Q2 2025 Willis Towers Watson Public Ltd Co Earnings Call

Yeah.

Good morning, and welcome to the W. T. W second quarter 2025 earnings conference call.

Please refer to W. T W O dot com for the press release and supplemental information that was issued earlier today.

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

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

These forward looking statements are subject to risks and uncertainties.

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

For more detailed discussion of these and other risk factors investors should review the forward looking statements section.

The earnings press release issued this morning as well as in our most recent Form 10-K and other subsequent W. T. W. SEC filings.

Carl Hess: During the call, certain non-GAAP financial measures may be discussed. To provide direct comparability with prior periods, all commentary regarding the company's revenue growth results will be on a non-GAAP organic basis unless specifically stated otherwise. For reconciliations of the non-GAAP measures, as well as other information regarding these measures, please refer to the most recent earnings release and other materials in the Investor Relations section of the company's website. I'll now turn the call over to Carl Hess, WTW's Chief Executive Officer. Please go ahead.

Right.

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

To provide direct comparability with prior periods all commentary regarding the Companys revenue growth.

<unk> will be on a non-GAAP organic basis, unless specifically stated otherwise.

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

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

Lucy Clarke: Good morning, everyone. Thank you for joining us for WTW's Second Quarter 2025 Earnings Call. Joining me today is Andrew Krasner, our Chief Financial Officer. Julie Gebauer, our President of Health, Wealth, and Career, and Lucy Clark, our President of Risk and Broking, are also joining us for our Q&A session. In the second quarter, we delivered 5% organic growth, 150 basis points of adjusted operating margin expansion, and an adjusted EPS of $2.86 up roughly 20% year over year. Through focused execution, these results were in line with our expectations for the quarter, and we remain on track to deliver on our full-year financial objectives. Our solid first-half results underscore the progress we have made advancing the strategic objectives we introduced at our Investor Day last December.

Good morning, everyone.

Thank you for joining us for Ww's second quarter 2025 earnings call Joy.

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

Julie gave our our president of health wealth and career and Lucy Clark, our president of risk and broker are also joining us for our Q&A session.

In the second quarter, we delivered 5% organic growth of 150 basis points of adjusted operating margin expansion and adjusted EPS of $2 86.

Roughly 20% year over year.

Through focused execution. These results were in line with our expectations for the quarter and we remain on track to deliver on our full year financial objectives.

Our solid first half results underscore the progress we have made advancing the strategic objectives, we introduced at our Investor Day last December.

Lucy Clarke: Our strategy to accelerate performance, enhance efficiency, and optimize our portfolio continues to be a key driver of our results, especially in the face of a dynamic macroeconomic environment. We remain committed to our strategy and its execution, and we are confident in the value it will continue to generate. I want to sincerely thank all WTW colleagues for their commitment in executing these objectives. Last quarter, we highlighted the impact of heightened geopolitical and macroeconomic uncertainty on our business, noting near-term headwinds in some of our consulting businesses, especially for discretionary projects, as well as potential longer-term tailwinds when conditions improve and clients begin responding more assertively to change. There were positive signs of improvement as the quarter went on, as capital markets rebounded and our businesses adapted to changes in demand and buyer sentiment.

Our strategy to accelerate performance enhanced efficiency and optimize our portfolio continues to be a key driver of our results, especially in the face of a dynamic macroeconomic environment.

We remain committed to our strategy and its execution and we are confident in the value. It will continue to generate.

I want to sincerely. Thank all WT W colleagues for their commitment in executing these objectives.

Last quarter, we highlighted the impact of heightened geopolitical and macroeconomic uncertainty in our business, noting near term headwinds in some of our consulting businesses, especially for discretionary projects as well as potential longer term tailwind when conditions improve and clients begin responding more assertively to change.

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There were positive signs of improvement as the quarter went on as capital markets rebounded and our business is adapting to changes in demand and buyer sentiment.

Lucy Clarke: Clients are increasingly turning to us to help address the many people, risk, and capital issues they're facing amidst rising global trade, inflation, and geopolitical uncertainty. We feel positive about both our outlook and our ability to deliver for the second half of the year. In health, wealth, and career, our strong mix of recurring revenue that supports required activities and our geographical diversification continue to provide a stable foundation for growth and for margin expansion. In the current environment, there continues to be significant demand for solutions focused on managing healthcare costs, de-risking pension obligations, and core pay benchmarking work. And as we see consumer and corporate confidence begin to improve, we're also seeing increased demand for broad-based compensation design, benefits governance reviews, and merger integration support.

Clients are increasingly turning to us to help address the many people risk and capital issues, they're facing amidst rising global trade inflation and geopolitical uncertainty.

We feel positive about both our outlook and our ability to deliver the second half of the year.

In health wealth and career, our strong mix of recurring revenue that supports required activities at our geographical diversification continue to provide a stable foundation for growth and for margin expansion.

In the current environment. There continues to be significant demand for solutions focused on managing health care costs, Derisking pension obligations and court benchmarking work.

And as we see consumer and corporate confidence begin to improve we're also seeing increased demand for broad based compensation design benefits governance reviews and merger integration support.

Lucy Clarke: In risk and broking, the pace of innovation and continued challenges in global trade and inflationary and geopolitical issues are elevating both business opportunities and risk. This is demonstrated in CRB's top-line performance. Q2 marks the 10th consecutive quarter where our corporate risk and broking business recorded high single-digit growth when excluding the impacts of both gain on sale activity and interest income. Our strengths and specialty and the relentless focus of our team are clearly resonating with the market and clients. I remain confident in the growth trajectory and resilience of our business amidst economic uncertainty, thanks to our proven ability to help our clients thrive in challenging circumstances time and time again. In addition, our consistent strategy execution is yielding clear benefits. The company's taken a holistic and intentional approach to technology and its role in accelerating growth and enhancing efficiency.

In risk and broking, the pace of innovation and continued challenges in global trade and inflationary and geopolitical issues are elevating both business opportunities and risks.

This is demonstrated in CRB topline performance.

Q2 marks the 10th consecutive quarter, where our corporate risk and broking business recorded high single digit growth when excluding the impacts of both gain on sale activity and interest income.

Our strength in specialty and the relentless focus of our team are clearly resonating with the market and clients.

I remain confident in the growth trajectory and resilience of our business amidst economic uncertainty thanks to our proven ability to help our clients thrive in challenging circumstances time and time again.

In addition, our consistent strategy execution is yielding clear benefits.

The company has taken a holistic and intentional approach to technology and its role in accelerating growth and enhancing efficiency.

Lucy Clarke: There's observable progress in many client-centric and digital efforts, such as the global broking platform, AI tools supporting digital interaction, and solutions that streamline data ingestion and further automate workflows, which allow our colleagues to further differentiate WTW in the market and win new work. Our rollout of the global broking platform has demonstrated the power of seamlessly connecting brokers with the markets. The adoption of our broking platform is progressing on schedule, and it has and will continue to streamline service delivery and efficiency. We're also seeing early results in AI. Through the WTW Enterprise Delivery Organization, or WEDU, we are raising AI literacy and fostering adoption throughout the company. We have several AI-augmented tools that are making measurable differences for both clients and colleagues. AI-powered solutions are enhancing real-time analytics and reducing manual effort by streamlining data ingestion, analysis, and workflows.

There is observable progress in many client centric and digital efforts such as the global Broking platform AI tool supporting digital.

Interaction and solutions that streamline data ingestion and further automate workflows, which allow our colleagues to further differentiate ww in the market and win new work.

Our rollout of the global Broking platform has demonstrated the power of seamlessly connecting brokerage with the markets.

The adoption of our broking platform is progressing on schedule and it has and will continue to streamline service delivery and efficiency.

We're also seeing early results in AI.

Through the W. Tw enterprise delivery organization or we do we are raising AI literacy and fostering adoption throughout the company.

We have several AI augmented tools that are making measurable differences for promote.

Clients and colleagues.

AI powered solutions are enhancing real time analytics, and reducing manual effort by streamlining data ingestion analysis and workflows.

Lucy Clarke: In some instances, we've seen a 75% reduction in routine work and processing time. In other areas, AI-infused voice bots, chatbots, and guided digital experiences are enhancing the client experience and satisfaction. We remain committed to harnessing the potential of our investments by balancing bold innovations with sustainable returns. The benefits we're seeing across the enterprise are measurable, and we intend to maintain pace and uphold rigor in ensuring these investments deliver net positive outcomes for our clients, our colleagues, and ultimately our shareholders. I'm looking forward to sharing more about our progress and the long-term potential benefits to both growth and margins. This quarter, we continue to record strong new business wins with specialty, technology, and global collaboration consistently being why we win in the market.

In some instances, we've seen a 75% reduction in routine work and processing time.

In other areas AI infused voice chatbot and guided digital experiences are enhancing the client experience and satisfaction.

We remain committed to harnessing the potential of our investments by balancing bold innovations with sustainable returns.

The benefits, we're seeing across the enterprise are measurable.

And we intend to maintain pace and a whole rigor and ensuring these investments deliver net positive outcomes for our clients our colleagues and ultimately our shareholders.

Im looking forward to sharing more about our progress and our long term potential benefits to both growth and margins.

This quarter, we continued to record strong new business wins with specialty technology and global collaboration consistently being why we win in the market.

Lucy Clarke: In health, wealth, and career, our innovative products and solutions, together with our focus on making smart connections, continue to drive growth across all our businesses. For example, in Europe, a large global shipping and logistics company chose WTW's Global Benefits Management Program for its 70,000 employees around the world. Key to delivering this win were our deep expertise and strong reputation in global benefits management alongside innovative tools and technology. In the wealth space, our innovative LifeSite platform in the UK was selected by a prominent medical association as its new master trust pension provider. WTW won the business from one of our main competitors due to the deep technical knowledge and clear articulation of the value we provide, coupled with our reputation for quality client service.

And health wealth and career, our innovative products and solutions together with our focus on making smart connections continue to drive growth across all of our business.

For example in Europe, a large global shipping and logistics company chose Wcw's Global benefits management program for our 70000 employees around the world.

Key to delivering this wind, where our deep expertise and strong reputation and global benefit management alongside innovative tools and technology.

In the wealth space, our innovative lifestyle platform in the U K was selected by a prominent medical association as its new Master Trust pension provider.

W. Tw won the business from one of our main competitors due to the deep technical knowledge and clearer articulation of the value we provide coupled with our reputation for quality client service.

