Q3 2024 Aon plc Earnings Call
Good morning, and thank you for holding.
Welcome to Aon Plc's third quarter 2024 conference call.
At this time all parties will be in a listen only mode until the question and answer portion of today's call.
I would also like to remind all parties that this call is being recorded.
Anyone has an objection you may disconnect your lines at this time.
Speaker Change: It is important to note that some of the comments on today's call may constitute certain statements that are forward looking in nature as defined by the private Securities Reform Act of 1995, such statements are subject to certain risks and uncertainties that could cause actual results to differ material.
Speaker Change: Really from historical results or those anticipated.
Speaker Change: Information concerning risk factors that could cause such differences are described in the press release, covering our third quarter 2024 results as well as having been posted on our website.
Speaker Change: It is now my pleasure to turn the call over to Greg case, CEO of Aon plc.
Yeah.
Greg Case: Good morning, everyone welcome to our third quarter conference call I'm joined by Edmund Reese, CFO, and Eric Anderson, our President and we're especially delighted that I'm on here, maybe this first quarterly earnings call as our CFO.
Greg Case: As in previous quarters, we posted a detailed financial presentation on our website.
Webcast slides, which have been more weapons in his remarks.
Greg Case: To begin even though.
Greg Case: To extend our deepest sympathies for those impacted by recent natural disasters, including Hurricanes flooding and typhoons around the world, particularly hurricane to me and Milton.
Greg Case: In these times of challenge as communities endure the tragic loss of life.
Greg Case: This damage our actions as a firm.
Greg Case: Because especially hard on helping businesses and communities respond and recover.
Greg Case: To our 60000 colleagues, who make this possible. Thank you and all you do.
Greg Case: For your tireless commitment and dedication to our clients.
Together, we're executing our three by three plan on each of the three pillars, delivering risk capital and human capital solutions to the Aon client leadership model scale by our Aon business services operating platform.
This is a monumental effort and we're seeing it in our results year to date financial performance represents great progress puts us well on track to achieve our goals in 2024 and over the long term.
Greg Case: Highlighting our results and key messages from the quarter and year to date in Q3, our team delivered 7% total organic revenue growth with all solution lines at 6% or greater and consistent organic revenue growth and Alan and NFC.
Greg Case: Well this organic growth and the addition of an ERP, we delivered 26% total revenue growth, 28% adjusted operating income growth.
Adjusted operating margin of 24, 6% an increase of 70 basis points year over year from a combined 2023 margin baseline.
Greg Case: Year to date, we delivered 6% organic revenue growth, 15% total revenue growth and 70 basis points of adjusted operating margin expansion from our baseline.
Greg Case: Including roughly five months within a P contributing to 15% adjusted operating income growth and 9% growth in earnings per share.
Greg Case: We also made progress on Delevering executing attractive M&A and returning capital to shareholders with 800 million of share buyback year to date.
And that's P continues to perform exceptionally well exactly in line with expectations for topline growth cost and revenue synergies free cash flow and ongoing M&A activity all executed through our independent and connected operating strategy.
Greg Case: Overall, we remain fully on track to achieve our financial guidance for mid single digit or greater organic revenue growth margin.
Greg Case: Margin expansion and double digit free cash flow growth over the long term all supported by disciplined capital management.
Greg Case: As we reflect on future client demand and our momentum we would offer a few observations.
Greg Case: Every industry and region, our clients are telling us that it's getting harder to make decisions across risk and people issues.
Greg Case: Face increasing volatility that decision, making becomes more complex requires deeper insight stronger partnerships and more innovative solutions.
Greg Case: Businesses are demanding urgent action and we're well positioned to respond with exceptional solutions in our core business and with the development and delivery of content capability and expertise that helps clients effectively address their challenges.
Greg Case: Our three by three plan is designed to meet these needs across the pillars of risk capital human capital Aon client leadership, and Aon business services, leveraging our structure to unlock new integrated solutions to support our clients.
Greg Case: A recent client example, highlights this opportunity across all three pillars of our clients.
Greg Case: Our client a leading global construction company needed a partner who could help in place one of the largest insurance programs in the marketplace with our contractors with seamless support and connection across multiple geographies.
Greg Case: Historically the program consisted of multiple regional placements, creating inefficiencies, which we're growing with our clients own rapid business growth.
Greg Case: To do this our global team brought regional data and insights from our analytic tools together in a more efficient global placement supported by enhanced service delivery.
Greg Case: Collectively we delivered a program for our client that enabled them to maintain coverage and optimize their placement process improved transparency and deliver savings our team's seamless work demonstrates the differentiated value that we bring without silos underscored by the financial advantage and innovation made possible the risk capital insights.
And Aon business services.
Greg Case: And as we think about Aon business services, our data and analytics, we're a meaningful part of this win.
Greg Case: And this is only the beginning not only for this client, but much more broadly as.
As we have often highlighted the primary element of our strategy is bringing together our data analytics operations and platforms.
Greg Case: Liver insight and more powerful ways at scale.
Greg Case: Because of the steps we've taken to build one platform Aon business services, we can develop tools and capabilities that effectively use AI today and evolve in the future with capabilities like new climate risk data and our property analyzer, although the insight around medical innovation demographics, and claims and our health risk analyzer the.
Greg Case: The investments, we're making are helping to ensure that we can continue to develop these advanced analytic tools and deliver differentiated value for clients further strengthening our relationships and enable us to do more with them.
Greg Case: Finally, highlighting NSP.
Greg Case: We remain even more excited.
Greg Case: And when we announced and closed the deal and remain exactly on track their expectations.
Greg Case: <unk> performance in the quarter continues to reinforce the thesis reflecting great work by our combined teams.
Greg Case: One area that we're really seeing strength is what we are building an NFPA strong client relationships by bringing additional content capabilities and tools to our NSA team.
Greg Case: Let me briefly highlight two examples of how our independent and connected operating strategy is driving value for clients and is accretive to Aon performance.
Greg Case: And our commercial risk business and a P colleagues can now bring our cycling tool to clients. This capability, let's our clients analyze and understand their cyber risk in terms of underlying risk mitigation factors and insurance cost drivers. This is a powerful tool for clients of all sizes and the benefit is resonating with our analytic teams and clients.
