Marsh & McLennan Companies Q3 2023 Earnings Report

Marsh & McLennan Companies EPS Results

• Actual EPS: $1.57
• Consensus EPS: $1.39
• Beat/Miss: Beat by +$0.18
• One Year Ago EPS: $1.18

Marsh & McLennan Companies Revenue Results

• Actual Revenue: $5.38 billion
• Expected Revenue: $5.22 billion
• Beat/Miss: Beat by +$166.42 million
• YoY Revenue Growth: +12.80%

Marsh & McLennan Companies Announcement Details

• Quarter: Q3 2023
• Date: 10/19/2023
• Time: Before Market Opens
• Conference Call Date: Thursday, October 19, 2023
• Conference Call Time: 8:30AM ET

Marsh & McLennan Companies (NYSE:MRSH), now operating under the name Marsh McLennan, is a global professional services firm that helps organizations manage risk, strategy and people-related challenges. Its businesses serve corporations, governments, institutional investors and other organizations across a broad range of industries and geographies.

The company’s principal businesses include Marsh, an insurance brokerage and risk advisory firm; Guy Carpenter, which provides reinsurance brokerage and related risk management services; Mercer, which offers consulting in areas such as talent, health, retirement and investments; and Oliver Wyman, a management consulting firm. Together, these businesses provide insurance placement, risk analytics, employee benefits consulting, investment advice and strategic and operational guidance.

Founded in 1905, Marsh McLennan is headquartered in New York City and serves clients through operations around the world. John Doyle has served as the company’s president and chief executive officer since 2023.

Marsh & McLennan Companies Q3 2023 Earnings Call Transcript

Key Takeaways

• Marsh McLennan delivered 10% underlying revenue growth in Q3, a 24% increase in adjusted operating income, 170 bps margin expansion and 33% growth in adjusted EPS, alongside $300 million of share repurchases.
• The company completed two key acquisitions—Graham Company in the U.S. mid-Atlantic and Honan Insurance Group in Australia—strengthening its middle-market insurance and benefits capabilities and expanding its Pacific presence.
• Ongoing investments in technology include Guy Carpenter’s next-gen catastrophe platform GC Advantage Point, Marsh’s Cyber Pathway solution for SMBs, and “Len AI,” an internal AI assistant, all designed to boost client offerings and colleague productivity.
• Cross-segment collaboration is gaining traction, with integrated solutions for enterprise healthcare risk (Marsh+Mercer), private equity/M&A advisory (Bursar+Marsh+Oliver Wyman) and insurer portfolio management (Guy Carpenter+Mercer OCIO).
• As part of restructuring actions, the firm now expects roughly $400 million in cost savings by 2024 (against $425–475 million of charges), supporting the 16th consecutive year of margin expansion and a full-year outlook of 9–10% revenue growth and strong EPS gains.

Presentation

[Operator]

Welcome to Marsh McLennan's earnings conference call. Today's call is being recorded. Q3 2023 financial results and supplemental information were issued earlier this morning. They are available on the company's website at marshmclennan.com. Please note that remarks made today may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties, and a variety of factors may cause actual results to differ materially from those contemplated by such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, including our most recent Form 10-K, all of which are available on the Marsh McLennan website. During the call today, we may also discuss certain non-GAAP financial measures. For a reconciliation of these measures to the most closely comparable GAAP measures, please refer to the schedule in today's earnings release.

[Operator]

If you have a question, please press star one one on your touchtone phone. If you wish to be removed from the queue, please press star one one again. If you are using a speakerphone, you may need to pick up the handset before pressing the numbers. Once again, if you have a question, please press star one one on your touchtone phone. I'll now turn this over to John Doyle, President and CEO of Marsh McLennan.

[John Doyle, President and CEO at Marsh McLennan]

Good morning, and thank you for joining us to discuss our Q3 results reported earlier today. I'm John Doyle, President and CEO of Marsh McLennan. Joining me on the call is Mark McGivney, our CFO, and the CEOs of our businesses, Martin South of Marsh, Dean Klisura of Guy Carpenter, Martine Ferland of Mercer, and Nick Studer of Oliver Wyman. Also with us this morning is Sarah DeWitt, Head of Investor Relations. Before I get into our results, I'd like to take a moment to comment on the violent attacks on Israel and the tragic events unfolding in Israel and Gaza. We, along with our colleagues, condemn all acts of terror and violence and reject hatred. Our primary focus is on ensuring the safety and well-being of our colleagues in Tel Aviv and supporting colleagues around the world who have family and friends in Israel and Gaza.

[John Doyle, President and CEO at Marsh McLennan]

We're also supporting our clients as they grapple with the challenges of this conflict. Turning to our Q3 results, I'm very pleased with our performance. We extended our best run of quarterly underlying revenue growth in over two decades and reported significant growth in adjusted EPS. Top line momentum continued, with 10% underlying revenue growth on top of 8% growth in the Q3 of last year. Adjusted operating income grew 24% versus a year ago. Our adjusted operating margin expanded 170 basis points compared to the Q3 of 2022. Adjusted EPS grew 33%, and we completed $300 million of share repurchases during the quarter. These results reflect our consistent focus on delivering in the near term while investing for sustained growth over the long term.

[John Doyle, President and CEO at Marsh McLennan]

We are seeing the benefit of investments we've made in our talent and capabilities, and we continue to see opportunities to add high-quality acquisitions. During the Q3, we announced two significant transactions. In early August, Marsh McLennan Agency acquired Graham Company, a top 100 U.S. insurance and benefits broker and risk management consultancy with 215 employees and over $70 million in revenue. Graham will provide significant business insurance and employee benefits expertise for MMA's clients in the Mid-Atlantic. This acquisition is another example of us attracting the best agencies in the U.S. MMA is now a $3 billion revenue business. In the same month, Marsh announced an agreement to acquire Honan Insurance Group. This deal expands our Australian middle market business and our position across the Pacific region and Asia.

[John Doyle, President and CEO at Marsh McLennan]

Honan specializes in corporate risk and employee benefits and serves over 30,000 clients. Beyond acquisitions, we continue to make targeted investments in talent, sales operations, and go-to-market strategies. We are also investing in new technologies and solutions to bring the best of Marsh McLennan to our clients. For example, Guy Carpenter recently launched the next generation of our catastrophe analytics platform, GC Advantage Point. The new platform is a critical tool to help clients drive profitable risk selection and manage catastrophe exposure in a quickly evolving risk landscape. Earlier this year, Marsh announced the launch of Cyber Pathway, an integrated cybersecurity and insurance solution for U.S. small and mid-sized businesses that helps enhance their resilience in a volatile threat environment. The program provides access to key security tools and capabilities, as well as insurance coverage that can grow as our clients evolve.

