformation as well as targeted expense management measures. We've put in place earlier. This year also contributed meaningfully to margin expansion.

We're beginning to see our expense management actions deliver results, including coordinated efforts on reducing spend for internal travel and vendor spend we continue to expect these actions to benefit our margin next quarter.

Turning back to enterprise level results. Our adjusted operating margin was 16, 2% a 170 basis point increase over prior year, excluding book of business activity. The margin would have increased 220 basis points year over year benefiting from transformation savings as well as the impact of inter.

Income. The net result was adjusted diluted earnings per share of $2 24.

Foreign exchange had minimal impact on EPS for the third quarter.

Assuming today's rates continue for the remainder of the year, we now expect a foreign currency headwind on adjusted earnings per share of seven for the year.

Our U S GAAP tax rate for the quarter was 15, 5% versus 0.7% in the prior year, our adjusted tax rate for the quarter was 24, 3% compared to 16, 8% in the prior year, reflecting the nonrecurring nature of discreet tax benefits reflected.

<unk> in the prior year rate we.

We continue to expect the full year adjusted tax rate to be modestly above the prior year.

Our strong balance sheet gives us continued confidence in our ability to execute a disciplined capital allocation strategy that balances capital returned to shareholders with internal investments and strategic M&A to deploy our capital and what we believe to be the highest returning opportunities.

During the quarter, we paid $88 million in dividends and repurchased approximately one 7 million shares for $350 million.

As Carl mentioned, we continue to view share repurchases as an attractive use of capital to create long term shareholder value last month, we raised our repurchase authorization by $1 billion of which approximately $1 5 billion remains.

So in the first half of the year, we had about $450 million of share repurchases. We expect a similar amount for the second half of the year subject to market conditions among other relevant factors.

Additionally, we repaid $250 million of debt that matured during the quarter with a portion of the proceeds from our may debt issuance year to date, we have generated free cash flow of $707 million compared to free cash flow of $337 million. During the same period in the prior year the improvement of $350 million was due.

Due to the non recurrence of prior year headwinds, including realized losses on foreign currency hedges payments made in the prior year for certain discretionary compensation and taxes for one time gains recorded in connection with the Willis resale in the deal termination payment. These.

These <unk> were partially offset by increased transformation program related cost. We are very pleased with our improving business performance and expect this momentum to continue for the rest of the year I am very proud of the leadership team and the resolve of our colleagues and the continued support of our clients our investments in talent innovation.

<unk>.

And operational transformation have helped drive organic revenue growth and we are confident that this will translate into sustained growth in margins EPS and free cash flow and with that let's open it up for Q&A.

Ladies and gentlemen, if you have a question or comment at this time. Please press star one one on your telephone keypad.

Again, if you have a question or comment at this time. Please press star one one.

In an effort to answer as many questions as possible. We ask that you. Please limit yourself to one question and one follow up if you have additional questions you can re queue by pressing star one one.

Standby, while we compile the Q&A roster.

Operator: Good morning. Welcome to the WTW third quarter, 2023 earnings conference call. Please refer to WTWCO.com for the press release and supplemental information that was issued earlier today. Today's call is being recorded and will be available for the next three months on WTW's website. Some of the comments in today's call may constitute for looking statements within the meaning of the Private Securities Reform Act of 1995. These for looking statements are subject to risk and uncertainties.

Our first question or comment comes from the line of the Gregory Peters from Raymond James Mr. Peters. Your line is open.

Okay.

Okay.

Mr. Peters, you may need to Ami July.

Yeah.

Okay, I will return to the queue.

Operator: As your results may differ materially from those discussed today and the company undertakes no obligation to update these statements unless required by law. For more detailed discussion of these and other risk factors, investors should review the for looking statements section of the earnings press release issued this morning, as well as other disclosures in the most recent form 10K and in other Willis Towers watches SEC filings. During the call, certain non-gap financial measures may be discussed for recapitulations of the non-gap measures as well as other information regarding these measures. Please refer to the most recent earnings release and other materials in the investor relations section of the company's website.

Our.

Question or comment comes from the line of.

Christian guest off from Wells Fargo Securities.

Mr. <unk>. Your line is open hi, good morning, Hi.

Quick question on the so the full year RMB margin expansion for the full year. So if we did the math that kind of implies over 300 bps expansion in the Q4 and assuming the math is correct on that like what is going to be the biggest driver of that in terms of are they coming from organic revenue growth is that lower growth in expenses.

And for that and for that full year margin expansion is that inclusive of the higher interest income.

Carl Hess: I'll now turn the call over to Carl Hess, WTW's Chief Executive Officer. Please go ahead. Good morning, everyone.

Yes. Thanks for your question, yes. It is.

Reported basis.

On a year margin expansion expectation and that is something that we still expect to see.

Carl Hess: Thank you for joining us for WTW's third quarter 2023 earnings call.

Carl Hess: Joining me today is Andrew Crazner, our Chief Financial Officer. We had a strong third quarter, delivering 9% organic revenue growth and adjusted deluded earnings per share of $2.24, maintaining our top line momentum as we continue to execute on our strategic priorities. Excluding book of business activity, organic revenue growth, the enterprise level would have been 10%. This solid result was fueled by the great efforts of our colleagues, the strength of our global client model, the investments we've made in talent and technology, and the resiliency of our business.

Full year.

That we believe will be driven by a number of factors.

First of all Q4 has the most operating leverage built into it it's historically rmb's highest revenue quarter with the most new business opportunities and we expect to continue its strong organic revenue growth for the rest of the year. So the potential to drive operating leverage on our fixed expense base is greater.

We also expect to see continued impact of our actions to mitigate some of the expense headwinds the results of those we've already begun to see this quarter.

They are also continuing benefits from our transformation program and additionally, the strategic hires that we've made have begun to contribute to our performance in a very meaningful way.

Carl Hess: Notably, our bottom line performance this quarter was driven by 170 basis points of year-over-year adjusted operating margin expansion. The positive impacts of both our recent cost saving measures and the growing productivity of our new hires led to a strong finish for the quarter. Additionally, we realized 23 million of incremental annualized savings from our transformation program during the third quarter. This brings the total to $300 million in cumulative annualized savings since the program's inception.

Which you can see this quarter in organic growth, we continue to expect a ramp up in production, which we anticipate will cover the increase in expenses, especially.

In Q4, when we seasonally have the most revenue.

Makes sense.

And then for my second question Theres been talk about Willis looking to get back into their reinsurance broking business can you comment on this or provide any color on whether or not you would consider entering the business.

Carl Hess: We are well positioned for further adjusted operating margin expansion over the long term driven by organic revenue growth from our unique offerings and strategic hires. They continued progress of our transformation program and a strengthened focus on cost discipline. In the near term, we expect year-over-year margin expansion for the fourth quarter and the full year as a result of operating leverage and increasing contributions from our expense management initiatives. We're pleased with our third quarter performance and our progress gives us confidence and our ability to drive profitable growth and create value over the long term.

Sure.

Thanks for the question.

Reinsurance is a natural fit with retail broking businesses in many of our peers operate these businesses, we did so successfully as well.

And with our noncompete with H H G. Soon expiring, we are able to add reinsurance to the universe of capital allocations that we consider.

We've remained well connected to the reinsurance markets.

We have a both a deep understanding of the strategic value of reinsurance brokerage for our business and a healthy appreciation for current market conditions as well so.

Carl Hess: As I touched on last quarter, our focus on specialization in our risk and broken segment has been one of the key drivers of our strong organic. We've generated substantial momentum by developing innovative products and services, engaging in strategic partnerships, and building platforms like MGA's, MGUs, and affinity products. For example, one of our major client wins for the quarter included an affinity solution that delivers compelling insurance products via digital channels to customers of a major manufacturer of luxury vehicles.

I think I look at this way I'm not going to comment on any hypotheticals regarding capital allocation decisions are and potential M&A transactions.

And when evaluating our opportunity here.

Look at it compared to any other opportunity we might have as a business.

Full range of capital allocation opportunities, we have including share repurchases as we said in prior quarters and will only pursue something if the expected returns and value creation potential of compelling versus other options we have.

Carl Hess: This showcase our specialized expertise in the automotive industry and high net worth personal lines of business, as well as our successful track record in global affinity insurance programs. Our strategic focus on specialization continues to drive strong growth in our specialty lines, which continue to grow much faster than our average R&D growth. As we've mentioned last quarter, based on the strong market response we've seen to date, we're expanding our pursuit of these initiatives.

So I think I'll leave it at that.