Greg Case: Similarly in health solutions, we're seeing great success with our health efficiency analyzer. This analytic capability helps clients understand health program dynamics across their population and across geographies, enabling actions to better assess drivers of spend improve ROI and managed health care investments for their people.
Greg Case: Finally, our independent and connected operating strategy is resonating and granted the colleagues and with our MLP M&A pipeline targets and with talented potential new hires who appreciate and understand the operating flexibility and additional value of the b part of Aon can bring to their clients.
In summary, our Q3 and year to date results demonstrate strong progress against our financial guidance.
Taking meaningful steps to continue to deliver great capability to our clients through our three by three plan, ensuring we bring relevant solutions to our clients all enabled through Aon business services.
Greg Case: We remain confident in our strategy, our financial guidance and outlook and our ability to drive long term value creation for our clients our colleagues and shareholders now let me turn to Edmund for his thoughts on our financial results and outlook Goodman.
Edmund Reese: Thank you, Greg and good morning, everyone.
Edmund: I joined a little over three months ago, and I couldn't be more excited to be a part of this company given the opportunities ahead of us.
Edmund: My confidence in the financial model delivering organic revenue growth margin expansion and double digit free cash flow over the long term has only increased.
Edmund: Immediate term I'm pleased to be here delivering the third quarter results and before jumping into the details let me elevate what matters most.
Edmund: First after a strong Q3, we're right on track to deliver our full year 2024 in line with our objectives and guidance, including mid single digit or greater organic revenue growth.
Edmund: Adjusted margin expansion and free cash flow generation that allows us to delever, while simultaneously returning $1 billion in capital to shareholders through share repurchases.
Edmund: Second our organic revenue growth reached 7% in the third quarter.
Edmund: Importantly, this performance was strong across the enterprise with organic revenue growth of 6% or higher in each of our solution lines.
Edmund: This is a direct result of executing our three by three plans.
Edmund: And the investments that we're making to drive topline growth beginning with our investment in higher client facing talent and specialty areas.
Edmund: Standing client group to now nearly 450 clients.
Edmund: And further expanding our integrated risk data predictive analyzers across property casualty D&O cyber and health.
Edmund: And finally, the investment thesis on NSP relays as we're off to a strong start with MSP performing in line or better than the metrics that we measure in the business case.
Edmund: With five months of results since the acquisition.
Edmund: These year to date organic revenue growth is strong retention is better than last year on top of a solid recruiting pipeline and the M&A middle market growth engine is humming, having acquired 26 million and EBITDA year to date.
These acquired firms are seeing value in our independent and connected model.
Edmund: Connected to a on content and capabilities, while maintaining an independent distribution and service model.
Edmund: Overall, we have momentum.
Edmund: And our continued execution of the three by three strategy.
Edmund: Creating investment capacity and margin expansion by delivering on our restructuring saves.
It gives me a high level of confidence in delivering on our near and long term financial objectives, including a double digit three year CAGR and free cash flow for 2023 through 2026.
Edmund: I'll add one logistical note before turning to the results.
Edmund: You'll notice that we took the opportunity to add content with the intention of providing additional transparency and clarity into our performance.
Edmund: Expectations and to help you better understand the connection between our strategy and performance you can expect that we'll have minor adjustments to refine our material over the next few calls to support greater engagement with our investors and our AOS.
Edmund: So now turning to the third quarter results and the financial summary on slide six.
Edmund: See that we delivered 7% organic revenue growth in the third quarter adjust.
Edmund: Adjusted operating margin was 24, 6% up 30 basis points.
Edmund: And I'll remind you that we look at our margin expansion relative to 2023 baseline that includes an F T.
Edmund: Doing so operating margin expanded 70 basis points in the quarter.
Edmund: Adjusted EPS was up 17% to $2.72 and finally, we generated $951 million in free cash flow, bringing our total to three quarters to $1 7 billion.
Edmund: Let's get into the details of these results starting with organic revenue growth on slide eight.
Edmund: Organic revenue growth of 7% in Q3 24 was at a high end of our mid single digit or greater guidance range.
Edmund: Both in commercial risk was again strong at 6% with all of their solution lines growing at or above 70%.
Edmund: In commercial risk organic revenue growth was 6% in Q3 and reflected strength in our North American core P&C business, driven by net new business and strong retention as well as double digit growth in M&A services and continued strong performance in EMEA.
Edmund: Reinsurance with 7% organic revenue growth in Q3 was led by our balanced contribution to growth from our treaty and facultative placements.
Worth, noting that our outlook on the seasonally smaller fourth quarter is for low single digit growth given lower fact revenue.
Edmund: And the impact of growing over an elevated Q4 'twenty three.
Edmund: We expect full year organic growth to achieve our mid single digit or greater growth objective.
Edmund: Health solutions delivered 9% organic revenue growth with double digit growth in our international markets from new business in core health and benefits and data analytics, driven sales and our talent business.
Edmund: The market demand environment continues to reflect increased health cost trends and positive impacts from enrollment levels.
Edmund: I'll also mention that in the fourth quarter will be growing over an elevated Q4 'twenty three.
Edmund: And finally, well solutions organic revenue growth was 7%.
Edmund: Driven by continued strong demand for pension risk transfer and regulatory changes across the U K and EMEA and a positive contribution from <unk>.
Edmund: Let me also provide some additional color on MSP.
Edmund: If he was accretive to commercial risk and wealth solutions and delivered mid single digit growth in health.
Edmund: Pete and Aon.
Edmund: Both producing mid single digit organic revenue growth in NSP is performing in line with our business case.
Edmund: Overall organic revenue growth continues to be driven by net new business and strong retention.
Edmund: I'll provide a little color on how net new business growth and market impact helped us deliver our 7% organic revenue growth.
Edmund: As you think about the 7%.
Edmund: Recurring new business from new logos and existing clients contributed 10 points to growth.
Edmund: And with continued high retention.
Edmund: Net new business contributed five points to organic growth.
Edmund: The net market impact from growth in exposures and rate was two points.
We saw flat rate impacts of a reinsurance with limit increases at a rate benefit across commercial health and wealth.
Ill also pause here and note that we continue to make great progress on our priority talent acquisition with.
Edmund: With continuing focus on hiring specialty talent and construction energy and health as well as in our enterprise client group.
Edmund: We expect these new colleagues to season and contribute to organic growth within 12 to 18 months, which contributes to our mid single digit or better organic growth objective.
