Q2 2024Willis Towers Watson PLC Earnings Call
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Operator: Good morning. Welcome to the WTW second quarter 2024 earnings conference call. At this time, all participants are in a listen only mode.
Operator: After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded; please refer to WTWCO.com for the press release and supplemental information that were issued earlier today. Today's call will be available for the next three months on the WTW's website. Additionally, some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. The actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law.
Operator: For a more detailed discussion of these and other risk factors, investors should review the forward-looking statement 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. 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 will now turn the call over to Carl Hess, WTW's Chief Executive Officer. Please go ahead.
Speaker Change: Good morning. Welcome to the WTW second quarter 2024 earnings conference call.
Speaker Change: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.
Speaker Change: Please refer to the WTWCO.com for the press release and supplemental information that were issued earlier today.
Speaker Change: Today's call will be available for the next three months on the WTW's website. Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995.
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 review 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 SEC.
Speaker Change: During the call, certain non-GAAP financial measures will be discussed.
Speaker Change: For reconciliations of the non-GAAP measures, as well as other information regarding these measures, please visit www.thevenusproject.com.
Carl A. Hess: Please refer to the earnings press release issued this morning and other materials in the Investor Relations section of the company's website. I will now turn the call over to Carl Hess, WTW's Chief Executive Officer. Please go ahead. Thank you.
Carl A. Hess: Good morning, everyone. Thank you for joining us for WTW's second quarter 2024 earnings call. Joining me today is Andrew Krasner, our Chief Financial Officer. We delivered a strong second quarter, headlined by 240 basis points of year-over-year adjusted operating margin expansion, adjusted diluting earnings per share of $2.55, a 24% increase over the prior year, and $361 million of free cash flow. These healthy bottom line results were the product of our continued robust organic growth, growing operating leverage across our business, and the ongoing success of our
Carl A. Hess: Good morning, everyone. Thank you for joining us for WTW's second quarter 2024 earnings call. Joining me today is Andrew Krasner, our Chief Financial Officer.
Speaker Change: We delivered a strong second quarter, headlined by 240 basis points of year-over-year adjusted operating margin expansion, adjusted diluting earnings per share of $2.55,
Carl A. Hess: A 24% increase over prior year and $361 million of free cash flow.
Carl A. Hess: These healthy bottom-line results were the product of our continued robust organic growth, growing operating leverage across our businesses, and the ongoing success of our transformation program.
Carl A. Hess: We are very pleased with our sustained momentum from the success of our strategic initiatives alongside continuing favorite Omar. Our 6% organic revenue growth in the quarter represents the value proposition of our business. The impact of our investments in talent and technology and the markets we have prioritized. Based on our strong first half performance and our continued confidence in our outlook and execution, we have raised the low end of our 2024 adjusted operating margin and adjusted EPS target ranges to 23.0 to 23.5% and $16 to $17. In addition, thanks to the success and momentum of our transformation program, we've been able to identify additional savings and accordingly are raising our cumulative run We continue to expect mid-single-digit organic growth to achieve revenue of $9.9 billion.
Carl A. Hess: We are very pleased with our sustained momentum from the success of our strategic initiatives alongside continuing favorite home market conditions.
Carl A. Hess: Our 6% organic revenue growth in the quarter represents the value proposition of our business, the impact of our investments in talent and technology, and the markets we have prioritized.
Carl A. Hess: Based on our strong first-half performance and our continued confidence in our outlook and execution, we have raised the low end of our 2024 Adjusted Operating Margin and Adjusted EPS target ranges
Carl A. Hess: to 23.0 to 23.5% and $16 to $17 of EPS respectively.
Carl A. Hess: In addition, thanks to the success and momentum of our transformation program, we've been able to identify additional savings and accordingly are raising our cumulative run rate transformation savings target from $425 million to $450 million by the end of 2024.
Carl A. Hess: We continue to expect mid-single-digit organic growth to achieve revenue of $9.9 billion-plus.
Carl A. Hess: I'm pleased with our colleagues' focus and dedication in executing our strategic priorities. Our Results and Outlook reflect their hard work in delivering for our clients and driving improved productivity and efficiency. With that in mind, let me share some specifics on our recent progress and the opportunities ahead. As I mentioned, our rising productivity drove greater operating leverage, significantly bolstering our bottom line. Our transformation efforts also contributed substantially to margining. We achieved $24 million of incremental annual life savings, bringing the total to $394 million in cumulative annualized savings since the program started.
Carl A. Hess: I'm pleased with our colleagues' focus and dedication in executing our strategic priorities.
Carl A. Hess: Our results and outlook reflect their hard work in delivering for our clients and driving improved productivity and efficiency.
Carl A. Hess: With that in mind, let me share some specifics on our recent progress and the opportunities ahead of us.
Carl A. Hess: As I mentioned, our rising productivity drove greater operating leverage this quarter, significantly bolstering our bottom line performance.
Carl A. Hess: Our transformation efforts also contribute substantially to margin expansion.
Carl A. Hess: We achieved $24 million of incremental annualized savings this quarter, bringing the total to $394 million in cumulative annualized savings since the program's inception.
Carl A. Hess: As we near the end of our three-year transformation program, we're confident that the program has positioned us for further margin expansion over the long term. We now have the organization, processes, and capabilities in place to further optimize our cost structure, increase operational effectiveness, and improve profitability on an ongoing basis. In HWC, we continue to harness the strength of our portfolio to drive growth, capture demand and add new clients in each of our core businesses, made many smart connections to better serve our clients' needs across different areas, and introduced new breakthroughs. That combination enabled us to achieve 5% organic revenue growth in the quarter, delivering Growth was led by our health business, which generated nine percent.
Carl A. Hess: As we near the end of our three-year transformation program, we're confident that the program has positioned us for further margin expansion over the long term.
Carl A. Hess: We now have the organization, processes, and capabilities in place to further optimize our cost structure, increase operational effectiveness, and improve profitability on an ongoing basis.
Carl A. Hess: In HWC, we continue to harness the strength of our portfolio to drive growth.
Carl A. Hess: We captured demand and added new clients in each of our core businesses, made many smart connections to better serve our clients' needs across different areas, and introduced new breakthrough solutions.
Carl A. Hess: That combination enabled us to achieve 5% organic revenue growth in the quarter, delivering accelerated growth across the health, wealth, and career businesses as we consciously manage BD&O growth to optimize earnings and cash flow.
Carl A. Hess: Growth was led by our health business, which generated 9% organic growth.
Carl A. Hess: Across the segment, we continue to see good levels of demand driven by health care inflation, strong employment, elevated pension fund status, new legislative and regulatory requirements, and other complexities in the macro environment. Our deep expertise and rich experience, combined with our data analytics and software, position us well to help clients navigate the dynamic environment from managing total rewards costs to de-risking pensions. Our teams have successfully generated notable increases in a number of areas.
Carl A. Hess: Our deep expertise and rich experience, combined with our data analytics and software solutions, position us well to help clients navigate the dynamic environment, from managing total rewards costs to de-risking pension plans.
Carl A. Hess: We've added several new global benefits management appointments with organizations that want to better manage costs and also improve their employees. With a favorable interest rate environment, we've helped more clients initiate pension de-risking processes through both sums in the U.S. and annuity buy-ins and buy-outs.
Speaker Change: Our teams have successfully generated buildable optics in a number of areas.
Speaker Change: We've added several new global benefits management appointments with organizations that want to better manage costs and also improve their employees' experience.
Speaker Change: With a favorable interest rate environment, we've helped more clients initiate pension de-risking processes through both sums in the U.S. and annuity buy-ins and buy-outs in Great Britain.
Carl A. Hess: As we've helped guide clients on the implications of new pay transparency and equity requirements in the EU, more companies have engaged us for broad-based rewards. In response to the strong employment market, we sold more compensation benchmarking surveys and more licenses for EMBARQ, our employee experience platform. And our LifeSiteMaster Trust in Great Britain continues to grow, having just exceeded $20 billion in assets.
Carl A. Hess: As we've helped guide clients on the implications of new pay transparency and equity requirements in the EU, more companies have engaged us for fraud-based reward projects.
Carl A. Hess: In response to the strong employment market, we sold more compensation benchmarking surveys and more licenses for Embark, our employee experience portable.
Carl A. Hess: Our focus on smart connections across HWC has also continued to pay dividends. This past quarter, we worked with a large airline that was already a global benefits management client of ours. This client sponsored a large number of pension plans in multiple countries and needed help keeping these plans compliant, competitive, and well-run.
Carl A. Hess: Our focus on smart connections across HWC has also continued to pay dividends.
Carl A. Hess: This past quarter, we worked with a large airline, which was already a global benefits management client of our health business.
Carl A. Hess: This client sponsored a large number of pension plans in multiple countries and needed help keeping these plans compliant, competitive, and well-run. Our GBM team introduced the client to our retirement team, which was able to provide a complete solution tailored to their retirement needs.
Carl A. Hess: Our GVM team introduced the claim to our retirement team, which was able to provide a complete solution tailored to their retirement. Our strong existing relationship, together with our smart connections mindset, helped us win a multi-year contract and gave our client a more developed service proposition with flexible pricing. Another example involves a large automotive retailer where we secured health and benefits consulting and brokerage services to improve how their employees valued and utilized their benefits. We introduced our employee experience team, who presented a personalized digital approach to communication that helped the plan members break through the complexity of the health care environment.
Carl A. Hess: Our strong existing relationship, together with our smart connections mindset, helped us win a multi-year contract and gave our client a more developed service proposition with flexible pricing options.
Carl A. Hess: To improve how their employees valued and utilized their benefits, we introduced our Employee Experience Team, who presented a personalized, digital approach to communication that helped the plan members break through the complexity of the healthcare environment.
Carl A. Hess: This generated an interest in learning how we could help them simplify the administration to their benefit. And after hearing how our teams could also collaborate to deliver insights to improve the plant's effectiveness and help them reduce overall health care costs, they appointed us as their beneficiary. In a third example, our segments collaborated when a team in CRB reached out to our health and benefits and retirement team. Our CRB team, who've been helping a client assess and manage integration risks in a newly acquired business, recognized that the client needs well beyond property cash to also include people risks requiring employee benefits expertise across multiple countries.
Carl A. Hess: This generated an interest in learning how we could help them simplify the administration of their benefit plans. And after hearing how our teams could also collaborate to deliver insights to improve the plan's effectiveness and help them reduce overall health care costs, they appointed us as their benefits outsourcer.
Carl A. Hess: In a third example, our segments collaborated when a team at CRB reached out to our health and benefits and retirement experts.
Carl A. Hess: Our CRB team, who have been helping a client assess and manage integration risks in a newly acquired business, recognize that the client needs well beyond property casualty risks to also include people risks requiring employee benefits expertise across multiple countries.
Carl A. Hess: We secured this win by offering complete M&A guidance, including strategic planning and brokerage services covering both corporate risk and employment. We've previously highlighted how HWC has developed breakthrough solutions that are leading the market, and we are delighted to share two more breakthroughs this. First, knowing how highly employees value flexibility, members of our U.S. retirement team helped one of our clients find a way through complex regulations and potentially challenging administration to introduce a new pension plan feature to help employees better manage their finances. Also, our investments team launched our first ever dedicated private equity pool.
Carl A. Hess: We secured this win by offering complete M&A guidance, including strategic planning and brokerage services covering both corporate risk and employee benefits.
Speaker Change: We've previously highlighted how HWC has developed breakthrough solutions that are leading the market, and I'm delighted to share two more breakthroughs this quarter.
Speaker Change: First, knowing how highly employees value flexibility, members of our U.S. retirement team helped one of our clients find a way through complex regulations and potentially challenging administrative requirements to introduce a new pension plan feature to help employees better manage their financial situation.
Carl A. Hess: Also, our investments team launched our first ever dedicated private equity pools fund.
Carl A. Hess: The fund's innovative, semi-liquid structure and nature will be open to wealth and defined. In Risk and Broking, our focus on specialization, investments in talent and technology, and top quality client service continues to sustain client retention rates in the mid-90s and generate substantial growth opportunities. This is evidenced by the segment's organic revenue growth of 10 percent, fueled by our specialty, which continues to outpace the growth of the Rutgers University All of this is the product of our differentiated service offerings and ability to adapt to our clients' changing and complex needs.
Carl A. Hess: The fund's innovative, semi-liquid structure, and nature will be open to wealth and defined contribution plans.
Carl A. Hess: In Risk and Broking, our focus on specialization, investments in talent and technology, and top quality client service continues to sustain client retention rates in the mid-90s and generate substantial growth opportunities.
Carl A. Hess: This is evidenced by the segment's organic revenue growth of 10% for the quarter, fueled by our specialty businesses.