Thank you. Our next question or comment comes from the line again tried Mr. Gregory Peters from Raymond James Mr. Peter Your line is open.

Okay.

St Peters, you may need to Amit your phone.

Carl Hess: For example, we recently announced the WTW will launch Verita, a new MGU focused on select industries, which will further advance our specialization strategy in risk and broken in North America. Verita will initially focus on the industry verticals of real estate, hospitality and leisure, financial institutions, and professional services. Our team deep knowledge of these industries, together with our insurance expertise, will enable Verita to have a comprehensive understanding of our clients' risks. This will allow us to offer best-in-class, holistic insurance solutions while maintaining underwriting discipline.

Okay. Our next question or comment comes from the line of.

Mr. Rob Cox from Goldman Sachs. Mr. Cox you have your line is now open.

Mr. Cox, you may need to Amit your line.

Hi can you hear me, yes, Sir.

Hi, yes. Thanks.

So yes, my first question on organic growth.

Year to date organic growth as a person accelerated across the board in the quarter.

Carl Hess: The target customers for Verita are growing companies seeking more flexible tailored insurance solutions, and over time we aim to expand Verita into more industries as we grow the platform. Our analytic tools and expertise and insurance advisory and brokerage give our clients confidence that they're getting the best value for their premium dollars. This quarter, our portfolio was expanded to include the global actual review for a leading P&C insurer and the brokerage of a global renewal energy program by a world-class player in the energy sector.

And comments in the presentation, where for expectations for the client pipeline momentum to continue.

And in that context should we be interpreting the mid single digit guidance for the full year as conservative conservatism.

Any more color on that would be appreciated.

Well I mean, we're quite pleased with our progress.

The growth we've shown this year, we see potential upside and we feel optimistic about the path to achieve that upside to our originally stated objectives that we're looking to capitalize on our momentum and there are a number of ways, we're trying to do that.

Carl Hess: Data analytics and specialty expertise are also key growth drivers for our health, wealth, and career segment. For example, we've had records success for our compensation benchmarking participation in sales with more than 43,000 companies participating in our surveys at the end of September, and we've introduced new talent intelligence reports, which examine hot skills and high demand jobs across industries to help our clients make better informed decisions on working rewards issues. We're also continued to build our healthcare benchmarking and specialty services.

Our strategic focus on specialization R&D continues to drive growth in our specialty lines that substantially outpaced RMB as a whole we are seeing stronger growth in <unk> C, which is supported by increasing demand in a complex macro environment.

For example, health care cost inflation than the changing ways of working are fueling demand for what we offer in terms of smart advice creative solutions, better data and analytics and in our wealth business right. The investments fortunate at least if capital markets remained relatively stable.

Carl Hess: Earlier this year, we enhanced our pharmacy offering with an expansion of our Rx Collaborative and a new product from mid-market organizations. This past quarter, we launched two new pharmacy partnerships to help plan members save on costs. Another key to our HWC success is the differentiated smart connections we're making across businesses and geographies. A client's simple request for data can lead to additional consulting opportunities for us. It's also done to enhance our solution systematically.

Should see some improvement there as well.

And just to add to that.

Q4, if you think about some of the segment expectations and in <unk>, we're expecting organic revenue growth in line with Q4 rates for the last several years.

Carl Hess: Our updated workforce management offering, which combines financial analysis, health assessment, and communication tools, is about one example that led to millions of dollars of incremental revenue. I know this past quarter. Another example is our life site solution, our Define Contribution Pooled Employer Plan. We've expanded life site to the US earlier this year, and are pleased to report that we've contracted with our first US client, while we added clients with $2.5 billion of asset value in Great Britain, Ireland, and Belgium. Across WTW, the Consulance of Innovation and Collaboration is driving consistent, sustainable growth. I'm energized by how our journey to one WTW is increasingly delivering new opportunities made possible by bringing together our diverse capabilities.

The risk and broking again, we're confident that we will continue with a robust organic revenue growth that we've seen so far this year and of course all of that feeds into into margin year to date, we've generated adjusted operating margin expansion of 70 basis points at the enterprise level and we continue to expect adjusted op.

Margin expansion for the full year.

Got it I appreciate all the color and then maybe just on buybacks I think.

You had previously guided to a similar level of buybacks in the back half of the year, but you are running well ahead of that.

Sort of thus far can you talk about.

How you view share buybacks from here and kind of your updated outlook on buybacks in Q4 and beyond.

Carl Hess: Finally, I want to touch on capital allocation. As we said in the past, we'll continue to take a balanced approach, with a focus on allocating our capital's the highest return opportunities. In the third quarter, we bought back $350 million of stock and expanded our repurchase authorization, demonstrating that share repurchases remain our top priority. As we enter the fourth quarter, I'm encouraged by the strong client response to the hard work we've done growing, simplifying, and transforming our business.

Yes sure.

We are going into the quarter, you don't have a baseline of $100 million or so of share repurchase expectations, but we do constantly look for opportunities.

To deploy capital to the highest return opportunities.

And depending on market conditions et cetera return profiles, we will look to be opportunistic to do more.

It's appropriate.

Carl Hess: We continue to see momentum building, as our unique offerings help clients evaluate and manage their risks and opportunities in a complex macro environment. We are committed to harnessing this momentum to drive greater operating leverage over time. We believe that our transformation program in Disciplined Expense Management, combined with consistent and sustainable growth opportunities, will support near-term and long-term margin expansion. I want to thank our colleagues for their performance this quarter. I'm truly appreciative of their dedication, service, and continued commitment to our vision.

Thank you. Our next question or comment comes from the line of Mark Hughes from <unk> Securities. Mr. Hughes. Your line is open.

Yes. Thank you very much good morning.

Visibility for the de risking to continue how much of a pipeline do you have there an hour.

Market conditions contributing to that.

Thanks, Yes, I mean market conditions have been.

Reasonable, especially with respect to bulk lump sum activity.

And with pension funds in general is still better funded than they were in prior years, we are seeing people looking at annuity purchase in buyout options as well.

Carl Hess: Now, before returning it over to Andrew, I'd also like to acknowledge the escalating conflict in the Middle East, the violent devastation, loss of life, and impact on innocent civilians are profoundly saddening. Our primary focus in times of tragedy is on the safety of our colleagues and their families. Thankfully, our colleagues who work in the region continue to be safe. We remain in regular contact and are providing the assistance they need. We support all of our colleagues and clients as well as their friends and family in the region as they cope with this difficult situation.

Part of our strong results in <unk>.

During the quarter was a result of <unk>.

Corporation with bulk lump sum programs.

And.

While those conditions may be more tempo, we do think that plan sponsors have more options and.

And we will consider their options and we are fortunate that they use us to consider those options.

Andrew Krasner: And with that, I'll turn the call over to Andrew. Thanks, Carl.

And then <unk>.

Garrett.

You talked about the meaningful expansion there when will that be big enough.

Andrew Krasner: Good morning, everyone. Thanks for joining us today. As Carl mentioned, our third quarter revenue was up 9% on an organic basis, an excluding book of business activity, organic revenue growth would have been 10%. This growth reflects the increasing productivity of our new hires and the impact of our strategic focus on specialization in risk and broken and increased demand from clients, taking solutions to manage the impact of inflation on healthcare costs, pensions, retirement plans, and human capital in HWC.

Kind of influence organic growth.

Yes.

It's early days right. We think we have a very good proposition for Aratana, we are launching it at a controllable size across a number of industry verticals.

If the reception is as we hope we'll be looking to expand that to additional industries and additional geographies over time.

Thank you. Our next question or comment comes from the line of Michael Zaremski from BMO. Mr. <unk>. Your line is open.

Andrew Krasner: I'm very pleased with the progress of our transformation program, which delivered 23 million of incremental annualized savings during the third quarter. This brings the total to 151 million in cumulative annualized savings this year. Our progress on the transformation program and our strength and focus on cost management will help us try and continue to operating leverage.

Hey, good morning.

I guess I'm back to the debt.

The commentary about reinsurance.

Clearly.

We all appreciate that that's a great business in a year you guys did a great job in that business in the past. So it makes sense. What you are saying I guess my question is.

Andrew Krasner: I will now discuss our detailed segment results. Note that to provide comparability with prior periods, all commentary regarding the results of our segments will be on an organic basis unless specifically stated otherwise. Health Walton Career generated revenue growth of 9% on an organic basis and 8% on a constant currency basis compared to the third quarter of last year. We feel confident in our pipeline and anticipate that the segment will finish off the year with good results and in line with historical trends.