Edmund: And one final point on our revenue.
Edmund: Third quarter fiduciary investment income was up 6% over last year to $85 million.
Edmund: And as a reminder, we do not include fiduciary investment income and our organic revenue growth operation.
Edmund: Of course as interest rates declined we expect an impact on income from fiduciary balances, which averaged seven 3 billion over the trailing 12 months.
Edmund: For modeling purposes, I'll remind you that a 100 basis point impact on rates has a full year impact of approximately $70 million on investment income.
As interest rates decline lower investment income does lower our margins. However, we still expect to drive adjusted operating margin expansion.
Edmund: Additionally, I'll point out that the earnings impact is partially offset by lower interest expense on our term loan debt.
Edmund: The strength of our business model.
Edmund: Outlook for top and bottom line growth.
Edmund: Underpins our expectations that we will deliver double digit free cash flow growth.
Irrespective of interest rate movements.
Edmund: On slide 10, operating income was up 28% to $915 million.
Edmund: Adjusted operating margins were 24, 6% in the third quarter and 38% year to date.
For the quarter margins were up 30 basis points from our combined baseline with MSP margins expanded 70 basis points in the quarter and year to date.
Edmund: Adjusted operating margin continued to benefit from our scale in our business, particularly in Aon business services or a b S.
Edmund: Our continued portfolio management and shift to higher margin businesses.
Edmund: As well as ongoing expense discipline.
Edmund: And importantly, the benefit from our restructuring initiatives to accelerate our three by three plan.
Edmund: Specifically restructuring savings in the third quarter were $25 million, resulting in $70 million year to date savings and 70 basis points of contribution to adjusted operating margins.
Edmund: Looking ahead, we continue to expect 100 million of savings in 2024 and are well on track to achieve our stated goal of $350 million of run rate savings in 2026.
Edmund: Additionally, the momentum and ABS.
Gives us confidence and continued margin expansion over the long term.
Edmund: As we standardize our operations and integrate our platforms.
Edmund: We remain committed to driving full year adjusted operating margin expansion in 2024 and over the long term for the N F. P. Adjusted 2023 baseline of 36.
Moving to interest other income and taxes on slide 11.
Edmund: Interest expense of $213 million was up $94 million versus last year, reflecting a $7 billion and higher debt driven by the <unk> acquisition.
Edmund: Expect $210 million of interest expense in Q4.
Edmund: Other income was 54 million higher year over year, as we divested non core personal lines and real estate advisory assets.
Edmund: Result of our continued focus on portfolio management is a higher growth.
Edmund: Higher margin portfolio.
And finally, the Q3 tax rate was 18% with year over year increase driven by growth in higher tax geographies, the unfavorable impact of discrete items and policy changes across the globe.
Edmund: As we look forward, we expect to provide further color on 2025 tax rates during our year end earnings call.
Edmund: Turning now to free cash flow.
Edmund: We generated $1 7 billion of free cash flow year to date reflect the strong operating income growth and continued working capital improvements.
Edmund: Our free cash flow is being impacted by extraordinary items, including NSP transaction and integration charges.
Edmund: Restructuring and legal settlement and legal settlement expenses.
Edmund: Previously communicated.
Edmund: We have line of sight on these items and remain confident in underlying free cash flow growth.
Edmund: We continue to expect a double digit three year CAGR on free cash flow from 2023 to 2026.
Edmund: Given our expectations on free cash flow, we are well positioned to pay down $2 1 billion of debt in 2024.
Edmund: As we look forward, we continue to have confidence in our ability to reduce our debt to EBITDA leverage ratio from three nine to two eight to three times in Q4 2025.
Edmund: I'll also highlight that through the first nine months of the year. We have returned a one to $1 2 billion of capital to shareholders through the dividend.
Edmund: $800 million in share repurchases.
Edmund: We continue to estimate approximately $1 billion in share repurchases for 2024.
Edmund: I'll end my prepared remarks on slide 13 with guidance and some concluding thoughts.
With 7% organic growth and continued margin expansion in the third quarter reflects continued momentum in our business.
Edmund: We are executing on our three by three plan and are pleased to see that execution come through in our results.
We're reaffirming our full year guidance for 2024, including mid single digit or greater organic revenue growth.
Edmund: Adjusted operating margin expansion above our 2023, 36% baseline.
Edmund: $100 million of savings in 2024 from a restructuring initiative.
All contributed to double digit free cash flow growth over 23 to 26.
Edmund: Additionally, the investments that we're making to hire in priority areas highlights the strength of our financial model and our ability to balance sustainable organic growth.
Edmund: With growth investments, while driving margin expansion and generating double digit free cash flow growth over the long term.
Edmund: This financial model that gives us confidence in meeting our 24 to 2026 objectives and in driving sustainable long term growth.
My prepared remarks. It gives you a sense of why I'm excited to be the CFO of Aon.
Edmund: Working with my 60000 colleagues to build on a long track record of performance.
Edmund: We have a clear strategy for growth.
Edmund: We are executing on that strategy and making the investments in ABS and middle market the priority hires to sustain that growth on both the top and bottom line.
Edmund: And as you can see in our 22000 for third quarter and year to date results.
Edmund: That execution is driving strong performance.
Edmund: So with that let's jump into your questions Melissa I'll turn it back to you.
Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Press Star two if he would like to remove your question from the camp.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Order to allow for as many questions as possible. We ask that you each keep to one question and one follow up thank you.
Speaker Change: Our first question comes from the line of Andrew <unk> with TD Cowen. Please proceed with your question.
Speaker Change: Hey, good morning, so very exciting to see the growth in commercial risk solutions.
Speaker Change: And it had been mentioned that you brought in talent in construction energy health Enterprise. So maybe you could give a little color on on those hirings are these high level producers any sense of.
Speaker Change: <unk>.
Are they a net add to your producer.
Speaker Change: Staffing and is there more to go in terms of hiring and.
Speaker Change: Net positive hiring.
Speaker Change: And it really appreciate the question and listen as we step back and think about the three by three plant and all that we've done to put us in place with risk capital human capital and the support of Amp up in services again delivered through an enterprise approach. We took a moment to really step back and say where can we add content and capability from a leadership standpoint that truly be ad.
Speaker Change: And we saw opportunities as Edmund described very well in construction and energy and health in enterprise and a few other selected areas very focused and we've been very fortunate, bringing some great talent and we'll continue to do that it will develop over time as we've as we've described.