[John Doyle, President and CEO at Marsh McLennan]

We are investing in technologies that enhance our internal productivity, insights for clients, and improve colleague experience. One example is LenAI, Marsh McLennan's internal AI assistant. LenAI offers the power of ChatGPT in a safe and data-secure environment and is available to all colleagues. Developed by our innovation center, it's also helping Oliver Wyman support clients in developing their own AI capabilities. Our approach to balancing investment and growth drives consistent, exceptional performance for shareholders and positions us well to deliver new solutions and insights for our clients. Turning to our strategic initiatives, the combined value proposition of our businesses continues to gain traction with clients, especially in certain industries and lines of business. For example, we are focused on enterprise risks for healthcare clients.

[John Doyle, President and CEO at Marsh McLennan]

Our Marsh and Mercer teams are coming together to respond to emerging challenges such as health and safety, labor actions, and workforce and liability risks from AI. In the private equity and M&A space, Mercer, Marsh, and Oliver Wyman are combining capabilities to help clients close deals and create post-transaction value. This can include due diligence, advisory on large transformations, health and benefits carve-out transactions, and providing stop-loss solutions. In the insurance sector, Guy Carpenter is partnering with Mercer to provide portfolio management solutions to insurance clients. One example is our advanced balance sheet solution, which is a collaborative approach that aligns risk and return across an insurer's balance sheet. This offering has already resulted in several regional insurers choosing to partner with Mercer for OCIO. We are also finding new ways to operate, reduce complexity, and organize for impact.

[John Doyle, President and CEO at Marsh McLennan]

As we continue to execute on our restructuring actions, we've identified additional opportunities to rationalize technology, reduce our real estate footprint, and realign our workforce. We now expect to achieve total savings of roughly $400 million by 2024, with total costs to achieve these savings of $425 million-$475 million. Overall, the momentum we are seeing as our businesses increasingly serve clients together, combined with our restructuring efforts, offers opportunities to deliver enhanced value for clients, drive higher growth, and be more efficient and connected. Now let me turn to the macro environment. The outlook remains uncertain. Capital market volatility has returned with the continued rise in interest rates. The trajectory of inflation and further central bank tightening remain an open question, and the geopolitical situation remains volatile.

[John Doyle, President and CEO at Marsh McLennan]

Despite the environment, we continue to perform well, and we have a track record of resilience. We believe we are well-positioned to perform across economic cycles and manage our business to grow revenues faster than expenses in good as well as challenging periods. Now let me turn to insurance and reinsurance market conditions. Primary insurance rates continue to increase, with the Marsh Global Insurance Market Index up 3% overall, in line with the Q2. Property rates increased 7% compared to 10% in the Q2. Casualty pricing was up in the low single-digit range. Workers' compensation increased slightly, while financial and professional liability insurance rates were down mid-single digits. Cyber insurance pricing decreased modestly after several years of increases. In reinsurance, our clients have faced consistent challenges throughout 2023. This includes elevated cat losses, core and social inflation, and continued political instability.

[John Doyle, President and CEO at Marsh McLennan]

As we look to January 1st, the market appears to be more orderly than last year, but we expect underwriting discipline to continue. On the property side, we expect firm pricing, but a more stable market with adequate capacity and increased reinsurer appetite. In casualty, the market is more cautious, with reinsurers assessing prior year loss development and inflation. We expect capacity to remain stable. Overall, clients will need thorough preparation and a proactive strategy to achieve desired outcomes. We are well-positioned to help our clients navigate these dynamic market conditions. Now let me turn to our Q3 financial performance. We generated adjusted EPS of $1.57, which is up 33% from a year ago. On an underlying basis, revenue grew 10%. Underlying revenue grew 11% in RIS and 9% in consulting.

[John Doyle, President and CEO at Marsh McLennan]

Marsh was up 8%, Guy Carpenter, 8%, Mercer, 8%, and Oliver Wyman grew 12%. Overall, the Q3 saw Adjusted Operating Income growth of 24%, and our Adjusted Operating Margin expanded 170 basis points year-over-year. For the 9 months, consolidated revenue grew 10% on an underlying basis. Adjusted Operating Income grew 17%, and our Adjusted Operating Margin expanded 130 basis points. Adjusted EPS was $6.31, up 17% from a year ago. With our outstanding results in the Q3 and year-to-date, we remain on track for a terrific year. Based on our outlook today, and assuming current market conditions persist, we now expect full-year underlying revenue growth to be 9%-10%.

[John Doyle, President and CEO at Marsh McLennan]

We also continue to expect margin expansion for the full year and strong growth in Adjusted EPS. Finally, I want to provide an update on our recently announced leadership changes. Martine Ferland, the CEO of Mercer, will retire on March 31st of next year. Pat Tomlinson has been appointed President of Mercer, where he will work closely with Martine through a transition period and have responsibility for Mercer's global health, wealth, and career practices. Pat will succeed Martine as President and CEO of Mercer upon her retirement. I'm excited to work with Pat in his new role. He brings an outstanding track record as a leader and strong knowledge of our business. He currently serves as Marsh McLennan U.S. and Canada CEO, and Mercer President of U.S. and Canada. Pat has 26 years of industry experience, including the last 9 years in leadership roles at Mercer.

[John Doyle, President and CEO at Marsh McLennan]

I also want to thank Martine for her leadership. In her five years as CEO of Mercer, she delivered strong growth, built and cultivated our talent, and delivered impact for our clients. This announcement is another example of our depth of exceptional talent and focus on succession planning. Overall, I am proud of our Q3 performance, which demonstrates continued execution of our strategy and continued momentum across our business. I'm grateful to our colleagues for their focus and determination, and the value they deliver to our clients, shareholders, and communities. With that, let me turn it over to Mark for a more detailed review of our results.

[Mark McGivney, CFO at Marsh McLennan]

Thank you, John, and good morning. Our Q3 results were outstanding. Continued momentum and underlying growth, strong double-digit adjusted EPS growth, and significant margin expansion. Our consolidated revenue increased 13% to $5.4 billion, with underlying growth of 10%. Operating income was $996 million, and adjusted operating income was $1.1 billion, up 24% from a year ago. Our adjusted operating margin increased 170 basis points to 21.3%. GAAP EPS was $1.47, and adjusted EPS was $1.57, up 33% over last year. Note that adjusted EPS in the Q3 included a $0.10 discrete tax benefit from the release of valuation allowance on foreign deferred tax assets. Even without this benefit, our adjusted EPS grew 25% in the quarter.

