Q1 2024 Willis Towers Watson Public Ltd Co Earnings Call

[music].

Okay.

Operator: Good morning. Welcome to the WTW first quarter 2024 earnings conference call. Please refer to WTWCode.com for the press release and supplemental information that were issued earlier today. Today's call is being recorded and will be available for the next three months on WTW's website.

Speaker Change: Good morning, welcome to the W. W first quarter 'twenty 'twenty four earnings conference call.

Speaker Change: Refer to WCW co dotcom for the press release and supplemental information that were issued earlier today.

Today's call is being recorded and will be available for the next three months on Wcw's website. Some.

Operator: Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties. Actual 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 visit the forward-looking statements section of the earnings press release issued this morning, as well as other disclosures in the company's most recent Form 10-K and in other filings the company has made with the SEC.

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

Speaker Change: These forward looking statements are subject to risks and uncertainties actual results may differ materially from those discussed today and the company undertakes no obligation to update these statements unless required by law.

Speaker Change: For a more detailed discussion of these and other risk factors investors should visit the forward looking statements section of the earnings press release issued this morning as well as other disclosures in the company's most recent Form 10-K and in other filings. The company has made with the SEC.

Operator: During the call, certain non-GAAP financial measures will be discussed. For reconciliations of the non-GAAP measures, as well as other information regarding these measures, please refer to the earnings press release issued this morning and other materials in the investor relations section of the company's website. I'll now turn the call over to Carl Hess, WTW's Chief Executive Officer. Please go ahead.

Speaker Change: During the call certain non-GAAP financial measures will be discussed for reconciliations of the non-GAAP measures as well as other information regarding these measures. Please refer to the earnings press release issued this morning, and other materials in the Investor Relations section of the company's website.

Speaker Change: I'll now turn the call over to Carl Hess Wcw's, Chief Executive Officer. Please go ahead.

Carl A. Hess: Good morning, everyone. Thank you for joining us for WTW's first quarter 2024 earnings call. Joining me today is Andrew Krasner, our Chief Financial Officer. We had a solid start to the year, delivering first quarter results in line with our expectations. Our momentum from last year has carried us into 2024, as we continue to execute on our strategic priorities to grow, simplify, and transform. Our exceptional solutions, productivity from new hires, and investments in talent and technology continue to play a pivotal role in fueling organic revenue growth of 5%.

Carl A. Hess: Good morning, everyone.

Carl A. Hess: Thank you for joining us for Wcw's first quarter 2024 earnings call joining.

Carl A. Hess: Joining me today is Andrew Krasner, our Chief Financial Officer.

Carl A. Hess: We had a solid start to the year delivering first quarter results in line with our expectations.

Carl A. Hess: Our momentum from last year has carried us into 2024 as we continue to execute on our strategic priorities to grow simplify and transport.

Andrew Krasner: Our exceptional solutions productivity from new hires and investments in talent and technology continued to play a pivotal role in fueling organic revenue growth of 5%.

Carl A. Hess: Simultaneously, our transformation initiatives helped us generate an adjusted operating margin expansion of 200 basis points year over year and 16% growth in adjusted diluting earnings per share. We achieved $33 million of incremental annual life savings from our transformation program during the first quarter, bringing the total to $370 million in cumulative annual life savings since the program. We continue to look for more opportunities to optimize the business while leveraging our cost structure to expand our market.

Andrew Krasner: Simultaneously our transformation initiatives helped us generate adjusted operating margin expansion of 200 basis points year over year, and 16% growth in adjusted diluted earnings per share.

Andrew Krasner: We had 33 million of incremental annualized savings from our transformation program during the first quarter, bringing the total to $370 million in Cuba.

Carl A. Hess: Cumulative annualized savings since the program's inception.

Carl A. Hess: We continue to look for more opportunities to optimize the business, while leveraging our cost structure to expand our margins.

Carl A. Hess: This encouraging start to the year, our robust new business pipeline, and our plans for realizing operating efficiencies across the rest of the year give us a high level of confidence that we will deliver on our 2020. I am pleased with how our strategic progress has driven this quarter's results and, more importantly, has positioned us for continued profitable growth. For the first quarter of 2024, we delivered top line growth underscoring the heightened importance of our services in the current market.

Carl A. Hess: This encouraging start to the year, our robust new business pipeline and our plans for realizing operating efficiencies across the rest of the year give us a high level of confidence that we will deliver on our 2024 commitments.

Carl A. Hess: I am pleased with how our strategic progress has driven this quarter's results and more importantly has positioned us for continued profitable growth.

Carl A. Hess: For the first quarter of 2024, we delivered topline growth underscoring the heightened importance of our services in the current market.

Carl A. Hess: Our distinctive data-driven and industry-specific approach is making us more attuned to specific economic dynamics that allow us to enhance outcomes and mitigate risks for our clients. Our global client model continues to resonate with the market thanks to our world-class offerings and the unwavering dedication of our customers. All this puts us in a strong position to achieve sustainable, profitable growth and to enhance long-term shareholder value. Let me give you an update on the progress we've made and the opportunities ahead for our students.

Carl A. Hess: Our distinctive data driven and industry specific approach is making us more attuned to specific economic dynamics that allow us to enhance outcomes and mitigate risk for our clients.

Carl A. Hess: Our global quiet model continues to resonate with the market. Thanks to our world class offerings in the unwavering dedication of our colleagues.

Carl A. Hess: All of this puts us in a strong position to achieve sustainable profitable growth and to enhance long term shareholder value.

Speaker Change: Let me give you an update on the progress we've made and the opportunities ahead for our segments.

Carl A. Hess: Our specialization strategy in risk and broking remains a key growth driver for both the segment and the company. R&B head, organic revenue growth of 8%. Our specialty businesses continue to strongly outpace the rest of the segment. And we also continue to see sustained client retention rates in the mid 90s, a testament to the ongoing value of our data and analytics focus and the effective insurance solutions that we provide to our clients. We often get questions about WTW's specialist approach and how it sets us apart.

Speaker Change: Our specialization strategy and risk in bromine remains a key growth driver for both the segment and the company.

Speaker Change: RMB had organic revenue growth of 8% for the quarter.

Speaker Change: Our specialty businesses continued to strongly outpaced the rest of the segments growth and.

Carl A. Hess: And we also continue to see sustained client retention rates in the mid nineties.

Carl A. Hess: Product of the ongoing value of our data and analytics focus and the effective insurance solutions that we provide to our clients.

Carl A. Hess: We often get questions about WCW specialist approach and how it sets us apart.

Carl A. Hess: What's unique about WTW's approach is that our entire business, not just the client facing, is structured around industry. This is a clear benefit for both our clients and our operators. Clients can tap into both our global and local expertise, which includes unique data and analytical tools that help create a continuous cycle as we tackle industry challenges, aggregate our experience and information, and use that to further improve our solutions to meet specific industry needs. From an operational point of view, these are businesses with national or even global P&Ls and not simply an industry practice.

Carl A. Hess: What's unique about wdw's approaches that our entire business not just the client facing parts is structured around industry concentrations.

Carl A. Hess: Clear benefits for both our clients and our operations.

Carl A. Hess: Clients can tap into both our global and local expertise, which includes unique data and analytical tools that help create a continuous cycle as we tackle industry challenges aggregate our experience in information and use that to further improve our solutions to meet specific industry needs.

Carl A. Hess: From an operational point of view these are businesses with national or even global P&L and not simply an industry practice group our dedicated industry teams have heightened accountability for end to end performance and make informed decisions based on their experience and in depth knowledge that results in exceptional value delivered to our clients.

Carl A. Hess: Our dedicated industry teams have heightened accountability for end-to-end performance and make informed decisions based on their experience and in-depth knowledge that results in exceptional value delivered to our clients while achieving strong financial results. A client win from this past quarter illustrates their effectiveness. Members of our global construction line of business based in our Europe and international geographies came together to win a multi-year contract for our rail infrastructure by creating a custom solution that fit the client's unique risk management program.

Carl A. Hess: While achieving strong financial results.

Carl A. Hess: A client win from this past quarter illustrates the effectiveness of this approach.

Carl A. Hess: <unk> of our global construction mining business based in our Europe and international geographies came together to win a multi year contract for our rail infrastructure leader by creating a custom solution.

Carl A. Hess: The client's unique risk management profile.

Carl A. Hess: The global teams were assisted by our local teams in the country where the railway was being built, enabling us to provide even further specific expertise to the situation. Our team's familiarity with the industry-specific risks associated with rail infrastructure, combined with our specialized geographic knowledge, ultimately secured us the win amidst fierce competition. In North America, our transition to industry-focused divisions is complete.

Carl A. Hess: The global teams where sits by our local teams in the country, where the railway it was being built.

Carl A. Hess: Enabling us to provide even further specific expertise to the situation.

Carl A. Hess: Our team is familiarity with the industry specific risks associated with rail infrastructure combined with our specialized geographic knowledge ultimately securities the win amidst fierce competition.

Carl A. Hess: In North America, our transition to industry focused divisions is complete enhancing our ability to meet client needs and driving innovation and new offerings through our industry verticals.

Carl A. Hess: Enhancing our ability to meet client needs and driving innovation and new offerings through our industry. One example of this is Verita, our open market MGU, which has continued to exceed our expectations since its introduction last quarter. The recent addition of workers compensation capabilities further solidifies Veritas' proposition within the insurance ecosystem, enhancing its value proposition and expanding its market share. We continue to expect the investments made in talented technology over the last few years, combined with the reorientation of the R&B business towards specialization, will drive higher levels of activity with new and existing clients that is fundamental to our organic revenue growth and margin expansion.

Carl A. Hess: One example of this is derrick or open market Mgo, which has continued to exceed our expectations since its introduction last quarter.

Carl A. Hess: The recent addition of workers' compensation capabilities further solidifies veritas proposition within the insurance ecosystem enhancing its value proposition and expanding its market reach.

Carl A. Hess: We continue to expect the investments made in talent and technology over the last few years combined with the reorientation of the RMB business towards specialization will drive higher levels of activity with new and existing clients that is fundamental to our organic revenue growth and margin expansion trajectory. This year.