And over the next 12 to 18 months, we'll see it really start to show up in results, but it's really been a terrific add in some priority areas, but Eric do you want to talk more specifically about some of these some of these leaders.
Eric Anderson: Sure Greg I would say just picking up on your commentary there certainly the ability to draw talent that exists in the industry over to our firm a lot of it has to do with the investment in analytics and tools that give these client leaders and opportunity to do more with their clients. So as you said, we're going to continue to make those investments and those priority areas where we.
Eric Anderson: You see an opportunity to deliver real value to our clients I also don't want to lose the point about the inorganic investment in talent that we're making certainly the addition of an RFP where their 8000 colleagues are you Brian.
Eric Anderson: The significant volume of relationships in the marketplace.
Eric Anderson: That really is the underpinning of this independent of them connected strategy, where we're trying to perfect more preferred.
Eric Anderson: Specialty expertise like our construction capability or our health care capability or et cetera.
Eric Anderson: Yeah.
Eric Anderson: Organic and.
Eric Anderson: Inorganic hiring by the way not just in the U S. We talk a lot about on a P. But certainly acquisition we did in France in the health space. It also gives us more capability there too so.
We're really excited about the new addition of talent emerge as well with our existing talent base.
Eric Anderson: Really excited about what what the opportunity there for us in the future.
Andrew the only thing I'd add to what Erik just said is I think you know well. It takes some time for those priority hires to season, we think 12 to 18 months before you start to reach the peak levels of revenue, but we're comfortable when we look at the growth in these lines of Eric just mentioned, we're comfortable that the talent.
Eric Anderson: Is that the quality level and contributing but overall that will contribute to our mid single digit or greater topline growth level. So we continue to focus on this as a priority area for us.
Speaker Change: Yeah, that's really compelling and also as I looked at health solutions and you you called out double digit growth in EMEA Asia Pacific and Latin America.
Speaker Change: Is are these markets just not as mature for E. On is this a big opportunity that we can expect to continue potentially even double digit growth in the out years.
Speaker Change: Listen again, Andrew This is this is it.
This is an area we've talked about before which is a category we love <unk>.
Speaker Change: Health when you think about it overall is is just an area of demand where clients are facing more and more every day and it's true across all geographies, we've got uniquely strong positions.
Speaker Change: Across the world and Youre seeing that reflected and I would emphasize the investment that Eric described before and then Edwin described in his comments around.
Speaker Change: Business services. These analyzers this capability means that our colleagues can be more effective in what they do every day on behalf of clients.
Speaker Change: Even the priority hires as they come in this is not about numbers scratch its about its about quality and capability and so we've got the leaders sort of in region very locally local understanding plus a global capability that can bring to bear with these analytics and thats why.
Speaker Change: We see a space with high demand and we have great capability to address which is why we see a lot of opportunity here.
Hey, Greg.
Greg Case: And I'm not a couple of quick thoughts waters, where contributor with new logos globally.
Greg Case: Clients come to us looking for health and <unk>.
Speaker Change: Just to go back to the question around outside the U S.
There is growth around the rest of it would you say in two or three different buckets. One is within some of these countries where there is nationalized health think about the U K or the Netherlands. Those systems are under pretty significant financial pressure and you're seeing ace in private markets for them.
So that creates a lot of need for insight around athletics around program construction et cetera.
We're also seeing this global benefit wave where clients are trying to understand their global spend.
Speaker Change: Take care of their colleagues around the world and really looking to link together their strategy rather than just do a country by country by country and so you've got certainly at the upper end of the segment. These global clients that are trying to get a handle on everything and what theyre spending around the world, but you also got specific markets outside the U S that have historically been nationally.
Speaker Change: It helps you see decent forming private markets, which actually allow us to give clients really good insight as to the strategy that can help them execute for their own colleagues within countries.
Speaker Change: And I did call out the international markets, Andrew because I think as you think across international fourth of different solutions that we have health is a fast growing opportunity for us and we're taking advantage of as Eric just talked about the diversity in our business is something that gives us confidence in the mid single digit or greater growth level. So.
Speaker Change: Might see some solutions or markets growing at higher levels than the others and it's.
Speaker Change: That diversity I think that gives us confidence in the long term sustainability of growing at those levels.
Speaker Change: Very helpful. Thank you.
Speaker Change: Thank you. Our next question comes from the line of Alex Scott with Barclays. Please proceed with your question.
Speaker Change: Hey, good morning.
Alex Scott: First one I have is on free cash flow.
Alex Scott: Looks like some of the growth progress was coming in quicker than we would've expected and I. Just wanted to see is there anything abnormal in there or anything we should think about timing wise heading into the end of the year.
Speaker Change: Free cash flow is coming right in line with what we've expected like first the first thing to think about it is our objective and we think we're right on track to be at a double digit level. When we think about our $3 2 billion in 2023, and where we expect to end in 2026, we know this year, it's being impacted by two years.
Speaker Change: Three I called out the extraordinary items, the NSP integration costs, the legal settlement costs.
Speaker Change: Impacting it and the restructuring charges part of Aon, United There could be some quarterly timing and movement in those numbers between quarters, but you know we run this company as an agile company when I think about it.
A full year basis is right in line with what we expected and most importantly, that's the thing that gives us confidence in being able to pay down the debt and continue to have the type of capital returns to both the dividends and the very important share repurchases that we've committed to for the year. So nothing out of the ordinary from our expectations on that.
Got it.
Speaker Change: And then the other thing I wanted to ask about is net new business I mean that sounded like a pretty strong result.
Speaker Change: Could you talk about some of the places you're seeing the most success there we kind of dive down into the different businesses.
Speaker Change: Sure why don't I, why don't I take a shot at that one.
Speaker Change: But then I would say in the priority hiring areas. There's a reason why there are priority harder hit areas. There's a lot of activity in that space, whether it's in construction and our health care.
Speaker Change: And we're seeing that across the globe. So it's not just in sort of North America I would say if you step back and look across the segments certainly the enterprise client space, which are our largest global clients as they think about dealing with some of these big trends that are out there around weather and climate around trade around technology around work.
Speaker Change: Force there their needs are complicated and so our ability to bring our analytics, we talk a lot about these analyzers.