Carl A. Hess: [inaudible]
Carl A. Hess: All of this is the product of our differentiated service offerings and ability to adapt to our clients changing and complex risks.
Carl A. Hess: Our R&D specialization strategy is about delivering tailored solutions that address industry-specific risks and optimizing our client outcomes. One of our client wins this quarter included the insurance placement for an energy supplier who had a challenging loss record and complex risk profile and was under severe time constraints for securing an insurance policy.
Carl A. Hess: Our R&D specialization strategy is about delivering tailored solutions that address industry-specific risks and optimizing our client outcome.
Carl A. Hess: One of our client wins this quarter included the insurance placement for an energy supplier who had a challenging loss record and complex risk profile and was under severe time constraints for securing an insurance solution.
Carl A. Hess: Thanks to our deep expertise in the natural resources sector across multiple geographies, we were able to provide the company with complete coverage in just one. We continue to make good progress with Verita, our open market MGU in North America. Submission volume continues to increase each month as the brand is expanded across the US with broad opportunities from different. The team continues to evaluate and add new products to the platform to further accelerate revenue growth in the second half of the year and beyond.
Carl A. Hess: Thanks to our deep expertise in the natural resources sector across multiple geographies, we were able to provide the company with complete coverage in just one month.
Carl A. Hess: We continue to make good progress with Verita, our open market MGU in North America. Submission volume continues to increase each month as the brand is expanded across the U.S. with broad opportunities from different brokers.
Carl A. Hess: The team continues to evaluate and add new products to the platform to further accelerate revenue growth in the second half of the year and beyond.
Carl A. Hess: As we've mentioned, investments in our R&D talent base have also been a significant revenue growth driver for the... After a focused effort to replenish our talent base over the past few years, these new hires have become increasingly productive and are contributing to our strong organic growth in the. Our recent hiring efforts have been more opportunistic and strategic, with the goal of enhancing our ability to achieve sustainable, profitable growth and creation. Lucy Clark, who's recently joined us, is one example of this type of strategic hire. Lucy's commitment to specialization, data, and analytics, and exceptional client service makes her a perfect fit to lead.
Carl A. Hess: As we've mentioned, investments in our R&D talent base have also been a significant revenue growth driver for the segment.
Carl A. Hess: After a focused effort to replenish our talent base over the past few years, these new hires have become increasingly productive and are contributing to our strong organic growth in the segment.
Carl A. Hess: Our recent hiring efforts have been more opportunistic and strategic, with the goal of enhancing our ability to achieve sustainable, profitable growth and create value.
Lucy Clark: Lucy Clark, who's recently joined us, is one example of this type of strategic hire. Lucy's commitment to specialization, data and analytics, and exceptional client service makes her a perfect fit to lead risk invoking.
Carl A. Hess: We expect that our market presence, proven track record, and focus on talent will help further drive organic growth and margin expansion in the segment, building on the excellent work Adam Garrard has done. We are confident that our strategic investments in talent and technology, along with our specialization strategy, are leading to increased engagement with both new and existing employees. This heightened activity is crucial for driving organic revenue growth and expanding margins for the rest of the year and beyond.
Lucy Clark: We expect that our market presence, proven track record, and focus on talent will help further drive organic growth and margin expansion in the segment, building on the excellent work Adam Gerard has accomplished.
Lucy Clark: over the last five years.
Lucy Clark: We are confident that our strategic investments in talent and technology, along with our specialization strategy, is leading to increased engagement with both new and existing clients.
Lucy Clark: This heightened activity is crucial for driving our organic revenue growth and expanding margins for the rest of the year and beyond.
Carl A. Hess: In conclusion, I'd like to thank our colleagues for their unwavering commitment to WTW and to our organization, which helped us to achieve another solid. We continue to effectively execute on our strategic priorities, setting us up to achieve our objective. I'm enthusiastic about our opportunities in the second half and have confidence that we are on the right path to achieving our goal. And with that, I'll turn the call over to Carl. Good morning, and thanks for joining us today.
Lucy Clark: In conclusion, I'd like to thank our colleagues for their unwavering commitment to WTW and to our clients, which helped us to achieve another solid quarter.
Lucy Clark: We continue to effectively execute on our strategic priorities, setting us up to achieve our objectives for the year.
Lucy Clark: I'm enthusiastic about our opportunities in the second half of the year and have confidence that we are on the right path to achieving our goals for 2020.
Andrew Krasner: In the second quarter, we delivered organic revenue growth of 6% and drove adjusted operating margin expansion of 240 basis points, resulting in adjusted diluted earnings per share of $2.55, an increase of 24% over the prior year. As Carl mentioned, thanks to our solid results for the past two quarters and our confidence in what we expect to achieve in the second half of the year, we have raised the low end of our 2024 financial targets for adjusted operating margin and adjusted EPS, bringing the target ranges to 23 to 23 and a half percent and $16 to $17, respectively.
Lucy Clark: And with that, I'll turn the call over to Andrew.
Andrew: Thanks Carl, good morning, and thanks for joining us today.
Andrew: In the second quarter, we delivered organic revenue growth of 6% and drove adjusted operating margin expansion of 240 basis points, resulting in adjusted diluted earnings per share of $2.55, an increase of 24% over the prior year.
Andrew Krasner: In addition, we have been able to identify additional transformation savings and are raising our cumulative run rate target from $425 million to $450 million by the end of 2024. The total cost to achieve these savings is now estimated at $1.175 billion.
Speaker Change: In addition, we have been able to identify additional transformation savings and are raising our cumulative run rate target from $425 million to $450 million by the end of 2024.
Speaker Change: The total cost to achieve these savings is now estimated at $1.175 billion. These additions to the transformation program will help us drive further efficiencies as we remain focused on a strong finish to the program.
Andrew Krasner: These additions to the transformation program will help us drive further efficiencies as we remain focused on a strong finish to the program. 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.
Speaker Change: 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 5% compared to the second quarter of last year, in line with our expectations of mid-single digit organic revenue growth for the segment for 2020. We noted last quarter that we expected health revenue growth to accelerate, and indeed, the business generated revenue growth of 9% for the quarter in comparison to 3% growth in Q1. North America generated strong growth as a result of increased project work.
Speaker Change: Health, Wealth, and Career generated revenue growth of 5% compared to the second quarter of last year, in line with our expectations of mid-single digit organic revenue growth for the segment for 2024.
Speaker Change: We noted last quarter that we expected health revenue growth to accelerate, and indeed the business-generated revenue growth of 9% for the quarter in comparison to 3% growth in Q1.
Andrew Krasner: In addition, International and Europe delivered double-digit growth driven by strong client retention, new local appointments, and the continued expansion of our global benefits management client portfolio. Wealth grew 5% in the second quarter, driven by strong growth in our retirement business due to new client acquisitions and increased project work, including pension de-risking work in North America and additional work required in a peak valuation year in Great Britain. We also delivered solid growth in our investments business due to improvements in capital markets and growth from our life site. Career delivered 4% revenue growth in the quarter, primarily driven by broad-based compensation assignments in work and rewards in North America and Europe, as well as projects related to communication work and employee experience.
Speaker Change: North America generated strong growth as a result of increased project work. In addition, international and Europe delivered double-digit growth driven by strong client retention, new local appointments, and the continued expansion of our global benefits management client portfolio.
Speaker Change: Wealth grew 5% in the second quarter, driven by strong growth in our retirement business due to new client acquisitions and increased project work, including pension de-risking work in North America and additional work required in a peak valuation year in Great Britain.
Speaker Change: We also delivered solid growth in our investments business due to improvements in capital markets and growth from our LifeSite solution.
Speaker Change: Career delivered 4% revenue growth in the quarter, primarily driven by broad-based compensation assignments in work and rewards in North America and Europe , as well as projects related to communication work and employee experience.
Andrew Krasner: We also saw growth in our product revenue, with more sales of Embark, our employee experience portal. Our compensation benchmarking participation continues to be elevated through 2023, which should lead to accelerated growth in the second half of 2024. Benefits delivery and outsourcing was flat for the quarter.
Speaker Change: We also saw growth in our product revenue with more sales of Embark, our employee experience portal. Our compensation benchmarking participation continues to be elevated over 2023, which should lead to accelerated growth in the second half of 2024.
Andrew Krasner: Solid growth and outsourcing from increased project work more than covered the revenue headwind related to the client we mentioned last quarter who outsourced its health and other benefits administration. This growth was offset by a decrease in our Medicare-related business, where we deliberately moderated growth to reflect market developments, maximize profitability, and improve free cash flow outcomes. Said differently, we do not simply chase growth at any cost.
Speaker Change: Benefits delivery and outsourcing was flat for the quarter. Solid growth and outsourcing from increased project work more than covered the revenue headwind related to the client we mentioned last quarter who insourced its health and other benefits administration.
Speaker Change: This growth was offset by a decrease in our Medicare-related business, where we deliberately moderated growth to reflect market developments, maximize profitability, and improve free cash flow outcomes. Said differently, we do not simply chase growth at any cost in this business.
Andrew Krasner: HWC's operating margin was 21.9%, an increase of 360 basis points compared to the prior year second quarter, primarily driven by operating leverage and transformation. Moving to risk and broking, revenue was up 10% on an organic basis for the second quarter, with no meaningful impact from book of business activity. Interest income was $29 million for the quarter, up $14 million from the second quarter last year.
Speaker Change: HWC's operating margin was 21.9%, an increase of 360 basis points compared to the prior year second quarter, primarily driven by operating leverage and transformation savings.
Speaker Change: Moving to risk and broking, revenue was up 10% on an organic basis for the second quarter, with no meaningful impact from book of business activity. Interest income was $29 million for the quarter, up $14 million from the second quarter last year.
Andrew Krasner: Corporate risk and broking had another exceptionally strong quarter with organic growth of 11%, primarily driven by higher levels of new business, strong client retention, and renewal increases across all geographies. Our specialty lines continue to be major contributors to the strong growth performance, led globally by our facultative, construction, crisis management, and financial solutions. Growth across CRB in Europe was led by Financial Solutions, Facultative, Cinex, and Crisis Management. North America CRB had solid growth driven by new business and higher renewal business from crisis management, natural resources, construction, real estate, hospitality, and leisure as well as healthcare and life science. Our international region had double-digit organic growth across all subregions, led by countries in Central and Eastern Europe, the Middle East, and Africa, and Latin America.
Speaker Change: Corporate risk and broking had another exceptionally strong quarter with organic growth of 11%, primarily driven by higher levels of new business, strong client retention, and renewal increases across all geographies.
Speaker Change: Our specialty lines continue to be major contributors to the strong growth performance, led globally by our facultative, construction, crisis management, and financial solutions teams.
Speaker Change: Growth across CRB in Europe was led by Financial Solutions, Facultative, Cinex, and Crisis Management.
Speaker Change: North America CRB had solid growth, driven by new business and higher renewal business from crisis management, natural resources, construction, real estate, hospitality and leisure, as well as healthcare and life sciences.
Speaker Change: Our international region had double-digit organic growth across all sub-regions, led by countries in Central and Eastern Europe , Middle East and Africa, and Latin America.
Andrew Krasner: In terms of rates, we see a continued improving landscape with favorable outcomes for clients. We see a stabilizing and softening market in some of our largest lines of business, such as property, caused by the increasing supply of capacity from insurers. The market for financial lines continues to soften, albeit with slower rate reductions in the past quarter.
Speaker Change: In terms of rates, we see a continued improving landscape with favorable outcomes for clients.
Speaker Change: We see a stabilizing and softening market in some of our largest lines of business, such as property, caused by the increasing supply of capacity from insurers.
Speaker Change: The market for financial lines continues to soften, albeit with slower rate reductions in the past quarter.
Andrew Krasner: An exception to that is cyber, where the market is softening faster. Across all specialty lines, we see a mix. For example, in political risks and trade credit, the market is stable with some small premium rises. The same is true in casualty, where the market remains challenged for primary risks, especially those with North American exposure. Insurance consulting and technology revenue was flat compared to the prior year due to tempered demand, mainly in the consulting business, in North America and the UK.
Speaker Change: An exception to that is cyber, where the market is softening faster. Across those specialty lines, we see a mix, for example. In political risks and trade credit, the market is stable, with some small premium rises.
Speaker Change: The same in casualty where the market remains challenged for primary risks, especially those with North America exposures.
Speaker Change: Insurance consulting and technology revenue was flat compared to prior year due to tempered demand mainly in the consulting business in North America and the UK. However, we have taken corresponding expense actions to protect our margins.