Carl A. Hess: In HWC, we remain focused on our core businesses while fostering smart connections to fuel sustainable organic growth of 4%. Clients continue to recognize that the deep expertise we have in each of our HWC businesses enables us to deliver market-leading solutions across our health, wealth, career, and benefits delivery and outsourcing businesses and make breakthroughs that matter in a complex and changing environment. For example, with many pension plans being well funded, our retirement teams around the world have helped clients de-risk their plans and gain access to surplus assets, not only through traditional means like annuity buy-ins and buy-outs but also through novel approaches like reopening previously closed pension plans.

Carl A. Hess: In each WC, we remain focused on our core businesses, while fostering smart connections to fuel sustainable organic growth of 4% in the quarter.

Carl A. Hess: Clients continue to recognize the deep expertise we have in each of our hw's businesses enables us to deliver market, leading solutions across our health wealth and career and benefits delivery and outsourcing businesses and make breakthroughs that matter in a complex and changing environment.

Carl A. Hess: For example, with many pension plans being well funded our retirement teams around the world and help clients derisk their plans and gain access to surplus assets not only through traditional means like annuity buy ins and buyouts, but also through novel approaches like reopening previously closed pension plan.

Carl A. Hess: In addition, we've assembled a unique solution involving bulk annuity purchases and our retiree health care that enables U.S. organizations to de-risk retiree medical options. After launching this solution late last year, we've already helped clients settle some $430 million in retiree medical liabilities, and we expect another $500 million in settlements over the next few years. In other Breakthroughs, we're using artificial intelligence and broader digital tools to help clients answer some big questions about their people processes.

Carl A. Hess: In addition, we've assembled a unique solution involving bulk annuity purchases at our retiree health care exchange that enables U S organizations did derisked retiree medical obligations.

Carl A. Hess: After launching this solution late last year, we've already help clients some of some $430 million in retiree medical liabilities and we expect another $500 million in settlements over the rest of this year.

Carl A. Hess: In other breakthroughs, we're using artificial intelligence and broader digital tools to help clients answered some big questions about their people processes.

Carl A. Hess: Specifically, we've doubled our digitally-enabled revenue in the career area for two years running and are focused on doubling again in 2020. This includes helping dozens of the world's largest companies identify the skills their employees need to deliver solid business results and grow in their careers. We've also developed thousands of job profiles and aligned hundreds of jobs to specific career levels with AI, freeing up time for consultants so they can spend more of their time advising clients on reward strategies and programs.

Carl A. Hess: Specifically, we've doubled our digitally enabled revenue into the career area two years running and are focused on doubling again in 2024.

Carl A. Hess: This includes helping dozens of the worlds largest companies identify the skills their employees need to deliver solid business results and grow in their careers.

Carl A. Hess: We've also developed thousands of job profiles and aligned hundreds of jobs to specific career levels with AI freeing up time for consultants that they can spend more of their time advising clients that reward strategy and program design.

Carl A. Hess: Our digital solution is extended to the executive pay area with our proprietary performance modeling tool that we've deployed to help hundreds of compensation committees make decisions about executive pay and performance. Stepping over to health care, we see no shortage of opportunities. There's continued high inflation around the world, and the introduction of new specialty solutions is not avoiding it.

Carl A. Hess: Our digital solutions extended to the executive pay area with our proprietary performance modeling tool that we've deployed to help hundreds of compensation committees make decisions about executive pay and performance targets.

Carl A. Hess: Stepping over to health care, we see no shortage of opportunities.

Carl A. Hess: There is continued high inflation around the world and the introduction of new specialty solutions is not abated clients.

Carl A. Hess: Clients and prospects are looking for breakthroughs to deliver value and impact, evidenced by the more than 2,500 people who recently attended our flagship U.S. healthcare conference. All of our core businesses are helping organizations respond to new legislation and regulation, from the Netherlands' pension legislation to the EU pay transparency requirements. An important part of core business growth in HWC is the smart connections that span the segment, which create opportunities to cultivate sustainable, sticky relationships.

Carl A. Hess: Clients and prospects are looking for breakthrough to deliver value and impact evidenced by the more than 2500 people, who recently attended our flagship U S Health care conference.

Carl A. Hess: All of our core businesses are helping organizations respond to new legislation and regulation from the Netherlands pension legislation to the EU pay transparency requirements.

Carl A. Hess: An important part of core business growth in <unk> smart connections that span the segment, which create opportunities to cultivate sustainable sticky relationships.

Carl A. Hess: Two examples of this came with WINS this past quarter with a telecommunications provider and a global biopharmaceutical company. In both instances, we were able to create a comprehensive bundle of solutions by engaging our teams across work and rewards, employee experience, retirement, and benefits delivery. In addition to being simply larger, these multi-business relationships are typically more embedded and more profitable as we build connections with varied client stakeholders, deliver greater value, utilize our client knowledge, and leverage common. Our focus on smart connections continues to gain traction across our segments, demonstrating the complementary nature of our businesses and providing further evidence of the value of our multi-industry.

Carl A. Hess: Two examples of this came with wins this past quarter with a telecommunications provider and a global biopharmaceutical company in both instances, we were able to create a comprehensive bundled solution by engaging our teams across working rewards employee experience retirement and benefit celebrated administration.

Carl A. Hess: In addition to be simply larger these multi business relationships are typically more embedded and more profitable as we build connections with varied client stakeholders deliver greater value utilize our client knowledge and leverage common resources.

Carl A. Hess: Our focus on smart connections continues to gain traction across our segments, demonstrating the complementary nature of our businesses and providing further evidence of the value of our multi industry expertise for.

Carl A. Hess: For example, this past quarter, our colleagues in HWC helped tee up a broking opportunity for our CRB team to do a complete review of a health and benefits client's P&C insurance strategy and program. After detailing our approach to industry specialization, our CRB colleagues were chosen for all lineups of coverage in the industry. Putting it all together, good market demand, well-positioned core businesses, breakthrough solutions in new areas, and smart connections that add value, the outlook for HWC remains positive.

Carl A. Hess: For example, this past quarter, our colleagues in H WC help tee up a broking opportunity for our CRB team to do a complete review of our health and benefits clients P&C insurance strategy and programs.

Carl A. Hess: After detailing our approach to industry specialization or CRB colleagues were chosen for all lines of coverage over the incumbent.

Carl A. Hess: Putting it altogether good market demand well positioned core businesses breakthrough solutions in new areas and smart connections that add value the outlook for <unk> remains strong.

Carl A. Hess: In closing, I'm proud of our performance, which reflects our continued strategic progress. We're executing successfully on our priorities and, as a result, are in a solid position to deliver on our goals for 2024. I'm excited about the opportunities that lie ahead for the rest of the year and beyond. And, as always, I extend my gratitude to our colleagues for continuing to stay dedicated and committed to WTW and our customers. And with that, I'll turn the call over to Andrew.

Carl A. Hess: In closing I'm proud of our performance this quarter, which reflects our continued strategic progress.

Carl A. Hess: Executing successfully on our priorities and as a result are in a solid position to deliver on our goals for 2024.

Speaker Change: I am excited about the opportunities that lie ahead for the rest of the year and beyond and as always I extend my gratitude to our colleagues for continuing to stay dedicated and committed to Ww and our clients.

Carl A. Hess: And with that I'll turn the call over to Andrew.

Andrew Krasner: Thanks, Carl Good morning, and thanks for joining us today as Carl mentioned, we started the year on a strong note achieving results that were in line with our expectations and position us well to achieve our 2024 targets.

Andrew Krasner: Thanks, Carl. Good morning, and thanks for joining us today. As Carl mentioned, we started the year on a strong note, achieving results that were in line with our expectations and positioned us well to achieve our 2024 target. We remain focused on driving profitable growth through improving productivity, leveraging our specialization and smart connection strategies, and executing our transformation program. In the quarter, we delivered organic revenue growth of 5% and drove adjusted operating margin expansion of 200 basis points. The result was adjusted diluted earnings per share of $3.29, an increase of 16% over the prior year. Next, I'll spend some time reviewing our 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.

Andrew Krasner: We remain focused on driving profitable growth through improving productivity, leveraging our specialization in smart connection strategies and executing our transformation program.

Carl A. Hess: In the quarter, we delivered organic revenue growth of 5% and drove adjusted operating margin expansion of 200 basis points. The result was adjusted diluted earnings per share of $3 29, an increase of 16% over prior year.

Carl A. Hess: Next I'll spend some time reviewing our 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.

Andrew Krasner: Health wealth and career generated revenue growth of 4% compared to the first quarter of last year in line with our expectations of mid single digit organic revenue growth for the segment in 2024.

Andrew Krasner: Health revenue increased 3% for the quarter led by high single digit growth of international in Europe, and driven by the continued expansion of our global benefits management client portfolio timing of new business contributed to lower growth in North America, where our business is typically fee based we expect that to accelerate significantly throughout the remainder of the year.

Andrew Krasner: Health, wealth, and career generated revenue growth of 4% compared to the first quarter of last year, in line with our expectations of mid single-digit organic revenue growth for the segment in 2024. Health revenue increased 3% for the quarter, led by high single-digit growth in international and Europe, and driven by the continued expansion of our global benefits management client portfolio. Timing of new business contributed to lower growth in North America, where a business is typically fee-based.

Andrew Krasner: Are in line with high single digit growth expectations for the full year.

Andrew Krasner: Wealth grew 3% in the first quarter driven by strong growth in our retirement business due to increased pension Derisking work in North America, and Europe, along with a modest increase in our investments business due in part to new products career.

Andrew Krasner: Career delivered 3% growth in the quarter, primarily driven by increased projects related to communication work and employee experience and more broad based reward assignments and work in a reward. It is notable that in this point in the year our compensation benchmarking participation is up double digits over 2023, creating a pipeline for accelerated growth in the <unk>.

Andrew Krasner: We expect that to accelerate significantly throughout the remainder of the year, in line with high single-digit growth expectations for the full year. Wealth grew 3% in the first quarter, driven by strong growth in our retirement business due to increased pension de-risking work in North America and Europe, along with a modest increase in our investment business due in part to new products. Career delivered 3% growth in the quarter, primarily driven by increased projects related to communication work and employee experience and more broad-based reward assignments and work and reward.