Speaker Change: And give them real insight has really led to the opportunity to do more with them. So it's both existing clients doing more with them as well as new clients that are new to the firm so, but we're seeing it priority areas, we're seeing it across the segments.
Speaker Change: Getting it across the globe. So it was really a strong quarter for us all the way around.
Speaker Change: And I would characterize it when you look at the history, Alex I'd characterize it as normal course of business for us to drive.
Edmund Reese: 10 points of growth from net new business and continue to have that strong retention. Those are the levers that drives the growth for aon here, So nothing new and as Eric just said, we're seeing it across these different segments and different countries. I think that will continue to be the key driver of growth for us on the top line.
Speaker Change: Got it very helpful. Thank you.
Speaker Change: Thank you. Our next question comes from the line of Elyse Greenspan with Wells Fargo. Please proceed with your question.
Elyse Greenspan: Hi, Thanks, good morning.
Elyse Greenspan: My first question was on just the M&A and stock activity I know you guys called out that there was double digit growth within that business and commercial risk in the quarter.
Speaker Change: Or are we I guess compared to peak levels and those markets start to rebound do you have a sense of how that could incrementally better think commercial risks from here.
Speaker Change: At least I appreciate the question just to start just for context overall as we said before we will.
Speaker Change: Loved the states.
Speaker Change: The space Redeveloped over time, we continue to invest behind its got a lot of derivative connections and we've really developed it in the downturn I would just for context, just remind M&A volume as you've heard on the investment banking calls by the way is still 13% below the 10 year average year to date, although thats better than it was last year, which was much much worse.
Speaker Change: And that's what's come back a bit youre, starting to see that show up Eric Edmund described that very very well.
Speaker Change: But over time, the dry powder out there as we all know is substantial.
So our view is this will be an area of real client value that we can deliver and as such will show up.
Speaker Change: Ross are across commercial risk for us in a very positive way, but even beyond that any other solution lines as well because a lot of things get connected with M&A activity. So overall, where we've made progress as had been described very well and we expect that to continue over time.
Speaker Change: Thanks, and then my second question is on tax Edmund I know you said that you would get into the 2025 tax discussion on the yearend call, but can you just help us think through.
Speaker Change: Positive and negative factors I guess that you're considering.
Speaker Change: Just to tack them on as you kind of think about the update that youre going to give us a few months.
Yeah look I.
Edmund Reese: The first thing that I would call out here Elyse is the fact that there's variability quarter to quarter. When you have a rate that's 21, 22% in Q1 and Q2 and then 18% in Q3. It gives you some sense of why we're very cautious about the exact guidance that we give on this item because there's variability in it.
Speaker Change: Sure.
Speaker Change: <unk> recently, I don't think the items that impacted year over year for us to change the system.
For my time, and even now we see the growth in the higher tax geographies as one driver of what happens to the tax rates to policy changes certainly are happening across the globe in different geographies right now in this particular quarter to answer your question specifically in this particular quarter there was a.
Speaker Change: Positive discrete item last year during this time.
Speaker Change: That has an impact on the tax rate in Q3 here as well I think the key point from my perspective is we have a tax rate that allows us to invest in the business.
Speaker Change: Finally, <unk> will finalize fiscal year 'twenty for over the next couple of months here, you'll you'll get insight on that and we'll give more insight on 2025.
Speaker Change: As we get into the Q4 call both on the baseline taxane to any discrete items that we're aware of at that time.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Mike Zaremski with BMO capital markets. Please proceed with your question.
Speaker Change: Yes.
Speaker Change: Hey, good morning.
Mike Zaremski: Thank you for the color on unpacking some of the high level components of the 7% organic this just.
Mike Zaremski: Just curious would you be able or willing to kind of share.
<unk> growth has accelerated a bit year to date.
Mike Zaremski: Has that come more so from the.
Mike Zaremski: The new business 10 points or from exposure, maybe was lower than two points previously our I kind of assume the retention I think if I do the math and.
Mike Zaremski: Back into the 95% that's kind of more stable, but it could be wrong.
Mike Zaremski: Any color there would.
Speaker Change: It would be helpful. I mean do you have it exactly right I mean do you have it exactly right Mike that five points that made you backed into the right number on retention to growth is coming from existing up from from new business from existing clients selling more solutions as Eric was just talking about earlier, and adding new logos and adding new logos.
New business from that offset by strong retention above 90% and it was strong in Q3 and the levels that you're talking about are largely on the market impact is the thing that we control.
Less of a rate impact in the pricing and that was only two points. It was a two point contribution to the net new business to get us to that seven points. Overall, so again I think thats in line with what the history has been.
Speaker Change: And what we expect as our efforts are the drivers of growth moving forward here.
Speaker Change: Okay got that two points isn't.
Speaker Change: Meaningfully different than the kind of historical okay got it.
Speaker Change: In line.
Speaker Change: Okay and.
Speaker Change: Maybe just switching gears curious.
On the MSP acquisition.
Speaker Change: Clearly going well.
At the time of.
Speaker Change: The deal was announced.
Speaker Change: Did talk about a potential for some fairly material revenue synergies.
Speaker Change: I think in some investors' minds revenue synergies or are a lot of hard work.
Speaker Change: Just curious if you think you'll be updating us on on on those going forward or any comments you'd like to make about about revenue synergies from the deal is a great question because it is clearly a focus of ours.
Speaker Change: It's clearly a focus of ours for short five months in Q3, the performance right in line with or better than the business case.
Speaker Change: Mid single digit in the quarter accretive to commercial accretive to well as I think about the four financial objectives that we put out their revenue synergies and Opex was one of them.
Speaker Change: Eric can jump in here, but we talked about the cross sell thats going to MSP and coming from MSP I feel very good about our expectations of $775 million in 2026 on the Opex.
Speaker Change: Synergies of $60 million by 2026 as well.
Speaker Change: Talked about in line or better than what I would point to there is the EPS accretion as we think about 2025, we talked about it being neutral during that time and I'd say, we're tracking to be better than that so we will definitely give updates on those numbers as well as the free cash flow in the in the a and.
And the M&A performance is happening in MP as well, but Eric I don't know if you want to add any color on that.
Eric: Let me add a little bit of color on it I think the so a couple of ways I would approach it the independent and connected philosophy when we.