Andrew Krasner: However, we have taken corresponding expense actions to protect our margin. We expect ICT to achieve mid-single-digit growth for the full year. R&B's operating margin was 20.6% for the quarter, a 450 basis point increase over the prior year second quarter, primarily due to operating leverage driven by solid organic revenue growth in CRB, disciplined expense management, interest income, and transformation. Now, let's turn to the enterprise-level results. At the enterprise level, adjusted operating margin for the quarter was 17%, a 240 basis point increase over the prior year, primarily driven by greater operating leverage and the benefits of our transformation program.
Speaker Change: We expect ICT to achieve mid-single-digit growth for the full year.
Speaker Change: R&B's operating margin was 20.6% for the quarter, a 450 basis point increase over the prior year second quarter, primarily due to operating leverage driven by solid organic revenue growth in CRB, disciplined expense management, interest income, and transformation savings.
Speaker Change: Now, let's turn to the enterprise level results.
Speaker Change: At the enterprise level, adjusted operating margin for the quarter was 17%, a 240 basis point increase over the prior year, primarily driven by greater operating leverage and the benefits of our transformation program.
Andrew Krasner: We had $24 million of incremental annualized transformation savings, bringing the total to $394 million of cumulative savings since the program's inception. The program continues to better position us to drive operating leverage going forward. Our unallocated net was negative $106 million for the second quarter and reflects the inclusion of a $13 million provision for significant litigation.
Speaker Change: We had $24 million of incremental annualized transformation savings, bringing the total to $394 million of cumulative savings since the program's inception.
Speaker Change: The program continues to better position us to drive operating leverage going forward.
Speaker Change: Our unallocated net was negative $106 million for the second quarter and reflects the inclusion of a $13 million provision for significant litigation. We continue to expect the full year 2024 balance to be relatively consistent with 2023.
Andrew Krasner: We continue to expect the full-year 2024 balance to be relatively consistent with 2023. Foreign exchange was a headwind to adjusted EPS of $0.03 for the quarter. At current spot rates, we expect foreign exchange to be a headwind of approximately $0.10 on adjusted EPS for the quarter. Our US GAAP tax rate for the quarter was 15.6% versus 19.8% in the prior year.
Speaker Change: Foreign exchange was a headwind to adjusted EPS of $0.03 for the quarter. At current spot rates, we expect foreign exchange to be a headwind of approximately $0.10 on adjusted EPS for the year.
Andrew Krasner: Our adjusted tax rate for the quarter was 22.6%, compared to 23.7% for the second quarter of 2023. We continue to expect our adjusted tax rate for the year to be close to our 2023 rate, excluding the one-time items we mentioned at year end. During the quarter, we returned $290 million to our shareholders via share repurchases of $200 million and dividends of $90 million. We continue to view share repurchases as an attractive use of capital to create long-term shareholder value and as the central focus of balanced capital allocation.
Speaker Change: Our U.S. GAAP tax rate for the quarter was 15.6% versus 19.8% in the prior year. Our adjusted tax rate for the quarter was 22.6%, compared to 23.7% for the second quarter of 2023.
Speaker Change: We continue to expect our adjusted tax rate for the year to be close to our 2023 rate, excluding the one-time items we mentioned at year end.
Speaker Change: During the quarter, we returned $290 million to our shareholders via share repurchases of $200 million and dividends of $90 million. We continue to view share repurchases as an attractive use of capital to create long-term shareholder value and be the central focus of balanced capital allocation.
Andrew Krasner: We continue to expect share repurchases to total approximately $750 million in 2024, subject to marketing conditions and other relevant factors. We generated free cash flow of $361 million for the six months ended June 30th, an increase of $11 million from the prior year, primarily driven by operating margin expansion, partially offset by cash outflows related to transformation and discretionary compensation.
Speaker Change: We continue to expect share repurchases to total approximately $750 million in 2024, subject to marketing conditions and other relevant factors.
Speaker Change: We generated free cash flow of $361 million for the six months ended June 30th, an increase of $11 million from prior year, primarily driven by operating margin expansion, partially offset by cash outflows related to transformation and discretionary compensation payments.
Operator: The free cash flow results for the quarter are in line with our expectation, as free cash flow margin was not intended to be linear for the year. We continue to be confident in our expectations of year-over-year improvement in our full-year free cash flow margin. Our strong top line and bottom line performance this quarter reflects our ongoing momentum and the exemplary efforts of our colleagues to drive greater productivity and efficiency. We expect this to continue into the second half of the year and are confident in achieving our 2024 target.
Speaker Change: The free cash flow results for the quarter are in line with our expectation, as free cash flow margin was not intended to be linear for the year.
Speaker Change: We continue to be confident in our expectations of year-over-year improvement in our full-year free cash flow margin.
Speaker Change: Our strong top line and bottom line performance this quarter reflects our ongoing momentum and the exemplary efforts of our colleagues to drive greater productivity and efficiency. We expect this to continue into the second half of the year and are confident in achieving our 2024 targets. With that, let's open it up for Q&A.
Operator: With that, let's open it up for Q&A. Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced.
Elyse Greenspan: To withdraw your question, please press star 1 1 again. Participants may ask a question and one follow-up question. Please stand by while we compile the Q&A rock. Our first question comes from Elyse Greenspan of Wells Fargo. Your line is now open.
Speaker Change: Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question, please press star 1, 1 again. Participants may ask a question and one follow-up question. Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from Elyse Greenspan of Wells Fargo. Your line is now open.
Elyse Greenspan: Thanks, good morning. My first question, you know, just as we think about the updated 24 guidance, what do you guys think is the biggest swing factor in just being able to exceed the EPS guidance you've outlined for 24? Good morning, Elyse.
Elyse Greenspan: Thanks. Good morning. My first question, you know, just as we think about the updated 24 guidance, what do you guys think is the biggest swing factor on just being able to exceed the EPS guidance you've outlined for 24?
Carl A. Hess: I guess I'd look at it this way. We're really pleased with our execution in the first half of this year, and we remain optimistic about where we're tracking within the updated guidance. We do see some opportunities for stronger performance relative to our margin guidance, for example, better than expected productivity from our investment in talent. The timing of transformation savings could have an effect. However, we are continuing to find opportunities to trim expenses without impacting growth and productivity.
Speaker Change: Good morning, Elyse. I guess I'd look at it this way. We're really pleased with our execution in the first half of this year, and we remain optimistic on where we're tracking within the updated guidance.
Speaker Change: We do see some opportunities for stronger performance relative to our margin guidance. For example, better than expected productivity from our investment in talent.
Speaker Change: The timing of transformation savings could have an effect.
Speaker Change: We are continuing to find opportunities to trim expenses without impacting growth and productivity.
Carl A. Hess: And then, I guess, fourth, maybe I'd identify the potential for rebounding global M&A activity that could create opportunities for both of our segments. So, all of these are factors that could potentially lead to some outperformance. Thanks.
Speaker Change: And then, I guess, fourth, maybe I'd identify the potential for rebounding global M&A activity. That creates opportunities for both of our segments. So all these are factors that could potentially lead to some outperformance.
Elyse Greenspan: And then my second question is on free cash flow. You know, Carl, you mentioned managing, consciously managing BDO growth, right, to optimize free cash flow. When I look at the cash flow, you know, for the quarter, and I kind of adjust for transformation spend, which would be winding down, the conversion was at, you know, 21 percent of revenue, a little bit lower for the first half of the year, given that cash users are higher in Q1.
Speaker Change: Thanks. And then my second question is on free cash flow. You know, Carl, you mentioned, you know, managing, consciously managing BDO growth, right, to optimize free cash flow. When I look at the cash flow, you know, for the quarter, and I, you know, kind of adjust for transformation spend, which would be winding down, the conversion was at, you know, 21 percent of revenue, a little bit lower for the first half of the year, given that cash users are hiring Q1. But it seems like you guys are, you know, on your way to being above that, you know, 16 percent target.
Speaker Change: Am I correct in that assessment, and when we get through transformation spend, is, you know, kind of the pre-cash flow conversion expected to perhaps be greater than what you've outlined to the street?
Elyse Greenspan: But it seems like you guys are, you know, on your way to being above that, you know, 16 percent target. Am I correct in that assessment? And when we get through transformation spend, is, you know, the free cash flow conversion expected to perhaps be greater than what you've outlined to the street? Yeah, hi, Elyse. It's Andrew.
Andrew: Yeah, hi, Elyse. It's Andrew. The free cash flow margin target of 16% plus was a longer-term target, not something necessarily tied to 2024. We're really pleased with the progress that we continue to make there. And again, the levers there that will get us to that 16% plus over time are, you know, the expansion of the operating margin, I think, which we've demonstrated quite well this quarter. And we'll continue to do that.
Andrew Krasner: The free cash flow margin target of 16% plus was a longer-term target, not something necessarily tied to 2024. We're really pleased with the progress that we continue to make there. And again, the levers there that will get us to that 16% plus over time are the expansion of the operating margin, I think, which we've demonstrated quite well this quarter. And we'll continue to do that not just through transformation and operating leverage but also by developing businesses in more profitable markets. The second item is going to be the abatement of the transformation-related cash outlays that you mentioned, which we would expect through the beginning of 2025.
Speaker Change: through transformation and operating leverage, but also by developing businesses in more profitable markets.
Speaker Change: The second item is going to be the abatement of the transformation-related cash outlays, which you mentioned, which we would expect through the beginning of 2025. And then, of course, the improved cash conversion in our Transact business, which, you know, we're managing the growth profile there to maximize profitability and cash conversion. So we think all of those things taken together put us on a really solid path to get to that 16 percent.
Speaker Change: Plus over time
Gregory Peters: And then, of course, the improved cash conversion in our Transact business, which we're managing the growth profile there to maximize profitability and cash conversion. So we think all of those things taken together put us on a really solid path to get into that 16% plus over time. Thank you. Our next question comes from Gregory Peters of Raymond James. Your line is now open.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Gregory Peters of Raymond James. Your line is now open.
Gregory Peters: So for the first question, I'm going to focus on organic revenue growth. And in both your comments, you called out guys that helped boost organic revenue growth for a project for Capital Markets, Bolt, and Columbia. So I guess my question about organic revenue growth is, how much of the result... [inaudible] of what type?
Gregory Peters: Good morning everyone. So for the first question I'm going to focus on organic revenue growth and
Speaker Change: In both your comments, you called out some, I'd call it good guys, that helped boost organic revenue growth in the second quarter. Career project work, capital markets, bulk lump sum.
Speaker Change: So, I guess my question in organic is, how much of the result from the second quarter and through the first half is sustainable versus one time in nature? Or put it another way, just trying to figure out...
Carl A. Hess: Aspect. Good morning, Greg. It's Carl.
Speaker Change: What type of recurring aspect of the organic results will continue through next year and beyond?
Carl A. Hess: So, let me start with HWC, right? As I mentioned in the prepared remarks, we expect tailwinds that will help sustain us in helping clients navigate the current economic environment. That includes work surrounding pension de-risking and managing total rewards, as you cited. We see the increased compensation benchmarking participation that we're getting, and that continues to be elevated over the prior year. That creates a pipeline for accelerated growth in the latter half of this year, and our smart connection strategy continues to lead to increased cross-selling opportunities. I will highlight a few of those in my prepared remarks.
Speaker Change: Good morning, Greg. It's Carl. So, let me start with HWC, right? You know, as I mentioned in the prepared remarks, we expect tailwinds.
Greg: that will help sustain us regarding, you know, helping clients navigate the current economic environment.
Greg: That includes work surrounding pension de-risking and managing total rewards, as you cited.
Speaker Change: We see the increased compensation benchmarking participation that we're getting, and that continues to be elevated over the prior year. That creates a pipeline for accelerated growth.
Speaker Change: in the latter half of this year. And our smart connection strategy continues to lead to increased cross-selling opportunities. I highlight a few of those in the prepared remarks.
Carl A. Hess: Moving over to R&B, we're really pleased with the 10% organic growth we delivered in R&B for the quarter, and we continue to expect mid-single-digit or better growth for that segment for the full year. We're seeing increased contributions from our strategic investments in talent and platforms, and as we continue to pursue opportunities in line with our specialty strategy. So we're confident we can achieve our 2024 revenue goals with the growing momentum we have with our clients, as well as our expected pipeline for the rest of the year.
Speaker Change: Moving over to R&B, we're really pleased with...
Speaker Change: the 10% organic growth we delivered in R&B for the quarter and we continue to expect mid single-digit or better growth for that segment in the full for the full year.
Speaker Change: We're seeing increased contributions from our strategic investments in talent and platforms, and as we continue to pursue opportunities in line with our specialties.
Speaker Change: Strategy.
Speaker Change: So, we're confident we can achieve our 2024 revenue goals with the growing momentum we have with our clients, as well as our expected pipeline for the rest of the year. Our client retention rates are strong, our book gain activity has normalized down to very manageable levels.