Lucy Clarke: In another great example, a major oil and gas company began using our career business's new AI-driven automated job-leveling tool to support regular restructuring across their business areas as they go through a significant transformation and change. To quote them, "We wouldn't have been able to evaluate 300 roles in three days without this tool." It was business-critical to complete this work with speed and confidence while going through their transformation. In risk and broking, we continue to benefit from our specialization strategy and our ability to deliver differentiated value through technical expertise, global collaboration, and client-centric solutions. For example, after obtaining our license to act as an insurance broker in Saudi Arabia, we successfully placed property damage and comprehensive general liability insurance for one of the world's largest chemical manufacturers.

And another Great example of major oil and gas company began using our career businesses, new AI driven automated job loving tool to support regular restructuring across their business areas as they go through a significant transformation and change to quote them.

It wouldn't have been able to evaluate 300 roles in three days without this tool.

It was business critical to complete this work with speed and confidence while going through their transformation.

In risk and broking, we continue to benefit from our specialization strategy and our ability to deliver differentiated value through technical expertise global collaboration and client centric solutions.

For example, after obtaining our license to act as an insurance broker in Saudi Arabia, we successfully placed property damage and comprehensive giant general liability insurance for one of the worlds largest chemical manufacturers.

Lucy Clarke: Our team's deep knowledge of the industry and our ability to tailor technical solutions to this client's needs were key to winning this mandate. We look forward to the opportunities for growth in the Middle East, which remains a key market for WTW. Our ability to provide tailored, specialized solutions continues to resonate with clients and transform businesses, and it's positioning WTW to capture market share in high-growth industry sectors to fuel our own expansion. For instance, our construction specialty business is seeing strong results from sizable construction placements for data centers, an industry sector forecasted to experience significant global growth. Our specialty model and our depth of expertise allow us to add value throughout the data center lifecycle, from land identification through funding and construction, powering the facility, and into operational management or divestment.

Our teams deep knowledge of the industry and our ability to tailor technical solutions to this client's needs were key to winning this mandate.

We look forward to the opportunities for growth in the middle East, which remains a key market for Ww.

Our ability to provide tailored specialized solutions continues to resonate with clients and transform businesses and its positioning ww to capture market share in high growth industry sectors to fuel our own expansion.

For instance, our construction specialty business is seeing strong results from sizable construction placements for data centers and industry sector forecasted to experience significant global growth.

Our specialty model and our depth of expertise allows us to add value throughout the data center lifecycle from land identification through funding of construction powering the facility and into operational management or divestment.

Lucy Clarke: In addition, our construction and natural resources teams are working together to support clients on clean energy technologies during the construction and operational stages. We expect exponential growth with rising global demand in this area. And these are two great examples in our CRB business of how our highly agile specialty business model, coupled with our expertise, allows us to spot opportunities and plan for rapid growth. Furthermore, our cutting-edge technology and analytics have proven to help clients transform their businesses. Recently, a large UK health insurer decided to engage our insurance consulting and technology business to lead their pricing transformation initiative using RadarVision. RadarVision is an AI-driven modeling tool for insurer clients, and it generates early actionable insights related to inflation, markets, competitors, and customer behaviors to help insurers manage pricing, underwriting, and claims.

In addition, our construction and natural resources teams are working together to support clients on clean energy technologies during the construction and operational stages.

We expect exponential growth with rising global demand in this area.

And these are two great examples in our CRB business of how our highly agile specialty business model, coupled with their expertise allows us to spot opportunities and plan for rapid growth.

Furthermore, our cutting edge technology and analytics have proven to help clients transform their businesses.

Recently, a large UK health insurer decided to engage our insurance consulting and technology business to lead their pricing transformation initiative using radar vision.

Radar vision is an AI driven modeling tool for insurer clients and it generates early actionable insights related to inflation markets competitors and customer behaviors to help insurers manage pricing underwriting and claims.

Lucy Clarke: The implementation of RadarVision helped our clients sustain a competitive advantage in a rapidly evolving market, while also reinforcing WTW's reputation as a trusted partner in pricing transformation and analytics innovation. Lastly, I want to reinforce our commitment and disciplined approach to optimizing our portfolio. I've highlighted some of the success of our organic investments, but our inorganic growth strategy remains consistent with our prior comments, and we're deliberately patient and focused on, first, enhancing our broking and wealth presence in key markets while strengthening our offerings in high-growth, high-margin areas of our core business. Second, expanding our reach across the insurance value chain to further accelerate our growth while filling gaps in our capabilities and footprint. And third, finding businesses that are good strategic fits that help us enhance our margin and free cash flow profile.

The implementation of radar vision helped our clients sustain a competitive advantage in a rapidly evolving market.

I'll also reinforcing wcw's reputation as a trusted partner in pricing transformation and analytics innovation.

Lastly.

I want to reinforce our commitment and disciplined approach to optimizing our portfolio.

I've highlighted some of the success of our organic investments, but our inorganic growth strategy remains consistent with our prior comments and we are deliberately patient and focused on first enhancing our broking and wealth presence in key markets, while strengthening our offerings in high growth high margin areas of our core business.

Expanding our reach across the insurance value chain to further accelerate our growth while filling gaps in our capabilities and footprint.

Third finding businesses that are good strategic fits that help us enhance our margin and free cash flow profile.

Lucy Clarke: We're pleased to have announced an investment in the United Arab Emirates, along with plans for AlphaTame Willis to become a wholly owned WTW business. This acquisition further enhances our value proposition and client experience delivered to global and local clients, and it directly complements our recent investments in Saudi Arabia by strengthening our presence in the Middle East. We're looking forward to continuing to work with our partners, AlphaTame, and the UAE to build on our years of success together. Looking ahead, we will look for ways to continue to balance our capital management strategy. We'll be intentional in delivering long-term operating and free cash flow margin expansion, which will ultimately create long-term value for our shareholders. In summary, results of this quarter were solid as we delivered organic revenue growth that contributed to meaningful margin expansion across both segments.

We're pleased to have announced an investment in the United Arab Emirates, along with plans for Alpha team with us to become a wholly owned Ww business.

This acquisition further enhances our value proposition and client experience delivered to global and local clients and its directly complements our recent investments in Saudi Arabia by strengthening our presence in the middle East.

We're looking forward to continuing to work with our partners Alpha <unk> in the UAE to build on our years of success together.

Looking ahead.

We will look for ways to continue to balance our capital management strategy will.

We will be intentional and delivering long term operating and free cash flow margin expansion, which will ultimately create long term value for our shareholders.

In summary results this quarter were solid as we delivered organic revenue growth that contributed a meaningful margin expansion across both segments.

Lucy Clarke: We look forward to building on these results in the second half of the year, and we remain confident in our ability to deliver on our 2025 guidance, including mid-single-digit organic growth, adjusted operating margin expansion, adjusted EPS growth, and ongoing improvement in free cash flow margin. And with that, I'll turn the call over to Andrew.

We look forward to building on these results in the second half of the year and we remain confident in our ability to deliver on our 2025 guidance, including mid single digit organic growth adjusted operating margin expansion.

Adjusted EPS growth and ongoing improvement in free cash flow margin.

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

Andrew Krasner: Thanks, Carl. Good morning, and thanks, everyone, for joining us today. In the second quarter, we delivered solid organic revenue growth of 5% and expanded adjusted operating margin by 150 basis points year over year to 18.5%, or 100 basis points of year-over-year improvement when excluding the tailwind from the divestiture of Transact. Adjusted diluted earnings per share were $2.86, which is an increase of approximately 20% over the prior year. As a reminder, we completed the divestiture of Transact on December 31, 2024, and for the full year 2025, this will create a $1.14 headwind to adjusted diluted earnings per share. As Carl discussed, our solid second quarter results reflect the strong foundation we've built and the benefits of the investments in talent and technology we've made recently. Our strategy continues to resonate with clients and colleagues, and our businesses are highly resilient despite the uncertain operating environment.

Thanks, Carl Good morning, and thanks to everyone for joining us today in the second quarter, we delivered solid organic revenue growth of 5% and expanded adjusted operating margin by 150 basis points year over year to 18, 5% or 100 basis points of year over year improvement when.

<unk> the tailwind from the divestiture of transact adjust.

Adjusted diluted earnings per share were $2 86.

Which is an increase of approximately 20% over the prior year as a reminder, we completed the divestiture of transact on December 31, 2024 and for the full year 2025. This will create a $1 14 headwind to adjusted diluted earnings per share.

As Karl discussed our solid second quarter results reflect the strong foundation, we've built and the benefits of the investments in talent and technology. We've made recently our strategy continues to resonate with clients and colleagues and our businesses are highly resilient. Despite the uncertain operating environment. We are relentlessly focused on our strategic.

Andrew Krasner: We are relentlessly focused on our strategic objectives, long-term shareholder value creation, and the financial framework outlined at Investor Day. Turning to our segment results, health, wealth, and career revenue grew 4% compared to the second quarter of last year. We saw a sequential improvement in growth and a strengthening pipeline during the quarter, although clients remain cautious about the macro environment. 4% growth for the second quarter is in line with our expectations, and we remain on track to deliver mid-single-digit growth and margin expansion for HWC in 2025. As a reminder, the vast majority of HWC's business is recurring, with only a small portion being more economically sensitive and discretionary. Our health business achieved strong growth of 8% this quarter, or 9% growth, excluding the impacts of interest income and gain on sale activity.

<unk> long term shareholder value creation, and the financial framework outlined at Investor Day.

Turning to our segment results health wealth and career revenue grew 4% compared to the second quarter of last year, we saw a sequential improvement in growth and a strengthening pipeline during the quarter, although clients remain cautious about the macro environment.

4% growth for the second quarter is in line with our expectations and we remain on track to deliver mid single digit growth and margin expansion for <unk> in 2025 as a reminder, the vast majority of <unk> business is recurring with only a small portion being more economically sensitive and discretionary.

Our health business achieved strong growth of 8% this quarter or 9% growth excluding the impact of interest income and gain on sale activity. All regions saw robust growth driven by double digit increases outside of North America and solid performance in North America strong new business and folk.

Andrew Krasner: All regions saw robust growth driven by double-digit increases outside of North America and solid performance in North America. Strong new business and focus on client retention remain key drivers of growth, coupled with the ongoing appeal of our global benefits management solution. In North America, focused sales efforts and mid-market growth led to an increase in commissions, while consulting projects increased with greater demand for cost management and legislative change projects. Looking ahead, we anticipate demand to remain strong for the health business, driven by healthcare inflation and employers' ongoing need to manage costs while providing a competitive employee value proposition. We also successfully introduced our enhanced mid-market solution in North America and launched new panels and facilities. Overall, we've established a healthy pipeline for the second half of the year.