Eric Anderson: We're talking to NFPA about the opportunity to become part of it was really about using those 8000 people we talked about on that talent question around how we can actually deliver more capability for each other and we are really seeing whether it's in NSP client relationship that needs additional subject matter expertise, whether it's trade credit or a transaction.
Eric Anderson: <unk> services are D&O or what have you or the <unk> example, that Gregg use so the ability to partner relationships and expertise, where we've already got a business relationship. We are really seeing that gathered momentum and thats just in the risk side on the health side, it's very similar our health analyzer of being able to bring tools to their clients.
Eric Anderson: Being able to bring the pharmacy benefits being able to bring the global connectivity. So we also were very conservative in how we look at revenue synergies recognizing that those are really hard to pull off but we thought that with this independent and connected strategy our ability to actually bring that capability together, it's an education process and I think as Ed mentioned we're.
Eric Anderson: Five months into this and our ability to sort of showcase and capability understand MSP relationships are really begin to work together towards driving client value one of our hypotheses going into this was the mid market segment is more risky and more complicated across risk health and wealth and our ability to bring that to.
Eric Anderson: <unk> into that segment in a way that that segment can digest and use it was one of the key aspects of why we wanted to partner up with NSP and so I do think that opportunity is starting to bear fruit for us as we go down the road and then the other piece I would offer.
Eric Anderson: Certainly our ability when we go into the marketplace, whether it's commission rates standardization, how we actually bring all of the premium volume on the risk side of the market is also is a concrete example of how sort of two or better than one in that example.
Speaker Change: And it's hard not to pile on with enough for you just given the progress. The teams have made jointly but wasn't fundamentally. This is demand we saw huge demand and opportunity in the middle market of all the issues that Eric just described and our ability to actually bring content through what is an incredibly strong set of client relationships that <unk> brings to the table there really exceptional.
Eric Anderson: And that's really the combination the last piece I just would highlight.
Eric Anderson: We mentioned in the opening comments is not just not just in the day to day business as it currently exists.
Think about the M&A pipeline.
Eric Anderson: Independent and connected has real meaningful value there in terms of all the operating flexibility that we're describing and independent and connected with additional capability and that's also actually showing up in and talented and hires who want to come be part of it. So has that been said, it's five months, we run everything a piece at a time.
Eric Anderson: At a time, but it's really been a good a good start to the process and we're more excited than ever.
Eric Anderson: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Jimmy <unk> with Jpmorgan. Please proceed with your question.
Jimmy: Hi, Good morning, first just had a question on organic growth and the contribution of NFC I think Greg you mentioned that growth would have been consistent with NSP I think he said the same thing last quarter as well.
I guess as a positive for your legacy business, but I would have assumed with the economics.
Jimmy: <unk> economy being fairly strong and then NSP being part of a larger organization that that business would be growing a little bit faster, but maybe you could sort of unpack that for us.
Speaker Change: I think Greg you should pile on but I think it's simply comes back to we're five months in as the revenue synergies come to fruition. What youll have is the baseline growth, which I think is strong at mid single digit levels in line with what we have at Aon.
Speaker Change: You're referencing from Greg's earlier comments is the revenue synergies starting to come through I think you'll see higher levels of growth and is the acquisition. We had an objective of $50 million to $60 million in earnings and EBITDA from the acquisition of NSP does as that comes online as well that will accelerate revenue growth.
Speaker Change: As well so it's those but I think about it in those three components the baseline growth would come through revenue synergies and then will come from the acquisition as well and that's what we feel like we're right on track to be able to deliver.
I don't know Jim Nielsen.
Speaker Change: You can have quarter progress meaningful progress, we just posted for the overall aon term, 7% organic growth seven.
Speaker Change: That's improvement and progression throughout the year so.
Speaker Change: And as you know in at least five months and it's it's a important but relatively smaller parts. Obviously, that's driven by Korea and then it was accretive with NFC. So from our standpoint. This is a really good formula but you start as you described with the strength of the fundamental strength of Aon across all solution lines.
And then we added the capability that admin and Eric just described so again, we're feeling very good about progression and really reinforcing that.
Speaker Change: Mid single digit or greater improved margins and double digit free cash flow growth over the long term so for us.
Speaker Change: You just saw a quarter of progress and then you saw NSP additive to that thesis.
Speaker Change: Okay, and then just following up on margins you've had steady margin expansion over time.
Speaker Change: How should we think about like margins improving going forward, especially if the fiduciary investment income becomes a headwind.
Speaker Change: There is an offset you mentioned from lower floating rate debt, but what should we assume that margin expansion would slow or like would you controlled discretionary spending or other items as well.
Speaker Change: Well I think the short answer to another question is that we expect continued margin expansion here, but I'll actually start with the point that you made as well, which is we have this long history of margin expansion I think there was a page in the release that showed over the last decade 100 basis points of margin expansion that has continued into Q3 and year to date.
Speaker Change: With 70 at 70 basis points for both of those time periods that piece is largely driven after you net everything in and out that is largely driven by the restructuring that we have but we think it will continue moving forward because primarily of ABS number one the scale that we get in that business as I said earlier standards.
Speaker Change: The operations and integrate the platforms number one there's a long runway to drive margin expansion from that but also the portfolio management that we have we're active with that that continues to drive margin expansion for US and then just the continued expense discipline fiduciary investment income.
Call it less than 20 basis points is our estimate this year in terms of its contribution to margin expansion. It's one of the levers that we use to create investment capacity and drive margin expansion. So we think despite.
Speaker Change: Despite that sort of going away that will continue to be able to have it and for us. It really is it margin expansion for the sake of words, an expansion of what we want to do is create investment capacity to invest in ABS to invest in the priority hires that Eric was just talking about earlier and we think our financial model allows us to create that capacity.
And still deliver margin expansion, which allows us to drive the double digit free cash flow that we're focused on.
Speaker Change: Just a punch line on the listen again evidence point last 12 years, we've done a 100 basis points a year.
Speaker Change: Last 12 years, a year and there were times there was zero fiduciary income zero sort of in the context of that and we didn't have risk capital. We didn't have human capital and its current contract. We didn't have aon business services normally the enterprise client at the state of Tim nor had we invested in been in the process. Since we are the three by three plan over 2000.
Speaker Change: $4, 25, and 26 of investing $1 billion into strengthening and accelerating that so for US we think there's lots of.
