Q4 2024 Willis Towers Watson PLC Earnings Call

And supplemental information that were issued earlier today.

Today's call is being recorded and will be available for the next three months on W. T W's website.

Some of the comments in today's call may constitute forward looking statements within the meaning of the private Securities Reform Act of 1995. These forward looking statements are subject to risks and uncertainties.

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

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

During the call certain non-GAAP financial measures may be discussed for.

For reconciliations of the non-GAAP measures as well as other information regarding these measures. Please refer to the most recent earnings release and other materials in the Investor Relations section of the company's website.

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

Good morning, everyone.

Speaker Change: Thank you for joining us for <unk> fourth quarter and full year 2024 earnings call.

Speaker Change: Joining me today is Andrew Krasner, our Chief Financial Officer.

Before we begin I'd like to acknowledge the devastating wildfires in California and express our deepest sympathy to all those affected.

Speaker Change: For our colleagues clients and business partners in the areas impacted our thoughts are with you and we will continue to lend our support through this difficult time.

Speaker Change: 2024 was a landmark year for Ww.

Speaker Change: The completion of our three year growth simplify and transform strategic priorities has strengthened our competitive position and enabled us to deliver on our financial targets for 2024.

Speaker Change: Thanks to our team's focus and collaboration we entered 2025 with strong momentum in the market and all of our businesses prime to perform.

As we discussed at our Investor Day in December three years of hard work to grow simplify and transform have made wdw, a faster growing more focused and more profitable company.

Speaker Change: We grew the business by making strategic investments in talent innovation simplified our business to become more efficient and agile and transform the business to modernize and enhance how we operate.

Speaker Change: The successful execution of our strategy was reflected in our fourth quarter and full year of 2024 results.

Speaker Change: We delivered 5% organic revenue growth in the fourth quarter with an adjusted operating margin of 36, 1% up 190 basis points over the prior year.

Speaker Change: Excluding transact, which we divested on December 31, we recorded 6% organic revenue growth and 36, 6% adjusted operating margin.

Speaker Change: Our transformation program, which is now concluded delivered $27 million of incremental annualized savings during the quarter, bringing total savings over the life of the program to $473 million.

Speaker Change: Adjusted diluted earnings per share were $8 13.

Speaker Change: A 9% increase year over year.

Speaker Change: For the full year, we had organic revenue growth of 5% in line with our mid single digit target or 6% excluding transact.

Speaker Change: We expanded adjusted operating margin by 190 basis points year over year to 23, 9% or 24, 4%, excluding transact fulfilling our commitment to annual margin expansion.

Speaker Change: Our adjusted Diluting earnings per share were $16 93 up 17% year over year.

Speaker Change: We're proud of our 2020 for performance and are excited for the next chapter at Ww as we implement our new strategy to accelerate performance enhance efficiency and optimize our portfolio.

Speaker Change: We're now focused on extending and amplifying our strengths and building on the solid foundation, we've created over the last three years.

Speaker Change: To accelerate performance, we're focused on strengthening our core businesses, continuing to innovate leveraging and expanding our global footprint and advancing connections across our business.

Speaker Change: To enhance efficiency, we're committed to continuous improvement and delivering on our we do effort to drive both margin and free cash flow improvement.

Speaker Change: And to optimize our portfolio well perceived by investing organically and inorganically to improve our business mix guided by our focused investment framework and a rebalanced capital allocation strategy.

Speaker Change: As we discussed at Investor day, many of our strategic objectives represent an evolution rather than a revolution for our businesses.

Speaker Change: We feel confident about the path forward, because we're focusing on and investing most heavily in our best performing ideas.

Speaker Change: Let me take a few minutes to share some color around several of our key client wins from the fourth quarter, reflecting our strategic priorities.

Speaker Change: Our industry, leading analytics capabilities were a key contributor to signing a major global logistics provider to a cross segment contract, which includes all its global lines of insurance coverage as well as global benefits management.

Speaker Change: We previously worked with this client a much smaller mandate and by using our risk intelligence software it changed how the client thought about their insurance portfolio and who they wanted to work with.

Speaker Change: Together with the trust our team built our innovative and collaborative solutions led the client to appoint us over their incumbent broker.

Speaker Change: We will continue to focus on strengthening smart connections across our business and going to market collaboratively.

Speaker Change: In the fourth quarter of this approach alongside our global service delivery model helped us expand our existing relationship with a large global vendor to cover a full spectrum of insurance programs global benefits management, and embark and engage implementations.

Speaker Change: Similarly collaboration between our CRB and <unk> teams in Asia, and Europe helped secure brokerage appointment across both businesses for a leading communications technology group in Asia, highlighting the connectivity of our businesses across segments and regions.

Speaker Change: In <unk>, we're continuing to focus on our core businesses that are sustained mid single digit growth in 2016, and delivered 3% organic growth or 6% organic growth excluding transact in the fourth quarter.

Speaker Change: HW six strategic priorities of core growth smart connections and innovation will enable us to build on our strong financial track record with sustained revenue growth and further margin expansion.

Speaker Change: Many of our new business wins in each WC in the fourth quarter reflect these priorities, we continue to add new multiyear client contracts in our core service areas due to our deep technical expertise sophisticated analytics and our ability to create breakthroughs that matter.

Our CRB and <unk> teams in Asia, and Europe helped secure brokerage appointment across both businesses for a leading communications technology group in Asia, highlighting the connectivity of our businesses across segments and regions.

Speaker Change: Our focus on smart connections resulted in wins that extend across surface areas.

In <unk>, we're continuing to focus on our core businesses that are sustained mid single digit growth in 2016, and delivered 3% organic growth or 6% organic growth excluding transact in the fourth quarter.

Speaker Change: For example, one of the world's fastest growing international Airlines chose us as their ongoing pension investment adviser global retirement governance adviser and outsourcing providers.

Speaker Change: We want health and benefits plan management and communications work for a fortune 500 diversified manufacturing company unseating decades long incumbents.

<unk> strategic priorities of core growth smart connections and innovation will enable us to build on our strong financial track record with sustained revenue growth and further margin expansion.

Speaker Change: And one of the largest nonprofit health care systems in the United States awarded US a long term outsourcing retirement and employee experience contract and so did a leading logistics company based in Europe.

Many of our new business wins in each WC in the fourth quarter reflect these priorities, we continue to add new multiyear client contracts in our core service areas due to our deep technical expertise sophisticated analytics and our ability to create breakthroughs that network.

Speaker Change: In RMB as our specialization strategy continues to generate strong results, we're focused on deepening our expertise and expanding our existing specialty lines into new geographies, while building the talent and tools to support new specialized lines.

Our focus on smart connections resulted in wins that extend across surface areas.

For example, one of the world's fastest growing international Airlines chose us as their ongoing pension investment adviser global retirement governance adviser and outsourcing providers.

Speaker Change: In the fourth quarter, we delivered high single digit organic growth in RMB and won a number of large contracts that reflect the value of our specialization strategy.

We want health and benefits plan management and communications work for a fortune 500 diversified manufacturing company unseating decades long incumbents.

Speaker Change: CRP across border teams spanning multiple specialties created a customized construction program, where our middle Eastern Mega project of an Asian manufacturing company.

And one of the largest nonprofit health care systems in the United States awarded US a long term outsourcing retirement and employee experience contract and so did a leading logistics company based in Europe.

Speaker Change: Our global collaboration with local expertise helped us secure the work for all risk coverage for the project.

Speaker Change: And in ICT, we won a multi year software contract with a large insurer driven by our global analytics capabilities and the efficiency of our technology solutions.

In RMB as our specialization strategy continues to generate strong results, we're focused on deepening our expertise and expanding our existing specialty lines into new geographies.

Speaker Change: I also want to take a moment to highlight our progress on optimizing our portfolio.

Building, the talent and tools to support new specialized lines.

Speaker Change: As I mentioned earlier, we completed the sale of transact for $632 million on December 31, and expect this divestiture to strengthen our growth rates operating margins and free cash flow starting in 2025.

In the fourth quarter, we delivered high single digit organic growth in RMB and won a number of large contracts that reflect the value of our specialization strategy.

And CRP across border teams spanning multiple specialties created a customized construction program, where our middle Eastern Mega project of an Asian manufacturing companies.

Speaker Change: We're also re entering the reinsurance market through a joint venture with Bain capital and Andrew will provide some financial details on that later.

Speaker Change: And as we discussed at Investor Day, we're taking a focused and disciplined approach to organic investment.

Our global collaboration and local expertise helped us secure the work for all risk coverage for the project.

Speaker Change: We're prioritizing improving our business mix, expanding our reach across the insurance value chain and enhancing our margins and cash flow.

And in ICT, we won a multi year software contract with a large insurer driven by our global analytics capabilities and the efficiency of our technology solutions.

Speaker Change: We will be thoughtful about the opportunities we pursue recognizing the importance of minimizing business disruption and creating clear cultural alignment.

I also want to take a moment to highlight our progress on optimizing our portfolio.

As I mentioned earlier, we completed the sale of transact for $632 million on December 31, and expect this divestiture to strengthen our growth rates operating margins and free cash flow starting in 2025.

Speaker Change: As I look at the year ahead, I feel confident in our position and our outlook for 2025.

Speaker Change: We have strong momentum in the market, we continue to make steady progress against our strategy and the political and regulatory changes, we're seeing in the U S and elsewhere across the globe tend to support client demand for our services.

We're also re entering the reinsurance market through a joint venture with Bain capital and Andrew will provide some financial details on that later.

Speaker Change: We introduced a financial framework at Investor Day in December that calls for mid single digit organic growth continued annual adjusted operating margin expansion.

And as we discussed at Investor Day, we're taking a focused and disciplined approach to organic investment.

We're prioritizing improving our business mix, expanding our reach across the insurance value chain and enhancing our margins and cash flow.

Speaker Change: Annual adjusted EPS growth and ongoing growth in free cash flow and free cash flow margin.

We will be thoughtful about the opportunities we pursue recognizing the importance of minimizing business disruption and creating clear cultural alignment.

Speaker Change: Andrew will share more details on our financial performance and outlook shortly.

Speaker Change: Before I hand, it over to him.

Speaker Change: Wanted to take a moment to reflect on what we gained from the journey that we've been on these past three years.

As I look at the year ahead, I feel confident in our position and our outlook for 2025.

Speaker Change: We have grown we have simplified and we are transformed and we are much better for it.

We have strong momentum in the market, we continue to make steady progress against our strategy and the political and regulatory changes, we're seeing in the U S and elsewhere across the globe tend to support client demand for our services.

Speaker Change: I have never been more optimistic about wdw's future.

Speaker Change: We are more focused more connected more efficient and more aligned than we've ever been.

Speaker Change: And we are keenly focused on realizing our potential to create value for our shareholders.

We introduced a financial framework at Investor Day in December that calls for mid single digit organic growth continued annual adjusted operating margin expansion annual adjusted EPS growth and ongoing growth in free cash flow and free cash flow margin.

Speaker Change: We are well positioned to accelerate performance and deliver profitable growth through innovation and expansion into attractive markets.

Speaker Change: Continuing to enhance efficiencies across the company for continued margin expansion and free cash flow improvement.