<unk> on client retention remain key drivers of growth coupled with the ongoing appeal of our global benefits management solution in North America focused sales efforts and mid market growth led to an increase in commissions, while consulting projects increase with greater demand for cost management and legislative change projects looking ahead.

We anticipate demand to remain strong for the health business, driven by health care inflation and employers ongoing need to manage cost, while providing a competitive employee value proposition.

We also successfully introduced our enhanced mid market solution in North America, and launched new panels and facilities overall, we've established a healthy pipeline for the second half of the year.

Andrew Krasner: Excluding the impacts of interest income and gain on sale activity, health grew 8% in the first half, and we continue to expect high single-digit growth for the full year 2025. Wealth had revenue growth of 3% in the second quarter, primarily driven by the retirement business, which delivered growth across all geographies and solutions. Our core-defined benefits consulting offerings remained resilient, and we saw growth in project work to support legislative changes, pension risk transfers, and workforce actions. In addition, we continue to expand our client base for our LifeSite master trust and insured solutions. Our investments business saw low single-digit growth with new products and client wins offset by capital market volatility, the latter of which improved as the quarter progressed. This was a headwind we pointed out last quarter and expected it to impact investments results in the second quarter.

Excluding the impact of interest income and gain on sale activity helped grew 8% in the first half and we continue to expect high single digit growth for the full year 2025.

Wealth had revenue growth of 3% in the second quarter, primarily driven by their retirement business, which delivered growth across all geographies and solution. Our core defined benefits consulting offerings remained resilient and we saw growth in project work to support legislative changes pension risk transfers and workforce actions. In addition.

We continue to expand our client base for our lifestyle Master Trust and insurance solutions.

Our investments business saw low single digit growth with new products and client wins offset by capital market volatility the latter of which improved as the quarter progressed.

This was a headwind we pointed out last quarter and expected it to impact investments results in the second quarter. We continue to expect low single digit growth in the wealth business for the year.

Andrew Krasner: We continue to expect low single-digit growth in the wealth business for the year. Career growth was 1% in the second quarter, with solid growth outside of North America driven by healthy demand for pay transparency support, compensation design, and employee communication projects, and a net positive increase in compensation committee appointments. As we communicated in the first quarter, advisory growth in North America was expected to be tempered by delays in certain discretionary projects. While lingering macroeconomic uncertainty may continue to impact some of our clients' decision-making, we expect revenue growth to increase in the second half due to the seasonality of compensation benchmarking surveys and increased support required to prepare for the EU pay transparency directive that goes into effect in mid-2026. Discretionary advisory project work only comprises about one-third of our career business, or less than 5% of the HWC segment.

Career growth was 1% in the second quarter with solid growth outside of North America, driven by healthy demand for pay transparency support compensation design and employee communication projects and a net positive increase in compensation Committee appointments.

As we communicated in the first quarter advisory growth in North America was expected to be tempered by delays in certain discretionary projects.

While lingering macroeconomic uncertainty may continue to impact some of our clients' decision, making we expect revenue growth to increase in the second half due to the seasonality of compensation benchmarking service and increased support required for to prepare for the EU pay transparency directive that goes into effect in mid 2026.

Discretionary Advisory project work only comprises about one third of our career business or less than 5% of the <unk> segment. As we previously communicated we expect career to grow low to mid single digits. In 2025, we continue to expect mid single digit growth in the long term based on our past and continued focus on product and technology off.

Andrew Krasner: As we previously communicated, we expect career to grow low to mid-single digits in 2025. We continue to expect mid-single digit growth in the long term based on our past and continued focus on product and technology offerings and recurring services. Benefits delivery and outsourcing, or BD&O, was flat versus last year's second quarter when we delivered 7% growth, excluding Transact. BD&O revenue benefited from growth in outsourcing due to increased project and core administration work in Europe, which was offset by lower commission revenue in the individual marketplace business. It is important to remember that even following the sale of Transact, BD&O maintains a B2B2C Medicare business and so generates nearly half of its revenue in the fourth quarter.

<unk> and recurring services.

Benefits delivery and outsourcing or be D&O was flat versus last year's second quarter, when we delivered 7% growth excluding transact.

<unk> revenue benefited from growth in outsourcing due to increased project in core administration work in Europe, which was offset by lower commission revenue in the individual marketplace business.

It is important to remember that even following the sale of transact <unk> maintains a b to b to C. Medicare business and so generate nearly half of its revenue in the fourth quarter.

Andrew Krasner: The seasonality of this business is driven by the timing of the Medicare enrollment period and new business generation, which is even more acute within the individual marketplace, where the fourth quarter is about 80% of its annual revenues. Accordingly, we forecast BD&O growth to be stronger in the second half of the year, especially with the expected timing of commissions, new client implementations, and new projects to support regulatory changes. We continue to expect BD&O to grow at mid-single digits for the year. HWC's operating margin in the second quarter was 23.8%, an increase of 190 basis points compared to the prior year, or an increase of 20 basis points, excluding the impact of the Transact divestiture. This demonstrates our ability to consistently deliver incremental margin expansion in cyclical macro conditions and adds to our strong track record of margin expansion in HWC.

The seasonality of this business is driven by the timing of the Medicare enrollment period, and new business generation, which is even more acute within individual marketplace, where the fourth quarter is about 80% of its annual revenues. Accordingly, we forecast <unk> growth to be stronger in the second half of the year, especially with the expected timing of.

<unk>, new client implementations and new projects to support regulatory changes, we continue to expect <unk> to grow at mid single digits for the year.

<unk> operating margin in the second quarter was 23, 8% an increase of 190 basis points compared to the prior year or an increase of 20 basis points, excluding the impact of the transact divestiture.

This demonstrates our ability to consistently deliver incremental margin expansion and cyclical macro conditions and adds to our strong track record of margin expansion in H WC.

Andrew Krasner: Let me move on to risk and broking, which delivered another strong quarter with revenue growth of 6%, underscoring the continued momentum in the business. Our specialization strategy and our investments in talent, data, and technology continue to pay dividends. Corporate risk and broking delivered another strong quarter, growing 6%, or 7% when excluding both book of business activity and fiduciary interest income. Notably, this is on top of 11% achieved in the prior year, and as Carl mentioned, this is the 10th consecutive quarter in a row of high single-digit growth when excluding book of business activity and fiduciary interest income. CRB's growth was broad-based across all regions, driven by sustained client retention in the mid-90s and strong business generation around the world. Importantly, we expanded our market presence with meaningful client wins in the Middle East, some of which Carl already highlighted.

Let me move on to risk and broking, which delivered another strong quarter with revenue growth of 6% underscoring the continued momentum in the business.

Our specialization strategy and our investments in talent data and technology continue to pay dividends corporate.

Corporate risk and broking delivered another strong quarter growing 6% were 7% when excluding both book of business activity and fiduciary interest income, notably this is on top of 11% achieved in the prior year and as Karl mentioned this is the 10th consecutive quarter in a row of high single digit growth when X.

<unk> book of business activity and fiduciary interest income.

<unk> growth was broad based across all regions driven by sustained client retention in the mid nineties and strong business generation around the World Importantly, we expanded our market presence with meaningful client wins in the middle East some of which Karl already highlighted.

Andrew Krasner: Our global specialization strategy remains a key growth driver for CRB. Our investments are yielding value, as demonstrated by its growth continuing to outpace the rest of the segment. Globally, our construction, facultative, surety, and natural resource specialty lines continue to deliver strong performance, and we're meaningful contributors to CRB's 6% growth this quarter and 7% growth in the first half of this year. Our recent investment in credit risk solutions, both organically and inorganically, is also helping to accelerate performance. From a geographic perspective, our global specialty business had double-digit growth in all of our geographies, underpinned by strong client retention and new business generation. We are excited by the results we are seeing from our specialization investments, and we expect mid-to-high single-digit growth to continue in CRB for 2025. In our insurance consulting and technology business, revenue was flat versus the same quarter last year.

Our global specialization strategy remains a key growth driver for CRB, our investments are yielding value as demonstrated by its growth continuing to outpace the rest of the segment.

Globally, our construction facultative surety and natural resource specialty lines continue to deliver strong performance and were meaningful contributors to CRB, 6% growth this quarter and 7% growth in the first half of this year.

Our recent investment in credit risk solutions, both organically and Inorganically is also helping to accelerate performance.

From a geographic perspective, our global specialty business had double digit growth in all of our geographies underpinned by strong client retention and new business generation. We are excited by the results. We're seeing from our specialization investments and we expect mid to high single digit growth to continue in CRB for 2025.

In our insurance consulting and technology business revenue was flat versus the same quarter last year. Our pipeline is strong for the second half of the year, especially on the technology sales side, but we observed a weaker consulting environment during the quarter as well as the more conservative buying behavior for large multi year technology implementations.

Andrew Krasner: Our pipeline is strong for the second half of the year, especially on the technology sales side, but we observed a weaker consulting environment during the quarter, as well as a more conservative buying behavior for large multi-year technology implementations. Consulting offers services such as reserve calculations, financial and capital modeling, and discretionary projects like transaction services for insurers, whereas technology offers software products that support advanced analytics for claims, underwriting, rate-making, and reserving for insurance clients with large multi-year contracts that tend to have longer sales cycles. We have been making a focused effort to bring the combined proposition of consulting and technology closer together to create more value for clients and to drive growth. For the full year, we are now expecting low single to mid-single digit growth in ICT.

Consulting offer services, such as reserve calculations financial and capital modeling and discretionary projects like transaction services for insurers, whereas technology offers software products that support advanced analytics for claims underwriting ratemaking and reserving for insurance clients with large multiyear contracts that tend to have long.

Our sales cycles, we have been making a focused effort to bring the combined proposition of consulting and technology closer together to create more value for clients and to drive growth for the full year. We are now expecting low single to mid single digit growth in ICT.

Andrew Krasner: Turning back to R&B segment results overall, we are pleased with R&B's momentum year to date, which gives us confidence in our ability to deliver mid-to-high single-digit growth for the full year. R&B's operating margin was 21.2% for the second quarter, a 60 basis point improvement over the prior year, or 100 basis points improvement when excluding the impact of foreign exchange. This was primarily driven by operating leverage from strong organic revenue growth performance, coupled with continued expense discipline, as well as benefits from prior year transformation savings. Foreign exchange was a headwind of 40 basis points to R&B's operating margin this second quarter due to the weakening US dollar, but we expect the full year foreign exchange impact to be more modest.

Turning back to RMB segment results. Overall, we are pleased with RBS momentum year to date, which gives us confidence in our ability to deliver mid to high single digit growth for the full year.