Speaker Change: With lots more to come but shows up top line and margin and again as we reflect on margin. It's not a zero sum game when we add more value to clients, we have more capability to clients, we're creating more value and so in the context of that our view is we have the capacity to invest back into the businesses that have been described and the capacity.
Speaker Change: To improve margin.
Speaker Change: From an operating and a efficiency standpoint, and you're seeing that play out exactly as we had intended and we have we have a long way to go and we're excited about so far that the distance traveled but we're looking forward to.
Speaker Change: To build the momentum through our three by three plan and exiting 2026 with even more momentum than we had coming in.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Grace Carter with Bank of America. Please proceed with your question.
Hi, everyone.
Grace Carter: I think you all said that NSP was accretive to organic growth in commercial risk and wealth. This quarter I am sorry, if I missed this earlier, but it would it be possible to quantify that impact.
Speaker Change: Good morning, Grace first of all yes look.
I think it's important just to start with the fact that it is a new acquisition and I. Appreciate the fact that folks want to parse out that business. It's important though for us that we think about our overall aon United strategy. We intend to include that in our solution. It is included in our solution line numbers in our overall growth.
Speaker Change: Since its early we are parsing it out right now.
Speaker Change: <unk> added less than 50 basis points to any of the solutions.
Speaker Change: In terms of contribution to any of the solution growth that we've had again it was positive the commercial risk. It was positive accretion too well with still strong single digit growth in a mid single digit growth in our health.
Speaker Change: As well so we feel very good about the performance, thus far and I think that's one.
Maybe one one pile on comment on this one is that when we went into this with the independent and connected model. The idea was not to spend a whole lot of time figuring out what bucket does the revenue falling so when we work on our work on a client opportunity within NSP producer M&A on capability, we're not really focused on weather.
Speaker Change: Ex belongs in that IP or why belongings.
Speaker Change: And so the opportunity to kind of keep it separate.
Speaker Change: We really didn't want to do that because we felt that culturally and business opportunity wise. It was more important to focus on just bring the capability when the business to the due to the client work and so the ability to kind of really parse it that way it becomes more difficult over time as the teams really connect.
Speaker Change: Thank you.
Speaker Change: I guess looking at health and wealth could you remind us of the mix of offerings in those segments that might fall under the discretionary bucket versus the more defensive bucket.
Speaker Change: And whether the addition of NSP has noticeably impacted that mix going forward or not.
Speaker Change: Yeah, I'll start and then did stop.
Speaker Change: A couple of pieces of color commentary here as well listen overall this business on the health side and on the wealth side like our commercial risk business and our reinsurance business as well are very high retention businesses.
Speaker Change: And it really is universal across the across the board there are certainly discrete areas, where we provide advice.
Speaker Change: On a project basis, but net net these are very very resilient businesses across the board and you've seen us benefit from that.
Speaker Change: Especially in areas like can help or adding new logos, we added new logos, we keep new logos for a long time, but our ability to add them.
Speaker Change: Over the last 18 months has been exceptional so the characteristics you're absolutely fantastic demand profile very very good and retention exceptional.
Speaker Change: Yes, Craig the only thing I would add when you think about the wealth business in particular with the pension actuarial work around defined benefit plan.
Speaker Change: That work has to happen each year and there is significant regulatory change that does create bespoke projects as time goes by most theoretically could be discretionary, but with the regulatory changes that continue to happen, whether it's global minimum pensions in the U K similar work in the Netherlands from work in the U S.
Whereas the rules change in the plans themselves have to adapt to them. It just creates project work that does seemingly recur each year and then maybe on the health side, Greg you said, it well I think the core health and benefit offering whether it's a pharmacy work and even the talent work around salary transparency.
Speaker Change: A lot of regulatory framework work that creates opportunity for us.
Speaker Change: Theoretically is discretionary, but honestly I got happens each year it tends to repeat.
Speaker Change: And then you asked about NFC and on our way to highlight is this is this is a group as Eric said 8000 colleagues, who come to be part of Aon.
Speaker Change: So we're excited to add them, but they bring great client relationships and extraordinary content and insight and health and benefits and in well so on both pieces.
Speaker Change: Not just accretive performance, it's accretive content and it is truly going both ways, we're bringing content to NFC and on our feedback to out so positive from our perspective.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from the line of David Mcmahon with Evercore ISI. Please proceed with your question.
Speaker Change: Hi, Thanks, good morning.
David Mcmahon: And then I think you mentioned that you guys have acquired $26 million in terms of EBITDA through the middle market, but so that's a little bit below the $45 million to $60 million that you guys have targeted for the year could you just comment on the achieved the ability of that of that target.
David Mcmahon: I was mentioning to the team earlier.
David Mcmahon: So close to the NSP.
David Mcmahon: Corporate development team over there I am more worried about us going over the number in terms of spending and capital deployment coming under the number right now the pipeline is rich and hopefully you picked up on Eric's comment that maybe you should.
David Mcmahon: Emphasizing this independent and connected strategy and how it really is attractive to others out there in the market is driving a big pipeline of opportunity. So.
David Mcmahon: Two 6 million in EBITDA year to date, when I look at that pipeline and weather.
David Mcmahon: It all happens in 2024, which I think we're confident in or if some spills over into 2025, I think were right in line with the objectives that we have on the M&A front.
Great that's helpful and then.
Speaker Change: Really appreciate the.
Speaker Change: The detail you gave in terms of net new.
Speaker Change: As well as the market impact for the total company is there any way you could share that same detail for the commercial risk segment specifically.
Speaker Change: It does.
Speaker Change: The thing about it.
Have you ever heard me mentioned in the beginning of my comments that we will think about sharing more information as we move forward. So we'll see exactly what it what it is the numbers are actually quite similar when you look across our solution lines in terms of contribution from net new business and retention together.
Speaker Change: From new business and retention together versus market impact.
Speaker Change: In the areas with light wealth or health, where there's this piece that Eric was just talking about where there's advisory or the opportunity to be able to articulate value and drive benefit that our customers find valuable and we changed sort of the composition of that growth outside of that it is quite similar across the different solution lines.
Speaker Change: We're working through exactly what we're able to share and disclose moving forward on that.
Speaker Change: Great. Thanks looking forward to it.
Speaker Change: Thank you. Our next question comes from the line of Deane Christian TLO with K VW. Please proceed with your question.