Andrew Krasner: Latter half of 2024.

Andrew Krasner: Benefits delivery and outsourcing generated 6% growth in the quarter. The increase was driven by higher volumes and placements of Medicare advantage and life policies and our individual marketplace business.

Andrew Krasner: Based on the incidence of growth projected by carriers in the Medicare advantage space, we expect more moderated growth later in the year.

Andrew Krasner: It is notable that at this point in the year, our compensation benchmarking participation is up double digits over 2023, creating a pipeline for accelerated growth in the latter half of 2024. Benefits delivery and outsourcing generated 6% growth in the quarter. The increase was driven by higher volumes and placements of Medicare Advantage and life policies in our individual marketplace business. Based on the incidence of growth projected by carriers in the Medicare Advantage space, we expect more moderated growth later in the year.

Andrew Krasner: Offsetting the BDA growth was low growth in our outsourcing business as we absorbed a revenue headwind due to a large client in sourcing its health and other benefits administration.

Andrew Krasner: <unk> operating margin was 25, 1% an increase of 110 basis points compared to the prior year first quarter, primarily driven by transformation savings.

Andrew Krasner: Risk and broking revenue was up 8% on an organic basis for the first quarter. There was a $5 million unfavorable year over year impact from book of business activity interest income was $28 million for the quarter up $16 million from the first quarter last year.

Andrew Krasner: Offsetting the BDA growth was low growth in our outsourcing business as we absorbed a revenue headwind due to a large client insourcing its health and other benefits administration. HWC's operating margin was 25.1%, an increase of 110 basis points compared to the prior year first quarter, primarily driven by transformation savings. Risk and Broking revenue was up 8% on an organic basis for the first quarter. However, there was a $5 million unfavorable year-over-year impact from Book of Business Activity.

Andrew Krasner: Corporate risk and broking had another strong quarter growing 9% or 10%, excluding the impact of book of business activity, primarily driven by strong client retention across all geographies and higher level of new business activity.

Andrew Krasner: Our specialty lines continued to be major contributors to the strong growth performance, but globally by financial solutions and natural resources.

Andrew Krasner: Growth across CRB in Europe was led by financial solutions Aerospace natural resources Marine in P&C.

Andrew Krasner: North America, CRB had solid growth driven by new business across several lines, including construction and natural resources and real estate hospitality and leisure as well as contributions from our new Veritas business or.

Andrew Krasner: Interest income was $28 million for the quarter, up $16 million from the first quarter last year. Corporate risk and broking had another strong quarter, growing 9% or 10% excluding the impact of the book of business activity, primarily driven by strong client retention across all geographies and a higher level of new business activity. Our specialty lines continue to be major contributors to the strong growth performance led globally by financial solutions and natural resources. Growth across CRB in Europe was led by financial solutions, aerospace, natural resources, marine, and PNC.

Andrew Krasner: Our International region also contributed strong organic growth across all sub regions led by countries in central and Eastern Europe, Middle East and Africa.

Andrew Krasner: Looking at the insurance industry more broadly in terms of rates the market remains a bit mixed with some flattening and even softening in specific insurance lines, such as D&O and cyber. However, the current risk environment is marked by increased frequency of natural disasters, social inflation and geopolitical conflicts and as a result of that we see.

Andrew Krasner: Rate increases across various lines, such as casualty, especially in North America, and globally and political violence and terrorism.

Andrew Krasner: Insurance consulting and technology revenue was flat with prior year due to the timing of consulting and technology revenue between quarters, we expect ICT to achieve mid to high single digit growth for the full year and in line with our expect overall expectations for risk and broken.

Andrew Krasner: North America CRB had solid growth driven by new business across several lines, including construction, natural resources, and real estate, hospitality, and leisure, as well as contributions from our new Veritop business. Our international region also contributed strong organic growth across all sub-regions, led by countries in Central and Eastern Europe, the Middle East, and Africa. Looking at the insurance industry more broadly, in terms of rates, the market remains a bit mixed, with some flattening and even softening in specific insurance lines, such as DNO and cyber. However, the current risk environment is marked by an increased frequency of natural disasters, social inflation, and geopolitical conflicts.

Andrew Krasner: <unk> operating margin was 28% for the quarter, a 90 basis point increase over the prior year first quarter, primarily due to interest income transformation savings and solid organic revenue growth in CRB RMB also faced margin headwinds this quarter from the impact of book of business activity as well as foreign exchange.

Andrew Krasner: In addition, as we mentioned at year end now that our talent base in the RMB is back to full strength, we are focused on strategic and opportunistic talent investments with industry expertise as well as investments in technology that will eventually yield more revenue than what is currently in the mix.

Andrew Krasner: These investments impacted rmb's margins. This quarter, however, they will enhance our presence and capabilities in the lines of business and geographies that we believe offer the greatest growth and profitability potential.

Andrew Krasner: And as a result of that, we see rate increases across various lines, such as casualty, especially in North America, and globally due to political violence and terrorism. Insurance consulting and technology revenue was flat with the prior year due to the timing of consulting and technology revenue between quarters. We expect ICT to achieve mid to high single-digit growth for the full year and in line with our overall expectations for risk and growth. R&B's operating margin was 20.8% for the quarter, a 90 basis point increase over the prior year's first quarter, primarily due to interest income, transformation savings, and solid organic revenue growth in CRB. R&B also faced margin headwinds this quarter from the impact of the book of business activity as well as foreign exchange.

Andrew Krasner: We continue to expect margin expansion on a full year basis.

Andrew Krasner: And as we mentioned last quarter, given the business has seasonality in uncertain pacing of our investments the scale of RMB margin expansion may vary from quarter to quarter, but should improve over the course of the year.

Andrew Krasner: Now, let's turn to the enterprise level results at the enterprise level adjusted operating margin for the quarter was 26% a 200 basis point increase over prior year the benefits of our transformation program drove a large part of our margin expansion for the quarter alongside improved operating leverage we had $33 million of incremental.

Andrew Krasner: <unk> annualized transformation savings for the quarter, bringing the total to $370 million since the program's inception.

Andrew Krasner: The benefits of this program provides will better position us to drive sustainable operating leverage going forward.

Andrew Krasner: Our unallocated net was negative $56 million for the first quarter. We continue to expect the full year 2024 balance to be relatively consistent with 2023.

Andrew Krasner: In addition, as we mentioned at year end, now that our talent base in R&D is back to full strength, we are focused on strategic and opportunistic talent investments with industry expertise, as well as investments in technology that will eventually yield more revenue than what is currently in the mix. These investments impacted RMB's margins this quarter. However, they will enhance our presence and capabilities in the lines of business and geographies that we believe offer the greatest growth and profitability.

Andrew Krasner: Foreign exchange did not have any meaningful impact on adjusted EPS for the quarter at current spot rates, we expect foreign exchange to have a headwind of approximately <unk> <unk> on adjusted EPS for the year, our U S. GAAP tax rate for the quarter was 19, 9% versus 19, 5% in the prior year, our adjusted tax rate for the quarter was 22 four.

Andrew Krasner: Percent compared to 25% for the first quarter of 2023, we continue to expect our adjusted tax rate for the year to be close to our 2023 rate excluding the onetime tax items, we mentioned last quarter.

Andrew Krasner: We continue to expect margin expansion on a full-year basis, and as we mentioned last quarter, given the business's seasonality and uncertain pacing of our investments, the scale of R&D margin expansion may vary from quarter to quarter but should improve over the course of the year. Now, let's turn to the enterprise level results.

Andrew Krasner: During the quarter, we returned $187 million to our shareholders with share repurchases of $101 million and dividends of $86 million. We continue to execute a disciplined capital allocation strategy and currently view share repurchases as an attractive use of capital to create long term shareholder value.

Andrew Krasner: At the enterprise level, adjusted operating margin for the quarter was 20.6%, a 200 basis point increase over the prior year. The benefits of our transformation program drove a large part of our margin expansion for the quarter alongside improved operating leverage. We had $33 million of incremental annualized transformation savings for the quarter, bringing the total to $370 million since the program's inception. The benefits this program provides will better position us to drive sustainable operating leverage going forward.

Andrew Krasner: We continue to expect approximately $750 million of share repurchases in 2024 subject to market conditions and other relevant factors.

Andrew Krasner: Our interest expense for the quarter was $64 million versus 54 million in the first quarter of 2023, we actively managed our leverage profile, but issuing $750 million of new debt in March a portion of those proceeds will be used to pay our upcoming $650 million debt maturity in June.

Andrew Krasner: We generated free cash flow of negative $9 million for the first quarter, a decline of $101 million from the prior year, primarily driven by increased cash outflows related to transformation and discretionary compensation payments, partially offset by higher inflows from collections. The free cash flow results for the quarter are in line with what we planned as tree.

Andrew Krasner: Our unallocated net was negative $56 million for the first quarter. We continue to expect the full year 2024 balance to be relatively consistent with 2023. Foreign exchange did not have a meaningful impact on adjusted EPS for the quarter.

Andrew Krasner: At current spot rates, we expect foreign exchange to have a headwind of approximately five cents on adjusted EPS for the year. Our U.S. gap tax rate for the quarter was 19.9 percent versus 19.5 percent in the prior year. Our adjusted tax rate for the quarter was 22.4 percent compared to 20.5 percent for the first quarter of 2023.

Andrew Krasner: Cash flow margin was not intended to be a linear path for the year.

Andrew Krasner: Continue to be confident in our expectations of year over year improvement in our full year free cash flow margin.

Andrew Krasner: Our results this quarter were a solid start to 2024 and reflect a continuation of the significant progress we've been making on our strategy and operational performance. We expect our momentum to continue throughout the rest of the year and are confident in achieving our 2024 targets with that let's open it up for Q&A.

Speaker Change: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced in the interest of time, we kindly ask that you limit yourself to one question and one follow up to withdraw your question. Please press star one again please.