Given its.

Reinsurance has a great margin profile it seen by some investors as being.

Maybe in an expensive proposition to Q.

To get into to grow into over time.

So.

If that was the path.

<unk> took us.

Could it be done within the context of guidance.

Andrew Krasner: Revenue for health increased 7% for the quarter or 8% without considering the impact of book of business activity. We delivered solid growth across all regions driven by the continued expansion of our global benefits management client portfolio, new local clients, expanding consulting work for existing clients and increased brokerage income. Welp through 7% in the third quarter, the growth with primarily attributable to Shlomo, menthem and retardment with increased de-risking activity and consulting work in North America.

For the 24 guidance.

Is that J grid or is this a kind of a board level conversation.

You might be willing to.

To change that guidance.

A decision was to go to make this a big commitment.

No I think we will.

I would phrase it.

Within the context of the guidance, we had write this business the strategic direction and we look at.

What the potential path.

<unk>.

Revenue might be in the context of our overall strategy and yes, it's an attractive business, but there are other attractive possibilities as well, we just we want to be judicious, how we approach.

Andrew Krasner: Retardament also grew in Europe as a result of de-risking work, regulatory compliance support and pension brokerage. Investments grew as a result of new client acquisitions and higher fees which more than offset headwinds from the negative impact of capital market performance. Career delivered 8% growth in the quarter, driven by increased compensation survey sales, executive compensation work and other word based advisory services, including pay transparency work and change communication services. Benefits delivery and outsourcing generated 14% growth in the quarter.

Any such decision.

Okay. That's helpful.

And I guess.

Switching gears a bit there's a lot of we can clearly see that margins improved more than expected with.

This quarter, which is great to see.

And you had a lot of commentary about strength and discipline on costs and but you've also had.

Expense program in place for a while.

Andrew Krasner: The increase we've driven by strength in outsourcing for new clients and increased compliance and other project activity and individual marketplace with growth from higher volumes and placements of life and Medicare advantage policies. As a reminder, we typically generate about 50% of the revenue for our individual marketplace business during the fourth quarter and we expect the growth next quarter to be relatively in line with historical trends. HWC's operating margin increased 350 basis points from the prior year third quarter to 23.8%.

Just kind of did something change.

Recently that.

Sure.

But theyre just more hitting the bottom line.

Or is it really just the operating liberation that strategic hires in that dynamic really taking hold.

Yes, it's actually all of that right. So clearly with the strong organic growth combined with the expense discipline and the transformation results, we generate great strong margin accretion.

The accretion.

Andrew Krasner: This margin increase was attributable to both improved operating leverage and transformation savings. Operating leverage was driven by a positive spread with revenue outpacing expense growth and some timing between the orders. Risk and broken revenue was up 10% on both an organic and constant currency basis compared to the prior year of their quarter. Excluding a $10 million euro per year impact from book of business activity, risk and broken grew at an exceptional 12%.

We've been maintaining discipline with respect to our cost structure.

Especially as the inflationary environment has put pressure on some of the costs right. We did.

Take some specific actions regarding travel expenses looking at vendor spend and some targeted management of marketing costs. In addition to that as it specifically relates to the transformation program now that we've optimized processes and improved our technology as part of that program, we've been able to take some workforce really.

<unk> actions, which.

Andrew Krasner: As a reminder, there were about 10 million of book of business sales in R&B in the fourth quarter of 2022. We currently expect a similar amount of book of business settlements next quarter and therefore do not expect a meaningful year over year impact from book of business activity in Q4. However, the timing for settlements can be difficult to predict and may drag into the following year. Corporate broken had another strong quarter delivering organic revenue growth of 10% and continuing the positive growth trajectory we have seen over recent quarters.

Enhanced I think some of the levers that you are seeing come through.

Thank you. Our next question or comment comes from the line of Shlomo Rosenbaum from Stifel. Mr. Rosenbaum. Your line is open.

Hi, Thank you for taking my questions I, just wanted to ask a little bit about some of the comments on timing of expenses benefiting margins in health and welfare segment.

Can you just give us a little more detail on what that was and how investors should consider that with regard to the fourth quarter expectations.

Andrew Krasner: Excluding book of business activity, CRB grew at 12%. This result was primarily driven by strong new business growth and improved client retention. Cracing had a moderate positive impact on it. Schler. Interesting come was up 19 million to the quarter due to higher rates and the reclassification of interesting come previously recorded in corporate. As noted last quarter due to the cessation of the co-broken agreement with Gallagher, interesting come directly associated with risk of broken fiduciary funds is now allocated to the segment.

Similarly.

Times Theres timing items that benefit organic revenue growth like this survey work can sometimes move between third and fourth quarter. We will end up with software sales or something was there anything unusual in terms of any of those things. So just kind of tightening on both expenses and revenue.

Yes, sure why don't I take you through the pieces of each WCS organic growth right. So there was 9% for the quarter across the segment. There was strong demand driven by the complex macro environment.

<unk> focus on cross selling and data and analytics and we feel very confident about the pipeline that we'll be able to finish off the year with good results in line with recent historical trends for the Q4 growth.

Andrew Krasner: The exceptional growth in Q3 was also driven by continued strong return on investment in our specialty lines. Globally the strongest growth came from our facultative financial solutions natural resources, surety and construction lines of business. Europe had the exceptional quarter with double digit growth in a number of countries led by our PNC retail and direct business as well as construction, aerospace and financial solutions. International also contributed to strong organic growth led by Latin America.

Within BDO, which had 14%.

Organic growth driven by new clients and increased compliance and other project activity in outsourcing and growth from higher volumes and placements of life in Medicare advantage and individual marketplace and wealth.

7% was generated from higher levels of retirement work in North America, and Europe, along with new client acquisitions and higher fees and investments.

Andrew Krasner: North America benefited from strong new business and increased client retention across most lines of business despite headwinds in our M&A business and from the impact of book of business activity. In the insurance consulting and technology business revenue was up 9% over the prior year period driven by increased sales and technology solutions including strong new business and higher project activity. R&B's operating margin was 15.7% for the third quarter an increase of 200 basis points compared to the prior year third quarter.

Health, which was 7% or 8% excluding the book of business headwinds there was organic growth driven by continued expansion of our global benefits management client portfolio, new local clients expanded consulting work for existing clients and increased brokerage income career, which was 8%.

Had organic growth driven by increased compensation survey sales executive compensation and other reward based advisory services, including trade spend <unk>.

Andrew Krasner: The expected ramp up in production from our strategic hiring efforts drove greater operating leverage while pale winds from increased interest income were offset by headwinds from gain on fail activity and foreign currency. Increased contribution from transformation as well as targeted expense management managers we put in place earlier this year also contributed meaningfully to margin expansion. We are beginning to see our expense management actions deliver results including coordinated efforts on reducing spend for internal travel and vendor spend. We continue to expect these actions to benefit our margin next quarter.

Hey, transparency hasn't changed communication services.

Within.

<unk> right, which had a 14% growth I think it's important to point out what was driving that and what we might expect going forward. So.

So that was driven like I said by both project work and outsourcing as well as transact.

<unk> growth for the quarter.

As also timing related and given that this is one of their lowest revenue quarters the year over year impact because magnified.

The best way to think about transact growth is on a full year basis, and we expect that to be substantially similar to the full year 2022.

Andrew Krasner: Turning back to enterprise level results our adjusted operating margin was 16.2% a 170 basis point increase over prior year. Excluding book of business activity the margin would have increased 220 basis points year over year benefiting from transformation savings as well as the impact of interest income. The net result was adjusted deluded earnings for share of $2.24. Foreign exchange have minimal impact on the EPS for this third quarter. Assuming today's rates continue for the remainder of the year we now expect a foreign currency headwind on adjusted earnings for share of $0.7 for the year.

Got a couple of points of color commentary in there to address sort of deal.

Sort of Q Q2, Q3 Q4 differential.

You talked about our survey business demand for there is actually stayed quite strong and that's the fastest growing area within career.

Within health right there.

Uptick in health care costs did cause quite a bit of activity during the quarter I think that as you look to farther out for managing health care costs will continue to be a priority for our client base.

Andrew Krasner: Our U.S, gap tax rate to the quarter was 15.5% versus 0.7% in the prior year. Our adjusted tax rate to the quarter was 24.3% compared to 16.8% in the prior year reflecting the non-recurring nature of discrete tax benefits reflected in the prior year rate. We continue to expect the full year adjusted tax rate to be modestly above the prior year. Our strong balance sheet gives us continued confidence in our ability to execute a disciplined capital allocation strategy that balances capital return to shareholders with internal investments and strategic M&A to deploy our capital and we will be able to do the highest return opportunity.