Carl A. Hess: Our client retention rates are strong, our book gain activity has normalized down to very manageable levels, and so we're pleased with the organic growth results from this past quarter. They are directly in line with our expectations that we laid out at year-end, with mid-single-digit growth at the enterprise level and in HWC, and mid-single-digit and better growth in R&B.
Speaker Change: And so we're pleased with the organic growth results from this past quarter. They are directly in line with our expectations that we laid out at year-end, right, with mid-single-digit growth at the enterprise level and in HWC, and mid-single-digit and better growth in the R&P.
Speaker Change: While some businesses are seeing lower growth, others are seeing higher-than-planned growth, and overall we're comfortable regarding our revenue expectations.
Gregory Peters: While some businesses are seeing lower growth, others are seeing higher than planned growth, and overall, we're comfortable regarding our revenue expectations. Look, we've had a lot of positive momentum in our business, largely due to the investments we've made in talent and technology, as well as our growth initiatives focused on specialization and smart connections. You know, the strategic investments we've made across the business position us, we think, very well to pursue opportunities globally that offer the greatest potential for profitable growth, and as these investments take shape, we expect greater top-line contributions. For the second question, I'm going to pivot to the slide on transformation.
Speaker Change: Look, we've had a lot of positive momentum in our business, largely due to the investments we've made in talent and technology, as well as our growth initiatives focused on specialization and smart connections.
Speaker Change: You know, the strategic investments we've made across the business position us, we think, very well to pursue opportunities globally that offer the greatest potential for profitable growth. And as these investments take shape, we expect greater top-line contributions.
Speaker Change: Okay, for the second question, I'm going to pivot to the slide on the Transformation Program Savings. And I'm going to...
Speaker Change: I'm citing that that last bullet point where you said
Speaker Change: We're focusing on building an infrastructure from which to drive further efficiencies from.
Gregory Peters: We're getting to the point where the transformation program is going to sunset. You've obviously looked like you're in a position to do really well and get your objective, and want to look beyond that. I'm sorry.
Speaker Change: So...
Speaker Change: I mean, we're getting to the point where the transformation program is going to sunset. You've obviously looked like you're in position to do really well.
Speaker Change: and then get your objectives. But I want to look out beyond that, you know, in 25 and 26. And I'm curious what you meant by the statement drive further efficiencies, because you put it in bold.
Carl A. Hess: I'm curious what you meant by the statement, "drive further." Sure, Greg. I mean, now that WTW is on a more stable footing and some of the simpler parts of the program, like real estate rationalization, are mostly behind us, the technology modernization and process optimization phases are our primary focus now. We expect these actions are going to yield efficiencies as we move forward, and we expect most of the transformation savings from this year will not have a meaningful impact until 2025.
Speaker Change: Sure, Greg. Now that WTW is on a more stable footing and some of the simpler parts of the program like real estate rationalization are mostly behind us, the technology modernization and process optimization phases are our primary focus now.
Speaker Change: We expect these actions are going to yield efficiencies as we move forward, and we expect most of the transformation savings from this year will not have a meaningful impact until 2025.
Carl A. Hess: And to bring this a bit to life, some examples include cloud initiatives like migration from data centers and servers and more reliability on cloud-based operations, centralizing and right-shoring support to delivery centers, reducing our application portfolio, renegotiating contracts, and reducing consultant spend, right? A lot of these types of undertakings have always been a part of the program, but we've been able to identify additional savings by applying these sorts of plans to additional areas in our environment. I mean, ultimately, these actions are about simplifying our environment, making it easier to manage, and that'll enable us to take advantage of streamlining, automation, and digitization.
Speaker Change: And to bring this a bit to life, right, some examples include cloud initiatives like migration from data centers and servers and more reliability on cloud-based operations.
Speaker Change: centralizing and right-shoring support to delivery centers.
Speaker Change: of reducing our application portfolio, renegotiating contracts, and reducing consultant spent. Right, a lot of these types of undertakings have always been a part of the program, but we've been able to identify additional savings by applying these sort of plans to additional areas in our business.
Speaker Change: I mean, ultimately, these actions are about simplifying our environment, making it easier to manage, and that'll enable us to take advantage of streamlining, automation, and digitization.
Carl A. Hess: That allows us to automate processes, to remove duplication, and to operate more efficiently, right, by reducing manual effort and creating faster turnaround times. These updates will not only reduce costs, but let us better leverage data, and that, in turn, provides more relevant advice and more targeted strategies for our clients, and that'll drive revenue growth as well, right? So, what we've been doing is laying a solid foundation going into the post, the world after the end of the 2034 transformation program, and we think that gives us momentum to continue to drive efficiency in the organization by taking advantage of what we've been able to construct during this time. Thank you. Our next question comes from Rob Cox of Goldman Sachs. Your line is now open.
Speaker Change: That allows us to automate processes, to remove duplication, and operate more efficiently, right? By reducing manual effort, creating faster turnaround times.
Speaker Change: And these updates will not only reduce costs, but let us better leverage data, and that, in turn, provides more relevant advice and more targeted strategies for our clients, and that'll drive revenue growth as well, right? So what we've been doing is laying a solid foundation going into
Speaker Change: the world post the end of the 2044 transformation program. And we think that gives us momentum to continue to drive efficiency to organization by taking advantage of what we've been able to construct during this period.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Rob Cox of Goldman Sachs. Your line is now open.
Robert Cox: Hey, thanks. So yeah, I just wanted to ask about the transformation cash spend. So it looks like with the updated guide, if I've got my numbers right, that there's a little more than $160 million in cash restructuring charges left under the program. Do you expect the majority of those cash payments to occur in the back half of 2024? And just given that there was over $250 million of cash spending in the back half of 2023, I just want to confirm that from this point forward, cash restructuring spend is likely to be a year-over-year tailwind to free cash flow.
Robert Cox: Hey, thanks!
Robert Cox: So yeah, I just wanted to ask about transformation cash spend. So it looks like with the updated guide, if I've got my numbers right, that there's a little more than $160 million in cash restructuring charges left under the program.
Speaker Change: Do you expect the majority of those cash payments to occur in the back half of 2024?
Speaker Change: And just given that there was over $250 million of cash spending in the back half of 2023, I just want to confirm that from this point forward, cash restructuring spend is likely to be a year-over-year tailwind to free cash flow.
Robert Cox: I think that's generally, I would flip that the other way. And don't forget, we're going to have some of that bleed over into 2025 as well in terms of when the cash goes out the door versus when it's incurred from a transformation program perspective. Okay.
Speaker Change: I think that's generally...
Speaker Change: I would flip that the other way, and don't forget we're going to have some of that bleed over into 2025 as well in terms of when the cash goes out the door versus when it's incurred from a transformation program perspective.
Okay, got it.
Andrew Krasner: And then just going back to the moderated growth and individual marketplace, and you know, how it was intentional. Can you just give us a little more color on why you did that in a quarter, your updated expectations for growth in the back half for this business, and the impact that that could have on free cash flow? Yeah, sure. As we said in our remarks, we deliberately moderated growth in our Medicare-related businesses to reflect market developments, maximize profitability, and improve free cash flow outcomes.
Operator: And then just going back to the moderated growth and individual marketplace, and you know how it was intentional.
Speaker Change: Okay, got it. And then just going back to the moderated growth and individual marketplace.
Operator: Can you just give us a little more color on why you did that in the quarter.
Speaker Change: and you know, how it was intentional. Can you just give us a little more color on why you did that in a quarter, your updated expectations on growth in the back half for this business and the impact that that could have on free cash flow?
Operator: You're updated expectations on growth in the back half for this business and the impact that that could have on free cash flow.
Andrew Kligerman: Yeah, sure. So we, as we said in our remarks, we deliberately moderated growth in our Medicare-related business to reflect market development, maximize profitability, and improve free cash flow outcomes. And we do remain focused on navigating the guard rails between growth, profitability, and free cash flow there.
Speaker Change: Yeah, sure. So, as we said in our remarks, we deliberately moderated growth in our Medicare-related businesses to reflect market developments, maximize profitability.
Andrew Krasner: And we do remain focused on navigating the guardrails between growth, profitability, and free cash flow there. You know, we're not chasing growth in this business and are being thoughtful about acquisition costs. At the moment, we're seeing some media buying costs increase, and that's really driven by the U.S. election and media buying, and it's also causing a bit of consumer distraction.
Speaker Change: and improved precastral outcomes.
Andrew Kligerman: You know, we're not chasing growth in this business and are being thoughtful about acquisition costs at the moment. We're seeing some media buying costs increase. And that's really driven by the US election media buying, and it's also causing a bit of consumer distraction. So we wanted to make sure we thoughtfully navigated that the decrease in our Medicare-related businesses was partially offset by solid growth and outsourcing within that line of business. And that was driven by increased project work, which more than covered the decrease in revenue related to the client we mentioned last quarter who insources health and other benefits administration.
Speaker Change: We do remain focused on navigating the guardrails between growth, profitability, and free cash flow there. You know, we're not chasing growth in this business and are being thoughtful about acquisition costs.
Speaker Change: At the moment, we're seeing some media buying costs increase, and that's really driven by the U.S. election media buying, and it's also causing a bit of consumer distraction. So we wanted to make sure we thoughtfully navigated that. The decrease in our Medicare-related businesses was partially offset by solid growth and outsourcing.
Robert Cox: So we wanted to make sure we thoughtfully navigated that. The decrease in our Medicare-related businesses was partially offset by solid growth and outsourcing within that line of business. And that was driven by increased project work, which more than covered the decrease in revenue related to the client we mentioned last quarter, who outsources health and other benefits administration. And, you know, but overall, we're still confident in our pipeline in HWC and continue to expect that segment to have mid single-digit organic revenue growth for the full year. Thank you. Our next question comes from Paul Newsome of Piper Sandler. Your line is now open.
Speaker Change: Within that line of business, and that was driven by increased project work, which more than covered the decrease in revenue related to the client we mentioned,
Andrew Kligerman: And, you know, but overall we're still confident in our pipeline and HWC continue to expect that segment to have the single digit organic revenue growth for the full year.
Speaker Change: last quarter, who insources health and other benefits administration. And, you know, but overall, we're still confident in our pipeline in HWC, and continue to expect that segment to have mid-single-digit organic revenue growth for the full year.
Operator: Thank you.
Paul Newsom: Our next question comes from Paul Newsom of Paper Famer; your line is now open.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Paul Newsome of Piper Sandler. Your line is now open.
Jon Paul Newsome: Good morning. Thanks for the call. I was hoping you could give us some thoughts on the issue of the day, which is the outlook for property, the market environment, and the problems we've seen in cash. Do you think it seems like pricing is basically kind of moderating property and kind of not doing much in casually? From your vantage point, what do you think is happening, and what do you think might change? Sure. Good morning, Rob.
Paul Newsom: Good morning. Thanks for the call. Was hoping you could give us some thoughts on the sort of the issue of the day, which is the outlook for the property cash market environment in the problems we've seen in casually.
Jon Paul Newsome: Good morning. Thanks for the call. I was hoping you could give us some thoughts on the issue of the day, which is the outlook for the property casualty market environment and the problems we've seen in casualty.
Paul Newsom: Do you think it seems like pricing is basically kind of moderating property and not doing much in casually?
Operator: From your vantage point, you know, what do you think is happening and what do you think might change? Sure.
Speaker Change: From your vantage point, what do you think is happening and what do you think might change?
Carl A. Hess: I guess I look at it this way, right? Overall, we're seeing a stabilizing to softening market with some differentiation there that I'll elaborate on a bit. For property, the global trend is stabilizing to softening, though there was a large amount of NATCAT losses in the first half of the year, such as U.S. storms, flooding in Europe, and the earthquake in Taiwan. However, natural catastrophe capacity is no longer the main driver of premium increases in this.
Unnamed Speaker: Good morning. I guess I look at this way, right? Overall, we're seeing is stabilizing to softening market. And with some differentiation, they're that will elaborate a bit on for property. The global trend is stabilizing to softening, though there was a large amount of net cap losses in the first half of the year, such as US storms flooding in Europe. The current quake and Taiwan natural catastrophe capacities no longer the main driver of premium increases in this space. But in the casually market, there's reduced capacity and higher pricing. Looking at financial lines, we do see them continue to soften, but the rate reductions is slowed down this quarter. Although in cyber, the market softening faster because ensures have been widening their appetite and new capacity entering the market.
Speaker Change: Sure. Good morning, Rob. I guess I look at it this way, right? Overall, we're seeing a stabilizing to softening market.