Andrew will share more details on our financial performance and outlook shortly.

Speaker Change: And we are optimizing our business mix to elevate our financial performance and our strategic position.

Before I hand, it over to him.

Speaker Change: I want to thank all our colleagues for their contributions to improving WCW and for their continued commitment to our clients and our company.

I want to take a moment to reflect on what we gained from the journey that we've been on these past three years we.

We have grown we have simplified and we are transformed and we are much better for it.

Speaker Change: And with that.

Andrew Krasner: I will turn the call over to Andrew.

I have never been more optimistic about wdw's future. We are more focused more connected more efficient and more aligned than we've ever been.

Andrew Krasner: Thanks, Carl Good morning, and thanks for joining us today in.

Andrew Krasner: In the fourth quarter, we delivered organic revenue growth of 5% or 6%, excluding transact adjusted operating margin expanded 190 basis points to 36, 1% or 36, 6% excluding transaction adjusted diluted earnings per share were $8 13, an increase of 9% over the <unk>.

And we're keenly focused on realizing our potential to create value for our shareholders.

We are well positioned to accelerate performance and deliver profitable growth through innovation and expansion into attractive markets. We're continuing to enhance efficiencies across the company for continued margin expansion and free cash flow improvement.

Andrew Krasner: Prior year for.

Andrew Krasner: For the full year, we delivered organic revenue growth of 5% or 6% excluding transact.

And we are optimizing our business mix to elevate our financial performance and our strategic position.

Andrew Krasner: Adjusted operating margins expanded 190 basis points to 23, 9%, excluding transact our margin expanded 210 basis points to 24, 4% adjusted diluted earnings per share were $16 93 up 17% over the prior period.

I want to thank all our colleagues for their contributions to improving WCW and for their continued commitment to our clients and our company.

And with that.

Andrew: I'll turn the call over to Andrew.

Andrew: Thanks, Karl and good morning, and thanks for joining us today.

Andrew Krasner: Our full year results reflect our strong execution against our grow simplify transform strategic priorities positioning us well as we entered 2025.

Andrew: In the fourth quarter, we delivered organic revenue growth of 5% or 6%, excluding transact adjusted operating margin expanded 190 basis points to 36, 1% or 36, 6% excluding transaction adjusted.

Next I'll spend some time reviewing our segment results note that to.

Andrew Krasner: <unk> comparability with prior periods all commentary regarding the results of our segments will be on an organic basis, unless specifically stated otherwise.

Andrew: Diluted earnings per share were $8 13, an increase of 9% over the prior year.

Andrew: For the full year, we delivered organic revenue growth of 5% or 6% excluding transact.

Andrew Krasner: Wealth and career revenue grew 3% compared to the fourth quarter of last year, excluding transact HW UC revenue grew 6% for the full year <unk> generated 4% organic growth or 5%, excluding transact, which was in line with our outlook for the segment as we outlined at Investor Day.

Andrew: Adjusted operating margins expanded 190 basis points to 23, 9%, excluding transact our margin expanded 210 basis points to 24, 4% adjusted diluted earnings per share were $16 93 up 17% over the prior period.

Andrew Krasner: Our health business grew 18% for the quarter were 16% excluding book of business activity, all geographies achieved double digit growth with new business and strong client retention being the primary contributors. The continued expansion of our global benefits management client portfolio, which we discussed at Investor day was a meaningful driver.

Andrew: Our full year results reflect our strong execution against our grow simplify transform strategic priorities positioning us well as we entered 2025.

Andrew: 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: As well.

Andrew Krasner: We also saw robust consulting project activity in Europe, and as expected timing of consulting projects and commissions positively impacted our North America results.

Andrew: Health wealth and career revenue grew 3% compared to the fourth quarter of last year, excluding transact HW UC revenue grew 6% for the full year <unk> generated 4% organic growth or 5%, excluding transaction, which was in line with our outlook for the segment as we outlined at Investor Day.

Andrew Krasner: We expect health to deliver high single digit growth in 2025 based on our 2024, new business success in our current pipeline and sales focus.

Andrew Krasner: Wealth revenue grew 3% in the fourth quarter, driven by low single digit growth in our retirement business. We saw strong demand for life site in Europe as well as consulting projects to implement legislative changes North America also grew on the back of higher levels of project activity, our investments business delivered low single digit growth. Despite a strong.

Andrew: Our health business grew 18% for the quarter were 16% excluding book of business activity, all geographies achieved double digit growth with new business and strong client retention being the primary contributors.

Andrew: Continued expansion of our global benefits management client portfolio, which we discussed at Investor day was a meaningful driver as well.

Comparable due to new business wins and successful new solutions, we continue to expect low single digit growth in the wealth business.

Andrew: Also saw robust consulting project activity in Europe, and as expected timing of consulting projects and commissions positively impacted our North America results.

Andrew Krasner: Career delivered 1% revenue growth in the quarter below our expectations.

Andrew Krasner: Timing limited growth in the quarter with some sold projects delayed to Q1 for the full year career recorded 4% organic growth and we are confident that career will continue growing at similar mid single digit levels.

Andrew: We expect health to deliver high single digit growth in 2025 based on our 2024, new business success in our current pipeline and sales focus.

Andrew: Wealth revenue grew 3% in the fourth quarter, driven by low single digit growth in our retirement business. We saw strong demand for life site in Europe as well as consulting projects to implement legislative changes North America also grew on the back of higher levels of project activity.

Andrew Krasner: Benefits delivery and outsourcing revenue declined 2% versus the fourth quarter of last year, excluding transact <unk> revenue grew 1% with notable growth in project work and benefits outsourcing and new client wins and retirees shopping for new plans and individual marketplace.

Andrew: Our investments business delivered low single digit growth. Despite a strong comparable due to new business wins and successful new solutions. We continue to expect low single digit growth in the wealth business.

Andrew Krasner: Excluding transact BDO grew 2% for the full year 2024, despite facing a significant headwind from a large client that in source its health and benefits administration as we've discussed in previous quarters.

Andrew: Career delivered 1% revenue growth in the quarter below our expectations.

Andrew Krasner: Looking ahead, we expect <unk> to grow at a mid single digit rate H WCS operating margin for the fourth quarter was 41, 9% an increase of 140 basis points compared to the prior year, primarily driven by transformation savings for the full year <unk> operating margin grew by 170 basis points to $29.

Andrew: Timing limited growth in the quarter with some sold projects delayed to Q1 for the full year career recorded 4% organic growth and we are confident that career will continue growing at similar mid single digit levels.

Andrew: Benefits delivery and outsourcing revenue declined 2% versus the fourth quarter of last year, excluding transact <unk> revenue grew 1% with notable growth in project work and benefits outsourcing and new client wins and retirees shopping for new plans and individual marketplace.

Andrew Krasner: 7% and by 180 basis points, excluding transact to 31, 4%.

Andrew Krasner: As we mentioned at Investor Day for 2025, we expect continued margin expansion in each WC.

Andrew: Excluding transact BDO grew 2% for the full year 2024, despite facing a significant headwind from a large client that in source its health and benefits administration as we've discussed in previous quarters.

Andrew Krasner: Moving to risk and broking fourth quarter revenue was up 7% on an organic basis or 8% excluding book of business activity on top of a double digit comparable in the prior year.

Andrew Krasner: Operating margin expanded 60 basis points to 33, 5%. Despite an 80 basis point combined headwind from book of business activity and a decline in interest income for the full year risk and broking revenue saw 8% organic growth excluding the impact of book of business activity and interest income RMB growth rate was also.

Andrew: Looking ahead, we expect <unk> to grow at a mid single digit rate Swc's operating margin for the fourth quarter was 41, 9% an increase of 140 basis points compared to the prior year, primarily driven by transformation savings for the full year <unk> operating margin grew by 170 basis points to $29.

Andrew Krasner: 8%.

Andrew Krasner: Corporate risk and broking had a solid quarter growing 6% excluding book of business activity and interest income CRB revenue grew 8% on top of double digit comparable with contributions from all regions and driven by continued improvement in client retention levels globally and strong new business generation.

7% and by 180 basis points, excluding transact to 31, 4%.

Andrew: As we mentioned at Investor Day for 2025, we expect continued margin expansion in each WC.

Andrew: Moving to risk and broking fourth quarter revenue was up 7% on an organic basis or 8% excluding book of business activity on top of a double digit comparable in the prior year.

Andrew Krasner: As Carl mentioned, our specialization strategy continues to lead the way with facultative surety and marine specialty lines, having been major contributors to the strong growth performance this quarter.

Andrew: Operating margin expanded 60 basis points to 33, 5%. Despite an 80 basis point combined headwind from book of business activity and a decline in interest income for the full year risk and broking revenue saw 8% organic growth excluding the impact of book of business activity and interest income RMB growth rate was also.

Andrew Krasner: Robust new business activity across a wide range of lines drove growth in great Britain, and Western Europe, which delivered double digit growth as a whole and in a number of countries in the region with particular strength in facultative construction natural resources financial solutions, FINEX Marine and aerospace.

Andrew: 8%.

Andrew: Corporate risk and broking had a solid quarter growing 6% excluding book of business activity and interest income CRB revenue grew 8% on top of double digit comparable with contributions from all regions and driven by continued improvement in client retention levels globally and strong new business generation.

Andrew Krasner: North America's growth was supported by strong client retention and new business growth.

Andrew Krasner: Our international region had strong organic growth across the board with notable double digit increases in Latin America, Central Europe, and Asia as well as many of our specialty lines.

Andrew Krasner: Moving onto our insurance consulting and technology business revenue was up 11% led by strong technology sales and modest growth in consulting services as we discussed at Investor day, our ongoing investment in technology is driving an intentional mix shift in ICT, creating value for our clients by integrated technology in <unk>.

Andrew: As Carl mentioned, our specialization strategy continues to lead the way with facultative surety and marine specialty lines, having been major contributors to the strong growth performance this quarter.

Andrew: Robust new business activity across a wide range of lines drove growth in great Britain, and Western Europe, which delivered double digit growth as a whole and in a number of countries in the region with particular strength in facultative construction natural resources financial solutions, FINEX Marine and aerospace <unk>.

Andrew Krasner: Salting solutions looking ahead, we continue to expect mid to high single digit growth for both CRB and ICT.

Andrew Krasner: <unk> operating margin was 33, 5% for the quarter, a 60 basis point increase over the prior year fourth quarter, primarily due to operating leverage from our organic revenue growth as well as transformation savings, partially offset by headwinds from book of business activity and declining interest income as we outlined in December we continue to.

Andrew: North America's growth was supported by strong client retention and new business growth.

Andrew: Our international region had strong organic growth across the board with notable double digit increases in Latin America, Central Europe, and Asia as well as many of our specialty lines.

Moving onto our insurance consulting and technology business revenue was up 11% led by strong technology sales and modest growth in consulting services as we discussed at Investor day, our ongoing investment in technology is driving an intentional mix shift in ICT, creating value for our clients by integrated technology in <unk>.

Andrew Krasner: Expect it to deliver 100 basis points of average annual adjusted operating margin expansion in RMB over the next three years, driven by operating leverage and additional efficiencies, including the deployment of our global broking platform and workflow optimization.