Andrew Krasner: We continue to expect our adjusted tax rate for the year to be close to our 2023 rate, excluding the one-time tax items we mentioned last quarter. During the quarter, we returned $187 million to our shareholders, with share repurchases of $101 million and dividends of $86 million. We continue to execute a disciplined capital allocation strategy and currently view share repurchases as an attractive use of capital to create long-term shareholder value. We continue to expect approximately $750 million of share repurchases in 2024, subject to market conditions and other relevant factors.

Andrew Krasner: Please standby while compile the Q&A roster.

Andrew Krasner: Okay.

Andrew Krasner: Our first question comes from Elyse Greenspan with Wells Fargo. Please go ahead.

Elyse Greenspan: Hi, Thanks. Good morning, My first question is on the <unk>.

Andrew Krasner: For the margin within RMB I think you said that.

Elyse Greenspan: The margin improvement should improve over the course of the year I just want to make sure I heard that correctly, because you did show pretty strong improvement in the back half of 'twenty three so I thought that maybe those would represent harder comps, but is the guy that you would expect improvement the margin improvement to gain steam at all Q2, then get better.

Andrew Krasner: Our interest expense for the quarter was $64 million versus $54 million in the first quarter of 2023. We actively managed our leverage profile by issuing $750 million of new debt in March. A portion of those proceeds will be used to pay our upcoming $650 million debt maturity in June.

Elyse Greenspan: Q3, and then Q4 or did I misunderstand that comment.

Speaker Change: At least I think youre thinking about that correctly, we do expect continued expansion throughout the course of the year.

Elyse Greenspan: We did make some investments in Q1, which did impact the margin expansion and operating leverage within RMB, but for the course of the year. We do expect margin expansion to continue as well as the operating leverage generation.

Andrew Krasner: We generated free cash flow of negative 9 million for the first quarter, a decline of 101 million from the prior year, primarily driven by increased cash outflows related to transformation and discretionary compensation payments, partially offset by higher inflows from collections. The free cash flow results for the quarter are in line with what we planned, as free cash flow margin was not intended to be a linear path for the year. We continue to be confident in our expectations of year-over-year improvement in our full-year free cash flow.

Speaker Change: Thanks, and then my second question was just on the impact.

Speaker Change: The potential ban of noncompete by the FTC.

Speaker Change: Can you just help us think through the impact that could have on Ww and how that could help you do your ability to bring on talent and then just thoughts around potential departures. How you. How you think through the balance of the two with or if there is a change.

Andrew Krasner: Our results this quarter were a solid start to 2024 and reflect a continuation of the significant progress we have been making on our strategy and operational performance. We expect our momentum to continue throughout the rest of the year and are confident in achieving our 2024 target. With that, let's open it up for Q&A.

Speaker Change: Yes, Thanks, Elyse and good morning.

Speaker Change: We see this as actually quite manageable for us.

Speaker Change: We employ non solicits.

Operator: At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. In the interest of time, we kindly ask that you limit yourself to one question and one follow-up. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question comes from Elyse Greenspan with Wells Fargo. Please go ahead.

Speaker Change: Part of what we do and we think that is.

Speaker Change: Actually quite a manageable situation for us.

Speaker Change: No.

Speaker Change: We are we think that we're still looking through this and of course, there may be some litigation concerning all of that but our standard restrictive covenants don't prevent our employees working for our competitors as I said non solicitation nondisclosure type agreements and they don't function to prevent someone from taking a job a competitor.

Elyse Greenspan: Hi, thanks. Good morning.

Elyse Greenspan: My first question is on the guide for the margin within R&D. I think you said that the margin improvement should improve over the course of the year. Just want to make sure I heard that correctly because you did show, you know, pretty strong improvement in the back half of twenty three. So I thought that maybe those would represent harder comps. But is this the guide that you would expect, you know, improvement, the margin improvement to gain steam, you know, Q2, then get better at Q3, and then Q4? Or did I misunderstand that comment?

Speaker Change: Don't think that there are all types of that type of restrictive covenant and so we've managed quite well against these in the past and won't match I think quite well going.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from Gregory Peters with Raymond James. Please go ahead.

Gregory Peters: Good morning, everyone.

Gregory Peters: For the comments.

Gregory Peters: Specifically, Andrew around expectations on organic and I wanted to revisit inside health wealth and career.

Gregory Peters: Two comments you made about the health piece and the career piece, both of which you seem to guide to a better organic results as we go through the year I was wondering if you could give us some some color behind why you have the confidence that that's going to be a better result for the year.

Andrew Krasner: Elyse, I think you're thinking about that correctly. We do expect continued expansion throughout the course of the year. We did make some investments in Q1, which did impact the margin expansion and operating leverage within R&B. But for the course of the year, we do expect the margin expansion to continue as well as operating leverage generation.

Speaker Change: Yes, good morning, Greg and maybe I'll start and Andrew can chime in as well so with respect to health right. We see a couple of factors is giving us confidence regarding the rest of the year.

Speaker Change: We continue to have strong performance in our global benefits management, offering where we help.

Elyse Greenspan: Thanks, and then my second question was just on the impact of the potential ban on non-competes by the FTC. Can you just help us think through the impact that could have on WTW and how that could help both your ability to bring in talent and then just thoughts around potential departures, how you would think through the balance of the two if there is a change?

Gregory Peters: Multinationals.

Speaker Change: For our consistent superior program of benefits to their workforce across our pipeline remains very strong and our hit rate within that pipeline remains very strong.

Carl A. Hess: Yeah, thanks, Elyse, and good morning. We see this as actually quite manageable for us. We employ non-soliciting staff as part of what we do, and we think that is actually quite a manageable situation for us. So, we think that, you know, we're still looking through this, and of course, there may be some litigation concerning all that, but our standard restrictive covenants don't prevent our employees from working for our competitors. They're, as I said, non-solicitation, non-disclosure type agreements, and they don't function to prevent someone from taking a job with a competitor. We don't think that the rule applies to that type of restrictive covenant, and so we've managed quite well against these in the past, and we'll manage everything quite well going forward.

Gregory Peters: Sort of the beginning of the selling season in Q1 for North America.

Gregory Peters: And here, we see opportunities to help companies continue to mitigate.

Gregory Peters: Inflation in health care, and specifically the impact of <unk> one drugs.

Gregory Peters: Sure.

Gregory Peters: Among other things obesity.

Gregory Peters: Also the high priced ticket some near term cost impact of course. These may have long term capacity healthcare offset.

Gregory Peters: Yes.

Gregory Peters: All of those outcomes.

Gregory Peters: On the career side, we are seeing as we alluded to before strong demand.

Gregory Peters: Participation in our compensation benchmarking and that typically turns into requests for compensation surveys.

Gregory Peters: Later on down the road a pain transparency legislation in the EU is driving demand for healthy people sort of understand.

Operator: Thank you. One moment for our next question. Our next question comes from Gregory Peters with Raymond James. Please go ahead.

Gregory Peters: How thats going to impact them K equity Ah projects are broad based and career projects with some of the outcomes.

Gregory Peters: Good morning, everyone. Thanks for the comments, specifically, Andrew, around expectations for organic. And I wanted to revisit in Health, Wealth, and Career two comments you made about the health piece and the career piece, both of which you seem to guide to a better organic result as we go through the year. I was wondering if you could give us some color behind why you have the confidence that that's going to be a better result for the year.

Gregory Peters: And just a couple of points of detail on that especially as it relates to Q1 and going forward. So within health, where the continued expansion of the global benefits management client portfolio, which Carl alluded to drove high single digit growth, particularly driven by Europe, and our international geographies as we talked.

Gregory Peters: About the timing of the new business contributed to lower growth in North America, where our business is typically fee based we expect that to accelerate significantly throughout the remainder of the year in line with high single digit growth expectations for the full year.

Carl A. Hess: Yeah, good morning, Greg, and maybe I'll start, and Andrew can chime in as well. So with respect to health, there are a couple of factors giving us confidence regarding the rest of the year. We continue to have strong performance in our global benefits management offering, where we help multinationals deliver a consistent and superior program of benefits to their workforce worldwide. Our pipeline remains very strong, and our hit rate within that pipeline remains very high.

Gregory Peters: In wealth, the 3% organic revenue growth.

Gregory Peters: It was driven from retirement work related to Derisking in North America, and Europe, and a modest increase in our investments business due to due to asset mix that two thirds of our assets. There are for DB plans, which are designed to hedge long term pension liabilities, so theyre highly interest rate dependent.

Carl A. Hess: It's sort of the beginning of the selling season in Q1 for North America, and here we see opportunities to help companies continue to mitigate inflation in health care and specifically the impact of GLP-1 drugs, which help, among other things, obesity, relatively high-priced tickets, so near-term cost impact. But, of course, these may help over the long term for managing health care costs and getting improved wellness outcomes. On the career side, we are seeing, as we alluded to before, strong demand for participation in our compensation benchmarking, and that typically turns into requests for a compensation survey for later on down the road. Pay transparency legislation in the EU is driving demand for helping people sort of understand how that's going to impact them, pay equity projects, and broad-based pay and career projects for the outcomes.

Gregory Peters: Don't benefit as much from run ups in the equity market.

Gregory Peters: Within career there was some really good project work increases and employee experience work it rewards.

Gregory Peters: And just to round things out of BDO. There was our organic revenue growth driven by higher volumes of placements of life in Medicare advantage policies within our individual marketplace business and based on the growth projected by carriers in the MA space and we do expect somewhat slower growth later in the year.

Gregory Peters: And then offsetting the BDA growth within BDO was our outsourcing business, but when you look through all of that we continue to be confident that our pipeline will drive mid single digit organic growth for the full year within within HIV assay.

Speaker Change: Excellent detail.

Speaker Change: For my follow up question I'd like to pivot to your investor deck on the free cash flow margin expectations I think it's slide 21.

Andrew Krasner: And just a couple of points of detail on that, especially as it relates to Q1 and going forward. So within health, the continued expansion of the Global Benefits Management Client Portfolio, which Carl alluded to, drove high single-digit growth, particularly driven by Europe and our international geographies. As we talked about, the timing of the new business contributed to lower growth in North America, where growth is typically fee-based.