Speaker Change: And with some differentiation there that I'll elaborate a bit on. For property, the global trend is stabilizing to softening. Though there was a large amount of NatCap losses in the first half of the year, such as...
Speaker Change: U.S. storms, flooding in Europe , the earthquake in Taiwan, natural catastrophe capacity is no longer the main driver of premium increases in this space.
Carl A. Hess: But in the casualty market, there's reduced capacity and higher prices. Looking at financial lines, we do see them continue to soften, but the rate reductions have slowed down this quarter. Although in cyber, the market's softening faster because insurers have been widening their appetite and new capacity is entering the market, we see marine is stable to softening. But geographically, right, there's a softening market in Asia, Australia, LATAM. In Europe, we see a generally flat market, same true for the UK.
Speaker Change: But in the casualty market, there's reduced capacity and higher pricing.
Speaker Change: Looking at financial lines, we do see them continue to soften, but the rate reductions have slowed down this quarter. Although in cyber, the market is softening faster because insurers have been widening their appetite and new capacity entering the market.
Unnamed Speaker: We see marine is stable to softening. But geographically, right, there's a softening market in Asia, Australia, Latam; in Europe we see generally flat, same group of the UK and premium rises in North America to slow the stable. You know, many of the current rate increases have been driven by complex risks such as social inflation, geopolitical conflicts, and natural disaster. All of this impacts our casually lines, especially in North America and globally in political violence and terror.
Speaker Change: We see marine is stable to softening, but geographically, right, there's a softening market in Asia, Australia, LATAM. In Europe , we see generally flat, same true for the UK. And premium rises in North America have slowed to stable.
Carl A. Hess: And premium rises in North America have slowed to stable. You know, many of the current rate increases have been driven by complex risks such as social inflation, geopolitical conflicts, and natural disasters. You know, all of those impacts are casualties lines, especially in North America and globally in political violence and terrorism. Looking at it in terms of our results, we don't view rate as a significant tailwind or headwind across our R&B portfolio in terms of how it impacted or resulted in our results this past quarter.
Speaker Change: You know, many of the current rate increases have been driven by complex risks such as social inflation, geopolitical conflicts, natural disaster, you know, all of those impacts are casualty lines, especially in North America and globally in political violence and terrorism.
Unnamed Speaker: Lookie at it in terms of our results, we don't view rate as a significant tailwind or headwind across our R&B portfolio in terms of how it resulted, our impact to our results this past quarter. Our growth was primarily driven by high retention rates in new business, as well as the investments we've made over the last few years, and the reorientation of the R&B business towards specialization. We think that's really made a difference for us and is going to continue to differentiate for us.
Speaker Change: Looking at it in terms of our results, we don't view rate as a significant tailwind or headwind across our R&B portfolio in terms of how it results.
Carl A. Hess: Our growth has primarily been driven by high retention rates in new business as well as the investments we've made over the last few years and the reorientation of the R&B business towards specialization. We think that's really made a difference for us and is going to continue to differentiate. Fantastic. That's all I wanted to ask. Why don't you let other people ask questions?
Speaker Change: impacted our results this past quarter. Our growth was primarily driven by high retention rates in new business as well as the investments we've made over the last few years and the reorientation of the R&D business towards specialization. We think that's really made a difference for us and is going to continue to differentiate for us.
Operator: Okay, let's start one. I want you to let other people ask questions.
Operator: Appreciate the help of Zoe.
Speaker Change: Fantastic. That's all I wanted to ask. Why don't you let other people ask questions. Appreciate the help, as always.
Operator: Thank you.
Speaker Change: Thank you.
Andrew Kilgramann: Thank you. One moment for our next question. Our next question comes from Andrew Kilgramann of TD Cohen; your line is now open.
Jon Paul Newsome: Appreciate the help, as always. Thank you. Thank you. One moment for our next question. Our next question comes from Andrew Kligerman of T.D.
Speaker Change: Thank you, one moment for our next question.
Andrew Kligerman: Cohen, your line is now open. Hey, good morning. I'd like to follow up on an earlier question about revenue, organic revenue growth. You did 9% in health care and then on the other side.
Speaker Change: Our next question comes from Andrew Kilgerman of TD Cohen. Your line is now open.
Andrew Kilgramann: Hey, good morning. I'd like to follow up on an earlier question about revenue, organic revenue growth. You did nine percent in health, and then on the other side in CRB, you did 10 percent. So, you know, I think about the, you know, exceptional talent that you hired, and they really are exceptional. And, and the numbers, you know, have brought the count up. So, and I think of those two, you know, low double high single digit numbers in L-Fand CRB.
Andrew Kligerman: Hey, good morning. I'd like to follow up on an earlier question about revenue, organic revenue growth. You did 9% in health and then on the other side in
Andrew Kligerman: So, you know, I think about the, you know, exceptional talent that you've hired, and they really are exceptional. And, and the numbers, you know, have brought the count up. So, when I think of those two, you know, low-double, high-single-digit numbers in health,
Speaker Change: CRB did 10%.
Speaker Change: So.
Speaker Change: You know, I think about the, you know, exceptional talent that you've hired, and they really are exceptional. And the numbers, you know, have brought the count up. So when I think of those two.
Carl A. Hess: CRB, how much of that, and then I put that next to your guidance of mid-single digit or higher in terms of your objective for growth. Did I think most of that outsized growth was just kind of the tailwinds of the new talent, and then it just kind of eases into mid-single digit or higher? Or do you think those high numbers in those two material subsegments will?
Speaker Change: You know low double high single-digit numbers in health and
Unnamed Speaker: How much of that? And then I put that next to your, your guidance of mid single digit or higher in terms of your, your objective for growth. Should I think about most of that outside growth as just kind of the tailwinds of the new talent and then it just kind of eases into mid single digit or higher?
Speaker Change: CRB. How much of that, and then I put that next to your guidance of mid single-digit or higher in terms of your objective for growth.
Speaker Change: Should I think about most of that?
Speaker Change: outsized growth as just kind of the tailwinds of the new talent and then it just kind of eases into mid single-digit or higher? Or do you think those high numbers and those two material subsegments will...
Unnamed Speaker: Or, or do you think those high numbers in those two material subsegments will continue? Well, I mean, as, as I've said before, it's a; we do have some positive momentum that results not just from the investment we've made in talent. But we think of a different strategy that enables that talent to best succeed in the marketplace. You know, we do think that we still have more productivity. We can get from the cohorts of talent we brought on board over the last several years. And we continue to look for talent out in the marketplace, who view WTW as the best place they can use to leverage what they can bring to their client base.
Andrew Kligerman: Will continue. Well, I mean, as I've said before, Andrew, we do have some positive momentum that results not just from the investment we've made in talent but what we think is a differentiated strategy that enables that talent to best succeed in the marketplace. We do think that we still have more productivity we can get from the cohorts of talent we've brought on board over the last several years, and we continue to look for talent out in the marketplace who view WTW as the best place they can use to leverage what they can bring to their client base.
Speaker Change: We'll continue.
Speaker Change: Well, I mean, as I've said before, Andrew, we do have some positive momentum that results not just from the investment we've made in talent, but what we think is a differentiated strategy that enables that talent to best succeed in the marketplace.
Speaker Change: You know, we do think that we still have more productivity we can get from the cohorts of talent we've brought on board over the last several years, and we continue to look for talent out in the marketplace.
Speaker Change: who view WTW as the best place they can use to leverage what they can bring to their client base.
Unnamed Speaker: So, we think that there's momentum in those businesses. We think our strategy helps us succeed.
Andrew Kligerman: So... We think that there's momentum in those businesses, and we think our strategy helps us succeed. We are optimistic that there is continued progress we can make, awesome and in ICT so that that was flat. And you said it was, you know, tempered demand for discretionary services. And I think Andrew said that he expects a pickup in the second half in that area. Can you talk specifically about some of those services that are big in ICT and why you think that'll pick up in the Yeah, sure. ICT comprises about 10% or roughly $400 million of R&B's annualized revenue.
Speaker Change: We think that there's momentum in those businesses. We think our strategy helps us succeed. We are optimistic that there is continued progress we can make.
Unnamed Speaker: We are optimistic that there is continued progress we can make.
Unnamed Speaker: That's awesome. And in I see T, so that that was flat. And you said it was, you know, tempered demand for discretionary services.
Speaker Change: That's awesome. And in ICT, so that that was flat.
Unnamed Speaker: And I think Andrew said that he expects a pickup and not in the second half. And that area, if you talk specifically about some of those services that are big at ICT and why you think that'll pick up.
Unnamed Speaker: and the second half. Yeah, sure. ICT comprises about 10% or roughly 400 million of R&B's annualized revenue. That split roughly 50, 50, between software sales and consulting revenue.
Andrew Krasner: And that's that split roughly 50-50 between software sales and consulting revenue. Given its size, a few million dollars in either direction can have an impact on the organic growth rate for the period if a couple of sizable contracts have, you know, modified timing from period to period. In the first half of the year, we saw some of these large consulting projects being postponed. However, we recognize that the environment for certain advisory work within ICT may continue to be challenging.
Unnamed Speaker: You've given it size if you million dollars in either direction can have an impact on the organic growth rate for the period of a couple of size of what contracts have modified timing periods per year. In the first half of the year, we saw some of those large consulting projects being postponed. However, we recognize that the environment for certain advisory work within ICT may continue to be challenging, so we moderated our growth expectation there accordingly, along the lines of the single-digit growth for ICT. So it's really around the timing of software sales, which can be chunky from time to time, as well as some of the discretionary spend related to the consulting side of the business and the timing of those projects.
Speaker Change: you know, modified timing, period to period.
Speaker Change: However, we recognize that the environment for certain advisory work within ICT may continue to be challenging, so we moderated our growth expectation there accordingly, you know, along the lines of mid-single-digit growth for ICT. So it's really around the timing of some software.
Andrew Krasner: So, we moderated our growth expectation accordingly, you know, along the lines of mid-single-digit growth for ICT. So, it's really around the timing of some software sales, which can be chunky from time to time, as well as some of the discretionary spend related to the consulting side of the business and the timing of those projects. Thank you. The next question comes from Mike Ward of Citigroup. Your line is now open. Thanks. Good morning.
Speaker Change: sales, which can be chunky from time to time, as well as some of the discretionary spend related to the consulting side of the business and the timing of those projects.
Mike Ward: Thank you. Our next question comes from Mike Ward of City Group.
Speaker Change: Thank you.
Mike Ward: Your line is now open. Thanks.
Speaker Change: Our next question comes from Mike Ward of Citigroup. Your line is now open.
Unnamed Speaker: Good morning. You mentioned the opportunity to do potentially do, uh, perform some of the guidance on a margin. I was wondering if you could quantify potential upside at all to margins. Yeah. We're not going to quantify any potential upside, but I think, um, if I think about how the rest of the year could play out, um, you know, uh, we, we obviously re very pleased with the 240 basis points of margin expansion. We had this quarter. That gives us the confidence in the outlook for the full year and the increase in the target range to 23 to 23 and a half of the year.
Michael Ward: Carl, you mentioned the opportunity to potentially outperform the guidance on the margins. I was wondering if you could quantify potential upside at all. Yeah, we're not going to quantify any potential upside.
Michael Ward: Thanks, good morning.
Michael Ward: Carl, you mentioned the opportunity to do, potentially to outperform the guidance on the margins. I was wondering if you could quantify potential upside at all to margins.
Andrew Krasner: But I think if I think about how the rest of the year could play out, you know, we're obviously very pleased with the 240 basis points of margin expansion we had this quarter. That gives us confidence and the outlook for the full year and the increase in the target range to 23 to 23 and a half. And if you just think about some of the puts and takes for the rest of the year, you know, we expect the run rate transformation savings to be spread readily over the year.
Carl: Yeah, we're not going to quantify any potential upside, but I think if I think about how the rest of the year could play out, you know, we obviously we're very pleased with the 240 basis points of margin expansion we had this quarter. That gives us the confidence and the outlook for the full year and the increase in the target range to 23 to 23 and a half of the year.
Unnamed Speaker: Um, and if you just think about some of the puts and takes for the rest of the year, um, you know, we expect to run rate transformation savings to be spread ratably over the year. We also anticipate operating leverage on a full-year basis as we continue to drive organic growth, as well as focusing on cost discipline and operating efficiency. Um, and just as a reminder, the pacing of bookings and interesting coming to comparable period, uh, some of those things may cause the scale of margin expansion to vary quarter by quarter. Um, but, you know, as you heard me mention, as Carl mentioned earlier, you know, we do see opportunities to potentially outperform.
Carl: And if you just think about some of the puts and takes for the rest of the year, we expect the run rate transformation savings to be spread ratably over the year. We also anticipate operating leverage on a full year basis as we continue to drive organic growth, as well as focusing on cost discipline and operating efficiency.