[Mark McGivney, CFO at Marsh McLennan]

For the first nine months of 2023, underlying revenue growth was 10%. Adjusted operating income grew 17% to $4.4 billion. Our adjusted operating margin increased 130 basis points, and adjusted EPS increased 17% to $6.31. Looking at risk and insurance services, Q3 revenue was $3.2 billion, up 12% from a year ago, or 11% on an underlying basis. This result marks the 10th consecutive quarter of 8% or higher underlying growth in RIS, and continues the best stretch of growth in nearly two decades. Operating income increased 21% to $640 million. Adjusted operating income increased 19% to $671 million, and our adjusted operating margin expanded 100 basis points to 23.4%.

[Mark McGivney, CFO at Marsh McLennan]

For the first nine months of the year, revenue in RIS was $10.8 billion, with underlying growth of 12%. Adjusted operating income increased 18% to $3.3 billion. Margin increased 150 basis points to 32.6%. At Marsh, revenue in the quarter was $2.7 billion, up 9% from a year ago, or 8% on an underlying basis. This comes on top of 8% growth in the Q3 of last year. Growth in the Q3 reflected solid new business and strong retention. In US and Canada, underlying growth was 6% for the quarter, led by strong growth in MMA. In international, underlying growth was 10% and comes on top of 11% in the Q3 of last year.

[Mark McGivney, CFO at Marsh McLennan]

Latin America was up 14%, Asia Pacific was up 10%, and EMEA grew 9%. The first nine months of the year, Marsh's revenue was $8.5 billion, with underlying growth of 9%. US and Canada grew 7%, and international was up 10%. Guy Carpenter's revenue was $359 million in the quarter, up 9% or 8% on an underlying basis, driven by strong growth across our global specialties and regions. For the first nine months of the year, Guy Carpenter generated $2 billion of revenue, 10% underlying growth. In the consulting segment, Q3 revenue was $2.2 billion, up 13% from a year ago, or 9% on an underlying basis. Consulting operating income was $424 million.

[Mark McGivney, CFO at Marsh McLennan]

Adjusted operating income increased 24% to $447 million, and the adjusted operating margin expanded 170 basis points to 20.8%. For the first nine months of 2023, consulting revenue was $6.4 billion, with underlying growth of 7%. Adjusted operating income increased 11% to $1.3 billion, and the adjusted operating margin expanded 50 basis points to 20.1%. Mercer's revenue was $1.4 billion in the quarter, up 8% on an underlying basis. This was Mercer's best quarter of underlying growth in 15 years. Wealth grew 7%, driven by continued demand in defined benefits consulting and higher growth in investment management.

[Mark McGivney, CFO at Marsh McLennan]

Our assets under management were $379 billion at the end of the Q3, up 19% compared to the Q3 of last year and down 4% sequentially. Year-over-year growth was driven by our transaction with Westpac, a rebounding capital markets and positive net flows. Health underlying growth was 8% and reflected strength in all segments and regions. Career revenue increased 7% on top of 15% growth in the Q3 of last year. We continue to see growth in rewards and talent strategy.... For the first 9 months of the year, revenue at Mercer was $4.1 billion, with 7% underlying growth. Oliver Wyman's revenue in the quarter was $781 million, an increase of 12% on an underlying basis that reflected strength in the Middle East and Europe.

[Mark McGivney, CFO at Marsh McLennan]

For the first nine months of the year, revenue at Oliver Wyman was $2.3 billion, an increase of 8% on an underlying basis. Foreign exchange was a $0.01 headwind to EPS in the Q3. Assuming exchange rates remain at current levels, we expect FX will have an immaterial effect on Q4 earnings. We reported $52 million of total restructuring costs in the quarter, approximately $37 million of which relates to the program we announced in the Q4 last year. These charges include costs related to severance, lease exits, and streamlining our technology environment. We've continued to pursue efficiencies under this program, and our outlook for savings has increased.

[Mark McGivney, CFO at Marsh McLennan]

As John noted, we now expect total charges of $425 million-$475 million, and expect total savings of roughly $400 million, of which approximately $225 million will be realized in 2023. To date, we've incurred approximately $325 million of charges under this program. We currently expect to incur the majority of the remaining charges by the end of 2023 and to realize the bulk of the remaining savings in 2024. Our other net benefit credit was $62 million in the quarter. For the full year of 2023, we expect our other net benefit credit will be about $240 million. Investment income was $1 million in the Q3 on a GAAP basis, and $2 million on an adjusted basis.

[Mark McGivney, CFO at Marsh McLennan]

Interest expense in the Q3 was $145 million, up from $118 million in the Q3 of 2022, reflecting higher levels of debt and higher interest rates. Based on our current forecast, we expect approximately $157 million of interest expense in the Q4. Our effective adjusted tax rate in the Q3 was 20.5%, compared with 24.6% in the Q3 of last year. Our tax rate in both periods benefited from favorable discrete items. The largest discrete item this quarter was a $48 million release of a valuation allowance on foreign deferred tax assets. Excluding discrete items, our effective adjusted tax rate was approximately 25.5%. When we give forward guidance around our tax rate, we do not project discrete items, which can be positive or negative.

[Mark McGivney, CFO at Marsh McLennan]

Based on the current environment, it is reasonable to assume a tax rate of around 25.5% for 2023. Turning to capital management and our balance sheet. We ended the quarter with total debt of $13.6 billion. This includes the $1.6 billion of senior notes we issued in September. Our next scheduled debt maturities are in March 2024, when $1 billion of senior notes mature, and in May, when another $600 million of senior notes come due. We also recently took the opportunity to increase borrowing capacity under our credit facility, increasing the size of this, the facility, to $3.5 billion from $2.8 billion and extending the term of the facility by 2.5 years to 2028.

[Mark McGivney, CFO at Marsh McLennan]

This was a prudent step to increase our access to short-term funding, given the significant growth in our business since we last renewed the facility in April 2021. We are also pleased that Moody's upgraded our senior unsecured debt rating to A3 in September. We continue to expect to deploy approximately $4 billion of capital in 2023 across dividends, acquisitions, and share repurchases. Our cash position at the end of the Q3 was $2.9 billion. Uses of cash in the quarter totaled $1 billion, and included $353 million for dividends, $368 million for acquisitions, and $300 million for share repurchases. For the first nine months, uses of cash totaled $2.9 billion and included $944 million for dividends, $1.1 billion for acquisitions, and $900 million for share repurchases.