<unk> operating margin was 21, 2% for the second quarter, a 60 basis point improvement over the prior year or 100 basis points improvement when excluding the impact of foreign exchange. This was primarily driven by operating leverage from strong organic revenue growth performance, coupled with continued expense discipline as well has been.

<unk> from prior year transformation savings.

Foreign exchange was a headwind of 40 basis points to <unk> operating margin is second quarter due to the weakening U S dollar, but we expect the full year foreign exchange impact to be more modest.

Andrew Krasner: We achieved 90 basis points of adjusted operating margin improvement in R&B so far this year, and we are committed to delivering 100 basis points of average annual adjusted operating margin expansion over the next three years. The strategic investments we made in our global broking platform, our global placement strategy, as well as our digital automation and workflow optimization, are strong foundations for additional operating leverage and efficiencies, and we will see these investments continue to deliver benefits for years to come. Finally, I will give some additional color on our enterprise-level results. Adjusted operating margin for the second quarter was 18.5%, a 150 basis point improvement over the prior year, primarily driven by the strong margin expansion in the segments and prudent business expense management. The adjusted operating margin includes a 50 basis point tailwind from the Transact divestiture for the quarter.

We achieved 90 basis points of adjusted operating margin improvement RMB. So far this year and we are committed to delivering 100 basis points of average annual adjusted operating margin expansion over the next three years.

Strategic investments, we made in our global Broking platform, our global placement strategy as well as our digital automation and workflow optimization are strong foundations for additional operating leverage and efficiencies and we will see these investments continue to deliver benefits for years to come.

Finally, I will give some additional color on our enterprise level results.

Adjusted operating margin for the second quarter was 18, 5% and 150 basis point improvement over the prior year, primarily driven by the strong margin expansion in this segment and prudent business expense management. The adjusted operating margin includes a 50 basis point tailwind from the transact divestiture for the quarter as.

Andrew Krasner: As we enter the second half of 2025, all of our businesses are operating with discipline and rigor, which gives us confidence in our ability to continue to expand margins. Foreign currency was neutral on adjusted EPS for the quarter, and a negative 9 cent impact for the first half of 2025. The US dollar has been weakening during the quarter, so I want to give you some additional color on foreign exchange. At the current spot rates, we expect an approximately 5 cent tailwind to adjusted EPS for the full year, though the impact may fluctuate quarter to quarter. Our US GAAP tax rate for the quarter was negative 6.8% versus 15.6% in the prior year. Our adjusted tax rate for the quarter was 18% compared to 22.4% for the second quarter of 2024.

As we enter the second half of 2025, all of our businesses are operating with discipline and rigor, which gives us confidence in our ability to continue to expand margins.

Foreign currency was neutral on adjusted EPS for the quarter and a negative nine impact for the first half of 2025.

U S dollar has been weakening during the quarter. So I wanted to give you. Some additional color on foreign exchange at current spot rates, we expect an approximately <unk> <unk> tailwind to adjusted EPS for the full year, so the impacts may fluctuate quarter to quarter.

Our U S GAAP tax rate for the quarter was negative six 8% versus 15, 6% in the prior year, our adjusted tax rate for the quarter was 18% compared to 22, 4% for the second quarter of 2024, we expect our full year 2025 tax rate to be relatively consistent with the prior year.

Andrew Krasner: We expect our full year 2025 tax rate to be relatively consistent with the prior year rate. We generated a free cash flow of 217 million for the first six months ending June 30, 2025, a decrease of 88 million from the prior year. This was driven by increased incentive costs, the redesign of one of our ongoing retirement programs, higher cash tax payments, and the absence of Transact cash inflows, which were partially offset by reduced transformation program cash costs and operational improvements. Looking at the back half of the year, remaining transformation costs will reduce further, and the divestiture of Transact will become a tailwind to free cash flow as we lap the quarters in which that business recorded net cash outflows. Additionally, we received the Willis re-earnout payment in April, and we do not anticipate any material cash tax payment on it in 2025 or beyond.

Great.

We generated free cash flow of $217 million for the first six months ending June 32025, a decrease of $88 million from the prior year. This was driven by increased incentive costs.

The redesign of one of our ongoing retirement programs higher cash tax payments and the absence of transact cash inflows, which were partially offset by reduced transformation program cash costs and operational improvements.

Looking at the back half of the year remaining transformation costs will reduce further and the divestiture of transact will become a tailwind to free cash flow as we lap the quarters in which that business recorded net cash outflows.

Additionally, we received the Willis re earn out payment in April and we do not anticipate any material cash tax payment on it in 2025 or beyond.

Andrew Krasner: We remain on track to deliver on our free cash flow objective of annual margin expansion, and our outlook remains largely unchanged. During the quarter, we returned 591 million to our shareholders via share repurchases of 500 million and dividends of 91 million. We view share repurchases as one of the primary methods of capital return and an attractive use of capital to efficiently deliver value to shareholders, and therefore is a central component of our capital allocation strategy. We continue to expect share repurchases to total approximately 1.5 billion in 2025, subject to market conditions and potential capital allocation to inorganic investment opportunities. As we've mentioned, we are taking a more balanced, disciplined approach to capital allocation to generate long-term shareholder value. We'll continue to be selective as we invest in talent and in our platform to ensure we're driving sustainable growth and margin expansion.

We remain on track to deliver on our free cash flow objective of annual margin expansion and our outlook remains largely unchanged during the quarter, we returned $591 million to our shareholders via share repurchases of $500 million and dividends of $91 million.

We view share repurchases as one of the primary method of capital return and an attractive use of capital to efficiently deliver value to shareholders and therefore as a central component of our capital allocation strategy. We continue to expect share repurchases total approximately $1 5 billion in 2025 subject to market.

Conditions and potential capital allocation to inorganic investment opportunities.

As we've mentioned we are taking a more balanced and disciplined approach to capital allocation to generate long term shareholder value will continue to be selective as we invest in talent and in our platform to ensure we are driving sustainable growth and margin expansion.

Andrew Krasner: In closing, we are pleased by our business performance in the first half of 2025. We are increasingly seeing the execution of our strategy manifest in our results, giving us confidence in delivering on our 2025 financial objectives and beyond. With that, let's open it up for Q&A.

In closing we are pleased by our business performance through the first half of 2025, we are increasingly seeing the execution of our strategy manifest in our results, giving us confidence in delivering on our 2025 financial objectives and beyond with that let's open it up for Q&A.

Carl Hess: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. In the interest of time, we ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from Rob Cox with Goldman Sachs. Your line is open.

As a reminder to SaaS a question. Please press star one on your telephone.

Wait for your name to be announced to withdraw your question. Please press star one one again in the interest of time, we ask that you. Please limit yourself to one question and one follow up please.

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

Our first question comes from Rob Cox with Goldman Sachs. Your line is open.

Rob Cox: Hey, thanks. Good morning. So I wanted to ask about HWC organic. I think you mentioned there's more positive signs of improvement as the quarter went on, and there was guidance for acceleration in a couple of the businesses there. So net-net, are you thinking about HWC growth accelerating a bit from here? And can you talk about the drivers?

Hey, Thanks, good morning so.

I wanted to ask about H WC organic I think you mentioned there is more positive signs of improvement as the quarter went on and there was guidance for acceleration in a couple of the businesses. There. So net net are you thinking about H WC growth accelerating a bit from here and can you talk about the drivers.

Julie Gebauer: Thanks, Rob, for the question, and good morning. So HWC grew 4% compared to the second quarter of last year, and that was in line with our expectations. We're seeing demand remain strong for our global benefits management, for pensions, for outsourcing, where we won many notable new appointments that I mentioned earlier. We feel confident in our pipeline, and we continue to expect that HWC is going to have mid-single digit organic revenue growth and margin expansion for the full year.

Thanks, Rob for the question and good morning.

So H WC grew 4% compared to the second quarter last year that was in line with our expectations.

We're seeing demand remains strong for our global benefits management pensions for outsourcing.

We won many notable new appointments that I mentioned earlier right, we feel confident in our pipeline.

And we continue to expect that <unk> is going to have mid single digit organic revenue growth and margin expansion for the full year.

Andrew Krasner: Yep. And it's Andrew. I can briefly touch on HWC's growth and then would want Julie to comment on what she's seeing. You know, as it relates to health, this continues to be a key strategic focus area for us. You know, we're capturing market share and seeing strong growth play out, as Julie's highlighted in the past. Health saw organic growth of 8% in Q2, or that would have been 9%, excluding interest income and gain on sale activity. And notably, we delivered 8% in the first half of the year with strong growth across all of our regions. So we're on pace for high single digits this year. We're also seeing strong demand for wealth, which generated 3% organic growth from strong growth in the retirement business, specifically for our LifeSite solutions and our pension advisory and brokerage services.

Andrew I can briefly touch on each WCS growth, then would want Julie to comment on what she is seeing.

As it relates to health continues to be a key strategic focus area for us.

Capturing market share and see strong growth play out as Julian has highlighted in the past.

Our organic growth of 8% in Q2, where that would have been 9% excluding interest income and gain on sale activity and notably we delivered 8% in the first half of the year with strong growth across all of our regions.

So we're on pace for high single digits. This year. We're also seeing strong demand for wealth, which generated 3% organic growth from strong growth in our retirement business and specifically for our lifestyle solutions and our pension advisory and brokerage services.

Andrew Krasner: So we continue to see a strong growth trajectory for our investment business as well. And putting those things together, we think of these as long-term accelerators of growth, and we continue to expect low single digits there for 2025. We continue to be confident about our pipeline in HWC and would expect the segment to maintain mid-single digit revenue growth and margin expansion in 2025 and over the longer term. Maybe, Julie, you want to comment about what you're seeing in HWC?

We continue to see strong growth trajectory for our investment business as well and putting those things together, we think of these as long term accelerators of growth as we continue to expect low single digits there for 2025.

We continue to be confident about our pipeline in <unk> and we'd expect this segment to maintain mid single digit revenue growth and margin expansion in 2025 and over the longer term.

Maybe Julie you want to comment about what youre seeing in each WC sure Andrew I would add.

Mark Hughes: Sure, Andrew. I'd actually like to start with an overview across HWC, and that is that clients are carrying on with their recurring and required work, and that is most of what we do. Clients are also starting up new project work. It's typically related to managing cost and risk, and it includes support for corporate transactions, plus some work on specific employee attraction and retention issues that clients are facing. Now, there are puts and takes across our businesses, so I'd like to go into more detail for each business area. Starting with health, it is worth noting that this is the fifth quarter in a row where our growth has been either at the upper bound of mid-single digits or at high single digits, or actually even more. And we expect that to continue at least for the rest of 2025. And that's because healthcare inflation hasn't abated.