Andrew Krasner: We also anticipate operating leverage on a full year basis as we continue to drive organic growth, as well as focus on cost discipline and operating efficiency. And, just as a reminder, the pacing of book gains and interest income in the comparable period, some of those things may cause the scale of margin expansion to vary quarter by quarter. But you know, as you heard me mention, as Carl mentioned earlier, we do see opportunities to potentially outperform. Okay, thank you.
Speaker Change: And just as a reminder, the pacing of book gains and interest income in the comparable period, some of those things may cause the scale of margin expansion to vary quarter by quarter. But, you know, as you heard me mention, as Carl mentioned earlier, you know, we do see opportunities to potentially outperform.
Unnamed Speaker: Okay.
Unnamed Speaker: Thank you. Um, and then for CRB, um, we've seen a divergence in the pricing environment for large accounts for some now marketer smaller. Um, I was hoping you could talk about what you're seeing in terms of pricing across your customer segments within CR, CRB overall again.
Michael Ward: Um, and then, for CRB, we've seen a divergence in the pricing environment for large accounts in a small market or smaller. I was hoping you could talk about what you're seeing in terms of pricing across your customer segments within CRV overall. Yeah, sure. I think I talked a little bit about this when I discussed rates a question or two ago.
Speaker Change: Okay, thank you. And then.
Speaker Change: For CRB, we've seen a divergence in the pricing environment for large accounts versus middle market or smaller.
Speaker Change: I was hoping you could talk about what you're seeing in terms of pricing across your customer segments within CRV overall, I guess.
Unnamed Speaker: Yeah, sure. I think I talked a little bit about this, uh, when I discussed rate a question or two ago. Um, there's, you know, there's certainly more differentiated depending on the nature of the risk and what the, you know, performance has been over time where, you know, for instance, cat exposed to that hit property is clearly a more challenged environment than, uh, clients who've had relatively loss free records. Uh, so there is, you know, clearly, I think a desire by a market to continue differentiating, uh, pricing that they offer our client face, but it's, you know, we're not seeing the difficulty we might have had a few years ago, uh, with capacity in various markets. We're able to achieve quite good results for our clients.
Speaker Change: Yeah, sure, I think I talked a little bit about this when I discussed rate a question or two ago.
Carl A. Hess: There's, you know, there's certainly more differentiation depending on the nature of the risk and what the, you know, performance has been over time where, you know, for instance, cat exposed and cat hit property is clearly a more challenging environment than clients who've had relatively loss-free records. So, there is, you know, clearly, I think, a desire by markets to continue to differentiate in the pricing that they offer our client base, but it's, you know, we're not seeing the difficulty we might have had a few years ago with capacity in various markets. We're able to achieve, I think, quite good results for our clients. I anticipate that will be the case going forward. Thank you. Our next question comes from Mike Zaremski of BMO. Your line is now open.
Speaker Change: There's, you know, there's certainly more differentiated depending on the nature of the risk and what the, you know, performance has been over time. Where, you know, for instance, cat exposed and cat hit property is clearly a more challenged environment than clients who've had relatively lost free records.
Speaker Change: So, there is, you know, clearly, I think, a desire by markets to continue to differentiate in the pricing that they offer our client base, but it's, you know, we're not seeing the difficulty we might have had a few years ago with capacity in various markets.
Unnamed Speaker: and to spade out with the case going forward.
Speaker Change: were able to achieve, I think, quite good results for our clients.
Mike Zaremski: Thank you. Our next question comes from Mike Zaremski of BMO.
Speaker Change: Anticipate that will be the case going forward.
Speaker Change: Thank you. Our next question comes from Mike Zaremski of BMO. Your line is now open.
Mike Zaremski: Your line is now open. Great morning. You know, back to the discussion on what was, you know, excellent, continues to be excellent organic growth in R&B. Just looking through kind of past transcripts and what you said this quarter, you mentioned client retention in the mid 90s, the past couple quarters, and the course before that you said a, you know, retention improved and increased. It is a fair to kind of assume that retention is continues to be a driver of some of the outsized growth, or am I reading into things too. I mean retention continues to be in the mid 90s, which is a level where we're very pleased with that. You know, business you keep is less business you have to replace.
Michael Zaremski: Hey, great morning. Now, back to the discussion on what was, you know, excellent and continues to be excellent organic growth in R&D. Just looking through kind of past transcripts and what you've said this quarter, you mentioned client retention in the mid-1990s. The past couple of quarters, and the quarters before that, you said, you know, retention improved and increased. Is it fair to kind of assume that retention continues to be a driver of some of the outsized growth, or am I reading too much into it?
Michael Zaremski: Hey, great, good morning. You know, back to the discussion on what was, you know, excellent, continues to be excellent organic growth in R&B.
Michael Zaremski: Just looking through kind of past transcripts and what you've said this quarter, you mentioned client retention in the mid-90s, the past couple quarters, and of course before that you've said, you know, retention improved and increased. Is it fair to kind of assume that that retention is
Speaker Change: continues to be a driver of some of the outsized growth or am I reading into things too much?
Michael Zaremski: I mean, retention continues to be in the mid-90s, which is a level we're very pleased with because the business you keep is less business you have to replace. We think that's a result of the excellent client service we deliver, as well as the insights we're able to provide our client base with our risk analytics, which we feel are unmatched in the industry. So, no question that the retention rates we have are ones we'd like to keep going forward. Got it.
Speaker Change: I mean, retention continues to be in the mid-90s, which is a level we're very pleased with, that business you keep is less business you have to replace. And we think that's a result of, you know, the...
Unnamed Speaker: Well, we think that's a result of, you know, the excellent client service we deliver, as well as the insights we're able to provide our client base with our risk and analytics that we feel are unmatched to the administrator. So no question that the retention rates we have are ones we'd like to keep our system going forward.
Speaker Change: Excellent client service we deliver.
Speaker Change: as well as the insights we're able to provide our client base with our risk analytics that we feel are unmatched to the industry. So no question that the retention rates we have are ones we'd like to keep persistent going forward.
Unnamed Speaker: Got to say that is kind of a, and you're at a normalized retention, and I should have been more clear today. Well, yeah, I mean, we're certainly at levels that are, you know, consistent with where we were a number of years ago before, you know, some of the disruption we had, and the stabilization of the talent base is at the Sunday bit of that.
Carl A. Hess: That is kind of a normalized retention rate. I should have been more clear today. Well, yeah, I mean, we're certainly at levels that are, you know, consistent with where we were a number of years ago before, you know, some of the disruption we had and the stabilization of the talent base, at the fundamental level. Okay, great.
Speaker Change: Got it. That is kind of a, you're at a normalized retention rate. I should have been more clear today.
Speaker Change: Well, yeah, I mean, we're certainly at levels that are, you know, consistent with where we were a number of years ago before, you know, some of the disruption we had and the stabilization of the talent base.
Unnamed Speaker: Okay, great. My follow up just sticking on the RMB segment, you know margins improvement was just was was excellent as well. You know, I heard some of the comments, but just want to make sure there's kind of nothing.
Michael Zaremski: My follow-up, just sticking on the R&B segment, margin improvement was just excellent as well. And I heard some of the comments, but just just want to make sure there's kind of nothing wrong, it was really mostly operating leverage, or is there something that was one time or something? That was cut in terms of expenses that we should just be careful with, run rating. And I know you obviously have guidance out there on the margin, but just curious about just the extent of the margin beat was so much. Yeah, there was nothing unusual.
Speaker Change: Happy Fundamental Day.
Speaker Change: Okay, great. My follow-up, just sticking on the R&D segment, you know, margins...
Speaker Change: Improvement was just was excellent as well. You know I heard some of the comments but just just want to make sure there's kind of nothing it was really mostly operating leverage or is there something that was one time or something
Unnamed Speaker: It was really mostly operating leverage, or is there something that was one time or something that was cut in terms of expenses that we should just be careful with run rating. And I know you obviously have guidance out there on the margin, but the risk is just the extent of the margin B was so much thanks. Yeah, there was nothing unusual. It was all driven by transformation savings and operating leverage, and of course, you know, focusing on prudent expense management as part of that.
Speaker Change: that was cut in terms of expenses that we should just be careful with, run rating. And I know you obviously have guidance out there on the margin, but just curious, just the extent of the margin beat was so much. Thanks.
Andrew Krasner: It was all driven by transformation, savings, and operating leverage. And, of course, you know, focusing on prudent expense management as part of that. Thank you. Our next question comes from Yaron Kinar of Jeffreys. Your line is now open. Thank you.
Speaker Change: Yeah, there was nothing unusual. It was all driven by transformation, savings, and operating leverage, and, of course, focusing on prudent expense management as part of that.
Aaron Kenar: Thank you. Our next question comes from Aaron Kenar of Jeffries.
Speaker Change: Thank you.
Aaron Kenar: Your line is now open. Thank you.
Speaker Change: Our next question comes from Yaron Kinar of Jeffreys. Your line is now open.
Yaron Kinar: I wanted to circle back to the guidance, the updated guidance, specifically the margin guidance. So I think at the midpoint, the new guidance would suggest a material slowdown and margin expansion in the second half. Can we talk about that a little bit?
Unnamed Speaker: Good morning. I wanted to circle back to the guidance, the updated guidance, specifically the margin guidance. So I think at the midpoint, the new guidance would suggest material slow down and margin expansion in the second half.
Yaron Kinar: Thank you. Good morning. I wanted to circle back to the guidance, the updated guidance, specifically the margin guidance. So I think at the midpoint, the new guidance would suggest material slowdown in margin expansion in the second half. Can we maybe talk about that a little bit? Yeah. Okay.
Unnamed Speaker: Can we talk about that a little bit? Yeah, sure. I think I would bring you back to Carl's comments earlier about sort of, you know, continuing to drive operating leverage transformation program, continuing to hit. And, you know, where we, where we think we might land within that range and the level of optimism around that. So we feel really comfortable about where we're going to land within that range, given the industry dynamics as well as our progress on transformation operating. And again, we do see the out. Yes, sorry, go ahead.
Andrew Krasner: Yeah, sure. I think I would bring you back to Carl's comments earlier about sort of, you know, continuing to drive operating leverage, the transformation program continuing to hit, and where we think we might land within that range and the level of optimism around that. So we feel really comfortable about where we're going to land within that range, given the industry dynamics, as well as our progress on transformation and operations. And again, we do see the, yeah, sorry, go ahead.
Carl: Yeah, sure, I think I would bring you back to Carl's comments earlier.
Carl: about sort of, you know, continuing to drive operating leverage, transformation program, continuing to hit.
Speaker Change: and you know where we where we think we might land within that range and the level of optimism around that. So we feel really comfortable about where we're going to land within that range given the industry dynamics as well as our progress on transformation and operating.
Unnamed Speaker: I was just going to say, with that comment of the continued kind of the fruits of the transformational program coming through into scale, why would we see a meaningful slowdown and margin expansion in the second half of the year, kind of year over year, relative to where it's been the first half. Yeah, so we do see the opportunity to outperform that range that we put out there, and Carl went through some of the puts and takes of that earlier about how we might get there around better than expected productivity from investment and talent, the timing of transformation savings, continuing to focus on prudent management of expenses without impacting growth.
Yaron Kinar: I was just going to say, with that comment about the continued fruits of the transformational program coming through and the scale, why would we see a meaningful slowdown in margin expansion in the second half of the year, year over year, relative to where it was in the first half? Yeah, so I mean, if we do see the opportunity to outperform that range that we put out there, and you know, Carl went through some of the puts and takes of that earlier about how we might get there around, you know, better than expected productivity from investment and talent, the timing of the transformation savings, and continuing to focus on, you know, prudent management of expenses without impacting growth. And then there are some, you know, business factors as well, which could provide some incremental tailwinds. I got it.
Speaker Change: And again, we do see the, yeah, sorry, go ahead.
Speaker Change: I was just going to say with that comment of kind of the continued kind of fruits of the transformational program coming through and the scale, why would we see a
Speaker Change: meaningful slowdown in margin expansion in the second half of the year, kind of year-over-year relative to where it's been in the first half.
Speaker Change: So, we do see the opportunity to outperform that range that we put out there, and Carl went through some of the puts and takes of that earlier about how we might get there around better than expected productivity from investment and talent, the timing of the transformation savings.
Speaker Change: continuing to focus on prudent management of expenses without impacting growth and then some business factors as well which could provide some incremental tailwinds.
Unnamed Speaker: And then some business factors as well, which could provide some incremental tailwinds. Got it. It's a potential upside to that guidance.