[Mark McGivney, CFO at Marsh McLennan]

Overall, we remain on track for a terrific 2023. Based on our outlook today, and assuming current conditions persist, we expect to generate 9%-10% full-year underlying revenue growth, strong growth in adjusted EPS, and to report margin expansion for the sixteenth consecutive year. With that, I'm happy to turn it back to John.

[John Doyle, President and CEO at Marsh McLennan]

Thank you, Mark. Operator, we are ready to begin Q&A.

[Operator]

Thank you. We'll now begin the question-and-answer session. If you have a question, please press star one one on your touchtone phone. If you wish to be removed from the queue, please press star one one again. If you are using a speakerphone, you may need to pick up the handset before pressing the numbers. Once again, if you have a question, please press star one one on your touchtone phone. In the interest of addressing questions from as many participants as possible, we ask that participants limit themselves to one question and one follow-up question. One moment, please, for our first question. Our first question comes from the line of Elyse Greenspan with Wells Fargo.

[Elyse Greenspan, Managing Director and Senior Equity Research Analyst at Wells Fargo]

Hi, thanks. Good morning. My first question is on the U.S., Canada within Marsh. Organic of 6%, but you know, a slowdown from where you guys were in the first part of the year. Can you just give a little bit more color on what's causing the slowdown? And then I think in the introductory comments, you guys mentioned that MMA saw strong growth. So could you give us a sense of the growth within MMA and the growth outside of MMA, MMA within that segment?

[John Doyle, President and CEO at Marsh McLennan]

Sure, Elyse, good morning, and thanks for the question. You know, again, overall, I was quite pleased with the growth, the revenue growth in the quarter. We had good growth at Marsh, best growth at Mercer in 15 years, and again, strong performance at Guy Carpenter and Oliver Wyman. Marsh U.S., inclusive of MMA, and I would also note, you know, our MGA operation had a good quarter as well. You know, growth was strong. Marsh U.S. was up 6% versus 5% a year ago. Again, you know, we caution you to look at growth at any one, you know, at any one quarter. You know, we think we're well-positioned and, you know, our team is executing well. Martin, do you have any other color on what impacted growth at Marsh on this quarter?

[Martin South, President and CEO at Marsh]

Yeah. Thank you, John. You know, as you said, very strong growth for Marsh across the board in International and North America. You know, as you said, we don't comment on specifically on MMA, but, they've had a good quarter. The growth in their MGA business was strong. There's partially some impact from the capital markets and some moderating growth in financial construction sidelines, reflecting some pricing pressures. But as you say, we don't look at this on a, you know, quarter-over-quarter basis. We look at it over a longer period of time, and we feel very positive about the U.S. business and the Canadian business.

[John Doyle, President and CEO at Marsh McLennan]

Thanks, Martin. Elyse, do you have a follow-up?

[Elyse Greenspan, Managing Director and Senior Equity Research Analyst at Wells Fargo]

Yeah, and then, my second question: so on the, revised savings program, is there a way to give us a sense, you, you mentioned, John, it came from rationalizing tech, real estate, and realigning the workforce, how much each of those buckets are contributing to the extra savings? And then is it still, fair to assume that most of the savings that you're expecting, you know, this year should be, falling to the bottom line?

[John Doyle, President and CEO at Marsh McLennan]

So, you know, really backing up a little bit, Elyse, you know, as our business has operated more closely together, we've just identified additional opportunities. They're largely in the same areas, right? It's around realigning our workforce and mostly in functions, you know, I would say, as opposed to market-facing workforce, talent, real estate and technology, but not broken it out, you know, by group, but, you know, the costs are severance, lease terminations, and streamlining technology. So again, we're excited about, you know, some of the opportunities that we've uncovered and, you know, I'm proud of the team we're executing against them. Thanks, Elyse. Operator, next question, please.

[Operator]

Thank you. Our next question comes from the line of Jimmy Bhullar with JPMorgan.

[Jimmy Bhullar, Managing Director, Equity Research Analyst at JPMorgan]

Hey, good morning. So first, question on the reinsurance market. I think you mentioned the word firm in terms of pricing, and are you expecting prices to be up further from these current levels, or firm just means that they'll be somewhat stable? And then how do you think that'll affect your growth at Guy Carpenter? You've grown double digits this year. Not sure how much of that is because of the tailwind from pricing.

[John Doyle, President and CEO at Marsh McLennan]

Yeah, you know, thanks, Jimmy. I did use the word firm, there's no question. You know, our team at Guy Carpenter has done a terrific job this year, helping our clients navigate what's a, you know, what's a challenging market. You know, as I said, I expect that the market on January one will certainly be more orderly than last year. You know, but there are concerns both in the insurance and reinsurance market about rising loss costs. And so, you know, we don't want to project and can't really project with accuracy, and there's still, you know, a quarter to run. You know, we expect underwriting discipline to remain. But, you know, with that, maybe, Dean, you could offer some thoughts on Guy Carpenter and what we think of the market.

[Dean Klisura, President and CEO at Guy Carpenter]

Thanks, John. Jimmy, maybe I'll give you a little color between property cat and casualty, as John mentioned. You know, as John noted, we expect challenging market conditions to persist for property cat at the upcoming January 1 renewal. As John noted, driven by inflation. As you're reading about, I mean, cat losses continue to be very elevated, you know, many attritional losses, you know, many billion-dollar plus events this year. Political instability continues. We do expect pricing to remain firm in property cat. You know, it'll vary region by region. It won't be what we saw last year, as an example, in the U.S. and Europe, but we do think that firmness will be there. We do expect additional capacity and an increased appetite from reinsurers to write more business, particularly at higher attaching property cat layers.

[Dean Klisura, President and CEO at Guy Carpenter]

But I think the key is we expect reinsurers to continue to exhibit that discipline on attachment points, pricing, and terms, and I don't see anything going backwards. As John noted, we think property cat capacity in the market will remain adequate, and as John noted, we think it'll be a more manageable renewal for our clients without that significant supply-demand imbalance and dislocation that we saw last year. And we do expect increased demand for our clients to buy more reinsurance, in particular key regions like Europe. You know, on the casualty side, for U.S. casualty, as John noted, the market is trending very cautiously. In all of our meetings with reinsurers this fall, everybody expressed concern with

[Dean Klisura, President and CEO at Guy Carpenter]

prior year loss development in U.S. casualty in certain lines, you know, again, driven by economic and social inflation. We do expect some downward pressure from reinsurers on ceding commissions for our clients with quota share contracts and certain casualty lines. But in casualty, we do expect capacity to remain adequate.