Andrew Krasner: Now, let's turn to the enterprise level results adjusted operating margin for the fourth quarter was 36, 1% a 190 basis point increase over prior year, primarily driven by greater operating leverage and continued benefits from our now completed transformation program, we had $27 million of incremental annualized transformation savings.

Andrew: <unk> solutions looking ahead, we continue to expect mid to high single digit growth from both CRB and ICT.

Andrew: RMB is operating margin was 33, 5% for the quarter, a 60 basis point increase over the prior year fourth quarter, primarily due to operating leverage from our organic revenue growth as well as transformation savings, partially offset by headwinds from book of business activity and declining interest income as we outlined in December we continue to.

Andrew Krasner: Bringing the total to $473 million of cumulative savings since the program's inception.

Foreign exchange was a headwind to adjusted EPS of eight cents for the quarter.

Andrew Krasner: On our current outlook and at current spot rates, we expect foreign exchange to be a headwind of approximately 18 <unk> on adjusted EPS for 2025.

Andrew: Expect it to deliver 100 basis points of average annual adjusted operating margin expansion in RMB over the next three years, driven by operating leverage and additional efficiencies, including the deployment of our global broking platform and workflow optimization.

Andrew Krasner: Our U S GAAP tax rate for the quarter was 26% versus 15, 7% in the prior year, our adjusted tax rate for the quarter was 21, 3% compared to 19, 1% for the fourth quarter of 2023.

Andrew: Now, let's turn to the enterprise level results adjusted operating margin for the fourth quarter was 36, 1% a 190 basis point increase over prior year, primarily driven by greater operating leverage and continued benefits from our now completed transformation program, we had $27 million of incremental annualized transformation savings.

Andrew Krasner: Our full year adjusted tax rate was 21, 5%, we expect our 2025 tax rate to be relatively consistent with that of 2024, though we do see some potential for a modestly more favorable rate.

Andrew: Bringing the total to $473 million of cumulative savings since the program's inception.

Andrew Krasner: As Carl mentioned WCW completed the sale of the transact business on December 31, we believe this sale will help us sharpen our strategic focus simplify our portfolio and accelerate our progress towards our long term free cash flow margin goals.

Andrew: Foreign exchange was a headwind to adjusted EPS of eight cents for the quarter based on our current outlook and at current spot rates, we expect foreign exchange to be a headwind of approximately 18 <unk> on adjusted EPS for 2025.

Andrew Krasner: The transaction resulted in a pretax loss and related impairment charges of over $1 billion, each which are reflected in the full year. GAAP results. These are onetime noncash charges and are not included in adjusted diluted earnings per share.

Andrew: Our U S GAAP tax rate for the quarter was 26% versus 15, 7% in the prior year, our adjusted tax rate for the quarter was 21, 3% compared to 19, 1% for the fourth quarter of 2023.

Andrew Krasner: We generated free cash flow of $1 4 billion for the full year of 2024, an increase of $184 million from prior year, primarily driven by operating margin expansion, partially offset by cash outflows related to transformation and discretionary compensation payments.

Andrew: Our full year adjusted tax rate was 21, 5%, we expect our 2025 tax rate to be relatively consistent with that of 2024, though we do see some potential for a modestly more favorable rate.

Andrew Krasner: Given the sale of transact the wind down of our transformation related cash spending and expected annual margin expansion. We expect to continue expanding our free cash flow margin in 2025 with partial offsets from residual cash transformation expenses and cash taxes on the Willis re earn out payment, which will be classified as <unk>.

Andrew: As Carl mentioned WCW completed the sale of the transact business on December 31, we believe this sale will help us sharpen our strategic focus simplify our portfolio and accelerate our progress towards our long term free cash flow margin goals.

Andrew: The transaction resulted in a pretax loss and related impairment charges of over $1 billion, each which are reflected in the full year. GAAP results. These are onetime noncash charges and are not included in adjusted diluted earnings per share.

Andrew Krasner: Cash flow from operating activities.

Andrew Krasner: During the quarter, we returned $484 million to our shareholders via share repurchases of $395 million and dividends of $89 million, bringing us to 1.2 dollars 6 billion in capital returned to shareholders for the full year.

Andrew: We generated free cash flow of $1 4 billion for the full year of 2024, an increase of $184 million from prior year, primarily driven by operating margin expansion, partially offset by cash outflows related to transformation and discretionary compensation payments.

Andrew Krasner: Before wrapping up I want to take a few minutes to provide some thoughts on 2025.

Andrew Krasner: First we are making some changes to our non-GAAP metrics to better reflect how we view our core operating performance and to better align with industry reporting starting with Q1 2025, we will exclude pension income from adjusted EPS adjusted EBITDA and the adjusted effective tax rate.

Andrew: The sale of transact the wind down of our transformation related cash spending and expected annual margin expansion. We expect to continue expanding our free cash flow margin in 2025 with partial offsets from residual cash transformation expenses and cash taxes on the Willis re earn out payment, which will be classified as <unk>.

Andrew Krasner: Free cash flow and free cash flow margin will reflect cash outflows for capitalized software costs.

Andrew: Cash flow from operating activities.

Please refer to the appendix of our supplemental slides for detailed information on these upcoming changes in the recast of our historical non-GAAP measures.

Andrew: During the quarter, we returned $484 million to our shareholders via share repurchases of $395 million and dividends of $89 million, bringing us to 1.2 dollars 6 billion in capital returned to shareholders for the full year.

Andrew Krasner: Second as we discussed at Investor Day in December we are now in a position to rebalance our capital allocation approach. Thanks to the success of our growth simplify and transform priorities, we intend to maintain share repurchases as the primary form of capital return and a central component of our capital allocation strategy.

Andrew: Before wrapping up I want to take a few minutes to provide some thoughts on 2025.

Andrew: First we are making some changes to our non-GAAP metrics to better reflect how we view our core operating performance and to better align with industry reporting starting with Q1 2025, we will exclude pension income from adjusted EPS adjusted EBITDA and the adjusted effective tax rate.

Andrew Krasner: We expect to allocate approximately $1 5 billion to share repurchases in 2025 subject to market conditions and potential capital allocation to organic and inorganic investment opportunities.

Andrew Krasner: We plan to continue to invest in talent in our platform to drive sustainable growth and expand margins. We will also increasingly emphasize M&A aligned with our strategic priorities of improving our business mix expanding our reach across the insurance value chain and enhancing our margins and free cash flow as part of our investment program, we will be making initial.

Andrew: Also free cash flow and free cash flow margin will reflect cash outflows for capitalized software costs.

Andrew: Please refer to the appendix of our supplemental slides for detailed information on these upcoming changes in the recast of our historical non-GAAP measures.

Andrew: Second as we discussed at Investor Day in December we are now in a position to rebalance our capital allocation approach. Thanks to the success of our growth simplify and transform priorities, we intend to maintain share repurchases as the primary form of capital return and a central component of our capital allocation strategy.

<unk> and our reinsurance joint venture to support its development as a startup venture, which we expect to be a 25% to 35 cent headwind to adjusted EPS. This year.

Andrew Krasner: Finally, we introduce our financial framework at Investor Day in December and have provided some financial considerations for 2025, and our release and slides most of which I've discussed and these comments as well in closing we are very pleased with our strong business performance in 2024 and expect this momentum to continue in 2025.

Andrew: We expect to allocate approximately $1 5 billion to share repurchases in 2025 subject to market conditions and potential capital allocation to organic and inorganic investment opportunities.

Andrew: We plan to continue to invest in talent and our platform to drive sustainable growth and expand margins. We will also increasingly emphasize M&A aligned with our strategic priorities of improving our business mix expanding our reach across the insurance value chain and enhancing our margins and free cash flow as part of our investment program, we will be making <unk>.

With that let's open it up for Q&A.

Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Investments in our reinsurance joint venture to support its development as a startup venture, which we expect to be a 25% to 35 cent headwind to adjusted EPS. This year.

Speaker Change: In the interest of time, we ask that you limit yourself to one question and one follow up please.

Speaker Change: Please standby, while we compile the Q&A roster.

Andrew: Finally, we introduced our financial framework at Investor Day in December and have provided some financial considerations for 2025, and our release and slides most of which I've discussed and these comments as well in closing we are very pleased with our strong business performance in 2024 and expect this momentum to continue in 2025.

Speaker Change: Our first question comes from the line of Elyse Greenspan with Wells Fargo.

Elyse Greenspan: Hi, Thanks. Good morning. My first question is just on just kind of thoughts on overall margin improvement.

Elyse Greenspan: You said 100 basis points in RMB. It was no guide other than improvement with an H WC and obviously unallocated costs can fluctuate. So can you just kind of go through the headwinds and tailwind to margin improvement and how you think about overall.

Andrew: With that let's open it up for Q&A.

Andrew: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Elyse Greenspan: Margin improvement in <unk> and 'twenty five.

Elyse Greenspan: Sure Elyse.

Andrew: In the interest of time, we ask that you limit yourself to one question and one follow up.

Elyse Greenspan: And good morning.

Elyse Greenspan: We expect to expand our margins were 25, we're going to do this in a few ways right, we're going to focus on capturing the benefits from our transformation program.

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

Speaker Change: Our first question comes from the line of Elyse Greenspan with Wells Fargo.

Elyse Greenspan: We're going to leverage our we do organizations know how to continue to enhance efficiency through our right work right place right technology right real estate strategy.

Speaker Change: Hi, Thanks.

Elyse Greenspan: Good morning, My first question.

Elyse Greenspan: Don just kind of thoughts on overall margin improvement.

Elyse Greenspan: Secondly, we see additional opportunities to invest in process optimization, and so our work and be more consistent in our client service delivery and then lastly, we're focused on automation to support productivity gains, we see opportunities to leverage AI responsibly to intelligently, hence our work and further streamline processes.

Elyse Greenspan: I know you said you know a 100 basis points in RMB. It was no guide other than improvement with an H WC and obviously unallocated costs can fluctuate. So can you just kind of go through the headwinds and tailwind to margin improvement and how you think about overall.

Elyse Greenspan: And at least I can walk you through some of the.

Elyse Greenspan: Margin improvement in 'twenty five.

Elyse Greenspan: The puts and takes as we think about the 25.

Speaker Change: Sure Lisa Thank you and good morning.

Elyse Greenspan: Margin expansion opportunity.

Speaker Change: We expect to expand our margins were 25, we're going to do this in a few ways right, we're going to focus on capturing the benefits from our transformation program.

Elyse Greenspan: So the sale of transact will be approximately a 50 basis point tailwind on enterprise margin.

Elyse Greenspan: And for EWC, where we have a strong track record of delivering margin expansion, we expect to have incremental growth beyond the impact of the transact divestiture.

Speaker Change: Going to leverage our we do organizations know how to continue to enhance efficiency through our right work right place right technology right real estate strategy.

Speaker Change: Secondly, we see additional opportunities to invest in process optimization, and so our work and be more consistent in our client service delivery and then lastly, we're focused on automation to support productivity gains, we see opportunities to leverage AI responsibly to intelligently, hence our work and further streamline processes.