Andrew Krasner: So it's a potential upside to that guidance. And my second question, Andrew, you know, you talked about the Medicare-related business. Can you maybe offer some additional color on what you meant by the market developments? And do you still consider this an attractive long-term business? And maybe I apologize for throwing in a lot here, but also, what's allowed Willis & Transact to succeed where we've seen a growing list of competitors stumble? Well, let me address the latter.
Andrew Kligerman: And my second question, Andrew, you talked about the medical-related business. Can you maybe offer some additional color on what you might buy the market developments? And do you still consider this an attractive long-term business?
Speaker Change: Got it. So it's a potential upside to that guidance.
Speaker Change: And my second question, Andrew, you know, you talked about the Medicare-related business. Can you maybe offer some additional color on what you meant by the market developments? And do you still consider this an attractive long-term business?
Andrew Kligerman: And maybe I apologize for throwing in a lot here. But also what's allowed Wilson transact to succeed where we've seen a growing list of competitors stumble? Well, let me let me address the latter. I mean, I think we run a business that's got a couple differentiating features to it. One is the diversification we've got between product and lead type. And second, I probably identify a bit of discipline. Historically, many of our competitors have gone for growth at all costs. But we've always, I think, tried to pursue a path that looks at growth and profitability and cash spend and find balance all three for sustainable margins and revenue growth.
Speaker Change: And maybe, I apologize for throwing in a lot here, but also what's allowed Willis & Transact to succeed where we've seen a growing list of competitors stumble?
Carl A. Hess: Right. I mean, I think we run a business that's got a couple differentiating features. One is the diversification we've got between product and lead type. And, Second, I'd probably identify a bit of discipline.
Andrew: Well, let me let me address the latter, right? I mean, I think we run a
Speaker Change: business that's got a couple differentiating features to it. One is the diversification we've got between product and lead type and
Carl A. Hess: Historically, many of our competitors have gone for growth at all costs, but we've always, I think, tried to pursue a path that looks at growth and profitability and cash spend and tries and balance all three for sustainable margins and revenue growth. And we've got a management team that, I think, has proven very effective over previous years at being able to manage all that. And so, there's a certain discipline we've approached that business with that hasn't necessarily been present throughout the industry.
Speaker Change: Second, I'd probably identify a bit of discipline.
Speaker Change: Historically, many of our competitors have gone for growth at all costs, but we've always, I think, tried to pursue a path that looks at growth and profitability and cash spend and try and balance all three for sustainable margins and revenue growth.
Andrew Kligerman: And we've got a management team that I think has proven very effective over prior years at getting to manage all that. And so, you know, there's a certain discipline we've approached that business that hasn't been necessarily present throughout the industry.
Speaker Change: and we've got a management team that I think has proven very effective.
Speaker Change: over prior years at being able to manage all of that. And so, you know.
Speaker Change: There's a certain dissonance when we've approached that business that hasn't been necessarily present throughout the industry.
Andrew Kligerman: Looking forward a bit, right? There's no question that there's, you know, we've seen any sort of headlines regarding what's going on here. You know, we've seen the proposed Medicare Advantage rates and what they could have in the business. You know, that's, you know, regarding what sort of permissions that carry skated brokers for selling policies. There continues to be some uncertainty is how that's going to play out with the carriers. But I think speculating as to the potential impact on our business regarding commissions, the really premature. You know, we've been managing regulatory changes, their impact over prior years.
Carl A. Hess: Looking forward a bit, there's no question that there's, we've seen any sort of headlines regarding what's going on here. We've seen the proposed Medicare advantage rates and what they could have in the business. That's regarding what sort of commissions that carry the state of brokers for selling policies.
Speaker Change: [inaudible]
Speaker Change: you know, regarding what sort of commissions that carriers pay to brokers for selling policies. There continues to be some uncertainty as to how that's going to play out with the carriers, but I think speculating as to the potential impact on our business regarding commissions be really premature. You know, we've been managing regulatory changes, their impact.
Carl A. Hess: There continues to be some uncertainty of how that's gonna play out with the carriers, but I think speculating as to the potential impact on our business regarding commissions is really premature. You know, we've been managing regulatory changes that have affected us over prior years. We've been successfully navigating those changes in the past, and I think we're gonna continue to do so. You know, carriers have a lot of options for managing their profitability. And while broker commissions could be a lever, there are other options that are going to be far more impactful for them, like benefit changes and premium tweaks.
Andrew Kligerman: We've been successfully navigating those changes in the past, and that they were going to continue to. So, you know, carriers have a lot of options for managing their profitability. And while broker commissions could be a lever, there are other options that are going to be far more impactful for them, like benefit changes and premium. Weeks.
Speaker Change: over prior years. We've been successfully navigating those changes in the past and I think we're going to continue to do so. You know, carriers have a lot of options for managing their profitability and while broker commissions could be a lever, there are other options that are going to be far more impactful for them like benefit changes.
Carl A. Hess: And, you know, turning to the final CMS rule for 2025 that addresses marketing of Medicare Advantage plans, which was reduced in early April. The final rule was less onerous than the proposed rule in a number of ways.
Andrew Kligerman: I, you know, turn to the final CMS rule, we're 2025, the address of the Barclinic of Medicare and Advantage Plants. That was reduced in early April. The final roll was less bonus than the proposed rule. In a number of ways, there's still some of the certain news about how that's all going to be implemented, but, right, the U.S. courts of state part of this rule, which means the terms may not, sorry, will not take effect this year. You know, we have, we were made actively engaged with the carriers in the space. They have reiterated the important role.
Speaker Change: and Premium Tweaks.
Speaker Change: And, you know, turning to the final CMS rule for 2025 that addresses marketing of Medicare Advantage plans, that was reduced in early April . The final rule was less onerous than the proposed rule in a number of ways.
Carl A. Hess: There's still some uncertainties about how that's all going to be implemented, but, right, the U.S. courts have stayed part of this rule, which means the terms may not, sorry, will not take effect this year. You know, we have, we remain actively engaged with the carriers in this space. They have reiterated the important role we play in the distribution of Medicare insurance solutions and the valuable services we provide to beneficiaries. So, I guess, in sum, we remain confident we'll be able to work effectively with carriers to deliver services and be compensated fairly as long as we bring value. Thank you. The next question comes from David Motemaden of Evercore ISI. Your line is now open. Hi, good morning.
Speaker Change: There's still some uncertainties about how that's all going to be implemented, but, right, the U.S. courts have stayed part of this role, which means the terms may not, sorry, will not take effect this year. You know, we have, we remain actively engaged with the carriers in this space.
Andrew Kligerman: We plight in the distribution of Medicare and Children's Solutions and the valuable services. We provide the beneficiaries. So I guess, in some, we remain confident. We'll be able to work effectively with carriers to deliver services and be compensated fairly as long as we bring value.
Speaker Change: They have reiterated the...
Speaker Change: The important role we play in the distribution of Medicare insurance solutions and the valuable services we provide to beneficiaries. So I guess in sum, we remain confident we'll be able to work effectively with carriers to deliver services and be compensated fairly as long as we bring value.
Operator: Thank you.
David Motemaden: Our next question comes from David Mote Meden of Evercore ISI.
Speaker Change: Thank you. Our next question comes from David Motemaden of Evercore ISI. Your line is now open.
David Motemaden: Your line is now open.
David Motemaden: I had a question just on the headcount growth within RMB. It sounds like the productivity enhancement has exceeded expectations. But I'm wondering, you know, as we sort of sunset that or whether that moderates as employees rank.
Unnamed Speaker: Hi, good morning. I had a question just on the head count growth within R&B. It sounds like the productivity enhancement has been, you know, exceeded expectations, but I'm wondering, you know, as we sort of sunset that or that moderates as employees ramp, how you guys are thinking about head count growth within R&B compared to the 2% head count growth in R&B had in 2023. So, I mean, yeah, after a focused effort after the past few years, we think we've started to start talent-based. We've seen the new hires begin to contribute to our organic growth, as we discussed earlier.
David Motemaden: Hi, good morning. I had a question just on the headcount growth within R&B. It sounds like the productivity enhancement.
David Motemaden: has been you know exceeded expectations but I'm wondering you know as we sort of sunset that or that moderates as employees ramp
Carl A. Hess: How are you guys thinking about headcount growth within R&B compared to the 2% headcount growth in R&B you had in 2020? So, I mean, you know, after a focused effort over the past few years, we think we've replenished our talent base. We've seen new hires begin to contribute to our organic growth, as I discussed earlier. We've had several waves of hiring over the past few years. And so we still have a bit more to go as these cohorts mature to peak productivity.
Speaker Change #109: How you guys are thinking about headcount growth within R&B compared to the 2% headcount growth in R&B you had in 2023?
Speaker Change: So, I mean, yeah.
Speaker Change: After a focused effort over the past few years, we think we've replenished our talent base.
Speaker Change: We've seen the new hires begin to contribute to organic growth, as I discussed earlier. We've had several waves of hiring over the past few years, and so we still have a bit more to go as these cohorts mature to peak productivity. Currently,
Unnamed Speaker: We had several waves of hiring over the past few years. And so we still have a bit more to go as these cohorts, the chart of peak productivity. Currently, our hiring efforts are more opportunistic. There were strategic with a goal of enhancing our ability to achieve sustainable and profitable growth and create value, right? Our hiring of Lucy Clark, when I talked about during the period of arts, is one example of this sort of strategic hire. We've recently announced a few other strategic hires to support our industry of verticals and Gerritah as well. With respect to our expense rate, space, any incremental investments, whether they're in talent or technology, are not able to prevent us from getting our 2020-4 margin targets.
David Motemaden: Our hiring efforts are more opportunistic; they're more strategic, with a goal of enhancing our ability to achieve sustainable and profitable growth and create value. Our hiring of Lucy Clark, who I talked about during the prepared remarks, is one example of this sort of strategic hire. We've recently announced a few other strategic hires to support our industry verticals and Verita as well. With respect to our expense rate space, any incremental investments, whether they're in talent or technology, are not going to prevent us from hitting our 2024 margin targets.
Speaker Change: Our hiring efforts are more opportunistic, they're more strategic, with a goal of enhancing our ability to achieve sustainable and profitable growth and create value. Our hirer of Lucy Clark
Speaker Change: I talked about during the prepared remarks, is one example of this sort of strategic hire. We've recently announced a few other strategic hires to support our industry verticals and Verita as well.
David Motemaden: And as Andrew alluded to, we expect to be toward the higher end of our target margin range in 2024, and I expect margin expansion in both segments. Got it, thank you, and then just my follow-up. I was wondering if I could get just a little bit more detail on Verita in terms of just how big it is and how fast it's growing.
Speaker Change: With respect to our expense rate space, any incremental investments, whether they're in talent or technology, are not going to prevent us from hitting our 2024 margin targets. And as Andrew alluded to, we expect to be toward the higher end of our target margin range in 2024.
Unnamed Speaker: And, as Andrews alluded to, we expect to be toward the higher end of our target margin page in 2024.
Unnamed Speaker: And let's take part in expansion both segments.
Andrew: and expect large expansion in both segments.
Unnamed Speaker: Got it. Thank you.
Unnamed Speaker: And then just my follow-up.
Unnamed Speaker: I wonder if I could get just a little bit more detail on Verita in terms of just how big it is and how fast it's growing. Any sort of numbers you can put around it would be helpful because it sounds like it's been fairly successful. Yeah, we're very pleased with the growth that we've seen since launching the platform. It's done better than we had initially expected. However, given the overall size of the R&B business, still relatively small and not necessarily moving the needle from an organic growth sector, we've been at this point.
Speaker Change #101: Got it. Thank you. And then just my follow-up.
Speaker Change: Wondering if I could get just a little bit more detail on Verita in terms of just how big it is and how fast it's growing. Any sort of numbers you can put around it would be helpful because it sounds like it's been fairly successful.
Carl A. Hess: Any sort of numbers you can put around it would be helpful because it sounds like it's been fairly successful. Yeah, we're very pleased with the growth that we've seen since launching the platform. It's, you know, done better than we had initially expected. However, given the overall size of the R&B business, still relatively small, and, you know, not necessarily moving the needle from an organic growth perspective at this point in time, Thank you. Our next question comes from Mark Marcon of the Bears. Your line is now open.
Speaker Change: You know, we're very pleased with the growth that we've seen since launching the platform. It's, you know, done better than we had initially expected, however, you know, given the overall size of the R&B business, you know, still relatively small and, you know, not necessarily moving the needle from an organic growth perspective at this point in time.
Unnamed Speaker: Thank you.
Mark Marcon: Our next question comes from Mark Marcon of Bears; your line is now open.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Mark Marcon of B.E.A.R.S. Your line is now open.