[John Doyle, President and CEO at Marsh McLennan]

The cost of risk, Jimmy, is rising, and, you know, it's up to us to find the best solutions in the market for both our insurance and reinsurance clients. And so, you know, I think we're well positioned to do that. Do you have a follow-up?

[Jimmy Bhullar, Managing Director, Equity Research Analyst at JPMorgan]

Yeah, just on Oliver Wyman. I think typically you think of Oliver Wyman as being sensitive to economic uncertainty, and this year the business has shown a lot of momentum. So maybe. I know you won the UBS, I don't know, UBS Credit Suisse integration contract, but I'm not sure how material that is. But what's really driving Oliver Wyman, and what's your sort of pipeline look like, and how do you think about it performing, if the economy does in fact slow down?

[John Doyle, President and CEO at Marsh McLennan]

Yeah, thanks. Thanks, Jimmy. Oliver Wyman has been more sensitive to global GDP over time, but it's also been a faster-growing part of our business over time, as well. And, you know, after you know, a relatively slow start to the year, you know, Oliver Wyman's had, you know, a terrific run, is now having, strong growth year to date and a very, very strong quarter. So Nick, maybe you can share with Jimmy some color on how things look at Oliver Wyman.

[Nick Studer, CEO at Oliver Wyman]

Thank you, John, and thank you, Jimmy. Yeah, let me enlarge on that a little bit. It's definitely not an easy environment for discretionary spending in our clients. I still see a fairly wide range of possible economic paths. But John called out our wider resilience with Marsh McLennan, and I'm proud that Oliver Wyman's demonstrated that resilience in clawing our way back from a flat Q1. And as Martin said as well, we do try to look at the business on a year-over-year basis more than a quarter-over-quarter basis, but it does matter. We're quite a diverse business now, and we've been becoming more diverse.

[Nick Studer, CEO at Oliver Wyman]

So if you think about the sectors that are driving our growth and the regions, our India, Middle East, and Africa region has been the biggest contributor to our regional growth, with Europe also contributing strongly. On the sectoral side, public sector, which is quite present in the Middle East, our communications, media and technology practice, followed by banking, followed by transportation and services. So, so again, quite a wide array of industry sectors there. And maybe just an interesting case study on the industry side would be our private equity, private capital practice. Clearly, it's not been a great deal environment, but that practice has been doing quite well, driven by portfolio company work.

[Nick Studer, CEO at Oliver Wyman]

And over the last few years, I've said a few times and have been asked questions about our offerings through the cycle, which we've been seeking to, to broaden. Our economic research practices grew strongly, our digital team, our restructuring practice, which is nascent, grew very strongly. Our work on performance transformation with clients, which is, is more of a tough economic environment, offering, as well as our people and organizational performance work, where we do a lot of collaboration with Mercer. So, ultimately, I'm optimistic in our long-term growth prospects, but we continue to plan for, you know, mid to high single digit growth over the longer term. And, you know, our pipeline is looking in line with that at this moment.

[John Doyle, President and CEO at Marsh McLennan]

Thanks, Nick, and thank you, Jimmy. Operator, next question.

[Operator]

Thank you. Our next question comes from the line of Mike Zaremski with BMO Capital Markets.

[Mike Zaremski, Managing Director and Senior Equity Research Analyst at BMO Capital Markets]

Hey, good morning, thanks. I guess just a follow-up to the last question about kind of global growth. So, you know, Marsh's, you know, growth, clearly record high levels. I feel like historically there's been more of a correlation between growth and nominal GDP. If you do agree with that, it just feels like there's been a decoupling of that relationship recently, in a good way for you all, obviously. Just curious if there's anything structurally, permanently that's changed, or is it are there kind of temporary phenomena with hires or anything you want to call out, if you agree with the premise of my question?

[John Doyle, President and CEO at Marsh McLennan]

Sure, Mike. You know, what I would say is, you know, it is a volatile macro environment, certainly both the economy and geopolitically, as I mentioned before. But I do believe nominal GDP is a better indicator of demand over time and with inflation, tight labor markets, you know, and pricing, you know, positive in the P&C market. Those macro factors are certainly supportive of growth. But, you know, what I would also say is we've been working very hard to shift our mix of business to better growth markets over time. You know, a handful of examples, MMA, of course, the middle market at both Marsh and Mercer, our OCIO business we've been investing in. We have invested organically and inorganically throughout, throughout Asia.

[John Doyle, President and CEO at Marsh McLennan]

And then more broadly, we've invested in talent, sales operations, and our client engagement model. So we, you know, we believe we're a better growth business and better positioned. And while again, you know, that macro environment is quite volatile, you know, we're confident in our ability to perform over economic cycles.

[Mike Zaremski, Managing Director and Senior Equity Research Analyst at BMO Capital Markets]

Okay. That, that, that's helpful. If I could, you know, ask a follow-up, and hopefully it's not out of left field, but, you know, there's been a chatter in the media and at a recent wholesale conference about potentially some of the larger brokers getting back into the wholesale business. I'm not sure if you want to comment on that or can, but maybe you can at least offer some perspective on why Marsh doesn't have as big of a wholesale presence as, you know, relative to just its market share of non-wholesale insurance.

[John Doyle, President and CEO at Marsh McLennan]

Yeah, sure, Mark. Mike, excuse me. I'm, you know, happy to, you know, happy to comment. I mean, you know, first of all, I would say, you know, that E&S, the E&S, E&S market volumes historically have moved with pricing cycles. I think given the volatile risk environment, I suspect that E&S market volumes will be, you know, more durable than they've been, you know, historically. Underwriters are looking for flexibility. And third-party wholesalers can give us access to, you know, to certain markets. At the same time, we access some E&S markets directly today. And so, in terms of a third-party wholesale, you know, I think, you know, we'd have to be thoughtful about, you know, whether or not we would be a good owner.