Elyse Greenspan: Within the RMB and as we discussed at Investor Day, we expect to deliver the roughly 100 basis points of margin expansion on average over the next three years and we're confident in our ability to achieve this is our transformation program has set us up to drive additional efficiencies in RMB.

Elyse Greenspan: Our unallocated net was $310 million in 2024, we expect 2025 to be roughly in line with 2024.

Speaker Change: At least I can walk you through some of the puts and takes as we think about the 25 margin expansion opportunity.

Speaker Change: So the sale of transact will be approximately a 50 basis point tailwind on enterprise margin.

Elyse Greenspan: And we acknowledge there may be some modest pressure from declining interest rates and that has been contemplated in what I just walked through.

Speaker Change: And for EWC, where we have a strong track record of delivering margin expansion, we expect to have incremental growth beyond the impact of the transact divestiture.

Elyse Greenspan: Thanks, and then.

Speaker Change: My follow up is on capital management I know you guys.

Speaker Change: Kind of we're talking to this more balanced approach right stemming from Investor day, I still would have thought the buyback might've been higher just given the transact proceeds the Willis me earn out is coming in you're still strong cash current cash position and free cash flow generation. So can you just spend a little bit more time walking us through how U K.

Speaker Change: Within RMB and as we discussed at Investor Day, we expect to deliver the roughly 100 basis points of margin expansion on average over the next three years and we're confident in our ability to achieve this is our transformation program has set us up to drive additional efficiencies in RMB.

Speaker Change: With the one 5 billion and then in terms of deal activity M&A right is now part of the equation is the smaller things just help us think through.

Speaker Change: Our unallocated net was $310 million in 2024, we expect 2025 to be roughly in line with 2024.

Speaker Change: What what what transactions might consider.

Speaker Change: And we acknowledge there may be some modest pressure from declining interest rates and that has been contemplated in what I just walked through.

Speaker Change: Yes, sure Elyse just to be clear rates shareholder returns remains a central component of our capital allocation strategy, you can expect us to remain aggressive and opportunistic Brian as we believe our stock remains undervalued in the marketplace. We are not just holding ourselves to a specific target for the next few years as we do.

Thanks, and then my follow up is on capital management I know you guys.

Speaker Change: We're talking to this more balanced approach right stemming from Investor day, I still would have thought the buyback might've been higher just given the transact proceeds the Willis me earn out is coming in you're still strong cash current cash position and free cash flow generation. So can you just spend a little bit more time walking us through how you came.

Speaker Change: With respect to deploy capital towards M&A and other organic opportunities.

Speaker Change: Yes and.

Speaker Change: For 2025, we are expecting share repurchases of approximately $1 5 billion subject to market conditions.

Speaker Change: With the $1 5 billion and then in terms of deal activity M&A right is now part of the equation is the smaller things just help us think through.

Speaker Change: So capital allocation to organic and inorganic investment opportunities.

Speaker Change: As we think about the pacing of that we continuously monitor our cash levels and market conditions.

What what what transactions might consider.

Speaker Change: To take advantage of opportunities to accelerate repurchases if the opportunity presents itself.

Elyse Greenspan: Yes sure Elyse.

Just to be clear rates shareholder returns from a central component of our capital allocation strategy, you can expect us to remain aggressive and opportunistic Brian as we believe our stock remains undervalued in the marketplace. We are not just holding ourselves to a specific target for the next few years as we do expect to deploy capital towards M&A.

Speaker Change: We've talked about in the past I believe it's prudent to maintain an appropriate amount of financial flexibility and I think thats, what youre seeing there and as we always have we'll evaluate all of our options for capital allocation, which.

Speaker Change: Which includes share buybacks internal investments and carefully considered strategic M&A to ensure that we're maximizing value creation for our shareholders.

Elyse Greenspan: In other organic opportunities.

Elyse Greenspan: Yes and.

Speaker Change: Yeah.

Elyse Greenspan: For 2025, we are expecting share repurchases of approximately $1 5 billion subject to market conditions.

Speaker Change: Our next question comes from the line of Gregory Peters with Raymond James.

Elyse Greenspan: So capital allocation to organic and inorganic investment opportunities.

Speaker Change: Yeah.

Gregory Peters: Good morning, everyone.

Gregory Peters: For the first question I'll focus on free cash flow.

Elyse Greenspan: How should we think about the pacing of that we continuously monitor our cash levels and market conditions.

Gregory Peters: It seems like.

Elyse Greenspan: To take advantage of opportunities to accelerate repurchases if the opportunity presents itself.

Gregory Peters: Theres going to be some moving pieces in 2025.

Elyse Greenspan: As we've talked about in the past you believe it's prudent to maintain an appropriate amount of financial flexibility and I think thats, what youre seeing there.

Gregory Peters: So maybe you did reference some of them in your comments, maybe we could go back in.

Gregory Peters: Go into a little more detail.

Elyse Greenspan: As we always have we'll evaluate all of our options for capital allocation.

Gregory Peters: What's going to happen and then also related to that I know you have this longer term objective of 16% can you.

Elyse Greenspan: Which includes share buybacks internal investments and carefully considered strategic M&A to ensure that we're maximizing value creation for our shareholders.

Gregory Peters: On the conversion ratio can you just update us on your perspective for that.

Elyse Greenspan: Yeah.

Gregory Peters: Yes sure.

Speaker Change: Our next question comes from the line of Gregory Peters with Raymond James.

Speaker Change: Greg So as we discussed at Investor Day, we are intensely focused on improving our free cash flow margin by beginning to evolve our business mix.

Elyse Greenspan: Yeah.

Gregory Peters: Good morning, everyone.

Gregory Peters: For the first question I'll focus on free cash flow.

Speaker Change: Continuing to improve working capital management and also of course, enhancing our operating margins and we're very happy with the progress we've made enhancing our free cash flow profile during 2024.

Gregory Peters: It seems like there's going to be some moving pieces in 2025.

Gregory Peters: So maybe you did reference some of them in your comments, maybe we could go back in.

Speaker Change: The free cash flow of $1 4 billion for the year is an increase of $184 million from last year that was primarily driven by operating margin expansion, partially offset by cash outflows related to transformation and discretionary compensation payments.

Gregory Peters: Go into a little more detail.

Gregory Peters: What's going to happen and then also related to that I know you have this longer term objective of 16% can you.

Gregory Peters: On the conversion ratio can you just update us on your perspective for that.

Speaker Change: All of that represented a free cash flow margin of 13, 9% in <unk>.

Speaker Change: <unk> thousand 24, there was a about a 140 basis point headwind from transact and approximately 320 basis point headwind from transformation spending.

Gregory Peters: Yes sure.

Speaker Change: Greg So as we discussed at Investor Day, we are intensely focused on improving our free cash flow margin by beginning to evolve our business mix.

Speaker Change: So normalizing our 2020 for free cash flow margin for those factors, we delivered a free cash flow margin of around 18, 4% and we expect to continue to improve upon this.

Speaker Change: Continuing to improve working capital management and also of course, enhancing our operating margins and we're very happy with the progress we've made enhancing our free cash flow profile during 2024.

Speaker Change: As a reminder.

Speaker Change: Starting in Q1 free cash flow and free cash flow margin will reflect cash outflows for capitalized software costs and we recast all of the historical non-GAAP measures.

Speaker Change: The free cash flow of $1 4 billion for the year is an increase of $184 million from last year that was primarily driven by operating margin expansion, partially offset by cash outflows related to transformation and discretionary compensation payments.

Speaker Change: In the appendix.

Speaker Change: Of the supplemental slides and as we think about 2025, given the sale of transact the wind down of the transformation related cash spending and expected annual operating margin expansion. We expect to continue expanding our free cash flow margin on a reported and normalized basis more.

Speaker Change: All of that represented a free cash flow margin of 13, 9% in.

Speaker Change: In 2024, there was a about a 140 basis point headwind from transact and approximately 320 basis point headwind from the transformation spending so normalizing our 2020 for free cash flow margin for those factors, we delivered a free cash flow margin of around 18, 4% and we.

Speaker Change: More specifically, we expect cash outflows of around $90 million in 2025 from the settlement of accrued costs related to the transformation program, which concluded in 2024.

Speaker Change: And in terms of.

Speaker Change: To continue to improve upon this.

Speaker Change: Cash taxes related to the Willis re earn out we expect the headwind there are up to around $90 million in 2025.

Speaker Change: As a reminder.

Speaker Change: Starting in Q1 free cash flow and free cash flow margin will reflect cash outflows for capitalized software costs and we've recast it all of the historical non-GAAP measures.

Speaker Change: Thanks for the detail.

Speaker Change: I guess the other question I had sticking on.

Speaker Change: In the appendix.

Speaker Change: The commentary you had you mentioned in your prepared remarks.

Speaker Change: Of the supplemental slides and as we think about 2025, given the sale of transact the wind down of the transformation related cash spending and expected annual operating margin expansion. We expect to continue expanding our free cash flow margin on a reported and normalized basis more.

Speaker Change: Foreign exchange headwinds you also talked about the reinsurance joint venture.

Speaker Change: Could you provide us some perspective on the geography of where these are going to show up inside your reported financials.

More specifically, we expect cash outflows of around $90 million in 2025 from the settlement of accrued costs related to the transformation program, which concluded in 2024.

Speaker Change: The foreign exchange can be evenly spread out between the two segments, but I'm curious how the reinsurance headwind is going to show up in your financials and is is there any seasonality issues that we should be considering when we think about foreign exchange and reinsurance costs.

Speaker Change: And in terms of.

Speaker Change: Cash taxes related to the Willis re earn out we expect the headwind they are up to around $90 million in 2025.

Speaker Change: Yes, sure. So in terms of geography on the reinsurance side that will be below the line outside of operating margins.

Speaker Change: Thanks for the detail.

Speaker Change: I guess the other question I had sticking on.

Speaker Change: The commentary you had you mentioned in your prepared remarks.

Speaker Change: And as it relates to FX.

Speaker Change: Our largest exposures are.

Speaker Change: Foreign exchange headwinds you also talked about the reinsurance joint venture.

Speaker Change: Sterling Euro and Canadian dollar.

Speaker Change: Could you provide us some perspective on the geography of where these are going to show up inside your reported financials.

Speaker Change: In Q1.

Speaker Change: We expect an FX headwind of about <unk> <unk>.

Speaker Change: Sure.

Speaker Change: I guess, the foreign exchange can be evenly spread out between the two segments, but I'm curious how the reinsurance headwind is going to show up in your financials and is is there any seasonality issues that we should be considering when we think about foreign exchange and reinsurance costs.

Speaker Change: Relative to the 18th.

Speaker Change: For the full year.

Speaker Change: Our next question comes from the line of Andrew <unk> with TD Cowen.

Speaker Change: Yes.

Speaker Change: Hi, good morning so.

Speaker Change: In your.

Speaker Change: Strategy.

Speaker Change: Yeah sure. So in terms of geography on the reinsurance side that will be below the line outside of operating margins.

Speaker Change: With the departure of Michael Chang recently, and then some big big hires to replace him and I think you added some other people it's great.

And as it relates to FX.