But now we're into sort of enrollment season, and largely sort of design actions, which were taken during Q2 and Q3.

As a nation of enrollment.

That's not a Q4 activity typically for our client base. So.

Retirement businesses awful lot of delivery.

During the summer months and sort of.

The strategic projects.

Some of the Derisking activity, we talked about earlier in the call.

So we were very comfortable with longer term prospects for the business.

But what about the expense items. So that's part of the question I see a lot of some of this you're discussing the revenue, but where there is some expense items. It seems like we're moving back timing of someone could you just discuss what exactly that meant.

Andrew Krasner: During the quarter, we paid 88 million individuals and repurchased approximately 1.7 million shares for 350 million. As Carl mentioned, we continue to view cherry purchases as an attractive use of capital to create long-term shareholder value. Last month, we raised a repurchase authorization by 1 billion of which approximately 1.5 billion remains. Similar amounts for the second half of the year, subject to marking conditions among other relevant factors. Additionally, we repaid 250 million of debt that matured during the quarter with a portion of the proceeds from our May debt issuance.

Yes.

Nothing of note it was primarily the.

Expanded growth on the topline that was really flowing through to the margins that youre seeing.

Okay. Thank you.

Thanks.

Thank you our next question or comment comes from the line of David.

From Evercore ISI, Mr. Mok Needham Your line is now open.

Thanks, Good morning.

I just had a question on the RMB segment organic growth I'm wondering if you could just size the contribution to organic growth from the new hires.

Andrew Krasner: Year-to-date, we have generated free cash flow of 707 million, compared to free cash flow of 337 million during the same period in the prior year. The improvement of 300 million was due to the non-recurrence of prior year headwinds, including realized losses on foreign currency hedges, payments made in the prior year for certain discretionary compensation, and taxes for one time gains recording connection with the Willis resale and the deal termination payment. These tailwinds were partially offset by increased transformation program related costs.

Are the ramp up of the.

The hiring that you guys have done over the last several years.

And also just wondering.

I think were nine to 12 months into the ramp up period. So if we kind of past the peak incremental contribution.

Of the new hires.

And so we'll just continue to get contribution going forward incremental contribution going forward. It will just be at lower levels or.

Andrew Krasner: We are very pleased with our improving business performance and expect this momentum to continue for the rest of the year. I am very proud of the leadership team and the resolve of our colleagues in the continued support of our clients. Our investments in talent, innovation, and operational transformation have helped drive organic revenue growth, and we are confident that this will translate into sustained growth in margins, EPS, and free cash flow.

Or am I, not thinking about that right.

Yes, so we are.

Not going to get into the specific contributions.

Recent hires.

But to your to your latter point.

We are 12 to 18 months in if you think about for the first cohort of folks that we had hired.

And those are at or near expected production levels. However, we did hire right. After that first round of hiring as well it's been a continuous process. So we do expect increasing contributions from enhanced productivity.

Operator: And with that, let's open it up for Q&A. Ladies and gentlemen, if you have a question or comment at this time, please press star 11 on your telephone keypad. Again, if you have a question or comment at this time, please press star 11. And an effort to answer as many questions as possible, we ask that you please limit yourself to one question and one follow-up. If you have additional questions, you can read Q by pressing star 11. Stand by while we compile the Q&A roster.

From those hires as time progresses.

We do think there's more room to run there.

Got it but the big cohort I guess.

<unk> is fully ramped isn't what it sounds like.

Is that correct.

We the hiring process was a bit more continuous and that there's not just one big lump of people.

Charles Peters: Our first question or comment comes from the line of see Gregory Peters from Raymond James. Mr. Peters, your line is open.

Paul here.

<unk> quarter.

It was a more gradual build up I think you may be.

Thanks.

The way you're phrasing it.

So I think we still keep.

Operator: Mr. Peters, you may need to unmute your line. Okay, we'll return to the Q.

Productivity from that group.

As a whole.

Got it understood and then just my follow up.

So I heard the commentary.

Yeah on the individual marketplace.

Yaron Kinar: Our next question or comment comes from the line of Christian guest off from Wells Fargo Securities. If the guest off your line is open. Hi, good morning. A quick question on the, so the full year RMB margin expansion for the full year. So if we do the math, that kind of implies over 300 bits expansion in the Q4 and assuming the math is correct on that, like what is going to be the biggest driver of that in terms of, you know, is they coming from organic revenue growth?

Driving the health wealth career organic in 2014 BDO.

BDO, which transact.

The driver there.

Yaron Kinar: Is it lower growth and expenses? And for that full year margin expansion, is that inclusive of the higher interest income? Yes, thanks for your question. Yes, it is on a reported basis, the pro-year margin expansion expectation, and that is something that we still expect to see for the pro-year. That, we believe, will be driven by a number of factors. First of all, Q4 has the most operating leverage built into it. It's historically R&B's highest revenue quarter with the most new business opportunities, and we expect to continue with strong organic revenue growth for the rest of the year, so the potential to drive operating leverage on our fixed expense base is greater.

It didn't look like that had add as adverse of an impact to free cash flow.

As I would have thought.

So was there anything you did in the quarter to help minimize that impact or was it just too small of a of a revenue.

New contribution number given what you said about it being a small base that it just didn't really.

Have an impact on free cash flow in the quarter.

Yes, I think Q2 things there one.

Is a relatively small contributor in that quarter overall, the second thing I'd say is one of our key focus areas has been to work to improve the free cash flow dynamics around transact and that includes balancing our Medicare advantage portfolio with the mix of products that have <unk>.

Or better free cash flow conversion profiles things like life insurance policies. So we are reorienting the portfolio a bit has helped enhance that profile of that business and thats. One of the one of the steps that we're taking to get that business to be free cash flow positive over the next few years.

Yaron Kinar: We also expect to see continued impact of our actions to mitigate some of the expense headwinds, the results of those we've already begun to see this quarter. There are also continuing benefits from our transformation program, and additionally, the strategic hires that we've made have begun to contribute to our performance in a very meaningful way, which you can see this quarter in organic growth. We continue to expect a ramp-up in production, which we anticipate will cover the increase in expenses, especially in Q4, when we seasonally have the most revenue. Nice sense.

Thank you. Our next question or comment comes from the line of Juran Qunar from Jefferies. Mr. <unk>. Your line is now open.

Thank you good morning.

A follow up question on one of the comments you made on.

Maybe curtailing T&D expenses and vendor.

Spend.

Do you.

Obviously, one of the challenges you have is an Android is bouncing between.

Organic growth margin improvement and.

And free cash flow.

Currently pushing that lever.

Good thing could impact organic growth to some extent so how do you think about <unk> and the impact you would have on organic.

Carl Hess: And then from my second question, there's been talk about Willis looking to get back into the re-insurance-broken business. Can you comment on this or provide any color or whether or not you would consider reentering the business?

Yes, good question and the answer is yes.

We are balancing between things, but there are places where there are just simply to be easier to cut and others right internal.

Travel isn't directly tied to client revenue going to see clients. So we've just ask people to be smart about how they spend their travel dollar and.

Carl Hess: Sure. Thanks for the question. You know, re-insurance is a natural fit with retail broken businesses, and you know, many of our peers operate these businesses. We did so successfully as well. And with our non-compete with AJG soon expiring, we are able to add re-insurance to the universe of capital allocations that we consider. We've remained well connected to the re-insurance markets. We have a both a deep understanding of the strategic value of re-insurance for current market conditions as well.

Just being a bit better organize can help by tailoring several client visits together for.

For apps combined if you're a senior management office does it can be a far more productive.

And I am really pleased how our team has responded to the call put better discipline. This time.

That makes sense. Thank you and then.

Then maybe going back to that.

<unk> appetite for for our reinsurance business were getting back into that business.

Carl Hess: So I think I look at this way. I'm not going to comment on any hypotheticals regarding capital allocations decisions or potential emanate transactions. And you know, when evaluating our opportunity here, we look at it compared to any other opportunity we might have as a business, you know, the full range of capital allocation opportunities we have, including share repurchases, as we've said in prior quarters. And we'll only pursue something if the expected returns and value-creased potential recovery versus other options we have. So I think I'll leave it at that.

I think one of the challenges.

Operator: Thank you.

We've looked at it from the outside of just scalability.

And also the absence of any very large assets that.