Speaker Change: And.

Speaker Change: I was looking at that.

Speaker Change: The column that says 2024 and beyond and I was wondering if you could spend a minute and give us.

Speaker Change: Quantify some of those variables in there like the improvement in transact free cash flow profile.

Andrew Krasner: We expect that to accelerate significantly throughout the remainder of the year in line with high single-digit growth expectations for the full year. In wealth, the 3% organic revenue growth was driven from retirement work related to de-risking in North America and Europe and a modest increase in our investments business due to asset mix. Two-thirds of our assets there are for DB plans, which are designed to hedge long-term pension liabilities. So they're highly interest-rate dependent and thus don't benefit as much from run-ups in the equity market.

Speaker Change: The headwind from cash in 'twenty, four and HW CNR be just sort of give us. Some some benchmark. So we can start to think of how that that the trajectory of improvement might progress over the next couple of years.

Speaker Change: Yes, we haven't quantified any of these specific components.

Speaker Change: With tears here's how.

Speaker Change: We think about the steps to getting to the 16% plus margin target right. So we've got greater profitability as a result of driving margin expansion as a contributing factor.

Andrew Krasner: Within career, there were some really good project work increases in employee experience work and rewards. And just to round things out in BDO, there was organic revenue growth driven by higher volumes of placements of life and Medicare Advantage policies within our individual marketplace business. And, you know, based on the growth projected by carriers in the EMA space, we do expect somewhat slower growth later in the year. And then also, the BDA growth within BDO was our outsourcing business. But when you look through all of that, you know, we continue to be confident that our pipeline will drive mid-single-digit organic growth for the full year within HWC.

Speaker Change: That's not just from transformation.

Speaker Change: And operating leverage but also over time, improving our business mix as we've talked about in the past so <unk> things of that nature.

Speaker Change: The second component, obviously, we'll have the abatement of the transformation related cash outlays that will.

Speaker Change: Taper off throughout the first half of 2025.

Speaker Change: And then as we think about the transact business.

Speaker Change: We still expect that to be positive within the next few years.

Speaker Change: That's going to come as a result of the.

Gregory Peters: Excellent detail. For my follow-up question, I'd like to pivot to your investor deck, the free cash flow margin expectations. I think it's slide 21, and I was looking at the column that says 2024 and beyond, and I was wondering if you could spend a minute and give us, and quantify some of those variables in there, like the improvement in Transact Free Cash Flow Profile, the headwind from cash in 2024, and HWC and RB. Just sort of give us some benchmarks so we can sort of think of how the trajectory of improvement might progress over the next couple of years.

Speaker Change: The maturing of the of the business in the portfolio as well as continuing to improve the product mix.

Speaker Change: I do think it's important to note that even when transact turns positive from a cash flow perspective, it will still be a drag on the enterprise free cash flow margin.

Speaker Change: It's not going to be converting right at the same rate as the rest of the business. So it will take some time for that for that headwind to subside.

Speaker Change: And then in the <unk>.

Speaker Change: Other direction as we've talked about we do have some temporary.

Speaker Change: Headwinds from cash investments.

Speaker Change: If in the business for product development and technology to support future growth and inefficiencies.

Andrew Krasner: Yeah, we haven't quantified any of these specific components, you know, but here's how we think about the steps to getting to the, you know, 16% plus margin target, right? So we've got, you know, greater profitability as a result of driving margin expansion as a contributing factor. You know, that's not just from transformation and operating leverage but also over time from improving our business mix, as we've talked about in the past. So, MGAs, MGUs, things of that nature.

Speaker Change: But at the end of the day, we are committed to making annual progress on the free cash flow margin as we drive towards that 60% plus.

Speaker Change: Thank you one moment our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from Rob Cox with Goldman Sachs. Please go ahead.

Robert Cox: Hey, just had a first question on talent I was just hoping you guys could give us an update in sort of the talent base in terms of hiring trends.

Robert Cox: Attrition trends and perhaps you could comment on some of the staff reductions that were reported in media articles over the quarter.

Andrew Krasner: The second component, obviously, we'll have the abatement of the transformation-related cash outlays that will, you know, taper off throughout the first half of 2025. And then, as we think about the Transact business, we still expect that to be positive within the next few years. You know, that's going to come as a result of the maturing of the business and the portfolio, as well as continuing to improve the product mix. But I do think it's important to note that even when Transact turns positive from a cash flow perspective, it will still be a drag on the enterprise free cash flow margin, as it's not going to be converting right at the same rate as the rest of the business.

Speaker Change: Sure Rob Thanks, and good morning.

Robert Cox: No.

Speaker Change: As we mentioned breakdown, we have replenished our talent base and so our investments going forward are more focused on strategic and opportunistic hiring and we think they've put us in a position to achieve sustainable profitable growth. We're not just hiring to fill our bench for hiring to take advantage of specific opportunities to create value.

Speaker Change: Lucy Clarke would be a great example of one of those strategic hires we are looking forward to welcoming <unk>.

Speaker Change: Next later this year.

Speaker Change: In addition, we've had some notable strategic hires to support our industry verticals and various hub with respect to attrition. It has come down within levels that are in our normal range quite manageable for us as a business.

Andrew Krasner: So, it will take some time for that headwind to subside. And then, you know, in the other direction, as we talked about, we do have some temporary headwinds from cash investments within the business for product development and technology to support future growth and efficiencies. But at the end of the day, you know, we are committed to making annual progress on the free cash flow margin as we drive towards that 60% plus.

Speaker Change: We are very much view ourselves still as a flagship for talent and.

Speaker Change: Retaining our current talent basis, just as important is attracting new talent and it's no accident I think our colleagues on each and every one of these calls.

Speaker Change: With respect to recent press reports.

Speaker Change: I would point out that we had always contemplated as part of the transformation program there.

Operator: Thank you. One moment for our next question. Our next question comes from Rob Cox with Goldman Sachs. Please go ahead.

Speaker Change: The relocation of work at various parts of what we do and so I view this as not really news just reporting.

Robert Cox: Hey. I just had a first question on talent. I was just hoping you guys could give us an update on sort of the talent base in terms of hiring trends, attrition trends, and perhaps you could comment on some of the staff reductions that were reported in media articles over the quarter.

Speaker Change: Great. Thanks.

Speaker Change: Just a follow up I think there are some updated rules from CMS regarding Medicare advantage broker compensation have you been able to assess if there is an expected impact.

Speaker Change: <unk> for many of those changes.

Carl A. Hess: Sure, Rob. Thanks, and good morning.

Speaker Change: Okay.

Carl A. Hess: So, you know, as we mentioned, we have replenished our talent base. And so our investments going forward are more focused on strategic and opportunistic hiring. And we think they put us in a position to achieve sustainable, profitable growth.

Speaker Change: So the final CMS rules for 'twenty five that address marketing on Medicare advantage plans in the U S. It was released in early April right. So not all that long ago.

Speaker Change: The good news is the final rule was less onerous on the proposed rule and a number of ways.

Carl A. Hess: We're not just hiring to fill our bench. We're hiring to take advantage of specific opportunities to create value. Lucy Clark would be a great example.

Speaker Change: And while there are still some uncertainties about how all of its provisions are going to be implemented by its not causing us to change our outlook for the year. We've been actively engaged with the carriers in the space. They reiterated the important role that we play in the distribution of Medicare insurance solutions in the valuable services, we provide beneficiary.

Carl A. Hess: One of those strategic hires. We are looking forward to welcoming her next later this year. In addition, we've had some notable strategic hires to support our industry verticals and Veritas. With respect to attrition, it has come down within levels that are in our normal range and quite manageable for us as a business. We very much view ourselves still as a flagship for talent, and retaining our current talent base is just as important as attracting new talent.

Speaker Change: Now I guess.

Speaker Change: Ill, just close that by saying managing regulatory changes are regular part of our business and I think we've been quite successful navigating these sort of changes in the past we will continue to do so in the future.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from Mike <unk> with Citi. Please go ahead.

Carl A. Hess: And it's no accident. I thank our colleagues on each and every one of these calls. With respect to recent press reports, I would point out that we had always contemplated, as part of the transformation program, the relocation of work at various parts of what we do. And so I view this as not really news. It's just reporting.

Mike: Thanks, guys good morning.

Mike: Just on the unallocated expense items, just wondering if you have any expectations for the rest of the year and is that kind of does that kind of depend on interest rate levels.

Mike: So the unallocated debt for the full year, we expect to be relatively consistent with 2023.

Carl A. Hess: Thanks. Just to follow up, I think there were some updated rules from CMS regarding Medicare Advantage broker compensation. Have you been able to assess if there is an expected impact at Transact for many of those changes?

Mike: Month basis, what Youre seeing there right now is.

Mike: The outcome of.

Carl A. Hess: So, the final CMS rules for 25 that address marketing of Medicare Advantage plans in the U.S. were released in early April, right? So, not all that long ago.

Mike: Driving down expenses at the corporate level.

Mike: Focused on enhancing the margin profile of the company going forward you. Some examples of that include things like refining our corporate support model for the businesses.

Carl A. Hess: The good news is the final rule was less onerous than the proposed rule in a number of ways. And while there's still some uncertainties about how all of its provisions are going to be implemented, it's not causing us to change our outlook for the year. We've been actively engaged with the carriers in this space, and they have reiterated the important role that we play in the distribution of Medicare insurance solutions and the valuable services that we provide to beneficiaries.

Mike: Well as managing discretionary spend.

Mike: So thats really where it manifests itself in the unallocated net this quarter and again for the full year should be relatively consistent with that with last year.

Speaker Change: Okay. Thank you and then.

Mike: Maybe on global specialties.

Speaker Change: I was hoping you could.

Carl A. Hess: Now, I guess I just close that by saying managing regulatory change is a regular part of our business, and I think we've been quite successful navigating these sorts of changes in the past. We will continue to do so in the future.

Speaker Change: Then on the kind of growth outlook, and maybe which.

Speaker Change: Which lines are you expecting faster or slower growth. Thanks.