We would like to start with an overview across HW, Steve and that is that clients are carrying on with their recurring and required work and that is most of what we do.

We're also starting up new project work, it's typically related to managing cost and risk.

And it includes support for corporate transaction, plus some work on specific employee attraction and retention issues our clients are facing.

Now there are puts and takes across our businesses. So I would like to go into more detail for each business area.

Starting with <unk>.

It is worth noting that this is the fifth quarter in a row, where our growth has been either at the upper bound of mid single digits or high single digits.

Even more and we expect that to continue at least for the rest of 2025 and thats because healthcare inflation hasn't abated.

Mark Hughes: In the US, our latest estimates are for increases of 10% or more, and that's due to several things, like prescription drug costs are increasing significantly, and there are more high-cost claims. On that latter point, we had one client recently tell me that a patient had a $3.5 million claim for gene therapy. Clients are facing similar challenges around the world, and so, of course, they're responding. They're doing things like taking their health plans out for competitive bids, they're evaluating specialty solutions, and also considering more significant design changes. And these are all things that we can help with. So we've got a strong pipeline, and we're confident in delivering high single-digit growth for the year. Now, in wealth, beyond the core work that Andrew mentioned, clients are focusing on using pension surplus, they're focused on de-risking, and they're focused on adapting to new legislation.

In the U S. Our latest estimates are for increases of 10% or more and thats due to several things like prescription drug costs are increasing significantly and there are more high cost claims.

On that latter point.

One client recently told me that a patient had three and a half million dollar claim for gene therapy.

Clients are facing similar challenges around the world and so of course, they're responding they're doing things like taking their health plans out for competitive bid.

Valuation specialty solutions and also considering more significant design changes.

These are all things that we can help with so we've got a strong pipeline and we are confident in delivering high single digit growth for the year.

No and well beyond the core work that Andrew mentioned clients are focusing on using pension surplus.

On de risking and Theyre focused on adapting to new legislation.

Mark Hughes: Andrew also mentioned LifeSite. We're live in 12 countries with this solution now, and we're implementing more clients. So all of this supports our outlook for low single-digit growth for the year. For career, we generated growth again this quarter, even with the challenging macro environment. And that's because most of our work is from recurring projects like compensation committee appointments or products like our Embark portal. And on the advisory side, even with some project delays, there are some strong areas, like Carl mentioned, pay transparency and incentive design. Our sales pipeline in these areas for the rest of the year is healthy and it's growing. I also just wanted to highlight that our compensation survey participation, which is a lead indicator of sales later in the year, is up again over last year.

Andrew also mentioned lifestyle, we're live in 12 countries with this solution now and we're implementing more client. So all of this supports our outlook for low single digit growth for the year.

For Korea, we generated growth again, this quarter, even with the challenging macro environment.

That's because most of our work is from recurring projects like compensation committee appointments or products like our embark corridor.

And on the advisory side, even with some project delays there are some strong areas like Karl mentioned pay transparency and incentive design.

Our sales pipeline in these areas for the rest of the year is healthy.

<unk>.

I also just wanted to highlight that our compensation survey participation, which is a lead indicator of sales later in the year is up again over last year.

Mark Hughes: So our outlook for the year is for growth, and that's in the range of low single digit to mid-single digit revenue growth for the year. Now, finally, in BDO, I want to highlight that a third of our revenues come from our individual marketplace. That's our Medicare exchange. The other two-thirds is outsourcing. I want to focus on the individual marketplace business because we generate 80% of our revenue in this business in the fourth quarter. And we expect growth in that because we've added clients. We also expect to see increases in commissions because we think more retirees will review and switch their coverage. And as a result, we expect mid-single digit growth this year across BD&O. So, Rob, those are the puts and takes. We think the areas of strength, like health, are expected to more than offset any short-term headwind or discretionary advisory work in 2025.

So our outlook for the year is slow growth and that's in the range of low single digit to mid single digit revenue growth.

Now finally on BDO I wanted to highlight that a third of our revenues come from our individual marketplace, that's our Medicare exchange.

Two thirds is outsourcing.

I wanted to focus on the individual marketplace business, because we generate 80% of our revenue in this business in the fourth quarter and.

And we expect growth in that because we've added clients. We also expect to see increases in commissions, because we think more retirees will review and switch their coverage and as a result, we expect mid single digit growth this year across <unk>.

So Rob those are the puts and takes.

We think the areas of strength like health are expected to more than offset any short term headwinds or discretionary advisory work in 2025. So H WC expectation is mid single digit revenue growth for 25 and over the long term.

Mark Hughes: So HWC expectation is mid-single digit revenue growth for '25 and over the long term.

Rob Cox: Awesome. Thank you so much for the answer. Moving on to risk and broking, I think, you know, high single digits again, core organic growth there. Are we basically at steady-state contributions from the talent investments at this point? And is growth, you know, does that make growth really a function of the core specialization strategy, or would you say there's still an extra lift relative to normal from the timing of talent investments?

Awesome. Thank you so much for the answer.

Moving on to risk.

Our risk and broking.

I think high single digits again core organic growth. There are we basically at steady state contributions from the talent investments at this point in its growth.

Does that make growth really a function of the core specialization strategy or would you say theres still an extra lift relative to normal from the timing of talent investments.

Julie Gebauer: So, I mean, again, Rob, we're pretty pleased with the 6% growth we delivered in R&B. That was on top of, remember, a 10% growth for the comparable quarter of the prior year. CRB delivered 6%, right, 7% excluding book of business sales and investment income, and that was on top of the 11% comparable in the prior year. And, you know, we attributed this to our specialization strategy, as we talked about our investments in talent, technology, and innovation, new business wins, and strong client retention, continue to help move things forward. I mean, Lucy, any commentary on the growth and the talent perspective?

So I mean again right.

Pleased with the 6% growth we delivered in RMB that was on top of.

10% growth over the comparable quarter of the prior year.

CRB delivered 6%, 7%, excluding Booker business sales and investment income and that was a tough 11% comparable.

In the prior year.

And we attribute this to our specialization strategy.

As we talked about our investments in talent technology innovation, new business wins and strong client retention.

Continue to help move things forward I mean, do you see any commentary on the growth than the our perspective, yes sure. Thanks, Thanks, Carl Hey, Rob Thanks for the question.

Mark Hughes: Yeah, sure. Thanks, thanks, Carl. Hey, Rob, thanks for the question. Yeah, we're encouraged by the 6% organic growth in the quarter, 7% in CRB, ex-book of business sales, and investment income. And combined with the strong results from the first quarter, you know, we think we're in a good position to meet our full-year goals. So the growth's been driven by new business, it's been driven by client retention, the impact of the investments we've made in people, which you noted, and technology, both paying off, as well as the specialty strategy. We don't see any end to the progress that we're going to make on the specialty strategy. We remain well-equipped to support our clients as they manage the ongoing volatility from trade and geopolitical challenges. We're also continuing to expand our market presence, strong wins across the globe, including the Middle East.

Yes, we are encouraged by the 6% organic growth in the quarter, 7% in CRB Aix book of business sales and investment income and combined with the strong results from the first quarter.

We think we're in a good position to meet our full year goals. So the growth has been driven by new business and driven by client retention.

Impact of the investments we've made in people, which you noted and technology, both paying off as well as the specialty strategy.

We don't see any end to the progress that we're going to make on the specialty strategy, we remain well equipped to support our clients as they manage the ongoing volatility from trade and geopolitical challenges. We're also continuing to expand our market presence strong wins across the globe, including the middle East.

Mark Hughes: Carl highlighted that during his prepared remarks. As a result, we're confident of achieving mid-to-high single-digit growth organic in R&B. Just for a few further specifics, the strong growth we have in our specialty businesses continues to outpace the rest of CRB, growing at double digits for the quarter. It's important to remember that it's growing at that rate because the strategy resonates with clients, it works for them, and we believe that that helps with the competitive edge. So, yeah, the approach is working. It's a key driver of growth in R&B, and we expect that to continue.

Carl highlighted that during his prepared remarks as a result, we're confident in achieving.

Mid to high single digit growth organic in RMB.

Just for a few further specifics.

The strong growth we have in our specialty businesses continues to outpace the rest of the CRB.

At double digits for the quarter, it's important to remember that it's growing at that rate because the strategy resonates with clients. It works for them and we believe that that helps with a competitive edge. So yeah. The approaches working it's a key driver of growth in RMB and we expect.

That's E.

Carl Hess: Thank you. Our next question comes from Charlie Letter with BMO. Your line is open.

Thank you. Our next question comes from Charlie letter with BMO. Your line is open.

Mark Marcon: Hey, thanks. Good morning. Andrew, you made some comments about free cash flow. I'm wondering if you can unpack second quarter performance and how we should think about the magnitude of free cash flow margin improvement over the balance of the year. Any puts and takes you could quantify would be helpful.

Hey, Thanks, good morning.

Andrew you made some comments about free cash flow I'm wondering if you can unpack second quarter performance.

How we should think about the magnitude of our free cash flow margin improvement over the balance of the year.

Any puts and takes you could quantify would be helpful.

Andrew Krasner: Yeah, absolutely. So for the first half of the year, we generated free cash flow of 217 million. While that's 88 million below the prior year, it primarily reflects the headwinds we called out in our prepared remarks. You know, specifically, that was the increased compensation and cash tax payments, the timing impact from the redesign of the key retirement program, and the absence of 63 million of transact-related cash inflows that benefited the first half of last year. Those more than offset the gains from the transformation initiatives and underlying margin expansion. But looking ahead, we see a more favorable setup in the second half. The key headwinds from the first half, namely the incentive comp and the retirement program redesign, are now behind us.

Yeah, absolutely so for the first half of the year, we generated free cash flow of $217 million.

That's $88 million below the prior year, primarily reflects the headwinds we called out in our prepared remarks, specifically that was the increased compensation and cash tax payments.

Timing impact from the redesign of the key retirement program.

In the absence of $63 million.

Transact related cash inflows that benefited the first half of last year.

Those more than offset the gains from the transformation initiatives and underlying margin expansion.

But looking ahead, we see a more favorable setup in the second half.

The key headwinds from the first half, namely the incentive comp in the retirement program redesigned are now behind us.

Andrew Krasner: And we expect a meaningful tailwind in the second half of '25 from the absence of both transformation program cash outflows and the transact business, which adversely impacted free cash flow results in the prior year. So, you know, here's how we think about sort of the full year view of free cash flow. So, you know, first, we had free cash flow of 217 million through the first six months. You know, to 2024, second half normalized free cash flow, so excluding the headwinds from transformation and transact, was about 1.2 billion. We expect improvement on that 1.2 billion driven by organic growth, higher margins, and working capital management. And lastly, you know, we do not anticipate any additional cash tax payments on the Willis re-earnout in 2025 or beyond.