You could pursue inorganically.

So assuming that it is something that you would want to pursue ultimately.

Does that have an impact on the business over the next few years or is it really going to be and build out mode.

So for a very long time before we actually see more substantial results.

Yes.

If it's something that we decide to.

Charles Peters: Our next question to comment comes from a line again. We'll try with the Gregory Peters from Raymond James. Mr. Peters, your line is open.

Act upon that we would expect to do so in a very thoughtful manner.

Recognizing the obligations and commitments that we've made.

And we'll do so in a very disciplined fashion.

Operator: Mr. Peters, you may need to unmute your phone. Okay.

Fashion.

And.

We recognize the.

Robert Cox: Our next question to comment comes from a line of Mr. Rob Cox from Goldman Sachs. Mr. Cox, your line is now open. Mr. Cox, you may need to unmute your line. Hi, can you hear me? Yes, sir. Hi, yeah, thanks. So, yeah, my first question on organic growth. Your today's organic growth is 8% accelerated across the board in the quarter. And, you know, comments in the presentations were for expectations for the client pipeline momentum to continue.

With the inorganic options look like.

And have to balance that from a strategic perspective with organic build might look like in the timescale for that we're just going to be disciplined and thoughtful about.

How how we approach that if that is something that.

We decided to act on in the future.

Thank you. Our next question or comment comes from the line of Michael Ward from City is toward your line is now open.

Thanks, guys just one more quick question Michael.

Sorry about that.

I was just wondering if you could maybe unpack that sources of organic growth acceleration in CRB.

Each global lines, you see is driving organic growth the most over the next 12 months.

Andrew Krasner: So, in that context, should we be interpreting the mid single digit guidance for the full year as conservative conservatism? Any more color on that would be appreciated. Well, I mean, we're quite pleased with our progress. And, you know, the growth we've shown this year, we see potential upside and we feel optimistic about the past to achieve that upside to our originally stated objectives are we're looking to capitalize on momentum and their number of ways we're trying to do that.

Okay.

Yes, so if you look at our global lines rates there.

John we're having great success in the marketplace, probably the biggest differentiator is what's happening in rate.

And I think.

Pretty well known that the D&O market, particularly as <unk> seen significant right.

Reductions, which does have an effect on.

Our overall revenue in the area.

Andrew Krasner: Our strategic focus on specialization R&B continues to drive growth in our specialty lines that substantially outpaced R&B as a whole. We are seeing stronger growth in HWC, which is supported by increasing demand in a complex macro environment. For example, healthcare cost inflation and the changing ways of working. We are seeing our fueling demand for what we offer in terms of smart advice, creative solutions, better data and analytics. And in our wealth business, right, the investments, fortunately, just capital markets for main growth be stable.

So good results despite a headwind.

From rates in that particular line, but we are seeing very good success across all our global lines and I think.

It's what we say is where we specialize we wind and.

Good Testament to that probably the other area I'd call out is facing a headwind has been in our M&A business.

Simply there's been much less M&A activity and so as a result, our revenues in the area along with everybody else.

It had been under pressure.

Of course this is a very interest rate sensitive business. So we've seen some benefit on the interest income side of the balance sheet at mitigates that.

Andrew Krasner: We should see some improvement there as well. And just to add to that in Q4, if you think about some of the segment expectations in HWC, we're expecting organic revenue growth in line with Q4 rates for the last several years. And risk and broken again, we're confident that we'll continue with the robust organic revenue growth that we've seen so far this year. And of course, all of that we're seeking to margin, you know, year to date, we've generated adjusted operating margin expansion of 70 basis points at the enterprise level.

Yes, we did see solid performance across the broad portfolio across all geographies. We did have a large increase in new business, which we were very.

Happy to see and.

<unk> prior year, and we also had really strong retention rates, which should contribute to the to the top line and we do see very clearly the benefits of the specialization and.

Focus.

Andrew Krasner: And we continue to expect adjusted operating margin expansion for the full year. Got it. I appreciate all the color. And then maybe just on buybacks, I think you had previously guided to a similar level of buybacks in the back half of the year, but you're running well ahead of that sort of thus far. Can you talk about how you view share buybacks from here and kind of your updated outlook on buybacks in Q4 and beyond?

We did see double digit growth across almost all of our global lines of business this quarter.

Awesome. Thanks, and then maybe the the cash flow improvement in the quarter.

It was up over $200 million I think with <unk> 75 from working capital I'm, just wondering any actions you can call out.

And if you could quantify the transformation and cash flow impact.

Yes, so the improvement of 370 was primarily due to the non recurrence of some of the prior year headwinds, we talked a little bit about the FX hedges.

Andrew Krasner: Yeah, sure. We are going into the quarter, you know, have a baseline of 100 million or so of share repurchase expectations. But we do constantly look for opportunities to deploy capital to the highest return opportunities. And depending on market conditions, et cetera, return profiles, you know, will look to be opportunistic to do more if it's appropriate. Thank you.

Discretionary comp payments made in the past and some taxes.

That those tailwind were partially offset by the increased transformation program related costs, we're continuing to expect in.

An incremental increase of approximately $150 million in cash spend related to the transformation program and Thats and thats for the full year.

Thank you. Our next question or comment comes from the line of Mark Marcon from RW Baird. Mr. Marchionne. Your line is now open.

Mark Hughes: Our next questioner comment comes from a line of Mark Hughes from two securities, Mr. Hughes, the aligner.

Mark Hughes: Open. Yeah, thank you very much. Good morning. The visibility for the de-risking to continue. How much of a pipeline do you have there and how are market conditions contributing to that? Thanks. Yeah, I mean, market conditions have been reasonable, especially with respect to bulk lumps from activity. And with pension funds in general, still better funded than they were in prior years. We are seeing people looking at a new way to purchase and buy out options as well.

Hey, good morning.

Carl Andrew.

I've followed you since the very first days of Watson, what I don't think I've ever seen.

A quarter, where we had such a broad based.

Improvement with regards to the organic growth rates across every single line of business.

I'm wondering was there anything that has changed.

Ranged internally in terms of <unk>.

Sensitive systems discussions with regards to goals objectives.

Debt.

Mark Hughes: Part of our strong results in BDO during the quarter results of preparation with bulk lump sum programs. And while those conditions may be more temporal, we do think that plan sponsors have more options and will consider their options and we are fortunate that they use us to consider those options. And then Verita, you talked about the meaningful expansion there. Wouldn't that be big enough to kind of influence organic growth? It's early days yet.

Led to such a broad based improvement.

You mentioned that you are becoming more disciplined in terms of <unk>.

I am wondering if thats part of a broader focus on operational discipline.

We are trying to become a more disciplined organization I think I've been saying that since we first announced the grow simplify and transform program in late 'twenty one.

We are I am very proud of the efforts.

Our colleagues have made to produce these results and that's not mean, Andrew right that is 46000 possible all pointing in the right direction and.

Mark Hughes: We think we have a very good proposition. Verita, we are launching it at a conformable size across a number of industry verticals. If the receptionist as we hope, we'll be looking to expand that to additional industries and additional geographies over time.

It's nice when the stars align.

Andrew Krasner: Thank you.

But no there is nothing in terms of underlying change in compensation programs et cetera, that's driving this.

<unk>.

It's 46000 people.

What was interesting 146000, all change over the course of a couple of quarters.

Michael Zaremski: Our next question of comment comes from a line of Michael Zyremsky from BMO. Mr. Zyremsky, your line is open. Hey, good morning. I guess I'm back to the commentary about reinsurance. You know, clearly, you know, you know, we all appreciate that that's a great business, you know, you're, you guys did a great job in that business in the past, it makes sense, you know, what you're saying. I guess my question is, you know, given its reinsurance has a great margin profile. It's seen by some investors as being, you know, maybe an expensive proposition to, to get into, to grow into over time.

Sure.

So.

The second question is the guide for the full year basically implies.

A T cell you mentioned that as conservative obviously.

BDO and transact or a huge swing factor with regards to the fourth quarter can you just discuss.

We only have two months in a few days left in this quarter can you just discuss how does the enrollment season look.

What are the trends.

Is that the biggest swing factor that is basically.

Keeping you from raising the full year.

God given the strong momentum that we currently have.

Carl Hess: You know, would, so if, you know, if that was the path Willis took, is it, you know, it could have been done within the context of guidance for, you know, that the 24 guidance or is that sacred or is this like a forward level conversation, you know, where, you know, you might be willing to change that guidance, you know, the decision was to go, you know, to make this a big commitment. No, I think the way I would pray that is we, it's within the context of the guidance we had, right, this is business, you know, strategic direction.