[John Doyle, President and CEO at Marsh McLennan]

We do have a business in Victor that does a lot of business with independent, really small commercial main street agents. That's a marketplace, you know, we can serve and do serve today with, you know, with solutions. But our focus, again, broadly speaking, in Marsh's business, is about bringing the entirety of the market, all solutions that are out there, whether they're standard market or admitted market solutions or non-admitted solutions; we want to have the flexibility to do that. And that's what we do to make sure that we can protect and bring the best solutions to our client. Hopefully, that was helpful. Operator, next question.

[Operator]

Our next question comes from the line of David Motemaden with Evercore ISI.

[David Motemaden, Managing Director and Senior Equity Research Analyst at Evercore ISI]

Thanks. Good morning. John, in the press release you mentioned continuing to make investments for the future in this quarter. I'm just wondering if there was an acceleration in some of those investments this quarter, particularly in RIS. And if so, if you could walk through the nature of them and how we can think about the future revenue contribution.

[John Doyle, President and CEO at Marsh McLennan]

No, I don't thanks, David. I don't see it as an acceleration in the quarter. Certainly on a GAAP basis, you know, in the quarter, you know, expense growth was impacted by M&A, restructuring, but also FX. And, you know, even on an adjusted basis, you know, obviously, FX played a role there. But, you know, as I said earlier, we're trying to balance, delivering today and investing for the future. We're not trying to optimize margins, in a particular quarter, or for that matter, in a year. You know, we've got a track record, a disciplined track record of growing revenue faster, than expense. But we're not going to do it in every quarter, in every business, in every quarter.

[John Doyle, President and CEO at Marsh McLennan]

And so, we see right opportunities to make investments that we think are going to create opportunities for us to deliver value for our clients, we're going to make them.

[David Motemaden, Managing Director and Senior Equity Research Analyst at Evercore ISI]

Got it. Thanks.

[John Doyle, President and CEO at Marsh McLennan]

Yep.

[David Motemaden, Managing Director and Senior Equity Research Analyst at Evercore ISI]

Just on the Marsh Global Insurance Market Index, I guess I'm wondering, you know, just if we're seeing an acceleration in some of the casualty lines, you know, excluding workers' comp and excluding financial lines. If you're seeing an acceleration there, it sounded like on the reinsurance side, there's, you know, a bit more discipline that's entering the market, given some social inflation concerns. I'm wondering if you're seeing any signs of that in the primary market.

[John Doyle, President and CEO at Marsh McLennan]

Yeah, you know, it's not a market. You know, I would suggest it's really, you know, a collection of markets. And, you know, what we saw, you know, in the Q3 was, you know, on average, pretty similar to what we experienced in the Q2. You know, I would note, you know, as it relates to our income statement, we have different levels of commission exposure to different products, right? So it doesn't always add up to the same amount. But it's a mixed market, and, you know, maybe I'll ask Martin to share some thoughts. And, you know, just remind everyone, it's our role is to get the best solution, you know, for our retail clients in the marketplace.

[John Doyle, President and CEO at Marsh McLennan]

And we have a role as a market maker, too. So, you know, we've done a few things, you know, as a market maker to try to bring, you know, more efficient financing solutions to our clients. Martin?

[Martin South, President and CEO at Marsh]

Yeah, I agree with that, John. That's our job. Just to level set, we're in the 24th consecutive quarter of rate increases. We'll release our survey in a couple of weeks' time. I don't think we're at an inflection point when it comes to pricing. The pricing cycles we're seeing across the different geographies and product lines are beginning to show a mix of strengths and weaknesses, depending on the combination. The Q3 casualty grew at 3%. It grew 3% the quarter before, and the quarter before, and the quarter before. So we're not seeing an acceleration, but I would say we're hearing a lot more talk from carriers about pressures on pricing and social inflation and some of the Nuclear Verdicts that are out there.

[Martin South, President and CEO at Marsh]

and we're, you know, keeping our clients closely posted on those. Property was at 7%. These rates were roughly in line with the prior quarter. We saw some softness in FinPro lines. FinPro lines came down by 6% in the Q3. They were down 8% in the quarter before, so I don't know if that's a trend yet, but it's certainly less. And as you mentioned in the introduction, John, our cyber index came down by 2%, and it was up by 1% in the quarter. That's a 3 percentage point delta between the quarters. So it's a relatively calm market, but we'll see on casualty.

[Operator]

Yeah, thanks, Martin. You know, what I would also say, David, and, you know, I mentioned this to, to Jimmy, but clearly, the cost of risk is rising, right? So whether it's the frequency of cat events, including extreme weather, casualty loss costs, whether it's core inflation, social inflation, you know, some of the underwriting community referring to as legal system abuse, the growth in litigation funding, you know, concerns for our clients for sure, and the underwriting community as well. Thanks, David. Operator, next question.

[Operator]

Thank you. Our next question comes from the line of Rob Cox with Goldman Sachs.

[Rob Cox, VP of Equity Research at Goldman Sachs]

Hey, thanks for taking my question. So I think last quarter, there were some comments that I interpreted as expectations for the level of margin expansion to accelerate in RIS in the second half, but it was just a bit lower. So just curious if you could talk about the puts and takes with respect to the margin relative to 2Q, and whether it's still fair to assume that the second half of the year will have stronger margin expansion than 2Q?

[John Doyle, President and CEO at Marsh McLennan]

Yeah, you know, sure, Rob. Again, you know, margins and outcome, it's not our primary objective. Our focus is on growing earnings and free cash flow over time. We're not trying to optimize margin expansion in any period, you know, certainly in any business in any period. We do expect solid margin expansion in 2023, which will be our sixteenth consecutive year of margin expansion. You know, there were FX headwinds, you know, in RIS's margins in the Q3. But again, I'm pleased with the progress that we've made there. And, you know, as I mentioned in my prepared remarks, again, we expect good solid margin expansion in 2023.

[Rob Cox, VP of Equity Research at Goldman Sachs]

Got it. Thank you. And maybe just to follow up, I think some peers have highlighted expectations for medical costs to increase. So I was hoping if you could discuss the trends you're seeing in the health and benefits space and expectations as we look into 2024.

[John Doyle, President and CEO at Marsh McLennan]

You know, sure, Rob, and I'll ask Martine to comment in a second. But, you know, we've had good growth in our health and benefits business at Mercer, in our business internationally, which is Mercer Marsh Benefits and at MMA. It is a pressure point, clearly, you know, for our clients in this economy, and so, clients more and more are looking to us for solutions there. Martine, maybe share some insights.