And we expect a meaningful tailwind in the second half of 'twenty five from the absence of bolt transformation program cash outflows and transact business, which adversely impacted free cash flow results in the prior year.

So here's how we think about sort of the full year view of free cash flow. So first we have free cash flow of $217 million through the first six months.

Yes to 2020 for second half normalized free cash flow so excluding the headwinds from transformation and transact was about $1 2 billion.

We expect improvement on that $1 $2 billion, driven by organic growth higher margins and working capital management and lastly.

We do not anticipate any additional cash tax payments on the <unk> earn out in 2025 or beyond so putting all of that together, we remain confident in our ability to deliver free cash flow margin expansion in 2025, and we see additional opportunity to build on that momentum in the years beyond.

Andrew Krasner: So putting all of that together, you know, we remain confident in our ability to deliver free cash flow margin expansion in 2025, and we see additional opportunity to build on that momentum in the years beyond.

Mark Marcon: Thanks. That's helpful. I know you just touched on the impact of investments in talent, but I just wanted to follow up. It seems like we've been seeing headlines in the insurance media about heightened competition for insurance brokerage talent. I'm wondering if you guys would agree with that being a theme in today's marketplace and how you're feeling about it and any actions you're taking.

Thanks, that's helpful. I know you just touched on on the impact of investments in talent, but I just wanted to follow up.

It seems like we've been seeing headlines any insurance media about heightened competition for insurance brokerage talent I'm wondering if you guys would agree with that.

Being the same in today's marketplace, and how youre feeling about any actions you're taking.

Julie Gebauer: Thanks for the question. I'm not sure we see that as particularly a new thing. It's something we've been aware of and, frankly, capitalizing on for the past several years. Others.Have

Thanks for the question I'm not sure we see that as particularly a new thing.

Something we've been aware of and frankly capitalizing on.

For the past several years, others may have woken up to talent being the key driver business. We believed in it for a long time. So we're staying focused on executing our strategy and making sure. We have the right talent in place to support that currently our.

Carl Hess: woken up to talent being the key driver for this business. We've believed in it for a long time. So we're staying focused on executing our strategy and making sure we have the right talent in place to support that. Currently, our approach is more opportunistic and strategic, aimed at enhancing our ability to achieve sustainable and profitable growth and create value. Lucy, you want to talk about what we're expecting to see in recent hires?

Approaches more opportunistic and strategic aimed at enhancing our ability to achieve sustainable and profitable growth and create value. Lucy you want to talk about we're expecting to see.

Lucy Clarke: Yeah, sure. Thank you. Thanks, Charlie. We, as Carl mentioned, we have been complementing our existing talent by making strategic hires in the areas where we think they'll be most impactful, within specialty or within geography, in CRB since 2021. It was a deliberate, systematic hiring strategy identified and executed by our existing talent. And a key part, actually, of Growth Simplify and Transform, the strategy set out by Carl Andrew and my predecessor, Adam Gerrard, for risk and broking. It is a strategy that has proven successful for us. We will continue to execute on that strategy. I would also just mention our specialty approach. It's not only a meaningful contributor to organic growth, but it is a key reason we're attracting the right talent in the market.

Yeah sure. Thank you thanks Charlie.

As Carl mentioned, we have been complementing our existing talent by making strategic hires in the areas, where we think there will be most impactful within specialty or within geography, and CRB 2021.

He was a deliberate systematic hiring strategy identified and executed by our existing talent and a key part actually of growth simplify and transform the.

The strategy set out by problem Andrew.

And my predecessor, Adam or risking broking and is a strategy that has proven successful for us we will continue to execute on that strategy.

I would also just mention.

Our specialty approach, it's not only a meaningful contributor to organic growth, but it is a key reason we are attracting the right talent in the market.

Lucy Clarke: We expect strong growth to continue in our specialty businesses, which is outpacing the average of the rest of the business because the strategy works for clients and it resonates with our people. So, yeah, identifying and attracting talent to complement our existing talent base will continue to be a really important part of our future strategy.

We expect strong growth to continue in our specialty businesses.

Is outpacing the average of the rest of the business because the strategy works for client and it resonates with our people so, yes, identifying and attracting talent to complement our existing talent base will continue to be.

A really important part of our future strategy.

Andrew Krasner: Thank you. Our next question comes from Elise Greenspan with Wells Fargo. Your line is open.

Thank you. Our next question comes from Elyse Greenspan with Wells Fargo. Your line is open.

Rob Cox: Thanks. Good morning. My first question is, within the guidance, I saw you guys lower the cost for the VANE and WILLIS joint venture. I think it's now expected to be $0.20 for the year, right? And I think prior, you know, it was $0.25 to $0.35. So I guess my question there is, are you guys behind original hiring plans, or is there some other factor related to the change in guide there? And will you guys be ready to transact with that entity by January 1, 2026?

Thanks.

Good morning, My first question on.

Within the guidance I saw you guys lowered the cost for the vein and Willis joined Fletcher I think its now expected to be.

<unk> for the year right and I think prior was.

25 to 35, so I guess my question. There is are you guys.

Behind original hiring plans or is there some other factor related to the change.

In Guy there and will you guys be ready to transact.

With that entity by January one 2026.

Julie Gebauer: Yes, sure. Andrew, I'll take the first part. So, you know, the launch is progressing in line with our expectations. The revised estimate is simply due to having better insight into the expense picture for the remainder of the year. So we're very satisfied with the progress made so far and continue to be excited about our reentry into the reinsurance space.

Yes sure.

Andrew I'll take I'll take the first part so the launch is progressing in line with our expectations.

The revised estimate is simply due to having better insight into the expense picture for the remainder of the year. So we're very satisfied with the progress made so far.

To be excited about our reentry into into the reinsurance space, Yes, and remember at least this new launch we're still the startup phase.

Carl Hess: Yeah. And remember, Elise, this is a new launch. We're still in the startup phase. We're focusing right now on building out the infrastructure and hiring new talent. And we'll update you on our plans for entering markets when there's more to share. That being said, we're really pleased with the progress we've made so far and remain really excited about our return to reinsurance.

Focusing right now in building out the infrastructure to hiring new talent.

And we will update you on our plans for entering markets. When there is more than sure that being said, what we're really pleased with the progress we've made so far and we remain really excited about our return to reinsurance.

Rob Cox: And then my second question is just on margins. You know, it sounds like the 100 basis points of margin expansion is the expectation for the full year within R&B. And can you just walk us through like the drivers that you see to achieve that improvement? And then I'm assuming that you guys also, at the enterprise level, reaffirmed the overall margin improvement. So is there anything related to operating leverage or margin expansion that you would point out, you know, now that we're beyond the transformation savings? Thank you.

And then my second question is just on margins.

It sounds like the 100 basis points of margin expansion is the expectation.

For the full year within RMB.

And can you just walk us through like the drivers.

That you see.

To achieve that.

That improvement.

And then I'm assuming that you guys also at the enterprise level, we affirmed the overall margin improvement so is there anything.

Related to operating leverage or margin expansion that you would point out.

Now that we're beyond the transformation savings. Thank you.

Julie Gebauer: Yeah. Yeah, sure. It's Andrew. Why don't I start with the R&B piece of that? So during the quarter, we improved margins in our R&B segment by 100 basis points before FX, which had a negative 40 basis point impact. So that's on top of Q1 with margin improvement of over 100 basis points. So, you know, despite headwinds from FX and investment income, R&B had first half margin expansion of 90 basis points. And while we're not guiding a specific number for the full year, our commitment to deliver the 100 basis points of annual margin expansion over the next three years has not changed. And our first half performance indicates we're on track to achieve that goal.

Yes, yes, sure it's Andrew I don't know why don't I start with the RMB.

Of that so so during the quarter, we improved margins in our RV segment by 100 basis points, before FX, which which had a negative 40 basis point impact.

So that's on top of Q1 with margin improvement of over 100 basis points.

Despite headwinds from excess FX and investment income RMB ahead, first half margin expansion of 90 basis points and what we.

We're not guiding a specific number for the full year, our commitment to deliver 100 basis points.

Annual margin expansion over the next three years has not changed.

And our first half first half performance indicate we are on track to achieve that goal.

Julie Gebauer: And that's driven by operating leverage as well as other operational efficiencies, including the deployment of our global broking platform and workflow optimization, I think, which we touched on during the prepared remarks. Maybe Lucy, you want to add some more color there?

It was driven by operating leverage as well as other operational efficiencies.

The deployment of our global Broking platform and workflow optimization, I think which we touched on during the prepared remarks, maybe Luke do you want to add some more color there, yes sure sure Andrew Thank you Elyse.

Lucy Clarke: Yeah, sure. Sure, Andrew. Thank you, Elise. Just in terms of the drivers for R&B, one is, of course, the continued impact of the enterprise delivery organization. This has played a key role in centralizing activities across the enterprise. And for one thing, it helps ensure that our teams are focused on doing the right work in the right places. And as Carl mentioned in his prepared remarks, it's also been a real foundational place to work on our stronger AI capabilities. In CRB, we're using AI to ingest and interpret unstructured data, accelerate workflows, just reducing manual effort. Our specific technology investments in R&B, global broking platform, our global placement strategies, and a number of other digital automation and workflow optimization initiatives are driving productivity across the business, improving client service and operational efficiency.

Just in terms of the drivers or RMB. One is of course, the continued impact of the enterprise delivery organization. This has played a key role in centralizing activities across the enterprise.

For one thing it helps to ensure that like our teams are focused on doing the right work in the right places and as Carl mentioned in his prepared remarks, it's also.

Been a real foundational.

Place too.

Work on our stronger AI capabilities in CRB, we're using AI to ingest interpret unstructured data accelerate workflows, just reducing manual effort.

Ossific technology investments in RMB Global Broking platform, our global placement strategies and a number of other like digital automation and workflow optimization initiatives are driving productivity across the business.

Proving client service and operational efficiency.

Lucy Clarke: As you know, we have targeted mid to high single-digit organic revenue growth, and we are also confident of being able to deliver operating leverage on that growth. We have room to grow in every specialty line we're in and in every geography. As we discussed at Investor Day, we're also taking deliberate steps to improve our business mix. We're trying to expand into higher growth, high margin markets, both organically and inorganically. Those initiatives will help us to deliver sustainable margin improvements and contribute to operating leverage. So efficiency gains, operating leverage, those will be the key drivers of the 100 basis points of average annual margin expansion in each of the next three years. And we remain confident in our ability to execute on that.