Speaker Change: And then on the call I heard and one of the kind of <unk>.

Speaker Change: Our largest exposures are.

Speaker Change: Hallmarks, while he was at WCW was too.

Speaker Change: Sterling Euro and Canadian dollar.

Speaker Change: Build out that specialization program and Karl I thought I heard you say that.

Speaker Change: In Q1.

Speaker Change: We expect an FX headwind of about eight.

You wanted to expand.

Speaker Change: Specialization into new geographies, so just just to confirm it sounds like.

Speaker Change: Sure.

Speaker Change: Relative to the 18th.

Speaker Change: For the full year.

Speaker Change: Specialization is still a very prominent part of your plan and could you.

Speaker Change: Our next question comes from the line of Andrew <unk> with TD Cowen.

Speaker Change: To elaborate on what you mean by new geographies, what what areas that might be and if that means that you are.

Andrew: Hi, good morning.

Speaker Change: So.

Speaker Change: In your.

Speaker Change: Strategy.

Speaker Change: With the departure of Michael Chang recently, and then some big hires to replace him. Thank you added some other people.

Speaker Change: Net hiring will be pretty robust as a result.

Speaker Change: Sure.

Speaker Change: Good morning, Andrew I mean, we are really pleased with the results we've been generating over the last few years, our specialization strategy. It has been a key driver of growth for RMB.

Speaker Change: And then on the call I heard and one of the kind of <unk>.

Speaker Change: Walmart while he was at WCW was too.

Speaker Change: We continue to see strong growth in our specialty businesses and that outpaces, our overall CRB average growth rate.

Build out that specialization program and Karl I thought I heard you say <unk>.

Speaker Change: Wanted to expand specialization into new geographies. So just just to confirm it sounds like.

Speaker Change: We think our strategy sets us apart from others in the industry and that our entire business not just the pace of the market and structured along industry verticals.

Speaker Change: Specialization is still a very prominent part of your plan and could you.

Speaker Change: And as part of this strategy, we have local specialties with each of our regions is there are nuances and different dynamics, depending on geography.

Speaker Change: To elaborate on what you mean by new geographies, what what areas that might be and if that means that.

Speaker Change: For example, we have industry verticals real estate and hospitality leisure in North America, given large client base demand in that region in Europe, where this more of a demand for commercial auto we have local specialty teams for that particular segment.

Speaker Change: Your net hiring.

Speaker Change: We will be pretty robust as a result.

Speaker Change: Sure. Thank you.

Andrew: Good morning, Andrew I mean, we are really pleased with the results we've been generating over the last few years more specialization strategy. It has been a key driver of growth for RMB.

Speaker Change: So we basically are expanding the specialty strategy, but customizing as we go for geographies North America, which is our largest geography was the natural place to start but building on our strong heritage and our global lines of business centers in the U K.

Andrew: We continue to see strong growth in our specialty businesses and that outpaces, our overall CRB average growth rate.

Andrew: We think our strategy sets us apart from others in the industry.

Speaker Change: We're really pleased.

Speaker Change: Results received from this because it's been successful because it works for clients right.

Andrew: Tire business not just the base of the market structure along industry verticals.

Speaker Change: And in North America, where the work is done just focus on our specialty strategy.

Andrew: And as part of this strategy, we have local specialties. Each of our regions is there are nuances and different dynamics, depending on geography. For example, we have industry verticals real estate and hospitality leisure in North America, given large client base demand in that region in Europe, where this more of a demand for commercial auto we have local specialty.

Speaker Change: And that's led to the continued growth in that region for the last years.

Speaker Change: Are very excited to welcome Pat Dominantly CW TWC Thats, what youre alluding to with your question I mean, as a highly respected and accomplished leader has a tremendous background and his leadership will help us drive growth and accelerate our specialty strategy in the region and we're looking forward to welcome him.

Andrew: The teams with that particular segment.

Andrew: So we basically are expanding the specialty strategy, but customizing as we go for geographies North America, which is our largest geography was the natural place to start but building on our strong heritage and our global lines of business centers in the U K.

Speaker Change: And during the second quarter.

Speaker Change: That's great.

Speaker Change: That's exciting expansion and then just thinking about what you've done in the last two three years with hires.

Speaker Change: Is there a still a tailwind from that as those producers kind of mature into their new their new roles at WCW.

Andrew: We're really pleased with.

Andrew: The results we see from this because it's been successful because it works for our clients.

Andrew: And in North America, where the work is done just focus on our specialty strategy.

Speaker Change: How does that generally kind of.

Speaker Change: Matured and your growth will be based on.

Andrew: And that's led to the continued growth in that region for the last years.

Speaker Change: What youre doing now and expanding into new geographies and and the like.

Speaker Change: We are very excited to welcome Pat Donnelly Tww's, that's what you're alluding to with your question.

Speaker Change: Yes.

Speaker Change: Highly respected and accomplished leader has a tremendous background and his leadership will help us drive growth and accelerate our specialty strategy in the region and we're looking forward to welcome him.

Speaker Change: Andrew.

Speaker Change: We're very pleased with the growth rates, we've had in risk broking and ERP as well.

And we do expect.

Speaker Change: And during the second quarter.

Speaker Change: Continued productivity improvement from those cohorts.

Speaker Change: That's great.

Speaker Change: That's exciting expansion and then just thinking about what you've done in the last two three years with hires.

Speaker Change: Over the last few years.

Speaker Change: And all of those new hires have contributed to the organic growth in this segment.

Speaker Change: Is there a still a tailwind from that as those producers kind of mature into their new their new roles at WCW.

Speaker Change: Our our competitive growth rates are a function of the efforts of all of our colleagues and the specialty strategy that's driving that.

Speaker Change: How does that generally kind of matured and your growth will be based on.

Speaker Change: Even without the contribution from the recent hires would have had competitive growth rates.

Speaker Change: And what Youre doing now and expanding into new geographies and and the like.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line of Rob Cox with Goldman Sachs.

Speaker Change: Yes.

Speaker Change: Andrew.

Rob Cox: Hey, thanks.

Speaker Change: We're very pleased with the growth rates, we've had in risk broking and ERP as well.

Rob Cox: Had a question on the reinsurance JV.

Rob Cox: Could you just talk about the dollar amount cash outflows.

Speaker Change: And we do expect.

Speaker Change: Continued productivity improvement from those cohorts.

Rob Cox: You would expect there annually and.

Sorry, if I missed this sorry, if you could just confirm that that would not impact the free cash flow.

Speaker Change: Hires over the last few years and all of those new hires have contributed to the organic growth in this segment.

Rob Cox: Yes, correct that would be sitting outside of free cash flow.

Speaker Change: Our our competitive growth rates are a function of the efforts of all of our colleagues and the specialty strategy that's driving that.

Speaker Change: Show up in the investing section of the statement of cash flows and in terms of overall size.

Rob Cox: You can think of it as a bolt on acquisition.

Speaker Change: Even without the contribution from the recent hires would've had competitive growth rates.

Rob Cox: <unk>.

Rob Cox: Over a several year period as we continue to fund the startup yes, I mean, the timing right. This is an organic essentially organic right. We don't expect to achieve steady state growth rates and full margin potential for the next several years.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line of Rob Cox with Goldman Sachs.

Rob Cox: Hey, thanks.

Speaker Change: Had a question on the reinsurance JV.

Speaker Change: Could you just talk about the dollar amount cash outflows.

Rob Cox: And the amount of the vessels will depend on the size of the opportunity we see in front of us.

Speaker Change: You would expect there annually and.

Yeah.

Rob Cox: Okay got it that's helpful.

Speaker Change: Sorry, if I missed this sorry, if you could just confirm that that would not impact the free cash flow.

Rob Cox: And I just wanted to ask on health.

Rob Cox: <unk>.

Rob Cox: Book of business sales kind of like organic growth was still 15%, which is much stronger than peers. Just curious what is driving that growth.

You are correct that would be sitting outside of free cash flow.

Speaker Change: Show up in the investing section of the statement of cash flows and in terms of overall size.

Rob Cox: Any of the large new business wins that you had I had touched upon there is kind of contributing to any of the forward growth.

Speaker Change: You can think of it as a bolt on acquisition.

Speaker Change: <unk>.

Speaker Change: Over a several year period as we continue to fund the startup.

Rob Cox: Yes sure so.

Rob Cox: Youre right excluding.

Rob Cox: The book of business activity.

Speaker Change: The timing right. This is an organic essentially organic right. We don't expect to achieve steady state growth rates and full margin potential for the next several years.

Rob Cox: Growth for the quarter was 16% within health.

Rob Cox: And that revenue growth was led by increased project work and brokerage income in North America as well as the continued expansion of our global benefits management client portfolio.

Speaker Change: And the amount of the vessel will depend on the size of the opportunity we see in front of us.

Speaker Change: Yeah.

Speaker Change: Okay got it that's helpful.

Rob Cox: Our international and Europe geographies and consistent with what we shared at Investor Day continue to expect high single digit growth for this business the market demand overall mi remains strong given health care inflation and unemployment levels.

Speaker Change: And I just wanted to ask on health, excluding the book of business sales kind of like organic growth was still 15%, which is much stronger than peers.

Speaker Change: Curious what is driving that growth and if any of the large new business wins that you had I had touched upon there is kind of contributing to any of the forward growth.

Rob Cox: And while we expect growth rates to be more balanced in 2025.

Rob Cox: The stronger comparable in the second and fourth quarter could lead to some lumpiness.

Speaker Change: Yeah sure so.

Rob Cox: On a quarter by quarter basis throughout 2025.

Speaker Change: Youre right excluding.

Speaker Change: The book of business activity.

Rob Cox: Yeah.

Speaker Change: Growth for the quarter was 16% within health.

Rob Cox: Our next question comes from Alex Scott with Barclays.

Speaker Change: And that revenue growth was led by increased project work and brokerage income in North America as well as the continued expansion of our global benefits management client portfolio, and our international and Europe geographies and consistent with what we shared at Investor Day continue to expect high single digit.

Alex Scott: Hey, good morning, first one I have is on.

Rob Cox: Just the M&A environment.

Rob Cox: It seems like maybe opportunities in.

Rob Cox: With larger companies.

Rob Cox: Maybe getting too large just in the private.

Rob Cox: Market.

Yeah.

Speaker Change: Growth for this business and market demand overall remains strong given health care inflation unemployment levels.

Rob Cox: We are accelerating.

Rob Cox: Just be interested in if that's what you're seeing if you have it.

Rob Cox: Interest in doing something larger.

Speaker Change: And while we expect growth rates to be more balanced in 2025.

Rob Cox: And just how to think about that in the context of what I thought it was a pretty sizable buyback actually.

Speaker Change: The stronger comparable in the second and fourth quarter could lead to some lumpiness.

Rob Cox: Yes.

Speaker Change: On a quarter by quarter basis throughout 2025.

Rob Cox: We will comment on one other companies may be thinking of in terms of their strategy.

Alex Scott: Our next question comes from Alex Scott with Barclays.

Rob Cox: So I'll, probably focus a bit more how we're thinking about this.

Alex Scott: Hey, good morning, first one I have is on.