[Martine Ferland, President and CEO at Mercer]

Yeah. Yeah, thank you, Robert, for the question. Thank you, John. Indeed, medical cost inflation is increasing, and as John just said, it's a challenge for our clients. At the same time, it's not a big part of our revenue sources because lots of our clients are on fee base and those kind of things. And we're also working a lot with clients to try to control those costs, cost control those increases, because, as you may know, in the health benefit space, very, very often the employers would share the costs with the employee base. So in this time of high inflation, they're pretty concerned about passing on those costs.

[Martine Ferland, President and CEO at Mercer]

So we're looking at design of the plan, access in a different way, leveraging technology, et cetera. So there's many different ways that we can help our clients address those increasing costs. And it's impacting revenue a little bit, but honestly, it's a small part for us, given all of the counter points.

[John Doyle, President and CEO at Marsh McLennan]

Thanks, Martine. Operator, next question?

[Operator]

Thank you. Our next question comes from the line of Meyer Shields with KBW.

[Meyer Shields, Managing Director of Equity Research at KBW]

Great. Good morning. Two quick questions, if I can. First, John, you talked about macroeconomic uncertainty, and I'm wondering how that impacts near-term visibility, specifically from Mercer, in terms of the revenue pipeline.

[John Doyle, President and CEO at Marsh McLennan]

Yeah, thanks, Meyer. You know, I would say, you know, as I said, obviously, the macro economy remains uncertain, and, you know, there is, you know, a fair amount of questions about it. What I would say is mature markets have remained relatively resilient, but inflation, of course, persists. You know, central banks are, you know, their primary mission is to reduce inflation. But, you know, we do see, you know, meaningful risk of recession and, you know, we're prepared for that, for sure. And some markets are in recession now. But, you know, I'll ask Nick, you know, and Martine, you know, again, I think, Oliver Wyman historically has been a bit more sensitive to GDP, and Mercer's career business has as well.

[John Doyle, President and CEO at Marsh McLennan]

But Nick, maybe you could share some thoughts on the economy and what you think that might mean to our business.

[Nick Studer, CEO at Oliver Wyman]

Yeah. Thank you, John. Thank you, Meyer. It's as I said earlier on, I think it is a wide range of economic paths that I see. Different of our sectors do react differently, and, you know, some of our industries have been having a pretty tough time since, sort of through and since the pandemic. Some have seen little spurts of growth. We've been growing in some sectors, for example, aerospace and defense, where we made a significant acquisition last year, which we see as being more robust through the cycle. I do think that a tough economic outlook tends to result in slower growth for alignment, but as I said earlier, we've been trying to develop a you know wider set of through the cycle offerings.

[Nick Studer, CEO at Oliver Wyman]

... and, you know, sometimes when the questions all change, people need help answering them. So it's definitely not a correlation anymore. I think it probably, that correlation has declined over time and is pretty low now.

[John Doyle, President and CEO at Marsh McLennan]

Thank you, Nick. Martine, maybe you can share some thoughts on Mercer Career?

[Martine Ferland, President and CEO at Mercer]

Yes. Yes, absolutely. And, you know, over the last few years, we have focused also on diversifying our portfolio of businesses, and we've improved our business mix a little bit away from the more discretionary nature of the business, particularly in career with more recurring type of work. And I would add to that, with the current environment, there's also lots of demand, as Nick just said. You look at volatile capital markets, for example, drives demand for advice in our Defined Benefit and our Defined Contribution businesses. Well-funded Defined Benefit plan on the back of high interest rates is also creating demand for Pension Risk Transfer.

[Martine Ferland, President and CEO at Mercer]

We talked about tight, tight labor markets, the different, the changes in the ways of working, the upcoming of digital health and technology in the workplace. It's all driving demand, and countering the more traditional, I would say, of previous years' impact of direct correlation to GDP, as we discussed earlier.

[John Doyle, President and CEO at Marsh McLennan]

Thanks, Martine. So, you know, we, of course, Meyer, are not immune to economic growth, but we're a resilient business. And again, you know, we have a track record of performing across economic cycles, and at the moment, demand remains strong. Do you have a follow-up?

[Meyer Shields, Managing Director of Equity Research at KBW]

Okay. Yeah. Just a quick one, and thanks so much. That was very helpful. With regards to Oliver Wyman, in the past, I guess, you've communicated that Oliver Wyman, when you have strong growth, there could be some pressure on consulting margins just because of the nature of that business. And we didn't see that in this quarter. I'm wondering, is that concept of lower margins at Oliver Wyman less true now?

[John Doyle, President and CEO at Marsh McLennan]

No, it's not, it's not less true, but, you know, again, keep in mind, Mercer had its best quarter of growth. It's a bigger business than than Oliver Wyman, and it had its best quarter of growth in 15 years. So, so that's the reason you didn't see anything there. Thank you, Meyer. Operator, next question.

[Operator]

Our next question comes from the line of Scott Heleniak with RBC Capital Markets.

[Scott Heleniak, Insurance Analyst at RBC Capital Markets]

Yes, good morning. Just at Marsh, just wonder if you could comment what's driving the double-digit growth there at EMEA and Latin America. I know that's been strong for a few quarters, but can you give more detail on that? Is there any new areas we're seeing growth, and is there much of a benefit from rate increases there?

[John Doyle, President and CEO at Marsh McLennan]

Yeah, sure. You know, happy to talk about that, Scott. You know, again, very pleased with our growth at Marsh. It was particularly strong in the international segment, in the quarter. And, you know, in spite of, you know, mixed economic outcomes in Europe, our business is performing exceptionally well there. And we've had good growth over a long period of time in Latin America. Martin, maybe you could share some color on growth in both of those markets.

[Dean Klisura, President and CEO at Guy Carpenter]

I'd be thrilled to. Yeah, as you say, great growth in international, 10%. Latin America, 14%, APAC, 10, EMEA, 9. So really, really pleasing growth. I'd say there are a few areas that are outstanding at the moment, the energy and power business, the transition is fueling growth. Credit specialties had a terrific quarter in aviation, as well as MMA, which is a big part of our business in Europe, delivered strong double-digit growth. And our advisory business, our value proposition is to go to market through a lens to help our clients think through the cost of risk. And so that's been a big growth area for us as we think that, and we think that will continue to broaden our opportunities. That's been great growth.

[Dean Klisura, President and CEO at Guy Carpenter]

It's been good growth between renewal and new business across the business, and we've had less lost business. So clients are staying with us longer as they see the value in, an organization like ours that has such broad, capabilities. So we feel very good about that, across the board. And of course, you've got the fundamentals in Latin America with protection gap and, and somewhat emerging markets in Eastern Europe as well, that have had a very strong growth as well. So we, we feel well-positioned and very positive about the, the trajectory there.