Speaker Change: So we continue to be delighted with the performance of our specialization strategy and for the quarter, our global lines of business. Once again grew more than doubled.

Operator: Thank you. One moment for our next question. Our next question comes from Mike Ward with Citi. Please go ahead.

Michael Ward: Thanks, guys. Good morning. Just on the unallocated expense items, just wondering if you have any expectations for the rest of the year, and does that kind of depend on interest rate levels?

Speaker Change: The rest of the portfolio. So we think it is working to treat.

Speaker Change: Some of these lines are facing more challenging conditions in others are spin X business for instance.

Andrew Krasner: So, the unallocated debt for the full year we expect to be relatively consistent with 2023 on a 12-month basis. What you're seeing there right now is the outcome of driving down expenses at the corporate level, you know, focused on enhancing the margin profile of the company going forward. Some examples of that include things like refining our corporate support model for the businesses, as well as managing discretionary spend. So, that's really where it manifests itself in the unallocated net this quarter, and again, for the full year, should be relatively consistent with last year.

Speaker Change: Has the headwind.

Speaker Change: Reduced M&A activity.

Speaker Change: Which lowers the amount of work, we're doing transactional liability as well as the sharp decline in rates, we have over here at <unk>.

Speaker Change: Reasonably large number of quarters, but continued actually still make quite good growth.

Speaker Change: Despite these.

Speaker Change: We see in things like construction and natural resources are our unique analytic proposition actually pumping eight debt.

Speaker Change: But in general we're seeing strong growth across the portfolio.

Speaker Change: Where we have headwinds and tailwind from rate and other conditions.

Michael Ward: Okay, thank you. And then maybe on global specialties, I was hoping you could expand on the kind of growth outlook and maybe, which lines you're expecting faster or slower growth. Thanks.

Speaker Change: Thanks, Mike.

Speaker Change: One moment for our next question.

Speaker Change: Yes.

Speaker Change: Our next question comes from Andrew <unk> with TD Cowen. Please go ahead.

Andrew Krasner: Hey, good morning.

Andrew Krasner: To follow up on Rob's earlier question about the staffing should should I take it.

Carl A. Hess: So we continue to be delighted with the performance of our specialization strategy. And for the quarter, our global lines of business, once again, grew more than doubled the rest of the portfolio. So we think it is working a treat.

Andrew Krasner: Karl when you say strategic hires.

Andrew Krasner: And then couple that you mentioned, what we had read about 120 to 130 staff members will reduce that was just kind of a normal course of business. So.

Carl A. Hess: Some of these lines are facing more challenging conditions than others. Our FinEx business, for instance, has the headwind of reduced M&A activity, which lowers the amount of work we do in transactional liability, as well as the sharp decline in rates we've had over a recent large number of quarters but continues actually to still make quite good growth despite these. We see in things like construction and natural resources, our unique analytic proposition actually gulping quite a bit. But in general, we're seeing strong growth across the portfolio, where we have headwinds and tailwinds from rates and other conditions.

Andrew Krasner: As I net that out should.

Andrew Krasner: Should we be thinking.

Andrew Krasner: That.

Andrew Krasner: W Tw does not.

Andrew Krasner: Planned to grow they just want to selectively hire and reduce wear where it's impactful is that.

Andrew Krasner: In terms of staffing is that the right way to think about it.

Speaker Change: Let me unpack that a bit Andrew.

Speaker Change: <unk>.

Speaker Change: As I said one of the big focuses for us coming out of 22% and 23 was rebuilding our talent base.

Speaker Change: Where the events of 2021 had not been hopeful that rebuild job is over right now doesn't need work done because we're always going to the market for great talent.

Operator: Thank you. One moment for our next question. Our next question comes from Andrew Kligerman with TD Cowen. Please go ahead.

Speaker Change: But.

Speaker Change: We are no longer distributing to rebuild its a built great if I could differentiate it that way with respect to non front office operations. The effects of the transformation program is twofold. One is we do have some.

Andrew Kligerman: Good morning. I'd like to follow up on Rob's earlier question about staffing. Should I take it that, Carl, when you say strategic hires and then couple that with the fact that, you know, you mentioned the 120 to 130 staff members were reduced, that was just kind of the normal course of business? So as I net that out, should we be thinking that WTW does not plan to grow; they just want to selectively hire and reduce where it's impactful in terms of staffing? Is that the right way to think about it?

Speaker Change: We are returning to work.

Speaker Change: Yes.

Speaker Change: Thanks, calling on those won't necessarily causing a reduction in headcount right because we actually might just be doing that work from a different location.

Speaker Change: And that wouldn't view the head count as much as the cost of what we do as being the driver for decisions in that regard.

Speaker Change: The other factor is technology.

Carl A. Hess: Let me unpick that a bit, Andrew. As I said, one of the big focuses for us coming out of 22 and 23 was rebuilding our talent base, where the events of 20 and 21 had not been helpful. That rebuilding job is over, right? But it doesn't mean we're done hiring, because we're always going to use the market for great talent. But, you know, we're no longer just trying to rebuild. It's a construction, right, if I can differentiate it that way.

Speaker Change: And.

Speaker Change: It is not just about it certainly not just about markwest relocation, but it is about automation and efficiency and we do see a role for that going forward.

Speaker Change: <unk> technology is not free there are suspended fault. There. So you may see a shifting in some line items here as we continue to optimize how we run.

Speaker Change: Got it.

Speaker Change: Okay, and I was really intrigued by the Smart connections example that you provided earlier.

Carl A. Hess: With respect to non-front office operations, you know, the effect of the transformation program is twofold, right? One is that we do have some, where are we doing the work? And transformation is not just about, it's certainly not just about workforce relocation, but it is about automation and efficiency. And we do see a role for that going forward. Now, you know, technology is not free, right? So there's a cost involved there. So you may see a shift in some line items here as we continue to optimize how we run the

Speaker Change: Could you tell a little bit about.

Speaker Change: It's H WC recommends.

Speaker Change: A big opportunity to CRB and Theyre successful is there some compensation to the to the.

Speaker Change: Referral people within W. Tw, and maybe you could elaborate if there is.

Speaker Change: Well I am not going to go into details of our compensation programs for obvious competitive reasons, Andrew but I will say that as the world's leading compensation consultant and that includes sales compensation. We have a very good advisor internally at how we structure programs to make sure we maximize the value of the internal cost.

Andrew Kligerman: Okay, and I was really intrigued by the smart connections example that you provided earlier. Could you tell a little bit about, you know, if HWC recommends a big opportunity to CRB and they're successful, is there some compensation for the referral people, you know, within WTW? And maybe you could elaborate if there is?

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from Mark Hughes with <unk> Securities. Please go ahead.

Mark Hughes: Yeah. Thank you good morning.

Mark Hughes: Carl you talked about the opportunity in pension Derisking.

Carl A. Hess: Well, I'm not going to go into details of our compensation programs for obvious competitive reasons, Andrew. But I will say that, as the world's leading compensation consultant, and that includes sales compensation, we have a very good advisor internally on how we structure programs to make sure we maximize the value of the internal resources.

Mark Hughes: Sure.

Mark Hughes: <unk>.

Mark Hughes: Organic.

Carl A. Hess: Well at 3% do you anticipate that will pick back up.

Mark Hughes: Okay.

Mark Hughes: Yes.

Mark Hughes: Characterize back our.

Mark Hughes: Our Investor day, right wealth as a low to mid single digit growth business, how it's performing within those sort of areas of expectation.

Operator: Thank you. One moment for our next question. Our next question comes from Mark Hughes with Truist Securities. Please go ahead. Yeah, thank you. Good morning. Carl, you talked about the opportunity and

Mark Hughes: We do see the environment for pension risk management as being one where we continue to play a valuable role for our clients over the upcoming year.

Mark Hughes: We've characterized our investor day wealth as a low-to-mid, single-digit growth business, so it's performing within those sort of areas of expectation. We do see the environment for pension risk management as being one where we continue to play a valuable role for our clients over the upcoming year. We see that there continues to be interest in opportunities, whether those are annuity buy-ins and buy-outs. We're probably a less favorable environment for both sums, but we think that other de-risking actions will make up for those opportunities.

Mark Hughes: We see that there continues to be interesting opportunities whether those are annuity buyouts.

Mark Hughes: Buyouts, we probably less favorable environment for bulk lump sums, but we think that other derisking actions will make up for those opportunities and as we alluded to during the first part of the call right. It's not just about derisking clients actually we have seen clients reopening their pension plan to take advantage of.

Mark Hughes: And as we alluded to during the first part of the call, it's not just about de-risking for some clients. We have seen clients reopening their pension plans to take advantage of utilizing surplus to actually improve their overall compensation.

Mark Hughes: Utilizing surplus.

Mark Hughes: To actually improve their overall compensation programs.

Mark Hughes: Right and then.

Mark Hughes: The interest expense for this year can you give us some sense of what you're looking for.

Mark Hughes: Okay.

Speaker Change: Yes, sure. So remember we took on some incremental debt.

Andrew Krasner: Yeah, sure. So, remember, we took on some incremental debt in the first quarter, and we're sitting on the cash related to a large portion of that related to the maturity that we have coming up in June. Again, that's $650 million. We took out $750 million. So, you'll see a temporary uptick in interest expense as we're carrying both components of that for a couple of months.

Speaker Change: At the.

Speaker Change: In the first quarter.

Speaker Change: And we're sitting on the cash related to a large portion of that related to the maturity we have coming up in June.

Speaker Change: That's $650 million, we took out 750, so you will see a temporary uptick in interest expense as we're carrying both components of that for a couple of months.

Operator: Thank you. One moment for our next question. Our next question comes from Bob Wong with Morgan Stanley. Please go ahead.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from Bob Huang with Morgan Stanley. Please go ahead.

Bob Wong: Good morning. My first question is just a high-level question on the growth outlook. First quarter U.S. GDP 1.6%; the European Union has been more or less in a weaker spot as well. Given Willis' material business in Europe and the U.S., can you maybe talk about what the clients are seeing, what you're expecting for the rest of the year, specifically the European business, and also as geopolitical concerns become more complex over time? Curious to hear your view on this.