Rob Cox: Look over the last three years, we solidified our infrastructure and strengthen the company. So we have the right business focus and more efficient processes and tools to integrate potential targets with Ww and deliver long term value. We look at our strategy is one trying to achieve three key objectives right.

Alex Scott: Just the M&A environment.

Alex Scott: It seems like maybe opportunities in.

Alex Scott: With larger companies.

Alex Scott: Maybe getting too large just in the private.

Alex Scott: The market.

Alex Scott: We are accelerating.

Rob Cox: First improve our business mix to enhance our broking and wealth presence in key markets, while strengthening our offerings our efforts in high growth high margin areas of our core business.

Alex Scott: Just be interested in.

Alex Scott: You are seeing if you have.

Alex Scott: Interest in doing something larger.

Alex Scott: And just how to think about that in the context of what I thought was a pretty sizable buyback actually.

Rob Cox: We want to expand our reach across the insurance value chain is designed to further accelerate our growth and fill gaps in our capability footprint and third target businesses that would help enhance our margins and free cash flow profile, alright, I am not going to comment on hypothetical targets, but we're looking for firms that could be.

Alex Scott: Yes.

Alex Scott: I won't comment on what other companies may be thinking of in terms of their strategy.

Alex Scott: So I'll, probably focus a bit more how we're thinking about this.

Alex Scott: Look over the last three years, we solidified our infrastructure and strengthen the company.

Rob Cox: Good fit culturally.

Alex Scott: We have the right business focus and more efficient processes and tools to integrate potential targets with Ww and deliver long term value. We look at our strategy is one trying to achieve three key objectives right.

With minimal business throughout disruption and of course satisfy the criteria I just laid out.

Rob Cox: So we're going to be thoughtful and disciplined in our approach.

Rob Cox: In that environment.

Alex Scott: First improve our business mix to enhance our broking and wealth presence in key markets, while strengthening our offerings our efforts in high growth high margin areas of our core business.

Rob Cox: Thanks, that's helpful and maybe for the second one just.

Rob Cox: Thoughts on <unk>.

Rob Cox: Pricing environment, and how we should think about that heading into 2025 compared to 2024 and.

Second we wanted to expand our reach across the insurance value chain and designed to further accelerate our growth and fill gaps in our capability footprint and third.

Rob Cox: I know you guys are giving high level guidance that sort of includes all of that but maybe just some extra texture around the pricing environment and how that's evolving.

Alex Scott: <unk> business that that would help enhance our margins and free cash flow profile, alright, I am not going to comment on hypothetical targets, but we're looking for firms that could be a good fit culturally.

Speaker Change: I assume you're referring to commercial risk when you're talking about the pricing.

Speaker Change: Yes, specifically risking broken yet sorry, okay. Yeah, just wanted to be clear I mean, the markets further stabilized in the fourth quarter I mean, most lines of insurance.

Alex Scott: With minimal business disruption and of course satisfy the criteria I just laid out.

Speaker Change: Positive outcomes for our clients.

Alex Scott: So we're going to be thoughtful and disciplined in our approach.

Speaker Change: And insurers are continuing to look for growth and that's leading to increased competition in the market.

Alex Scott: In that environment.

Speaker Change: Thanks, that's helpful.

Speaker Change: The market remains, especially advantageous for well risk managed non caps woven and loss free clients.

Speaker Change: And maybe for the second one just.

Speaker Change: Your thoughts on.

Speaker Change: Pricing environment, and how we should think about that heading into 2025 compared to 2024 and.

Speaker Change: From a geographic point of view Asia Pacific and Latin America are leaving the market shifts towards softening.

Speaker Change: I know you guys are giving high level guidance that sort of includes all of that but maybe just some extra texture around the pricing environment and how that's evolving.

Speaker Change: Where local market supply and the international.

Speaker Change: Insurers are markets compete and that leads to better results for our clients.

Speaker Change: I assume you're referring to commercial risk when you talked about the pricing.

Speaker Change: Property lines continue to be stable to improving for our clients.

Speaker Change: Specifically risk and broken Yep, sorry, Okay, Yes, just wanted to be clear I mean, the markets further stabilized in the fourth quarter I mean, most lines of insurance there is some positive outcomes for our clients.

Speaker Change: With some rate reductions available depending on the risk profile.

Speaker Change: Rate reductions are still available, but the accelerating in cyber and pioneer show in professional lines.

Speaker Change: And the global casualty market in contrast remains rather firm with the North American market, maybe except for workers' comp still challenging.

Speaker Change: And insurers are continuing to look for growth and that's leading to increased competition in the market.

Speaker Change: The market remains, especially advantageous for well risk managed non cat driven and loss free clients.

Speaker Change: Overall, we don't view right is a significant or a headwind or tailwind across our R&D portfolio in terms of how it impacts us this past quarter for during the year. Our growth was driven primarily by high retention rates and new business as well as the investments we talked about earlier, we have made over the last few years and the Reoriented.

Speaker Change: From a geographic point of view Asia Pacific and Latin America are leaving the market shifts towards softening.

Speaker Change: Our local market supply and the international insurer.

Speaker Change: Insurers are markets compete and that leads to better results for our clients.

Speaker Change: <unk> of the R&D business towards specialization, we think that's really made a difference for us and we will continue to differentiate.

Speaker Change: Most property lines continue to be stable to improving for our clients with some rate reductions available depending on the risk profile.

Speaker Change: Our next question will come from the line of Michael Zaremski with BMO.

Speaker Change: Rate reductions are still available, but the accelerating in cyber and pioneer show in professional lines.

Speaker Change: Yeah.

Charlie: Hey, Good morning, this is Charlie on for Mike.

Speaker Change: And the global casualty market in contrast remains rather firm with the North American market, maybe except for workers' comp still challenging.

Speaker Change: Just going back to the reinsurance joint venture.

Charlie: Karl mentioned the focused approach.

Charlie: Can you add some color on what areas you see the opportunity and is there anything more you can share about the terms whether in terms of financial commitments.

Speaker Change: Overall, we don't view right is a significant or a headwind or tailwind across our R&D portfolio in terms of how it impacts us this past quarter or during the year. Our growth was driven primarily by high retention rates and new business as well as the investments we talked about earlier, we've made over the last few years and the reorient.

Charlie: Our buyout option or anything else, we should be thinking about.

Charlie: Yes, we're not going to get into the specific terms of the JV agreement.

Charlie: In terms of timing and things of that nature.

Speaker Change: <unk> of the R&D business towards specialization, we think that's really made a difference for us and we will continue to differentiate.

Charlie: As we alluded to this structure provides us with flexibility to deploy capital if.

Speaker Change: Our next question will come from the line of Michael Zaremski with BMO.

Charlie: If and when it makes sense to continue to expand that just based on the size of the opportunity.

Speaker Change: Hey, Good morning, this is Charlie on for Mike.

Charlie: That we see.

Charlie: We will take some time for us to reach critical mass and have an impact there.

Speaker Change: Just going back to the reinsurance joint venture Karl mentioned the focused approach.

Charlie: There is the opportunity and potential for for WT W. Two wholly owned the asset at some point in the future if thats what makes sense.

Speaker Change: Can you add some color on what areas you see the opportunity and is there anything more you can share about the terms whether in terms of financial commitments.

Charlie: And so we're really excited about the business opportunity there I think it will contribute a lot to the platform.

Speaker Change: Or a buyout option or anything else, we should be thinking about.

Speaker Change: Yes, we're not going to get into the specific terms of the JV agreement.

Charlie: And.

Charlie: Looking forward to talk to you more about it as it as it evolves.

Speaker Change: In terms of timing and things of that nature.

Speaker Change: Thanks, and Andrew you mentioned.

Speaker Change: Thank.

Speaker Change: As we alluded to this structure provides us with flexibility to deploy capital.

Speaker Change: <unk> with taxes to maybe get a more favorable rate can you add some color around that as well.

Speaker Change: And when it makes sense to continue to expand that just based on the size of the opportunity.

Speaker Change: Yes, sure we're always.

Speaker Change: Looking for opportunities to be efficient from a tax perspective.

Speaker Change: That we see.

Speaker Change: We will take some time for us to reach critical mass and have an impact there.

Speaker Change: Pillar two is still being implemented globally.

Speaker Change: There is the opportunity.

Speaker Change: And there are still some moving pieces there. So I think there could be some some slight upside to the guide that we gave.

Speaker Change: Potential for for W. T. W. Two wholly owned the asset at some point in the future if thats what makes sense.

Speaker Change: Our next question will come from the line of John Newsome with Piper Sandler.

Speaker Change: And so.

Speaker Change: So we're really excited about the business opportunity there I think it will contribute a lot to the platform.

John Newsome: Hi, good morning, it's actually almost.

And.

Speaker Change: Looking forward to talk to you more about it as it as it evolves.

Speaker Change: Well first thing first.

Speaker Change: I was hoping you could add similar to what you talked about and this can broking.

Speaker Change: Thanks, Andrew you mentioned, an opportunity with taxes to maybe get a more favorable rate.

Speaker Change: Hum.

Speaker Change: About the.

Speaker Change: Can you add some color around that as well.

Speaker Change: Environmental.

Speaker Change: Environment for pricing and competition.

Speaker Change: Yes, sure we're always.

Speaker Change: We hear a lot about health insurance in.

Speaker Change: Looking for opportunities to be efficient from a tax perspective.

Speaker Change: Completion.

Speaker Change: It's kind of tough to translate that back to you.

Speaker Change: Pillar two is still being implemented globally.

Speaker Change: Hopefully well conclude business as well, but maybe if you can kind of expand upon that in a similar way that you did with.

Speaker Change: And there are still some moving pieces there. So I think there could be some some slight upside to the guide that we gave.

Speaker Change: And this can broking business.

Speaker Change: Sure.

Speaker Change: Honestly there.

Speaker Change: Our next question will come from the line of John Newsome with Piper Sandler.

Speaker Change: Pretty good span of businesses in each WC, let me start with <unk>.

John Newsome: Hi, good morning, it's actually almost.

Speaker Change: Healthcare inflation as a direct impact on premiums April fully insured plans.

Speaker Change: My first one.

Speaker Change: I was hoping you could add similar to what you talked about can broking.

Speaker Change: <unk> are prevalent outside North America and in the small slash middle markets in North America hosted care inflation as a indirect impact on self insured plans, which are nearly universal among large market in North America.

Speaker Change: Hum.

Speaker Change: About the.

Speaker Change: Environmental.

Speaker Change: Environment for pricing and competition.

Speaker Change: During periods of high healthcare inflation.

Speaker Change: Hear a lot about.

Speaker Change: Insurance inflation.

Sponsors are self insured plans often engage in new ways to keep costs in check.

Speaker Change: Completion.

Speaker Change: But it's kind of tough to translate that back to you.

Speaker Change: Which can generate opportunities for us.

Speaker Change: Hopefully well conclude business as well, but maybe if you can kind of expand upon that and the <unk> and <unk>.

Speaker Change: We have a relatively smaller portion of our health business outside North America, and in North America middle market compared to others.

Speaker Change: This can broking.

Speaker Change: Yes.

Speaker Change: Sure.

There we go.