Mark Marcon: Good morning, and thanks for taking my questions. Andrew, one quick question and then a follow-up for Carl. On the unallocated costs, obviously, they jumped up. You mentioned that there was a legal fee.
Mark Marcon: Good morning, and thanks for taking my questions. Andrew, one quick question, and then a follow-up for Carl. On the unallocated costs, obviously they jumped up. You mentioned that there was the legal fee. You did say that for the full year, we should be roughly equal to the level that we saw in 2023. Is that correct? Yeah, that is correct. So unallocated net was 106 million for the quarter, which, you know, that's an increase from the 52 million in the prior year. And it doesn't include that $13 million provision that you referenced. Year to date, we're at 162 million.
Mark Marcon: Good morning and thanks for taking my questions. Andrew, one quick question and then a follow-up for Carl.
Speaker Change #108: On the unallocated costs, obviously they jumped up, you mentioned that there was the legal fee.
Andrew Krasner: You did say that for the full year, we should be roughly equal to the level that we saw in 2023. Is that correct? Yeah, that is correct. So unallocated net was $106 million for the quarter, which is an increase from the $52 million in the prior year. And it does include that $13 million provision that you referenced. Year to date, we're at $162 million. We think that's a more meaningful comparison point, given the expectation that 24 should be relatively consistent with the 23 balance, which is about $296 million. And then, Carl, you know, take a look at all the various segments.
Speaker Change #102: You did say that for the full year, we should be roughly equal to the level that we saw in 2023. Is that correct?
Speaker Change #113: Yeah, that is correct. So, unallocated net was $106 million for the quarter, which, you know, that's an increase from the $52 million in the prior year.
Mark Marcon: And it does include that $13 million provision that you referenced. Year-to-date, we're at $162 million. We think that's a more meaningful comparison point, given that expectation that 24 should be relatively consistent with the 23 balance, which is about $296 million.
Andrew Kligerman: We think that's a more meaningful comparison point given that expectation that 24 should be relatively consistent with the 23 balance, which is about 296 million.
Carl Hess: And then Carl, you know, we take a look at all the various segments and you know, with the exception of Transact which you're moderating on purpose, it seems like the momentum is quite solid.
Mark Marcon: And then Carl, you know, would take a look at all the various segments and, you know, with the exception of...
Mark Marcon: And, you know, with the exception of Transact, which you're moderating on purpose, it seems like the momentum is quite solid. Obviously, you've got a differentiated strategy, and you've made some talent hires. But I'm also wondering, you know, when you internally monitor engagement within the more than 40,000 professionals that you have within the organization, after, you know, several years of change, do you feel like morale has improved significantly, and some of the productivity improvements that we're seeing are basically just due to a widespread increase in terms of confidence and, and, and things being more settled?
Carl Hess: Obviously, you've got to differentiate its strategy; you've made some talent hires, but I'm also wondering, you know, when you internally monitor engagement within the more than 40,000 professionals that you have within the organization after, you know, several years of change.
Carl: Transact, which you're moderating on purpose. It seems like the momentum is quite solid. Obviously, you've got a differentiated strategy, you've made some talent hires, but I'm also wondering, you know, when you internally monitor engagement within the
Speaker Change: The more than 40,000 professionals that you have within the organization, after several years of change, do you feel like
Carl Hess: Do you feel like morale engagement has improved significantly? And some of the productivity improvements that we're seeing are basically just due to a widespread increase in terms of confidence and things being more subtle.
Speaker Change #105: Morale engagement has improved significantly and some of the productivity improvements that we're seeing are basically just due to a widespread increase in terms of confidence and
Mark Marcon: I don't want to give any impression that we're sitting there thinking we've solved everything, that we're arrogant, but I do think organizationally we're dealing with 46,000 people who've got their mojo back, and it shows. And when I walk the halls of an office, whether it's here today in New York or London or Paris or Hong Kong, people like where they're working, and they're enthusiastic about our And that's a wonderful thing to say.
Carl Hess: I don't want to give any impression that we're sitting there thinking we've solved everything; they're arrogant. But I do think organization we're dealing with, you know, 46,000 people who've got their mojo back, and it shows. And when I walk walk the polls at an office, whether it's here today in New York or London or Paris or Hong Kong, you people like where they're working and they're enthusiastic about our prospects, and that's a wonderful thing to say.
Speaker Change #106: and things being more settled.
Speaker Change #110: I don't want to give any impression that we're sitting there thinking we've solved everything or that we're arrogant, but I do think organizationally we're dealing with 46,000 people who've got their mojo back.
Speaker Change #110: And it shows. And when I walk the halls of an office, whether it's here today in New York or London or Paris or Hong Kong, people like where they're working and they're enthusiastic about our prospects.
Operator: Thank you.
Carl A. Hess: Our next question comes from Meyer Shield of Keefe, Brouette, and Woods. Your line is now open. So, two quick questions. I guess the first is, because of the strangeness of transact accounting, can you help us think about how impactful moderating growth could be to fourth-quarter organic growth in health, wealth, and career? Yeah, sure.
Meyer Shields: Our next question comes from my shield of Keith, Brett, and Woods; your line is now open. Thank you. Two quick questions. I guess the first because of the strangeness of transact accounting, can you also think about how impactful moderating goes to be to the fourth quarter, organic growth and in health level. Yeah, sure. You know, if, if we do continue to see that moderation of growth within the Medicare-related businesses, you know, if it could temper some growth within the overall HWC segment, however, we continue to, you know, focus on the strong pipeline that we do have in the other businesses.
Speaker Change #107: Thank you. Our next question comes from Meyer Shield of Keefe, Brouette, and Woods. Your line is now open.
Meyer Shields: Thanks. So two quick questions. I guess the first, because of the strangeness of transact accounting, can you also think about how impactful moderating growth could be to the fourth quarter organic growth in health, wealth, and career?
Meyer Shields: You know, if we do continue to see that moderation of growth within the Medicare-related businesses, it could temper some growth within the overall HWC segment. However, we continue to focus on the strong pipeline that we do have in the other businesses there. You know, it is a portfolio of businesses, and I believe that, as Carl mentioned earlier, for example, the pipeline and survey work that we expect to take hold, as well as some of the project-based work in North America within health. So we're really confident about delivering the mid-single-digit growth for the segment overall for the year. Okay, that's helpful.
Speaker Change #115: Yeah, sure. You know, if we do continue to see that moderation of growth within the Medicare-related businesses,
Speaker Change #117: You know, it could temper some growth within the overall HWC segment. However, we continue to, you know, focus on the strong pipeline that we do have in the other businesses.
Meyer Shields: There, you know, it is a portfolio of businesses and believe that I think Carl mentioned earlier, for example, you know, the pipeline and survey work that we expect to take hold, as well as some of the project-based work in North America and health. So we're really confident about delivering the big single-digit growth for the segment overall for the year.
Meyer Shields: There, you know, it is a portfolio of businesses and believe that, I think Carl mentioned earlier, for example, you know, the pipeline and survey work that we expect to take hold.
Carl: as well as some of the project-based work in North America within health. So we're really confident about delivering the mid-single-digit growth for the segment overall for the year.
Unnamed Speaker: Okay, that's helpful.
Andrew Krasner: Second question, maybe bigger picture, can you have a sense of what Lucy Clark's priorities are as she comes in, like for the first? Oh, Lucy's Priority. Sorry, it got a little garbled there for a second. (Inaudible) I guess I'll look at it this way, right?
Unnamed Speaker: A second question, a bigger picture. Can you give a sense of what U.P. Clark's priorities are, as he comes in, like, for the first 12, 18 months? Oh, Lucy's priorities. Sorry, you got a little marble there for a second. I guess I'll look at this way, right? I mean, we're incredibly excited because he's joined us; she's a perfect debt to accelerate our existing strategy in lead, R&B. She's got deep experience in specialization; she's got a proven tracker of attracting and developing top tier talents. And she's got a well-honed ability to execute; her background's well-aligned with our focus of specialization and our investments in telling the technology.
Speaker Change #103: Okay, that's helpful. A second question, maybe a bigger picture. Can you give a sense of what Lucy Clark's priorities are as she comes in, like for the first 12 to 18 months?
Meyer Shields: I mean, we're incredibly excited that Lucy's joined us. She's a perfect fit to accelerate our existing strategy and lead R&B. She's got deep experience in specialization, a proven track record of attracting and developing top-tier talent, and a well-honed ability to execute. Her background's well-aligned with our focus on specialization and our investments in talent and technology. I think she, you know, just joined us this week, right? She's surveying the landscape of the R&B business.
Speaker Change #103: Oh, Lucy's priority. Sorry, it got a little garbled there for a second.
Speaker Change #112: I guess I'll look at it this way, right? I mean, we're incredibly excited that Lucy's joined us. She's a perfect fit to accelerate our existing strategy and lead R&B. She's got deep experience in specialization. She's got a
Speaker Change #103: She's a proven tracker of attracting and developing top-tier talent, and she's got a well-honed ability to execute. Her background is well-aligned with our focus of specialization and our investments in talent and technology.
Unnamed Speaker: I think you know, Lucy's just joined us this week, right? She's surveying the landscape of the R&B business. I expect she'll, you know, affirm what's working well, use the benefit of her decades of experience of the organizations to see what else we could be doing to modify our approach. But the reason she's joined us is that she believes in our strategy, and I expect that we're looking at fine-tuning, not a whole civil revolution. Thank you.
Carl A. Hess: I expect she'll affirm what's working well, and use the benefit of decades of experience in other organizations to see what else we could be doing to modify our approach. But the reason she's joined us is that she believes in our strategy, and I expect that we're looking at fine-tuning, not wholesale revolution. Thank you. The next question comes from Mark Hughes of Truist Securities. Your line is now open. Yeah, thank you. Good morning.
Speaker Change #103: I think she, you know, Lucy's just joined us this week, right, she's surveying the landscape of the R&B business.
Speaker Change #119: I expect she'll affirm what's working well, use the benefit of her decades of experience in other organizations to see what else we could be doing to modify our approach, but the reason she's joined us is that she believes in our strategy.
Mark Hughes: Our next question comes from Mark Hughes of Troy Securities; your line is now open. Yes, thank you. Good morning, Andrew. Anything you can say about the projectory of unallocated into 2025? We're not giving any guidance or financial perspectives for 2025 yet, but again, for 2024.
Speaker Change #103: Thank you.
Speaker Change #114: Our next question comes from Mark Hughes of Truist Securities. Your line is now open.
Mark Hughes: Andrew, anything you can say about the trajectory of unallocated into 2025? We're not giving any guidance or financial perspectives for 2025 yet, but again, for 2024, we do expect the balance to be relatively similar to where we landed the year at PERP in 2023. And then any specifics on the cash spend on the transformation in the second half and how much it will go. Yeah, so we do expect some of the transformation cash spend to bleed over into 2025.
Mark Hughes: Yeah, thank you. Good morning. Andrew, anything you can say about the trajectory of unallocated into 2025?
Andrew: We're not giving any guidance or financial perspectives for 2025 yet but again for 2024 we do expect the balance to be relatively similar to where we landed the year at for 2023.
Mark Hughes: We do expect the balance to be relatively similar to where we landed a year at her for 2023. And then any specifics on the cash spend on the transformation in the second half, and then how much goes into 2025? Yeah, so we do expect some of the transformation cash spend to bleed over into 2025, and you know, expect, you know, some payments to be made from a counter cash basis perspective, you know, throughout the third and fourth quarters.
Speaker Change #116: And then any specifics on the cash spend on the transformation in the second half and then how much goes into 2025?
Speaker Change #120: Yeah, so we do expect some of the transformation cash spend to bleed over into 2025 and, you know, expect, you know, some payments to be made from a counter-cash basis perspective, you know, throughout the third and fourth quarters.
Operator: Thank you.
Andrew Krasner: And, you know, expect some payments to be made from a cash basis perspective throughout the third and fourth quarters. Thank you. This concludes the question and answer session. I would now like to turn it back to Carl Hess, WTW's Chief Executive Officer. Thank you once again for joining us today for our second quarter earnings conference call. I deeply appreciate the dedication of our WTW colleagues worldwide who have made this strong quarter possible. Additionally, I extend my gratitude to our shareholders for their ongoing support. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Carl A. Hess: This concludes the question and session. I would now like to turn it back to Paul Hess, WTW's Chief Executive Officer. Thank you once again for joining us today for our second quarter earnings conference call. I deeply appreciate the dedication of our WTW colleagues worldwide who have made this strong quarter possible. Additionally, I send my gratitude to our shareholders for their ongoing support. Thank you for your participation in today's conference.
Operator: This does conclude the program; you may now disconnect.
Speaker Change #118: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.