Bob Huang: Good morning. My first question is just a high level question on growth outlook.

Bob Huang: First quarter U S GDP at one 6%.

Bob Huang: European Union has been more or less in a weaker spot as well given well material business thing in Europe and U S. Can you maybe talk about what the clients are seeing what youre expecting for rest of the year specifically in the European business.

Speaker Change: And also at the geopolitical.

Speaker Change: Concerns become more complex over time.

Speaker Change: And your view on that.

Operator: Yeah, sure. Thanks.

Carl A. Hess: I guess I'd look at it this way. The current heightened risk landscape and, you know, potentially changing rate environment creates more opportunities for us to help our clients manage their risk profile, given the scale and depth of the solutions we can offer them. And given the demand we see in the marketplace, we feel good about delivering on our top-line targets of mid-single-digit organic revenue growth at at least $9.9 billion.

Speaker Change: Yes, sure. Thanks, I guess I look at it this way I think the current heightened risk landscape and potentially changing rate environment creates more opportunities for us to help our clients manage their risk profile given the scale and depth of the solutions, we can offer them and given the demand we see in the marketplace. We feel good about delivering on our.

Speaker Change: Our topline targets of mid single digit organic revenue growth and at least nine $9 billion in revenue.

Carl A. Hess: In R&B, we see opportunities for growth given our ability to help our clients address complex and challenging risks, such as natural disasters, social inflation, you know, things like media impact, litigation, tort reform, and public sentiment all factor their way into that. Geopolitical conflicts, we're, you know, you're sort of on the edge of a couple of those.

Speaker Change: RMB, we see opportunities for growth given our go we need to help our clients address complex and challenging risks such as natural disasters, social inflation things like media impact on litigation of tort reform in public sector at all factored their way into that geopolitical conflicts, where Europe sort of on the edge.

Carl A. Hess: And more importantly, we're seeing increased demand for our customized tools and specialized solutions that will ensure that clients receive the best return for their premium dollar across their entire portfolio risks. And given the success we've seen from these efforts, we'll continue to grow and expand this strategy into additional geographies and industry verticals. You heard us talk earlier about specialization now making its way to select industries in Europe and internationally. So we think this is a very sound footing for us.

Speaker Change: A couple of those.

Speaker Change: <unk>.

Speaker Change: More importantly, we're seeing increased demand for our customized tools and specialized solutions that will ensure the clients receive the best return for their premium dollar across their entire portfolio of risks and given the success. We've seen from these efforts will continue to grow and expand this strategy into additional geographies industry vertical.

Speaker Change: You heard us talk earlier about specialization now, making its way to select in the streets of Europe and international. So we think this is Stan.

Speaker Change: A very sound footing for us.

Bob Wong: In HWC, right, as complexity in the human capital landscape continues to increase, you know, our clients' need for sound advice and risk management solutions intensifies. As a result, they turn to us to provide solutions and help them navigate issues surrounding benefits, pension plans, and workforce management. You know, for example, we help health clients address rising health care costs by providing effective plan management, and specialty solutions that can improve their population health status. We also provide comp benchmarking, you know, and but I guess a couple things are looking at Europe specifically to get down to the point you're kind of drilling down on.

Speaker Change: In HW say, great test complexity in the human capital landscape continues to increase our clients' need for sound advice and risk management solutions intensified as a result, they turn to us to provide solutions and help them navigate issues surrounding benefits pension plans workforce management. For example, we help health clients address.

Speaker Change: Rising health care costs by providing effective plan management specialty solutions that can improve their population health status.

Speaker Change: We also provide comp benchmarking.

Speaker Change: And but I guess, a couple of things aren't looking at Europe, specifically to get debt down point, you are trying to pulling on we identified E pay transparency.

Bob Wong: We identify EU pay transparency as a tailwind for us. It's also the peak valuation year in Great Britain. And that typically brings some of it up as a spike in the workforce that's probably tempered a little bit this year because of the fact that pension plans are well funded. So they need a bit less support in managing trustee corporate negotiations. But in general, you know, the unsettled landscape that you led your question with tends to be a driver for this for us rather than a challenge.

Speaker Change: As a tailwind for us. It's also the peak valuation year in Great Britain and that typically brings some of it.

Speaker Change: Spike and workforce, that's probably tempered a little bit this year.

Speaker Change: Because of the fact that pension plans are well funded so they need a bit less support and managing trustee corporate negotiations over contributions.

Speaker Change: But in general.

Speaker Change: The unsubtle landscape that you lead your question with tends to be a driver for our business.

Carl A. Hess: Got it. That's very helpful. Thank you.

Speaker Change: Rather than a challenge.

Speaker Change: Got it very helpful. Thank you a follow up question I know that you addressed part of this just trying to put everything together.

Bob Wong: Follow-up question. I know that you addressed part of this, but I'm just trying to put everything together. Obviously, on slide 21, your cash flow walk, you mentioned that a cash investment in transformation will subside after 2024. Obviously, in the first quarter of 2024, earnings free cash flow decreased because of transformation discretionary comp payments. Just curious, how much of that was transformation in the first quarter? And I understand that it's not linear, but can you maybe help us think about how we should think about that transformation impact for 2024 on free cash flow?

Speaker Change: Obviously on the slide 21 in your cash flow walk you mentioned that.

Speaker Change: Cash investment in transformation to walk.

Speaker Change: I'd ask for 2024.

Speaker Change: Obviously on the first quarter of 2024 earnings.

Speaker Change: Free cash flow decreased because of transportation transformation discretionary comp payments just curious how much of that was transformation in the first quarter and understand that it's not linear but can you maybe help us think about how we should think about that transformation impact for 2024, all free cash flow.

Speaker Change: Yes, I think we expect for the full year.

Speaker Change: For it to be marginally higher than than last year.

Andrew Krasner: Yeah, I think we expect for the full year, you know, for it to be marginally higher than last year. And, you know, we, from a payment timing perspective, you know, we'll bleed into 2025, right? But the incurrence of all the costs will be in 24. There'll be a couple of months lag as payments go out. So we do expect, you know, a net headwind there, you know, year over year for free cash flow margin. Thank you. One moment.

Speaker Change: And we from a payment timing perspective will bleed into 2025, right, but the incurrence of all the costs will be in 'twenty four there'll be a couple of month lag as payments as payments go out so we do expect.

Speaker Change: Net headwind there.

Speaker Change: Year over year.

Speaker Change: For free cash flow margin.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from Michael Zaremski with BMO. Please go ahead.

Operator: Thank you. One moment for our next question. Our next question comes from Michael Zaremski with BMO. Please go ahead.

Michael Zaremski: Hey, good morning.

Michael Zaremski: First question in regards to the.

Michael Zaremski: Hey, good morning. First question in regards to the risk and broking segments, you know, continued excellent organic growth levels. I'm curious if Willis has been the beneficiary of any reverse book sales that are aiding growth, like meaning, you know, you've been the book sale buyer, or would that be netted out within the book sales line item, I think, that you've disclosed?

Michael Zaremski: The risk and broking segments.

Michael Zaremski: Excellent organic growth levels.

Michael Zaremski: Curious if that has been the beneficiary of reverse book sales that are aiding growth that you've been that the book sale buyer or would that be netted out within the book sales line item.

Carl A. Hess: Yeah, there's nothing meaningful in there that's contributing to the growth from that. Okay. Okay, got it. It's mostly been driven by, you know, new business retention rates, very little impact from rates.

Michael Zaremski: Now that you've disclosed.

Speaker Change: Yes, there is some there is nothing meaningful in there that's contributing to the growth.

Speaker Change: From that okay.

Speaker Change: Okay got it.

Speaker Change: Lee it's been driven by.

Speaker Change: New business.

Speaker Change: Retention rates.

Michael Zaremski: Okay, yep, you guys have been clear about, you know, the reinvestment talent. Okay, I got it. Lastly, on interest income, and I don't think we have the fiduciary asset levels yet, but it looks like the yield implied is kind of high. Is there anything unusual in there? Or is that a good run rate or anything we should be thinking about seasonality wise?

Speaker Change: Very little impact from from rate.

Speaker Change: Okay. Yeah, you guys have been clear about the reinvestment of talented okay got it.

Speaker Change: Lastly on interest income and I don't think we have seen the fiduciary asset levels yet but.

Speaker Change: It looks like the yield implied is is kind of.

Speaker Change: Hi is there anything unusual in there or is that a good run rate or anything we should be thinking about seasonality wise.

Andrew Krasner: No, I think it's a good run rate, you know, the asset levels obviously vary by quarter, but on an annual basis, I think the yield should be, you know, fairly consistent.

Speaker Change: No I think it's a a good run rate the asset levels, obviously vary by quarter.

Speaker Change: But on an annual basis I think the yield.

Operator: Thank you. One moment for our next question. Our next question comes from Mark Marcon with Baird. Please go ahead.

Speaker Change: It should be fairly consistent.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Yes.

Speaker Change: Our next question comes from Mark Marcon with Baird. Please go ahead.

Mark Marcon: Hey, good morning. You know, clearly really strong progress in terms of the margin expansion, and clearly there are successful efforts with regard to efficiency and utilization. But I'm also trying to understand the impact of pricing. What are you seeing from, and obviously it varies by segment, but broadly speaking, to what extent is pricing been a positive catalyst for margin expansion? And to what extent, if that is the case, to what extent is that sustainable?

Speaker Change: Okay.

Mark Marcon: Hey, good morning.

Mark Marcon: Clearly really strong progress in terms of the margin expansion and clearly there is successful efforts with regards to efficiency and utilization, but I'm also trying to understand the impact of pricing what are you seeing from a <unk>.

Mark Marcon: Obviously, it varies by segment, but broadly speaking to what extent pricing.

Mark Marcon: Positive catalyst for the margin expansion and to what extent.

Carl A. Hess: So, within R&B, as we alluded to earlier, rate has been a non-factor in our business, and I just don't view it that way. As Andrew said, right, our results have been driven by great retention and great new business. And we think with our strategy of specialization, those are sustainable. With respect to HWC, I guess I'd put this two-fold, right? One thing we continue to try and derive differentiated solutions in the marketplace that can enable us to charge a fair value for the great work we do.