Speaker Change: That being said we are very pleased with our organic revenue growth of 24, and healthcare inflation was one but only one of the factors that help deliver that result, and we expect that trend to continue.

Speaker Change: Good span of businesses in each WC, let me start with <unk>.

Speaker Change: Healthcare inflation as a direct impact on premiums April fully insured plans.

Speaker Change: These are prevalent outside North America, and then the small slash middle markets in North America posted care inflation as a indirect impact on self insured plans, which are nearly universal among large market in North America.

Speaker Change: Which leads to our outlook for high single digit growth prospects for that business for 25 based on our expected pipeline and commission streams.

Speaker Change: Moving over to wealth the.

Speaker Change: The wealth business is.

Speaker Change: During periods of high health care inflation. The sponsors are self insured plans often engage in new ways to keep cost in check.

Speaker Change: Got several components.

Speaker Change: On pensions consulting business.

Speaker Change: Is largely annuity based with very long term relationships that can stretch multiple decades.

Speaker Change: Which can generate opportunities for us.

We have a relatively smaller portion of our health business outside North America, and in North America middle market compared to others.

Speaker Change: The drivers there for growth are often regulatory activity, which could drive demand and then derisking pension plans are what you would call pension risk transfer.

Speaker Change: That being said we are very pleased with our organic revenue growth of 24 and healthcare replacement was one but only one of the factors that helped deliver that result, and we expect that trend to continue.

Speaker Change: On the PRT side, we continue to see strong demand for consulting the interest rate environment that drives demand for pension de risking strategies, but they're also strategies that drive that.

Speaker Change: Which leads to our outlook for high single growth prospects for that business for 25 based on our expected pipeline and commission streams.

Speaker Change: Factors that drive activity such as the level of surplus assets in the system, we think that the overall volume of annuity volumes and buyouts in the U S is expected to be similar.

Speaker Change: Moving over to wealth the wealth business is.

Speaker Change: Got several components.

Speaker Change: Compared to prior years.

Speaker Change: Our pensions consulting business is largely annuity based with very long term relationships that can stretch multiple decades.

Speaker Change: On the career side.

Speaker Change: This is probably the most economically sensitive of our businesses, but one we have taken substantial.

Speaker Change: The drivers there for growth are often regulatory activity, which could drive demand and then de risking of engine plans or what you would call pension risk transfer on the PRT side, we continue to see strong demand for consulting the interest rate environment that drives <unk>.

Speaker Change: Activity over the past years too.

Jim: Jim This Cape it with respect to activity.

Speaker Change: Couple of things to think about one is we've been focused on rebalancing our portfolio. We still have meaningful project work, but we now have a greater balance of product software and annuity type relationships. Those two tend to be recurring and multi year that includes things like compensation benchmarking compensation Committee appointments.

Speaker Change: <unk> for pension Derisking strategies, but they're also strategies that drive a Ferrari factors that drive activity such as the level of surplus assets in the system, we think that the overall volume of annuity volumes and buyouts in the U S is expected to be similar.

Jim: And our digital solutions like embark and engaged.

Jim: Second is our disciplined focus if we were simply responding to rfps, we wouldnt be seeing the growth. We are we're out there in the marketplace and generating activity.

Speaker Change: Compared to prior years.

Speaker Change: On the career side.

Speaker Change: This is probably the most economically sensitive of our businesses, but one we have taken substantial.

Jim: <unk>.

Jim: The wealth business regulatory change and what this can quote or companies thinking rethinking their talent strategy drives demand for our business here and then lastly benefits delivery outsourcing right. These are typically multiyear contracts.

Speaker Change: Activity over the past years too.

Speaker Change: Derisk a bit with respect to activity.

Speaker Change: Couple of things to think about one is we've been focused on rebalancing our portfolio. We still have meaningful project work, but we now have a greater balance of product software and annuity type relationships. Those two tend to be recurring and multi year that includes things like compensation benchmarking compensation Committee appointments.

Jim: With a very very high renewal rates.

Jim: We do manage this business not just for growth but for profitable growth.

Jim: If we see competitive activity driving down price beyond the point, where we think we can achieve a good return on our contracts.

Speaker Change: And our digital solutions like embark and engaged.

Jim: Will.

Jim: Pass on the opportunity.

Speaker Change: Second is our disciplined focus if we were simply responding to rfps, we wouldnt be seeing the growth. We are we're out there in the marketplace and generating activity.

Jim: So our growth there, we like to think of as being measured by the opportunity out there.

Jim: A quick survey of HW savings.

Jim: That's great maybe per second question, we could switch to your.

Speaker Change: <unk>.

Speaker Change: The wealth business regulatory change and what this can quote or companies thinking rethinking their talent strategy drives demand for our business here and then lastly benefits delivery and outsourcing right. These are typically multiyear contracts.

Jim: Middle market property casualty business.

Jim: <unk> had a middle market platform.

Jim: Curious at this point.

Speaker Change: Are there geographies within that middle market platform that are.

Speaker Change: With a very very high renewal rates.

Speaker Change: We do manage this business not just for growth, but for profitable growth. So if we see competitive activity driving down price beyond the point, where we think we can achieve a good return on our contracts we will.

Speaker Change: Hum, particularly strong or particularly lacking.

Speaker Change: In general.

Speaker Change: As you look towards trying to expand that market platform.

Speaker Change: I mean first of all from a performance perspective, we've seen good growth across the portfolio.

Speaker Change: Pass on the opportunity.

Speaker Change: We have a business that.

Speaker Change: So our growth there, we like to think of as being measured by the opportunity out there.

Speaker Change: Occupancy and marketing companies across the world and we've been growing all geographies over the past several years. So we're quite happy with that strategy.

Speaker Change: That's a quick survey of HW savings.

Speaker Change: That's great maybe per second question, we could switch to your.

Speaker Change: Now in terms of the opportunity.

Speaker Change: Middle market property casualty business.

Speaker Change: There are geographies, we see where we are relatively underweight, we highlighted the U S, which is the world's largest insurance market as a place where we see significant opportunity.

Speaker Change: <unk> had a middle market platform.

Speaker Change: I'm just curious at this point.

Speaker Change: Are there geographies within that middle market platforms that are.

Speaker Change: And we will be addressing that.

Speaker Change: Particularly strong or particularly lacking.

Speaker Change: Both organically.

Speaker Change: Organically as we have been for the past several years as well as looking at inorganic potential there as well.

Speaker Change: In general as we move.

Speaker Change: As you look towards trying to expand that marketing platform.

Speaker Change: Okay.

Speaker Change: I mean first of all from a performance perspective, we've seen good growth across the portfolio.

Speaker Change: Our next question comes from the line of Mark Hughes with <unk> Securities.

Speaker Change: We have a business that improved occupancy and marketing companies across the world.

Speaker Change: Yes.

Yes, Thank you and good morning, Andrew the 18, 4% normalized free cash is that recast for the capitalized software cost it looks like it's about 110 bps is that.

Speaker Change: And we've been growing all geographies over the past several years, so we're quite happy with that strategy now.

Speaker Change: Now in terms of the opportunity.

Speaker Change: Already include that headwind.

Speaker Change: There are geographies, we see where we are relatively underweight, we highlighted the U S.

Speaker Change: Yeah, no so the.

Speaker Change: <unk>.

Speaker Change: The $18 four that I referenced is on a current.

Speaker Change: Which is the world's largest insurance market as a place where we see significant opportunity.

Speaker Change: Calculation base, just not the new go forward, which will start in 2025 with Q1.

And we will be addressing that.

Speaker Change: Both organically.

Speaker Change: So as a baseline we might take that 110, but call. It 17 three is that fair.

Speaker Change: Organically as we have been for the past several years as well as looking at the inorganic potential there as well.

Speaker Change: That's fair on a normalized basis correct.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Mark Hughes with <unk> Securities.

Carl Hess: Okay, and then Carl you mentioned, how political regulatory activity.

Speaker Change: Yeah.

Speaker Change: Yes, Thank you and good morning, Andrew the 18, 4% normalized free cash is that recast for the capitalized software cost it looks like it's about 110 bps is that.

Carl Hess: May be helpful for your business could you expand on that a little bit.

Carl Hess: Yes.

Carl Hess: When the regulatory environments change clients are faced with potential change to their business and they turn to us for.

Speaker Change: Already include that headwind.

Carl Hess: Our evaluation of their options understanding of what others can do and implementation of the change.

Speaker Change: Yes, so the.

Speaker Change: The $18 four that I referenced is on a current.

Carl Hess: That's a formula that's worked very well for us for a very long time, and we expect that to continue.

Speaker Change: Calculation base, just not the new go forward, which will start in 2025 with Q1.

Carl Hess: Yeah.

Carl Hess: Thank you.

Speaker Change: So as a baseline we might take that 110 bits of call. It 17, three is that fair.

Speaker Change: Our next question will come from the line of Josh Shanker with Bank of America.

Speaker Change: Okay, that's fair on a normalized basis correct.

Josh Shanker: Yes. Thank you very much Karl I really appreciate youre around the world does it with Paul I want to talk about that a little bit.

Speaker Change: Okay, and then Karl you mentioned, how political regulatory activity.

Josh Shanker: In terms of the economic sensitivity of the business is it more revenue sensitivity or is it margin sensitivity.

Speaker Change: May be helpful for your business could you expand on that a little bit.

Speaker Change: Yes.

Speaker Change: When the regulatory environments change clients are faced with potential change to their business and they turned to us for evaluation of their options understanding of what others can do and implementation of the change.

Josh Shanker: A business with a lot of very talented people, who in hard times can't produces much but you'll want to keep them for the recovery how should we frame.

Josh Shanker: Our recessionary impact on revenues versus recessionary impact on margins.

Speaker Change: That's a formula that's worked very well for us for a very long time, and we expect that to continue.

Josh Shanker: Yes really good question first of all I guess I would point out.

Josh Shanker: This is a business that if you look at our history, we've been able to produce revenue growth in all sorts of different economic conditions, but yes. There is no economic sensitivity to the overall.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Our next question will come from the line of Josh Shanker with Bank of America.

Revenue of the firm and you can look to sort of prior crisis environment.

Speaker Change: Yes. Thank you very much Karl I really appreciate youre around the world does it with Paul I'm going to talk about that a little bit.

Josh Shanker: <unk> growth, but it's been more muted.

Josh Shanker: However in terms of looking at our bottom line.

Terms of the economic sensitivity of the business is it more revenue sensitivity or is it margin sensitivity.

Josh Shanker: Yes.

Josh Shanker: It's substantial.

Josh Shanker: Trunk of our compensation is variable compensation.

Speaker Change: <unk> business with a lot of very talented people, who in hard times can't produce as much but you'll want to keep them for the recovery.

Josh Shanker: And just as our employee our colleagues sharing the upside there.

Josh Shanker: They help us manage through the downside as well and so we've been able to deliver stable.

Speaker Change: Should we frame.

Speaker Change: Recessionary impact on revenues versus recessionary impact on margins.

Josh Shanker: More stable operating income results through thick and thin as a result.

Speaker Change: Yes really good question first of all I guess I'd point out. This is a business that if you look at our history, we've been able to produce revenue growth.