Yes, I think it's still way too early enrollment season.

Make any predictions about trend et cetera.

We plan to sample island I think it would have been up amongst group with respect to sort of how we think demand is for the within the businesses I think we alluded to that.

Reasonably detailed level earlier in the call.

Yes. There are there is some activity that we enjoyed during the summer.

Especially with respect to as I said.

Benefit redesign and Derisking that just yet.

Carl Hess: And we look at, you know, what's the potential path of, you know, send and you, you know, revenue might be in the context of our overall strategy. And yes, it's an attractive business, but there are other attractive possibilities as well. We just, we want to be judicious.

We don't expect to be as big a force in Q4.

And then.

BDO will do with BDO does an enrollment season.

Carl Hess: How we approach any such decision. Okay, that's helpful.

Thank you. Our next question or comment comes from the line of Mark Shields from K B W. Mr. Shiels. Your line is now open.

Andrew Krasner: And I guess, you know, switching gears a bit, there's a lot of, you know, we can clearly see that margins improve more than expected with, you know, this quarter, which is great to see. And you had a lot of commentary about, you know, strength and discipline on costs and, and, but, you know, you've also had this, you know, expense program in place for a while is just kind of something change. Recently that you've put, they're just more hitting the bottom line hours.

Great. Good morning can you hear me.

Yes.

Okay, Alright point has been a little bit lumpy today, I guess first question with regard to transact.

Just wanted to fill sort of generating negative cash flows can you have line of sight in terms of when the annual negative cash flow don't get worse on a year over year basis.

But when it wont sorry, I just make sure I understood. Your question when it won't get worse on a year over year basis right in other words I'm looking at two hurdles. One is obviously ultimately are cash flow positive.

Andrew Krasner: There's really just the operating leverage in the strategic hires and that dynamic really taking full. Yeah, it's actually all of that, right? So if you clearly with the strong organic growth combined with the expense discipline and the transformation results, we generate very strong margin accretion. We've been maintaining discipline with respect to our cost structure, especially as the inflationary environment has put pressure on some of our costs, right? We did take some specific actions regarding travel and experiences, looking at vendor spend and some targeted management of marketing costs.

But before that I would imagine that it generate negative cash flow, but not as much into the prior year.

Yes, yes.

Ryan it's becoming incrementally.

Better every year.

Until we get to being cash flow positive. So we do expect a positive trajectory from that business as we evolve the portfolio and take other actions.

Okay, and then just wanted to clarify something because.

I, maybe misinterpreting it but on the last quarter call I think.

When you talked about some of the non transformational expense efforts. The expectation was that would be clearer in the fourth quarter than in the third.

Andrew Krasner: In addition, as a specifically the race of the transformation program, now that we've optimized processes and include their technology as part of that program, we've been able to take some workforce-related actions which enhance some of the levers that you're seeing come through. Thank you.

I just wanted to see whether that's still the case or whether it proved out.

With an expected.

Yes, yes, I think some of it did prove out faster than expected, but we do expect that benefit to carry through to the fourth quarter.

Shlomo Rosenbaum: Our next question of comment comes from the line of Shlomo Rosenbaum from Stiefel. Mr. Rosenbaum, your line is open. Hi, thank you for taking my questions. I just wanted to ask a little bit about some of the comments on timing of expenses, benefiting margins in health and welfare or segment. Can you just give us a little more detail on what that was and how investors should consider that with regard to the fourth quarter expectations?

And there may be a bit more to go there and some of the areas, but very happy with with the with the progress that we've made so far.

Thank you. Our next question or comment comes from the line of Brian Meredith from UBS. Mr. Meredith. Your line is now open hey.

Thank you.

Carl just curious.

Nominal GDP stayed I think better than people kind of anticipated. Although I know there are some people, saying that this is going to slow down at some point next year, what are your clients, saying kind of what's your kind of crystal ball looking right now above GDP and then how does that factor into your 2024 guidance. Maybe you can just remind us on that particularly with respect to revenues.

Shlomo Rosenbaum: And similarly, sometimes there's timing items that benefit organic revenue growth like do this survey work and sometimes move between third and fourth quarter or you'll end up with software sales or something. Was there anything unusual in terms of any of those things? So just kind of timing in both expenses and revenue?

Andrew Krasner: Yes, we're wondering to take you through the pieces of HWC's organic growth. So there was 9% for the quarter across the segment. There was strong demand driven by the complex macro environment, our strategic focus on cross-selling and data and analytics. And we feel very confident about the pipeline that we'll be able to finish off the year with good results in line with recent historical trends for the Q4 growth. Within the BDO, which had 14%, there was organic growth driven by new clients and increased compliance and other project activity and outsourcing and growth from higher volumes and placements of life and Medicare advantage in individual marketplace.

Yes, so I mean.

Yes.

As a company, we are well positioned to weather macroeconomic uncertainty.

I think if you ask you a prediction for me on GDP.

It's uncertain.

There's a range of actions that I think we're actually in pretty good shape to handle both ww and our predecessor companies have been able to grow revenue during recessions.

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Our clients are facing many uncertainties in this macro environment. Some of our clients have to navigate rising sustained rising commercial insurance rates that the industry has been enduring amidst the current conditions.

Insurers are still pushing for premium increases net cause even greater challenges for our clients as they try and navigate.

Andrew Krasner: In wealth, 7% was generated from higher levels of retirement work in North America and Europe, along with new client acquisitions and higher fees and investments, health, which was 7% or 8% excluding the book of business headwinds. There was organic growth driven by continued expansion of our global benefits management, client portfolio, new local clients, expanded consulting work for existing clients and increased brokerage income. Career, which was 8%, had organic growth driven by increased compensation survey sales, executive compensation, and other reward-based advisory services, including increased pay transparency and some change communication service.

Lx risks.

But our customized tools, our specialist approaching RMB insurers that the clients get the best return for their premium dollars.

Across the entire portfolio risk and I think that.

Us.

Physicians doing very well on the HW C side, the same economic issues.

As our clients too evidenced more intense need for sound advice and risk management solutions, whether it's pension derisking are coping with healthcare inflation. So our clients look for help in navigating these issues and that creates opportunities that drives demand for our services around benefits pensions and workforce management.

Andrew Krasner: You know, within BDO, right, which had the 14% growth, I think it's important to point out what we're driving at, what we might expect going forward. So that was driven, like I said, by both project work and outsourcing as well as transact, transact growth for the quarter is also timing related and given that this is one of their lowest revenue quarters the year over year impact becomes magnified. So again, the best way to think about transact growth is on a full year basis and we expect that to be substantially similar to the full year 2022.

Yeah.

Got it. Thank you and then my second question, there's been some chatter I think this quarter about.

Some of the major brokers getting back in the wholesale insurance brokerage business I'm just curious what your thoughts are with respect to you know is that an opportunity maybe for you all to get back into.

Sure.

We don't speculate about potential transactions.

Hello.

I would sort of wholesale transaction not an extension of what we're doing.

Thank you. Our next question or comment comes from the line of Joshua Shanker from Bank of America. Mr. Shanker. Your line is now open.

Andrew Krasner: A couple of points of color commentary in there to address sort of your sort of Q2, Q2, Q3, Q4 differential. I mean, you talked about our survey business in the end for there has actually stayed quite strong and that's the fastest growing area within career. Within health right there had the up kick and health care costs did cost quite a bit of activity during the quarter. I think that as you look to farther out for managing health care costs will continue to be a priority for our client base.

Yes, thank you very much.

I was wondering if you can give any color I mean, you're a bunch of different businesses on the brokerage side, how are things looking at middle market here in the United States, how are things looking in euro.

Sure.

Alright.

Yes, I would call them international businesses in some of your.

Places, where you are dominant and francophone countries and whatnot can you give us a little color on the geographical differences in performance I know you say, it's broad based but I mean, not everything is moving at the exact same.

Andrew Krasner: But you know, it's now we're into sort of enrollment season and largely sort of those design actions which were taken during Q2, Q3 application of enrollment. You know, that's not a Q4 activity typically for a client basis. So and then retirement, you know, that businesses awful lot of delivery during the summer months and sort of expected strategic projects and some of the de risking activity we talked earlier in the call. So what week we were very comfortable with longer term prospects for the business.

Gearing I assume.

Yes, there are some differentiation.

Ben our results around the world.

But first pointed out we don't have a dominant business anywhere, but we have strong businesses in many places.

Growth.