Speaker Change: Hi, you guys noted that aggregate pricing was flat this quarter, but I was curious if that were there any differences between the middle market and larger accounts and if you guys had any assumptions going forward on pricing.
Speaker Change: Why don't I take that one guys listen I think I.
Speaker Change: And I think I've said, it before but I think it's always worth sort of saying where the pricing actually fits into the work that we do so we first start with our clients around how do we actually identify and help them understand what risks they have as a business and then we actually think through with them. What are your options to manage the risks whether it is to finance it yourself, whether it's these captives that we've talked about in the past.
Speaker Change: And then ultimately if you decided to transfer the volatility.
Speaker Change: How are you going to do that and as you sort of asked with the segments I would say theres multiple markets out there whether it's you know if the question was U S or whether it's outside the U S and Latin America in Europe, and Asia et cetera, and then Theres industry event and then there is segment back. So you get a variety of different market approaches based on what the risks are the individual client.
Speaker Change: But the hardware to bucket. It for you I would say on a property basis I would say for those clients that deserve to see premium decreases based on their risk exposure. We are seeing that happen and we continue to expect that I think casualty, especially in North America and this is up and down the segment continues to see pressure.
Speaker Change: Whether it's because of increased loss cost social inflation and things that you know well about is driving pricing increases and they sort of restriction of appetite from the insurers.
Speaker Change: And then there's sort of bucket called specialty casualty D&O cyber that type of thing, we're continuing to see a surplus of capital that's in that space and so opportunities for clients to really.
Speaker Change: Obtaining some premium relief for their different risks, but listen there is a there is ultimately capital in all the segments and so we do see an opportunity for clients, whether you're a small client a mid sized client or a large client.
Speaker Change: To actually be able to make some buying choices based on surplus capital on some of the key areas.
Speaker Change: Thank you for that and then my follow up I was curious as to having a lower interest rate than the expectation for additional interest rate cuts have any implications on the growth outlook in either the health of the wealth segment.
Speaker Change: I think the big impact that we expect to experience from interest rate impact is on the fiduciary investment.
Speaker Change: Income line that as I said in my prepared remarks.
Speaker Change: Illustrative way about 100 basis points.
Speaker Change: A 70 million dollar impact on that business.
Speaker Change: Of course, you need to think about the growth in those balances you're thinking about the lower <unk>.
Speaker Change: <unk> that we have because of our term loan debt.
Speaker Change: As well, we need to think about where the currencies are located less than 60% or in the U S. And then they are in euro and GBP. That's the biggest impact on our business and as I said earlier, we still expect to be able to hit our objectives across the firm across each of our solution lines. Despite the interest rate environment. So.
Speaker Change: That's what I would call out to you.
Speaker Change: Got it. Thank you think about think about the overall.
Speaker Change: Thank you.
Speaker Change: As it relates to health and.
Speaker Change: Okay well.
Speaker Change: Listen this opportunity is.
Speaker Change: Fundamentally.
Speaker Change: Unlimited on the health side. This has gone up this is healthcare inflation.
Speaker Change: This is projected to be up 97% again in 'twenty five is unbelievably challenged profile for our clients and that really is the demand driver.
Speaker Change: On the health side and similar on the wealth side, if you think about pension risk transfer and some of the other things that come the changing rate environments. The demand profile in both categories. Both solution lines is exceptionally strong.
Thank you. Our final question comes from the line of Rob <unk> with Goldman Sachs. Please proceed with your question.
Speaker Change: Hey, thanks.
Speaker Change: First question I had on reinsurance brokerage.
Speaker Change: Some of your peers have said that the market might be centering on more muted property cat reinsurance pricing changes into next year and I'm not sure. What your view is on reinsurance demand growth, but I know it was quite strong. This year. So I'm curious how conducive you think the reinsurance brokerage environment might be into 2000.
Speaker Change: 25.
Speaker Change: Yeah.
Speaker Change: Great question.
Speaker Change: Expected somebody was going to ask us that question at some point, maybe I'll just opened with an overarching thought that the reinsurance market is constructed to handle events like Helene and Milton Oh, that's why it exists it's doing great work there is money flowing into the area for reconstruction. So it's all good on that front.
Speaker Change: We'll say that.
Speaker Change: We were going into the fall you definitely had pressure from clients, which I think was rightly applied around pricing and around attachment points based on the way. The market has moved over the last three years, where there were significant program changes as reinsurers sort of changed their position certainly post. These two events. There is there is conversation.
Speaker Change: That are happening around does it flattened the pricing does it slow the rate of descent. However, you want to phrase it and I would say it's early.
There is still substantial capital that's in the marketplace and I would say that depending on where you sit in the world certainly the Europeans are pushing hard for price decreases in the cost from point a relief based on where they sit.
Speaker Change: As these negotiations take firmer sort of structure over the next eight to 10 weeks I think youre going to see clients continue to push either for right or for attachment point relief going forward and we'll see where it turns out and I look forward to talking to you about it. The next time, we're together.
Speaker Change: That's really helpful.
Speaker Change: If I could follow up with a question on cat bonds I. Appreciate you guys, putting the 13% growth in.
Speaker Change: Cat bond issuance year to date in the press release could you help us think about the economics, the aon of cat bond placement versus traditional reinsurance brokerage.
Speaker Change: So listen those those bonds.
Speaker Change: Let me, let me take a step up for Zika in the end our goal here is to get paid for value for what we deliver for clients whether it's in the form of a reinsurance brokerage whether it's in the form of cat bonds. These are very sophisticated clients and we have very sophisticated discussion around what our value proposition is in the structure. So we're agnostic to the tool that they use.
Speaker Change: <unk>.
Speaker Change: Because they each have a have a role in their capital stack in terms of there are certain risks up along in the capital markets. There are certain risks that belong in the reinsurance market and our goal is to help the clients figure out which one it so for US we're not we're agnostic to whether its a cat bond whether it's a traditional reinsurance placement.
Speaker Change: But rest assured the conversation with each of the clients around our value for what we're doing for them.
Speaker Change: Open and transparent and so for us it doesn't really matter, which way. It goes because ultimately we're just trying to provide the right level of value to our clients.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you, ladies and gentlemen that concludes our question and answer session I will turn the floor back to Mr. Kingston for any closing comments.
Speaker Change: Wanted to say thanks for joining us and we look forward to your call next time and again have a great day and appreciate it would be part of the call today.
Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.