Josh Shanker: Great.

Josh Shanker: In terms of two things that were sort of worried about there is some concern about the potential for recession. There is also maybe more at the forefront as concerns about inflation.

Speaker Change: And all sorts of different economic conditions, but yes, there is no economic sensitivity to the overall revenue of the firm and you can look to sort of prior crisis environment, we produced growth, but it's been more muted.

Josh Shanker: Confronted with both recession inflation simultaneously.

Josh Shanker: Did the two net each other out in the way that your revenues are generated or is one a bigger impact on your freight than the other.

Speaker Change: However in terms of looking at our bottom line.

Speaker Change: A substantial chunk of our compensation is variable compensation and just as our employee our colleagues share in the upside.

Josh Shanker: Yes, remember those Fabulous <unk> I guess is what you said.

Josh Shanker: Thinking about climates like that.

Josh Shanker: I think that there is.

Speaker Change: They help us manage through the downside as well and so we've been able to deliver stable.

Josh Shanker: As a.

Josh Shanker: The sum of the parts that are across the business can work in very very different ways I mean.

Speaker Change: Or more stable.

Josh Shanker: Inflation will affect the price of insurance as well as asset values that will help us in terms of our commission based income in both segments as well as the asset based fees, we may be getting on with.

Speaker Change: Operating income results through thick and thin as a result.

Speaker Change: Great and in terms of two things that were sort of worry about there is some concern about the potential for recession.

Speaker Change: There is also maybe more at the forefront of concerns about inflation.

Josh Shanker: And the wealth business.

Speaker Change: Confronted with both recession inflation simultaneously.

Josh Shanker: It does affect of course, our compensation costs, but as I just alluded to we've got some control over that.

Speaker Change: The two net each other out in the way that your revenues are generated or is one a bigger impact on your freight than the other.

Josh Shanker: And we've also been able to manage over the past.

Josh Shanker: Couple of decades through efforts like our right.

Yes, remember those Fabulous <unk> I guess is what you said.

Josh Shanker: Real estate right workforce location programs to be able to help manage our biggest chunk of cost across the organization, which is comp and Ben.

Speaker Change: Thinking about climates like that.

Speaker Change: I think that.

Speaker Change: There is a dip.

Josh Shanker: So we think that because of the flexibility we didn't vendor to this organization increasingly so in the last three years, we're pretty well positioned.

Speaker Change: Some of the parts of their across the business can work in very very different ways I mean.

Speaker Change: Inflation will affect the price of insurance as well as asset values that will help us in terms of our commission based income.

Josh Shanker: Whether all sorts of economic client climate, including stagflation.

Speaker Change: In both segments as well as the asset based fees, we may be getting.

Speaker Change: Our next question will come from the line of David <unk> with Evercore ISI.

Speaker Change: Within the wealth business.

Speaker Change: It does affect of course, our compensation costs, but as I just alluded to we've got some control over that.

Speaker Change: Hey, good morning, I had a bigger picture margin question just around the natural operating leverage for the enterprise just sort of growing revenues faster than expenses.

Speaker Change: And we've also been able to manage over the past.

Speaker Change: Couple of decades through efforts like our right.

Speaker Change: Real estate right workforce location programs to be able to help manage our biggest chunk of cost across the organization, which is comp and Ben.

Speaker Change: I believe in 2021.

Speaker Change: And I know I'm going back but back then you guys had called out around 70 basis points, a year of natural operating leverage but the mix has changed a bit. Since then so I'm wondering if that still stands as a good baseline to consider.

Speaker Change: We think that because of the flexibility we have in vendor to this organization.

Speaker Change: <unk> sold in the last three years, we're pretty well positioned.

Speaker Change: Whether all sorts of economic client climate, including stagflation.

Speaker Change: Before can think before thinking about some of the other moving pieces.

Speaker Change: Here in 2025.

Speaker Change: Our next question will come from the line of David <unk> with Evercore ISI.

Speaker Change: Yes, I think.

Speaker Change: That may have been relevant at that time with that business mix. As you suggested I think there were obviously several components that are no longer part of the business portfolio.

Speaker Change: Yes.

Speaker Change: Hey, good morning, I had a bigger picture margin question just around the natural operating leverage for the enterprise just sort of growing revenues faster than expenses.

Speaker Change: I think I do think the best way to think about it now is what I was alluding to earlier.

Speaker Change: Which is the 100 basis points on average over the next three years in R&D continued.

Speaker Change: I believe in 2021.

Speaker Change: And I know I'm going back but back then you guys had called out around 70 basis points, a year of natural operating leverage but the mix has changed a bit. Since then so I'm wondering if that still stands as a good baseline to consider.

Speaker Change: Continued incremental margin improvement in HW, UC, which already has very high margins and then factoring in the tailwind at the enterprise level from the divestiture of transact.

Speaker Change: Before can think before thinking about some of the other moving pieces.

Speaker Change: So I think if you think about that weight the portfolio, that's probably the best way to think about sort of the margin expansion opportunity going forward.

Speaker Change: Here in 2025.

Speaker Change: Yes, I think.

Speaker Change: That may have been relevant at that time with that business mix. As you suggested I think there were obviously several components that are no longer part of the business portfolio.

Speaker Change: Okay, great. Thank you and then.

Speaker Change: Just wanted to follow up on.

Speaker Change: What sort of hiring and what sort of employment growth.

Speaker Change: Within within the Willis employee base you guys saw in 2024, I think it wasn't like 2% to 3% in 2023, if I look at just head count growth.

Speaker Change: I think I do think the best way to think about it now is what I was alluding to earlier.

Speaker Change: Which is the 100 basis points on average over the next three years in RMB continued.

Speaker Change: Continued incremental margin improvement in HW, UC, which already has very high margins and then factoring in the tailwind at the enterprise level from the divestiture of transact.

Speaker Change: How was that in 2024.

Speaker Change: And is that sort of like a good run rate to think about how you guys are expecting to grow head count and maybe more specifically producers into 2025.

Speaker Change: Yes, it's not a bad way to think about it.

Speaker Change: So I think if you think about that weight the portfolio, that's probably the best way to think about sort of the margin expansion opportunity going forward.

Speaker Change: I mean philosophically, we look at it this way.

Speaker Change: We had a focused effort several years ago to replenish our talent base and we talked a little bit about the effect that's had on our revenue trajectory.

Speaker Change: Okay, great. Thank you and then.

Speaker Change: Just wanted to follow up on.

Speaker Change: But these days our current hiring efforts are more opportunistic there more strategic.

What sort of hiring and what sort of employment growth.

Speaker Change: Within within the Willis employee base you guys saw in 2024, I think it wasn't like 2% to 3% in 2023, if I look at just head count growth.

Speaker Change: The goal of enhancing our ability to achieve sustainable profitable growth and create values and so.

Speaker Change: <unk>.

Speaker Change: With respect to our hiring and overall expense base.

Speaker Change: How is that in 2024.

Speaker Change: And is that sort of like a good run rate to think about how you guys are expecting to grow head count and maybe more specifically producers into 2025.

Speaker Change: Any incremental investments, but they are in talent and technology aren't going to prevent us hitting our margin targets, we expect to get to those with.

Speaker Change: With the hiring we contemplate.

Speaker Change: Yes, it's not a bad way to think about it.

Speaker Change: I mean philosophically, we look at it this way.

Speaker Change: Our next question will come from the line of Meyer Shields with K B W.

Speaker Change: We had a focused effort several years ago to replenish our talent base and we talked a little bit about the effect that's had on our revenue trajectory.

Meyer Shields: Great. Thanks, two small modeling questions first I'm, a little unclear when you talk about the $1 5 billion of share repurchases is that the baseline assuming no inorganic activity, but if there is any of that that goes down or does that $1 five takes that into account.

Speaker Change: But these days our current hiring efforts are more opportunistic there more strategic.

Speaker Change: The goal of enhancing our ability to achieve sustainable profitable growth and create value and so.

Meyer Shields: Yes, the one five is the baseline and depending on the size of any inorganic opportunities that could come down if we find a.

Speaker Change: <unk>.

Speaker Change: With respect to our hiring and overall expense base.

Speaker Change: Any incremental investments, but they are in talent and technology aren't going to prevent us hitting our margin targets, we expect to get to those.

Practice return opportunity to invest that.

Meyer Shields: Funds and aside from share repurchases.

Meyer Shields: Okay. Thanks for the clarification and then.

Speaker Change: The hiring we contemplate.

Speaker Change: I think Paul you mentioned some timing issues in career.

Speaker Change: Our next question will come from the line of Meyer Shields with K B W.

Speaker Change: Is it really a ballpark and the impact on either revenues or margins.

Speaker Change: Great. Thanks, two small modeling questions first I'm, a little unclear when you're talking about the $1 5 billion of share repurchases is that the baseline assuming no inorganic activity, but if there is any of that that goes down or does that $1 five takes that into account.

Speaker Change: Yeah.

Speaker Change: Well I mean.

Speaker Change: We talked about the prepared remarks right. The projects that were delayed from Q4 to Q1. They are sold but we fully expect those to start this quarter.

Speaker Change: More broadly our pipeline remains robust.

Speaker Change: Yes, the one five is the baseline and depending on the size of any inorganic opportunities that could come down.

Speaker Change: Our proactive discussions with clients and prospects.

Speaker Change: To continue to turn up many needs that our clients want our help to address.

Speaker Change: We find a attractive return opportunity to invest those.

Speaker Change: And I talked a little bit about the balancing act between products and software and consulting is designed to be deliberate thing will love this pattern of growth.

Speaker Change: Those funds and aside from share repurchases.

Speaker Change: Okay. Thanks for the clarification and then.

Speaker Change: I think Paul you mentioned some timing issues in career.

Speaker Change: Is it really a ballpark and the impact on either revenues or margins.

That concludes today's question and answer session I'd like to turn the call back to Carlos for closing remarks.

Speaker Change: Okay.

Speaker Change: Well I mean.

Speaker Change: Yeah.

Speaker Change: Thank you again all of you for joining us.

Speaker Change: We talked about in your prepared remarks right. The projects that were delayed from Q4 to Q1. They are sold but we fully expect those to start this quarter.

Speaker Change: Once again want to extend my thanks, and appreciation to all our Ww colleagues globally.

Speaker Change: Their dedication and commitment has made 2020 for such a success I look forward to maintaining our momentum in 2025 as we continue to implement our updated strategy and to deliver for our clients. Thank you have a great day.

Speaker Change: More broadly our pipeline remains robust our proactive discussions with clients and prospects.

Speaker Change: Continue to turn up many needs that our clients want our help to address.

Speaker Change: And I talked a little bit about the balancing act between products and software and consulting.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: <unk> two dee.

Speaker Change: We're seeing more loved the pattern of growth.

Speaker Change: That concludes today's question and answer session I would like to turn the call back to Carlos for closing remarks.

Speaker Change: Thank you again all of you for joining us I once again want to extend my thanks and appreciation to all our Ww colleagues globally their dedication and commitment has made 2024.

Speaker Change: The success I look forward to maintaining our momentum in 2025 as we continue to implement our updated strategy and to deliver for our clients. Thank you have a great day.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].