Growth has been I think quite.

Quite good in both international and Europe.

And we are seeing.

Our U S business performed very well in the revamp we've done over the last months to where.

Organize the business across industry lines.

Andrew Krasner: What about the expense items though that's that's part of what the question I see a lot of some of this you're discussing the revenue, but where there's some expense items, it seems like we're moving back timing of something could just discuss what exactly that meant. Yeah, it's not nothing of no, it was primarily the expanded growth in the top line that was really flowing through the margin is what you're seeing. Okay, thank you. Thanks. Thank you.

Andrew did talk a little bit in the beginning of the call about relative performance in the geographies.

But we do see that R. R.

Specialty led approach as really led to very good results in a number of countries within Europe strong results in Latin America, and as I said, the North America.

We have made.

Is working well.

And just a quick modeling question should we assume in 2024 that the book of business sales are basically have run their course.

David Motemaden: Our next question of comment comes from the line of David. I just had a question on the R&B segment organic growth. I'm wondering if you could just size the contribution to organic growth from the new hires. Or the ramp up of the hiring that you guys have done over the last several years and and also just wondering, you know, I think we're nine to 12 months into the ramp up period so if we kind of pass the peak incremental contribution of the new hires. And so we'll just continue to get contribution going forward incremental contribution going forward will just be at lower levels or. Or am I not thinking about that right?

Yes, I think that's a fairly safe assumption at this point in time, we do expect it to look like the historical average.

I did mention in my prepared remarks that we did expect a bit in Q4, some of that timing as always can be uncertain and it can slip, but it should not make a material difference to 2020.

Thank you. Our next question or comment is a follow up from Mr. Shlomo Rosenbaum from Stifel. Mr. Rosenbaum. Your line is now open.

Thank you I had a couple of just kind of housekeeping questions.

Probably for Andrew just first just in the move up in interest rates in September or is there kind of any update that we should think about in terms of pension income expectation for 2024, and then also there is none.

David Motemaden: Yeah, so we're not going to get into these specific contributions of recent hires. But here to your latter point, you know, we're 12 to 18 months in if you think about for the first cohort of folks that we had hired. And those are, you know, at or near, you know, expected production levels. However, we did hire right after that first round of hiring as well. It's been a continuous process. So we do expect, you know, increasing contributions from enhanced productivity from those hires at time progresses.

The non operating income line seem to have spiked up a little to $66 million in the quarter I don't know if thats from the gain of sale that got adjusted out of net income, but is there something material in that line item, it's spiked had positively in the quarter.

David Motemaden: So we do think there's more room to run there. Got it, but the big cohort, I guess, is fully ramped as to what it sounds like. Is that correct? We, the hiring process was a bit more continuous than that, so there's not just one big lump of people, well hired in the same order. It was a more gradual buildup, I think you may be, the way you're raising it. So I think we still, as we said, we got it understood.

Yes.

Yes, so first on the on the pension side.

As we've mentioned before the.

The increase in interest rates and declining capital markets return.

It did create a significant headwind to some of the pension income dynamics. We continue to expect pension income of about $112 million in 2023 and for 2024, we'll update our expectations, there and our fourth quarter call. After the annual Remeasurement process. However, based on current market conditions.

Don't expect the pension headwinds to subside.

And on your question related to the other income line item the big component that Youre seeing there is a gain on the sale of our several assessment business.

Thank you I'm showing no additional questions in the queue at this time I would like to turn the conference back over to Mr. Carl Hess for any closing remarks.

Andrew Krasner: And then just my follow-up, so I heard the commentary on the individual marketplace driving the health wealth career organic and the 14 in BDO. It was transact, was a driver there. It didn't look like that had, as adverse of an impact to free cash flow, as I would have thought. So was there anything you did in the quarter to help minimize that impact, or was it just too small of a revenue contribution number given what you said about it being a small base that it just didn't really have an impact on free cash flow in the quarter?

Thank you all again for joining US today, we do appreciate the continued support of all of our stakeholders I, especially want to reiterate my thanks to all of Wcw's colleagues around the globe for their continued hard work and dedication are the results of which are evident in this third quarter performance I am proud of their resolve.

And I look forward to working together to keep the momentum going as we finished the year strong have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.

Okay.

Okay.

[music].

Andrew Krasner: Yeah, I think two things there. One, it is, you know, a relatively small contributor in that quarter overall. The second thing I'd say is, you know, one of our key focus areas has been to work to improve the free cash flow dynamics around transact. And that includes balancing our Medicare Advantage portfolio with the mix of products that have, you know, different or better free cash flow conversion profiles, things like life insurance policies.

Okay.

Yes.

Okay.

Andrew Krasner: So reorienting the portfolio a bit has helped enhance that, you know, profile of that business, and that's one of the, one of the steps that we're taking to get that business to be free cash flow positive over the next few years.

Yaron Kinar: Thank you.

Michael Ward: Our next question or comment comes from a line of Iran Kenar from Jeffries. Mr. Kenar, your line is now over. Thank you.

Yaron Kinar: Good morning. I have a follow-up question on one of the comments you made on maybe curtailing T&E expenses and vendor spend. How do you, obviously, one of the challenges you have as managers is balancing between organic growth, margin improvement and free cash flow, ultimately pushing that lever, I would think could impact the organic growth to some extent. So how do you think about that, too, and then the impact you would have on organic?

Yaron Kinar: Yeah, good question. And the answer is we are balancing between things, but there are places that are just simply going to be easier to cover. There's right internal travel. It isn't directly tied to client revenue. Going to seek clients gets. So we've just asked people to be smart about how they spend their travel dollar. And, you know, just being a bit more organized can help, right, tailoring several client visits together. Perhaps combined if you're seeing a graduate office visit can be a far more productive spend. And I'm really pleased how our team has responded to the call with better disciplines. That makes sense. Thank you.

Carl Hess: And then we'll be going back to the appetite for the re-insurance business. We're getting back into that business.

Carl Hess: I think one of the challenges that we've looked at from the outside is just scalability and also the absence of any very large assets that you could pursue in organically. So assuming that it is something that you'd want to pursue, ultimately, does that have an impact on the business over the next few years or is it really going to be in build out mode for a very long time before we actually see more substantial results?

Carl Hess: If this is something that we decide to act upon, we would expect to do so in a very thoughtful manner, recognizing the obligations and commitments that we've made. And we'll do so in a very disciplined fashion. And we recognize what the inorganic options look like and have to balance that from a strategic perspective with what an organic build might look like and the timescale for that. We're just going to be disciplined and thoughtful about how we approach that if that is something that we decide to act on in the future. Thank you.

Michael Ward: Our next question to comment comes from a line of Michael Ward from City. Mr. Ward, your line is now over. Thanks, guys. Thank you. Would you like to ask a question, Michael? Sorry about that.

Carl Hess: I was just wondering if you could be unpacked the sources of organic growth the most over the next 12 months. If you look at our global lines, we're having great success in the marketplace. Probably the biggest differentiator is what's happening in rate. And I think it's pretty well known that the D&O market particularly has seen significant rate reductions, which does have an effect on our overall revenue in the area. So good results despite a headwind from rate in that particular line. We are seeing very good success across all our global lines. And I think what we say is where we specialize we win. And that's a good testament to that.

Carl Hess: Probably the other area I call out is facing a headwind has been in our M and A business where simply there's been much less M and A activity. And so as a result, our revenues in the area, along with everybody else, have been under pressure. Of course, this is a very interest rate sensitive business. So we've seen some benefit on the interest income side of the value that mitigates that. And we did see solid performance across the broad portfolio across all geographies.

Carl Hess: And we did have a large increase in new business, which we were very happy to see and versus prior year. And we also had really strong retention rates, which did contribute to the top line. And we do see very clearly the benefits of the specialization and focus. And we did see double-digit growth across almost all of our global lines of this, and this is where. Awesome, thanks.

Andrew Krasner: And then maybe the cashflow improvement in the quarter. It was up over 200 million, I think, with 75 from working capital. Just wondering any actions, you can call out. And if you could quantify the transformation cashflow impact. Yeah, so the improvement of 370 was primarily due to the nodding recurrence of some of the prior year headwinds, we talked a little bit about the BFX hedges, just discretionary campaigns made in the past and some taxes.

Andrew Krasner: And that, that tail, those tailwinds were partially offset by the increased transformation program related costs. We're continuing to expect, you know, an incremental increase of approximately 150 million in cash spent related to the transformation program and that's, and that's for the full year. Thank you.