Mark Marcon: That is the case to what extent is that sustainable.

Mark Marcon: So within RMB as we alluded to earlier our rate has been a non factor.

Mark Marcon: Yes.

Mark Marcon: In our business.

Mark Marcon: I, just don't view sort of.

Mark Marcon: Okay.

Mark Marcon: Andrew set right.

Mark Marcon: Results have been driven by great retention and create new business and we.

Mark Marcon: We think with our strategy of specialization those are sustainable.

Mark Marcon: If anything else.

Mark Marcon: Continued focus.

Mark Marcon: With respect to <unk> I guess I put this to.

Mark Marcon: One is.

Mark Marcon: We continue to trying to do.

Mark Marcon: Differentiated solutions in the marketplace that can enable us to charge a fair value for the great work we do.

Carl A. Hess: We remain very engaged with our client base to ensure that our already high retention rates stay there, and we think that we have been very successful delivering value, a significant multiple of what we charge, and our clients very much value that as a trusted advisor with relationships that, in some cases, stretch back multiple decades.

Mark Marcon: We remain very engaged with our client base to ensure that our already high retention rates stay there and we think that we have been very successful delivering value significant multiple of fees, we charge our clients very much value that of a trusted advisor with relationships that in some cases stretch back.

Mark Marcon: Terrific. And then for my follow-up, just on BDO, you did mention that there was one large client that ended up outsourcing some of the retirement programs. I'm wondering, do you have a perspective in terms of why that was, and is this kind of a one-off, or is this anything to be concerned about as I go forward, David?

Mark Marcon: Multiple decades.

Mark Marcon: Okay.

Mark Marcon: Terrific and then for my follow up just on BDO you did mention that there was one large.

Mark Marcon: Client that ended up in sourcing.

Mark Marcon: Some of the retirements.

Mark Marcon: Programs.

Mark Marcon: I'm wondering do you have a perspective in terms of why that was and is this kind of a one off or is this anything to be concerned about on a go forward basis.

Carl A. Hess: So we very much view that as a one-off. This is a client that had a pronounced bent toward, you know, technology inclined toward self-service. And we were a bit of an outlier in their portfolio of advisors. So while we would have preferred a different decision, we understand that decision. If anything, though, we see the market going the other way. Clients continue to deal with the complexity of what it takes to administer these programs. And companies such as us can offer a more turnkey solution they could ever develop on their own.

Mark Marcon: So we very much view that as a one off this is a client that had a pronounced spent toward.

Mark Marcon: Technology banks towards self service and we were a bit of an outlier in their portfolio of advisors.

Mark Marcon: So.

Mark Marcon: While we would've preferred a different decision we understand that decision if anything that we see the market going the other way Scott.

Mark Marcon: <unk> continue to deal with the complexity of what it takes to administer these programs.

Mark Marcon: Companies, such as us kind of offer more turnkey solution that could ever develop on their own.

Operator: Thank you. One moment for our next question. The next question comes from Meyer Shields with KBW. Please go ahead.

Speaker Change: Thank you one moment for our next question.

Mark Marcon: Next question comes from Meyer Shields with <unk>. Please go ahead.

Meyer Shields: Good morning, Carl. You distinguish between sort of the rebuilding that was necessary after 2020 and 2021 and more recent hiring. When you talk about the hires that have come on in the first stage of that, are they fully productive in line with the longer-term legacy Willis Towers Watson employees, or is there still more room to go over time?

Meyer Shields: Good morning.

Meyer Shields: Paul.

Meyer Shields: English between some of the rebuilding that wouldn't necessarily Apple 2020, 2021 and more recent hiring when you talk about the hires that have come on in the first stage of that.

Meyer Shields: Are they fully productive in line with the longer term legacy Willis towers Watson plays or is there still more room to go.

Meyer Shields: Overtime.

Carl A. Hess: Yeah, so I mean, we are very pleased with the progress these groups of hires have made, and they are contributing to our success. But we think there is still more room to go, especially for the more recent bendages, right? Yeah, we this this effort began in early 22, and continued through 23. The people we hired in 23 still, you know, don't have, for the most part, a year under their belts. And we've always said, you know, six to 18 months before they become fully productive.

Speaker Change: Yes, so I mean.

Speaker Change: We are very pleased with the progress. These groups of hires have made and they are contributing to our success.

Meyer Shields: But we think there is still more room to go especially for the more recent vintages right yes.

Meyer Shields: <unk> began in early 'twenty, two and continued through 'twenty three the people we hired in 'twenty three still don't have from loan part of year under their belt and we've always said six to 18 months become fully productive.

Meyer Shields: Okay, perfect. And then, if we just go back to the timing issue in health, does that timing impact the expenses as well?

Speaker Change: Okay perfect.

Speaker Change: And then if could just go back to the timing issue in health.

Speaker Change: Does that timing impact the expenses as well.

Andrew Krasner: We expect the expenses to be relatively even throughout the year in that regard, and it's really just the pace of the revenue for project work that we expect to pick up throughout the rest of the year to get to that mid to high single-digit growth rate.

Speaker Change: We expect the expenses to be relatively.

Speaker Change: Even throughout the year and that in that regard and it's really just the pacing of the revenue for project work that we expect to pick up.

Speaker Change: Throughout the rest of the year to get to that.

Carl A. Hess: I think I'll just go through it. That business is a combination of commissions, which outside the U.S. is largely how we collect things. And then in the U.S., we have a very successful large market consulting business that's fee-based. So we're typically collecting fees as we earn them, but, you know, we keep the people on throughout the year.

Speaker Change: Mid to high single digit growth rate I mean that business is a combination of commissions, which is outside the U S is largely how we collect things and then in the U S. We have a very successful large market consulting business that's fee based.

Speaker Change: So we're typically collecting fees as we earn them but.

Operator: Thank you. One moment for our next question. Our next question comes from David Motemaden with Evercore ISI. Please go ahead.

Speaker Change: We keep the people on throughout the year.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from David <unk> with Evercore ISI. Please go ahead.

David Motemaden: Hi, thanks. Good morning. I just had a question for Andrew.

David: Hi, Thanks, good morning.

David: I just had a question for Andrew.

David Motemaden: So I heard you on the moderated transacts growth later in the year, given the projected growth by the carriers and Medicare Advantage. Just wanted to know if that changes your view at all on the free cash flow trajectory. Does that pull forward, you know, sort of the timing in terms of how you think about getting to that 16 percent or just how that lower growth in the Transact business might help or aid free cash flow throughout this year?

David: So I heard you on the moderated transact growth later in the year, given the projected growth by the carriers and Medicare advantage.

David: Just wanted to know if that changes your view at all on the free cash flow trajectory.

Andrew Krasner: Does that pull forward sort of the timing in terms of how you think about getting to that 16%.

Andrew Krasner: Or just how that how that lower growth in the transact business might.

David: It might help or.

Andrew Krasner: Yeah, good question. Naturally, slower growth within that business, which is a net consumer of cash, will, you know, foster a quicker move up the up the curve there on getting to break even and any positive on free cash flow. So that would definitely be a tailwind there, if it did play out that way, based on what we're hearing from some of the carriers at the moment and their expected growth.

David: Eight free cash flow throughout this year.

Speaker Change: Yeah. Good question, you're naturally slower growth within <unk>.

David: That business, which is a net consumer of cash will.

David: Foster a quicker.

David: Move up the up the curve there on getting to getting to breakeven in any positive on free cash flow.

David: It would definitely be a tailwind there if it did play out that way based on what we're hearing from some of the carriers at the moment and their expected growth rates.

David Motemaden: I got it. Helpful.

Speaker Change: Got it helpful.

David Motemaden: And then maybe just another question on, you know, good to see that the R&B growth has continued to be robust. And I'm not looking for specific numbers here, but I'm wondering if you guys sort of look at your market share today compared to, you know, where it was back in, you know, call it 2020, 2021. Are you guys back to that level? Is there still room to go, you know, within just the risk and broking businesses that you compete in?

Speaker Change: And then.

Speaker Change: Maybe just another question on <unk>.

David: Good to see that the RMB growth.

David: Has continued to be robust.

David: And I'm not looking for specific numbers here, but I'm wondering if you guys sort of look at your market share.

David: Today compared to where it was.

David: No.

David: In call it 2000 22021.

David: You guys back to that level or is there still room to go.

Speaker Change: Yes within just the risk and broking businesses that you that you compete in.

Carl A. Hess: Well, I mean, we certainly think there is room for us to grow market share, right? We think we have a differentiated service offering that works very well for clients who appreciate a calculated approach to a smarter way to risk, right? We call it that. And so we continue to see great potential, and that's one of the reasons we think our new business results have been so strong as they are. And we think that he certainly has the ability.

Speaker Change: Well, we certainly think there is room for us to grow market share. We think we have a differentiated service offerings that shows very well for clients appreciate a.

David: <unk> approach to a smarter way to risk right we call it.

David: <unk>.

David: So we continue to see great potential and Thats one of the reasons, we take our new business results have been so strong as they are and we think that as certainly the ability to continue.

Carl A. Hess: Thank you. This concludes the question and answer session. I would now like to turn it back to Carl Hess for closing remarks.

Speaker Change: Thank you. This concludes the question and answer session.

Speaker Change: I would now like to turn it back to Carl Hess for closing remarks.

Carl A. Hess: Thank you. Thank you all again for joining us. I appreciate the hard work of all our WTW colleagues globally who've helped us start the year on such a solid note. I'd like to thank you, our shareholders, for your continued support of our efforts. Have a great day.

Carl A. Hess: Thank you. Thank you all again for joining us I appreciate the hard work of all our W. Tw colleagues globally, who have helped us start the year on such a solid note I'd like to thank you are.

Carl A. Hess: Our shareholders for your continued support of our efforts have a great day.

Operator: Thank you for your participation in today's conference. This concludes the program. You may now disconnect.

Speaker Change: Thank you for your participation in today's conference. This concludes the program you may now disconnect.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].