As you know we have targeted mid to high single digit organic revenue growth.

And we are also confident of being able to deliver operating leverage on that.

We have room to grow in every specialty line, we're in and in every geography as we discussed at Investor Day.

We're also taking deliberate steps to improve our business mix, we're trying to expand into higher growth high margin market, both organically and inorganically.

Initiatives will help us to deliver sustainable margin improvement and contribute to operating leverage so efficiency gains operating leverage those will be the key drivers of the 100 basis points of average annual margin expansion in each of the next three years and we remain confident in our ability.

Carl Hess: So speaking a little bit about the enterprise, Elise, I mean, our expectations have not changed. We still expect to deliver margin expansion for the year. And I'll let Andrew sort of dive into some margin expectations in more detail.

To execute on that yes, so speaking a little bit about the enterprise at least our expectations have not changed we still expect to deliver margin expansion for the year.

I'll, let andrew sort of dive into the margin expectations in more detail.

Julie Gebauer: Yeah. Thanks, Carl. And you know, I'd just start off by saying the 150 basis points of adjusted operating margin expansion we delivered this quarter was in line with our expectations. That growth was really driven by strong organic growth and enhanced efficiencies, which drove greater operating leverage. We also had a 50 basis point tailwind from the divestiture of Transact, which was mostly offset by headwinds in investment income and currency. Like Carl said, our margin expansion outlook remains unchanged. As we communicated at our Investor Day, the financial framework, we're committed to driving continued annual margin expansion through efficiency and operating leverage. I already talked about the 100 basis points of average annual margin expansion in R&B. You know, that coupled with building on HWC's strong track record of margin expansion, as you have seen this quarter, is what will get us there.

Thanks, Karl and I'll, just start off by saying the 150 basis points of adjusted operating margin expansion. We delivered this quarter was in line with our with our expert expectations that growth was really driven by strong organic growth and enhanced efficiencies, which which drove greater operating leverage.

<unk> also had a 50 basis point tailwind from the divestiture of transact, which was mostly offset by headwinds in investment income and currency.

It would like Carl said, our margin expansion outlook remains unchanged as we communicated at our <unk>.

Investor Day, the financial framework, we are committed to driving continued annual margin expansion through efficiency and operating leverage.

I already talked about the 100 basis points of average annual margin expansion in RMB that coupled with building on <unk> strong track record of margin expansion. As you have seen this quarter is what will get us there I think for the full year. The key drivers of that margin expansion be a combination of the operating leverage.

Julie Gebauer: I think for the full year, the key drivers of that margin expansion will be a combination of the operating leverage, the enhancing efficiency. You've heard, I think, about our WeDo strategy, which is set up to continue to drive efficiencies, and for the streamlined processes, which I think gives us a really, really strong foundation alongside our business mix and portfolio optimization efforts to really drive sustainable annual margin expansion for WTW going forward.

Hence the efficiency you've heard I think about our we do our strategy, which is set up to continue to drive efficiencies and further streamline processes, which I think gives us a really strong foundation.

Alongside our business mix and portfolio optimization efforts.

To really drive sustainable annual margin expansion for Ww going forward.

Andrew Krasner: Thank you. Our next question comes from Mark Hughes with True Securities. Your line is open.

Thank you. Our next question comes from Mark Hughes with true Securities. Your line is open.

Mark Hughes: Yeah, thank you. Good morning. You had mentioned in the health that outside of North America, your growth was quite strong, up in the double digits. Was that attributable to any kind of macro volatility, tariffs, that sort of thing? Or is that more just underlying momentum?

Yes. Thank you good.

You had mentioned in the health that outside of North America. Your growth was quite strong up in the double digits.

Net attributable of any kind of macro volatility tariffs that sort of thing or is that.

More just underlying momentum.

Mark Marcon: For outside of North America, our health growth was driven by momentum, as you suggested, and the very significant healthcare cost inflation that organizations are experiencing outside of the US.

Yeah.

Outside of North America, our health.

Driven by momentum as you suggested and the very significant health care cost inflation that organizations are experiencing.

The U S.

Mark Hughes: Very good. And then I think in HWC, you mentioned the trajectory through the quarter was good. You saw a strengthening pipeline. Any similar observations about risk and broking, just how that progressed through the three months?

Very good and then I think in HW see you mentioned the trajectory through the quarter was good you saw strengthening pipeline.

Any similar observations about risk and broking and just how that progressed through the three months.

Lucy Clarke: Yeah, we're expecting to continue to deliver mid to high single-digit organic growth throughout the balance of the year and in the medium to long term.

Yes.

Expected to continue to deliver.

Mid to high single digit organic growth throughout the balance of the year.

And in the medium long term.

Andrew Krasner: Thank you. Our next question comes from Katie Saki with Autonomous Research. Your line is open.

Okay.

Thank you. Our next question comes from Katie <unk> with Autonomous Research. Your line is open.

Rob Cox: Hey, good morning. I wanted to dial in on ICT growth expectations over the balance of the year. I understand it's just one of many moving pieces and that there can be a lot of lumpy transactions that influence growth in the line. But in terms of thinking about the rest of this year, you know, what are you guys thinking might drive higher organic growth? And what assumptions are you making about client spend management as you look into the next six months?

Hey, good morning.

Wanted to dial in on an ICT growth expectations over the balance of the year I understand it's just one of many moving pieces and that there can be a lot of lumpy transactions influenced the growth in the line.

But in terms of thinking about the rest of this year. What are you guys thinking might drive higher organic growth.

<unk> are you, making about client spend management as you look into the next six months.

Carl Hess: Yeah. First, let me take a bit of a step back, right? Just give everyone a quick refresher on some key points about ICT. It represents about 11% of the segment, and it's focused on delivering top-tier technology solutions and trusted consulting services to insurance carriers. That's the client base. On consulting, we deliver both recurring services like reserve calculations, as well as discretionary project work for things like securities issuance or M&A amongst insurance companies. On the technology side, we do software products that support underwriting, rate-making, and reserving for clients, and those are typically larger and multi-year contracts. And while we are seeing and continue to see significant value in the combined approach of consulting and technology offerings, due to the software consulting environment, we're now expecting low to mid-single-digit growth for the full year. I'm going to, Lucy, want to elaborate?

Yes, first let me take a bit of a step back right just given everyone. A quick refresher on some key points about ICT.

It represents about 11% of the segment.

And its focus on delivering top tier technology solutions and trusted consulting services to insurance carriers Thats the client base.

On the consulting we deliver both recurring services like reserve calculations as well as discretionary project corporate things like securities issuance or M&A amongst insurance companies on the technology side, we do software products that support underwriting ratemaking in reserving for clients and those are typically larger in multiyear contracts.

And while we are seeing and continue to see significant value in the combined approach consulting and technology offerings due to the softer consulting and Barbara we're now expecting low to mid single digit growth all year Lucy one elaborate yes.

Lucy Clarke: Yeah, yeah, sure. Thanks. Thanks, Katie, for the question. We feel good about the ICT business. We're particularly confident about the strong technology pipeline we have for the second half of the year. As we've seen in the past, the timing of some large-scale finance or technology transformations often create variability in the timing of results. So in some clients are taking a more measured approach to investment in the second quarter due to economic conditions. Our underlying pipeline and opportunities remain strong. And so our long-term outlook for ICT remains mid to high single-digit organic growth.

Yes, yes sure. Thanks, Thanks, Katy for the question, we feel good about the ICT business, we're particularly confident about the strong technology pipeline, we have for the second half of the year.

As we have seen in the past the timing of some large scale finance our technology transformation.

Often create variability and the timing of results.

Some clients are taking a more measured approach to investment in the second quarter.

Due to economic conditions, our underlying pipeline and opportunities remained strong and so are our.

Our long term outlook for ICT remains mid to high single digit organic growth.

Rob Cox: Got it. Okay. And then on the changing guidance on the reinsurance JV, is it fair to frame the discussion there in thinking the additional upside to that guide would come from further improvement to the insight on expenses, or could we potentially see some further upside into that guide over the next six months as you get a better sightline on potential growth expectations?

Got it Okay and then.

On the changing guidance on the reinsurance JV.

Sure.

In the.

The discussion there.

Im thinking the additional upside too.

Two that died when comes from further improvement to the insight on expenses or could.

Could we potentially see some further upside to that guide over the next six months.

You get a better sightlines on potential growth expectations.

Julie Gebauer: Yeah, I mean, based on what we know today and the startup phase of the business, we don't expect additional changes at this time in terms of the cost associated with getting that built and launched.

Yes, I mean based on what we know today in the startup phase.

Of the business, we don't expect additional.

Additional changes at this time.

In terms of the cost.

<unk> with getting that built and launched.

Andrew Krasner: Thank you. Our next question comes from Brian Meredith with UBS. Your line is open.

Thank you. Our next question comes from Brian Meredith with UBS. Your line is open.

Brian Meredith: Yeah, thank you. Yeah, so some other brokers in the quarter have talked about the impact of the rate environment, particularly large-ticket property business on growth this quarter. I'm curious, was there any impact on CRB? And maybe just remind us what the potential impact of just the pricing environment could have on your revenues?

Yes. Thank you, yes, so some other brokers in the quarter have talked about.

The impact of the rate environment, particularly large ticket property business on growth. This quarter I'm curious was there any impact on CRB and maybe just remind us what the potential impact of just the pricing environment could have on your revenues.

Mark Marcon: Yeah, sure, sure Brian. Hi, Lucy. Thanks for the question. So that's right. We've seen rates in certain classes continuing to trend downward. We've seen that in the market since the beginning of last year. Like the others have said, most lines are softening. The most affected part of the market is the large and complex property segment. And the part of the market where rates are still hardening is the North American casualty excess umbrella auto. The important thing to remember about where the rating is is that after many years of market hardening across all lines, this was expected. We planned for it. The industry will have planned for it. Obviously, we didn't know exactly where it was going to go, but we knew directionally. And so where carriers still consider that they're getting rate adequacy, the conditions will continue to improve for clients.

Yeah sure sure, Brian Hi, <unk>. Thanks for that thanks for the question. So thats right, we've seen rate in certain classes continuing to trend downward we have seen that in the market since the beginning of last year.

And like the others have said most lines are softening the most affected part of the margin of the market is a large and complex property segments.

And the part of the market where rates are still hardening is the north American.

Casualty excess umbrella auto.

The important thing to remember about where the rating is is that after many years of market hardening.

Across all lines. This was expected we plan for it the industry will have plan for it obviously, we didn't know exactly where it was going to do but we knew directionally and so where carriers still consider that theyre getting rate adequacy. The conditions will continue to improve for clients.