Mark Marcon: Our next question of comment comes from the line of Mark Marcon from R.W. Baird, Mr. Marcon, your line is now open. Thank you. Good morning, Carl Andrew, you know, followed you since the very first days of Watson, why I don't think I've ever seen a quarter where we had such a broad based, you know, improvement with regards to organic growth rates across every single line of business. I'm wondering, was there anything that has changed internally in terms of incentive systems, discussions with regards to goals objectives that, you know, led to such a broad based improvement.

Mark Marcon: You mentioned that you're becoming more disciplined in terms of P and E, but I'm wondering if that's part of a broader focus on operational discipline. We are trying to become a more disciplined organization. I think I've been saying that since we first announced that grow, simplify and transform program in late 21. We are, I'm very proud of the efforts that, you know, our colleagues have made to produce these results and, you know, that's not me and Andrew, right?

Mark Marcon: That is 46,000 plus plus all pointing in the right direction, and it's, it's nice when the star is aligned. But no, there's, there's nothing in terms of underlying, you know, change in competition programs, et cetera, and it's driving this. It's, it's 46,000 people's heart.

Carl Hess: Always interesting when 46,000 all change over the course of a couple of quarters. So the second question is, you know, the guide for the full year basically implies a decel you mentioned that is conservative. Obviously, BDO and transact, you know, a huge swing factor with regards to the fourth quarter. Can you just discuss, you know, we only have two months and a few days left in this quarter. Can you just discuss, you know, how does the enrollment season look?

Carl Hess: What are the trends, you know, is that the biggest swing factor that is basically, you know, keeping you from raising the full year. You know, God, given the strong momentum that we currently. Yeah, I think it's still a way too early in enrollment season to make any predictions about trends, etc., you know, we've had this over a while and I think it's been up amongst you. With respect to sort of how we think the command is for the, you know, within the businesses, I think we alluded to that at a reasonably detailed level earlier in the call.

Carl Hess: You know, there are there is some activity that we enjoy during the summer that, you know, especially with respect to, you know, as I said, you know, a benefit redesign and and be risking that just, you know, we don't expect to be as big a force in Q4. And then, you know, BDO will do what BDO does in enrollment season. Thank you.

Mark Shields: Our next question of comment comes from the line of March Shields from KBW. Mr. Shields, your line is now open. Great. Good morning. Can you hear me? Yes. Okay. Sorry. I've wanted to be a little bit lumpy today.

Mark Shields: I guess first question, with respect to transact, I'm sending Phil sort of generating negative cash flows. Do we have line of sight in terms of when the annual negative cash flows don't get worse on a year of your basis? When it won't, sorry, I should make sure I have a short question when it won't get worse on a year over your basis. Right. In other words, there are, I'm looking at two hurdles.

Mark Shields: One is obviously ultimately a cash flow positive. But before that, I would imagine that it generates negative cash flow, but not as much as the prior year. Yes. Yeah. That's right. It's becoming incrementally better every year. And so we get to being cash flow positive. So we do expect positive trajectory for that business as we evolve the portfolio and take other actions.

Andrew Krasner: Okay. And then, I just want to clarify something because I may be misinterpreting it. But on the last quarter call, I think when you talk about some of the non-transformational expense efforts, the expectation with that would be clearer in the fourth quarter than in the third. And I just want to see whether that's still the case or whether it proved out fasted and expected. I think some of it did prove out faster than expected.

Andrew Krasner: But we do expect that benefits to carry through to the fourth quarter. And there may be a bit more to go there in some of the areas, but very happy with the progress that we've made so far.

Andrew Krasner: Thank you.

Brian Meredith: Our next question or comment comes to the line of Brian Meredith from UBS. Mr. Meredith, your line is now open. Hey, thank you.

Carl Hess: It's called just curious. It's like normal GDP has stayed, I think better than people kind of anticipated, although I know there's some people saying that it's going to slow down to some point next year. What you're clienting, what you're kind of crystal ball looking like, I don't know, I'm a GDP. And then, how does it factor into your 2024 guides? Maybe you can just remind us on that, particularly with respect to revenues.

Carl Hess: Yeah. So, I mean, you know, as a company, right, we are well positioned to whether macroeconomic uncertainty. And, you know, I think if you're asking a prediction for me on GDP, I think I'll go with it's uncertain. But there's a range of actions that I think we're actually in pretty good shape to handle both WGW and our predecessor companies. They've been able to grow revenue during recessions. You know, our clients are facing many uncertainties in this macroeconomic environment.

Carl Hess: You know, some of our clients have to navigate rising, sustained rising, commercial insurance rates, that the industry has been enduring amidst the current conditions. You know, insurers are still pushing for premium increases and that causes even greater challenges for our clients if we try to navigate, and complex risks. But our customized tools, our specialists approach in R&B, ensures that the clients get the best of the term for their premium dollars across the entire portfolio risk, and I think that helps us position very well.

Carl Hess: On the HWC side, these same economic issues can cause our clients to have an even more intense need for sound advice and risk-added solutions, whether it's pension-D risking or hoping with health care in place. So our clients look for help in navigating these issues, and that creates opportunities that drives the manpower services around benefits, pensions, and workforce management.

Carl Hess: God, thank you.

Joshua Shanker: And then my second question, there's been some chatter, I think this quarter about some of the major brokers getting back into wholesale insurance brokerage business, I'm just curious what your thoughts are with respect to, is that an opportunity maybe for y'all to get back into. I, we don't speculate about potential transactions, and I would sort of wholesale a transaction, not an extension of what we're doing. Thank you.

Carl Hess: Our next question or comment comes from a line of Joshua Shanker from Bank of America, Mr. Shanker, your line is now open. Yeah, thank you very much. I was wondering if you can give any color. I mean, you're a bunch of different businesses on the broken side. How are things looking in the middle market here in the United States? How are things looking in your, your, I guess, I would call them international businesses and some of your places where you're dominant and francophone countries and whatnot, can you give us a little color on the geographical differences in performance? I know you say it's broad based, but I mean, not everything's moving at the exact same gearing, I assume. Yeah, there are some differences in, in our results around the world, right?

Carl Hess: But first point out, we don't have a dominant business anywhere, but we have strong businesses in many places. Growth, you know, growth has been, I think, quite good in both international and Europe. And we are seeing our US business perform very well in the revamp we've done over the last months to reorganize the business across industry lines. Andrew did talk a little bit in the beginning of the call about growth performance in the geographies, but we do see that our, our specially led approach has really led to very good results in a number of countries within Europe, strong results in Latin America. And as I said, the North America revamp we've made is working well.

Andrew Krasner: And just a quick modeling question, should we assume in 2024 that the book of business sales are basically run their course? Yep, I think that's a fairly safe assumption at this point in time we do expect it to look like the historical average. I did mention it might prepare the marks that we didn't expect a bit in before some of that timing as always can be uncertain and it can slip, but it should not make a material difference to 2024. Thank you.

Shlomo Rosenbaum: Our next question to comment is a follow up from Mr. Shlomo Rosenbaum from Stiefel. Mr. Rosenbaum, your line is now open. Thank you.

Andrew Krasner: I had a couple just kind of housekeeping questions. Probably for Andrew, just first just in the move up an interest rates in September is there kind of any update that we should think about in terms of pension income expectation for 2024. And then also there's not the non-operating income line and seem to have spiked up a little to $66 million in the quarter. I don't know if that's from the gain of sale. They got just it out of the net income. But is there something material in that line item that's spiked it positively in the quarter?

Andrew Krasner: Yes, so first on the on the pension side, you know, as we've mentioned before the increase in interest rates since the client capital market turned, you know did create a significant headwind to some of the pension income dynamics. We continue to expect pension income of about 112 million in 2023. And for 2024, we'll update our expectations there on our fourth quarter call after the annual measurement process. You know, however, based on current market conditions, you know, we don't expect the pension headwinds to subside.

Andrew Krasner: And on your question related to the other income line item, the big component that you're seeing there is a gain on the sale of our several assessments business. Thank you.

Operator: I'm sure I know additional questions in the queue at this time.

Carl Hess: I would like to turn the conference back over to Mr. Carl Hess for any closing remarks.

Operator: Thank you all again for joining us today. We do appreciate the continued support of all of our stakeholders. I especially want to reiterate my thanks to all of WTW's colleagues around the globe for their continued hard work and dedication. The results of which are evidence in this third quarter performance. I am proud of their result. I look forward to working together to keep the momentum going as we finish the year strong. Have a great day.

Operator: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect everyone. Have a wonderful day.