Mark Marcon: So rate has been a moderate headwind for us. But the two elements that affect how it impacts us are how clients decide to behave and the makeup of our overall book. And just in terms of clients, right, sometimes they take the savings. Sometimes they use the opportunity of a really good market to buy more. And in terms of the makeup of our book, we're about half property, half casualty. We skew to the middle market, so we're not as impacted by large and complex property. And we have a good balance between commission and fee. And just as an overall observation, we've made significant investments in the business over the last three years, and those investments are continuing to pay off. So we can't predict the extent to which rates may continue to decline, but we do not rely on pricing to drive our organic growth.

So our rate has been a moderate headwind for us.

But the two elements that affect how it impacts us.

Our how clients decide to behave.

The makeup of our overall book.

And just in terms of clients right, sometimes they take the saving some time they use the opportunity of a really good market to buy more.

In terms of the makeup of our book, we're about half property <unk> casualty.

We skew to the middle market, so we're not as impacted by <unk>.

Large and complex property and we have a good balance between commission and fee.

And just as an overall observation we've made significant investments in the business over the last three years and those investments are continuing to pay off so we can't predict the extent to which that rates may continue to decline, but we do not rely on pricing to drive.

Mark Marcon: And we remain well-positioned and confident about our mid to high single-digit organic growth guidance for risk and broking.

Our organic growth and we remain well positioned and confident about our mid to high single digit organic growth guidance or risking broking.

Brian Meredith: That's really helpful. Thank you. And then just, Carl, I wonder if you could just remind us of kind of your view with respect to inorganic growth. And I know you talked about strategic acquisitions. A number of the other major brokers have made some very large acquisitions. Is your view that you're more focused on kind of bolt-ons, or do you have the capacity and the ability to do something of larger scale?

That's really helpful. Thank you and then just Carl I Wonder if you could just remind us of kind of your view with respect to inorganic growth and you talked about strategic acquisitions, a number of the other major brokers have made some very large acquisitions is your view that you are more focused on kind of bolt ons or do you have the capacity.

<unk> and the ability to do something larger scale.

Carl Hess: Yeah, let me talk a little bit about our thinking on M&A. And let me start with some illustrations of what we have been up to. Right earlier this year, we completed the purchase of Global Commercial Credit. That's a specialist broker focused on trade, credit, and political risk. We've talked about the buyout of Alpha Team Willis that's currently pending. We are actively looking for opportunities, and we're being thoughtful and disciplined in our approach. We're particularly interested in bolt-on acquisitions that fit nicely into our specialty strategy. In the wealth space, the market's vast and expanding, so we are particularly interested in wealth management and defined contribution capabilities in growing markets. And beyond bolt-ons, we'll also consider larger opportunities to enhance our presence in select geographies or market segments. Ultimately, WTW is leading data and technology platforms and a unique culture.

Yes, let me talk a little bit about our thinking on M&A.

And.

Let me start with some illustrations of what we have been up two quite earlier. This year, we completed the purchase of global commercial credit at the specialist broker focused on trade credit and political risk.

We've talked about the buyer.

Switching Willis that's currently and then we are actively looking for opportunities and we're being thoughtful and disciplined in our approach, we're particularly interested in bolt on acquisitions that fit nicely into our specialty strategy in the wealth space. The market is vast and expanding so we are particularly interested in wealth management.

And defined contribution capabilities in growing markets and beyond bolt ons, we'll also consider larger opportunities to enhance our presence in select geographies or market segments.

But like at WCW, leading data and technology platforms and a unique culture. These assets should make a lot of sense for any business that may be looking to join us. So it would be a bit more specific.

Carl Hess: These assets should make a lot of sense for any business that may be looking to join us. So to be a bit more specific, we're aiming to increase our business mix in broking wealth through M&A. We see this as a key opportunity expanding into high growth, high margin areas of our core business. Secondly, we see an opportunity to play across the insurance value chain, like our reentry into free reinsurance with VANE, accelerate growth. And third, a combination of WTW should have a compelling financial story, enhancing our margins and free cash flow profile. And lastly, I want to remind you that we're looking for those that can be a good cultural fit, minimize business disruption, and satisfy the criteria that I just talked about. Now, as far as size, I'm not going to talk about hypotheticals, right?

Aiming to increase our business mix and broking well through M&A, we see this as a key opportunity expanding into high growth high margin areas of our core business.

Secondly, we see an opportunity to play across the insurance value chain like our reentry into St.

Pre reinsurance with Bain accelerate growth and third a combination of <unk> should have a compelling financial story.

Enhancing our margins and free cash flow profile.

And lastly, I want to remind you that we're looking for those things can be a good cultural fit minimize business disruption and satisfy the criteria.

I just talked about it now as far as size I'm not going to talk about hypothetical strike will only going to pursue something that the expected return value creation potential are compelling versus our other capital allocation options and if we're confident we can execute the opportunity without disrupting our existing business.

Carl Hess: We're only going to pursue something that the expected return and value creation potential are compelling versus our other capital allocation options. And if we're confident we can execute the opportunity without disrupting our existing business and adding, we want to add value to our clients and business and our shareholders along the way. You know, the last few years, we solidified our infrastructure. We've strengthened the company, and we now have the right business focus and more efficient processes and the tools to integrate potential targets with WTW and deliver long-term value.

And adding but we want to add value to our clients in business and our shareholders along the way.

The last few years, we solidified our infrastructure, we've strengthened the company and we now have the right business focused and more efficient processes and the tools.

Integrate potential targets with Ww and deliver long term value.

Andrew Krasner: Thank you. And our last question comes from Mark Marcon with Robert W. Baird. Your line is open.

Thank you and our last question comes from Mark Marcon with Robert W. Baird. Your line is open.

Brian Meredith: Thanks for squeezing me in. Two long-term questions. Carl, you mentioned AI in your prepared script. I'm wondering if you can elaborate a little bit more in terms of your efforts there, in terms of increasing efficiencies, automating, and how you're thinking about that from a long-term perspective. And then, Julie, you know, health within HWC has been a key driver. Obviously, things are looking very good for this year. I'm wondering if you can talk a little bit about longer term in terms of the next three to five years, and particularly, you know, how much work you expect in terms of plan redesign given the healthcare inflation that's occurring. Thank you.

Thanks for squeezing me in.

Two two long term questions. Carl you mentioned AI in your prepared script I am wondering if you can elaborate a little bit more in terms of your efforts there in terms of increasing efficiencies automating and how youre thinking about that from a long term perspective.

And then Julie.

Health within.

HW C has been a key driver obviously things are looking very good for this year I'm wondering if you can talk a little bit about longer term.

In terms of the next three to five years and particularly.

How much.

Work you expect in terms of planned redesign given the healthcare inflation that's occurring thank you.

Carl Hess: Sure. And I'll treat that as two questions. Let me get to the AI one first, and I'll let Julie take hers. I talked about this in my prepared remarks, right? And you know, we've been implementing various forms of AI for years, such as advanced analytics, machine learning models, right? And that helps drive efficiency and deliver our client solutions. We use these types of AI in our risk modeling for clients and in other risk management solutions. Let me give you an example, right? Coverage Clarified in our construction business. That uses AI to verify that insurance coverage is adequate and contractually compliant, which is otherwise a pretty time-consuming and labor-intensive manual process. We built Coverage Clarified in-house, and we estimate it's making our process up to 40% more efficient. And that's just one example, right?

Sure and Thats two questions. So let me get to the AI, one first and I'll, let Julie.

That hurts.

I talked about this in my prepared remarks, we've been implementing various forms of AI for years.

Just to add advanced analytics machine learning models, right and that helps drive efficiency and deliver our client solutions.

We use these types of AI for and our risk modeling for clients and other risk management solutions.

Let me give an example, right coverage clarified in our construction business that uses AI to verify that insurance coverage is adequate and contractually compliant, which is otherwise a pretty time consuming and labor intensive manual process. We built coverage clarified in house and we estimate is making our product.

Process up to 40% more efficient and Thats. Just one example, alright, we continue to explore opportunities to use AI to improve the overall client experience streamline our internal processes and to enhance both client and our decision making.

Carl Hess: We continue to explore opportunities to use AI to improve the overall client experience, streamline our internal processes, and to enhance both client and our decision-making. Now, as always, we're doing it thoughtfully and responsibly by putting our clients first and in full alignment with our values and applicable legal and regulatory requirements. I'm sure my general counsel is out there smiling somewhere to ensure the quality of our advice and solutions are what clients expect and what our customers are getting from WTW. So we intend to balance innovation with sustainable return, and we've seen long-term potential benefits to both growth and margins from our AI investments. Julie?

Now as always we're doing it thoughtfully and responsibly.

By putting our clients first and as full alignment with our values and applicable legal and regulatory requirements I'm sure. My General Counsel is out there smiling somewhere.

To ensure the quality of our advice on what clients expect.

With our customer to getting to WCW. So we intend to balance innovation with sustainable return and we see long term potential benefits to both growth and margins.

Investments Julie Stewart.

Mark Marcon: Sure. And thanks for the question on health, Mark. Look, as you know, healthcare coverage is a significant component of the employee value proposition in virtually all countries around the world. And the cost of that coverage is meaningful relative to other components, particularly in some large economies like the US. The drivers of cost increase are currently, I mentioned before, prescription drugs. There's overall utilization. There are new treatments that are driving high-cost claims. And we don't see those changing in the short term, for sure, but also in the medium term. So organizations will need to continue to keep an eye on this component of their total compensation and benefits cost. And we expect long-term to see high single-digit growth over this for this business.

Thanks for the question on health Mark.

Look.

As you know healthcare coverage is a significant component.

The employee value proposition in virtually all countries around the world and the cost of that coverage is meaningful relative to other components, particularly in some large economies like the U S.

The drivers of cost increase.

Are.

Theyre currently I mentioned before our prescription drug there is overall utilization there are new treatments that are driving high cost claims and we don't see those changing.

In the short term for sure but also in the medium term so organizations will need to continue to keep an eye on this component of their total compensation and benefits costs and we expect long term to see high single digit growth.

Okay.

This business.

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

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

Carl Hess: So thank you all for joining us this morning. I want to thank all our WTW colleagues again for their hard work and dedication. And thank you to our shareholders for their continued support of our efforts. Have a great day, everyone.

So thank you all for joining us this morning, I want to thank all our Ww colleagues again for their hard work dedication and.

And thank you to our shareholders for their continued support of our efforts have a great day everyone.

Andrew Krasner: This concludes today's conference call. Thank you for participating. You may now

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

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