[John Doyle, President and CEO at Marsh McLennan]

Thanks, Martin. Scott, do you have a follow-up?

[Scott Heleniak, Insurance Analyst at RBC Capital Markets]

Yeah, just, just one other quick follow-up here. Just on M&A, you did those couple, bigger-sized deals in the quarter. Just wondering if you could just comment on the, you know, your M&A pipeline versus where it was maybe six to nine months ago. Are you feeling, a bit better about those opportunities as you go into 2024, and maybe some areas that you're, that you're looking at, in particular with the focus areas?

[John Doyle, President and CEO at Marsh McLennan]

Sure. You know, we remain quite active in the market and the pipeline remains, solid, for sure. You know, and again, I just wanna emphasize, how pleased we were to welcome Graham to the family, in the Q3, and, you know, we expect to close Honan, relatively soon. They're two well-led, businesses, well-positioned, solid growth fundamentals in both of them, expanding our presence in the middle market, which gets back to the mix point that I was making, earlier. So, you know, overall, we closed 5 deals in the quarter. Those were the two bigger ones. We're very excited about it. You know, we're certainly. You know, it's an active, marketplace.

[John Doyle, President and CEO at Marsh McLennan]

While there's fewer transactions, you know, there's a lot, you know, there's a lot, you know, that is at play, and so, you know, we're wide-eyed about and clear on, you know, what we're looking for. Valuations remain elevated for, you know, for strong businesses, that are in the market, but we know what we're looking for, and we know how to manage the risk of M&A. And so we're gonna be selective and disciplined, but we expect to continue to deploy capital inorganically. Thank you, Scott. Operator, next question.

[Operator]

Thank you. And our next question comes from the line of Bob Huang with Morgan Stanley.

[Bob Huang, VP of Equity Research at Morgan Stanley]

Hi, thank you. So maybe if we can just go back to Oliver Wyman a little bit. Previously, you mentioned that, regarding the UBS and Credit Suisse merger deal, that happened in Q2. Just curious if that was a meaningful driver of organic growth for Oliver Wyman in Q2 and Q3, and also on top of that, do you expect any residual from that deal to, to come through in the Q4 and going forward for Oliver Wyman?

[John Doyle, President and CEO at Marsh McLennan]

Yep, you know, thanks, Bob. We're not going to comment on individual clients and the work that we do for individual clients. So, you know, as Nick talked about a couple of different times on this call, we have an increasingly diverse set of offerings that we think is more resilient, and we're very, very pleased with the growth at Oliver Wyman through three quarters. Again, quarter to quarter, you know, we could see more volatility and expect to see more volatility at Oliver Wyman's top line than our other businesses.

[John Doyle, President and CEO at Marsh McLennan]

But we also expect Oliver Wyman to grow faster, you know, over a medium term and longer term, and that's certainly been the case, you know, both it's been the case in this year, and we expect it to be the case over the longer term. Do you have a follow-up?

[Bob Huang, VP of Equity Research at Morgan Stanley]

Yeah, sure. So, one more thing very quickly. Regarding your cyber insurance practice, I know you mentioned that a cyber insurance pricing growth is slowing down a little bit. There have been a few relatively large headline cyber incidents as well as some cyber claims, namely in the casino gaming area as well as the government and other areas. Do you expect the current slowdown in cyber pricing may be just sort of in a soft patch, but do you expect that pricing growth to rebound back? Or do you think the cyber insurance pricing will just kind of stay where it is right now?

[John Doyle, President and CEO at Marsh McLennan]

You know, Bob Huang, what I you know, again, the most important point to make here is it's our job to find efficient risk financing solutions, you know, for our clients. So, what I would say is, yes, there's been, you know, some, you know, major breaches that, you know, will drive some insured losses in the marketplace. There's also been an increase, again, in the number of ransomware claims that's, you know, that have happened during the course of, of this year. But I would also note that the underwriting community has, you know, reacted to growing ransomware claims over the course of the last couple of years through higher attachment points. The market is also, the underwriting market is also, reacting to, possible systemic events that could aggregate losses in their portfolios.

[John Doyle, President and CEO at Marsh McLennan]

We're, of course, helping them at Guy Carpenter, and at the same time, you know, working with Marsh to build better solutions for that. But the market's been restricting coverage for systemic-type events. And so that's a factor, you know, in that marketplace as well. And so, I don't think the market will move meaningfully based on a couple of losses. But we have some work to do collectively, to help in a digital economy. When I say collectively, I mean the royal we, the entire marketplace in coming up with better solutions to help clients manage the risks, cyber-related risks in a digital economy. So thank you. Underwriter? Underwriter. Operator, sorry. Andrew, do you have another question?

[Operator]

Our next question comes from the line of Ryan Tunis with Autonomous Research.

[Ryan Tunis, Partner at Autonomous Research]

Hey, thanks. So I'll just ask the one here, I know we're at the top of the hour. So some, some competitors have, like very specifically highlighted, pressures, organic growth pressures in the U.S. from D&O, capital markets, related transactions. You mentioned it briefly. Just curious, when we look at, at your U.S., Canada within Marsh, is there any reason to believe that you guys wouldn't be wearing, a headwind of similar magnitude?

[John Doyle, President and CEO at Marsh McLennan]

Yeah, thanks. Thanks, Ryan, for the question. Yes, you know, I think Martin, you know, pointed this out. There's, you know, I can't talk about relative exposure, you know, but, but clearly, you know, capital market volatility, rising cost of capital, you know, M&A activity is down, IPO activity is down, SPACs are down, de-SPACs, you know, down, all those kinds of things that, you know, drive risk and, create opportunities for us to, offer advice and solutions, you know, are under some pressure. And, you know, somewhat related to that, as Martin also noted earlier, D&O pricing is down, you know, as well. And so, you know, those are headwinds, but again, we have a well-diversified business, in the United States.

[John Doyle, President and CEO at Marsh McLennan]

We help our clients manage a wide range of risks, and broadly speaking, again, the cost of risk continues to rise for the factors that I mentioned earlier on the call. So thank you, Ryan. I appreciate that. I want to thank you all for joining us on the call. In closing, I want to thank our over 85,000 colleagues for their hard work and dedication. I also want to thank our clients for their continued support. Thank you all very much, and we look forward to speaking with you again next quarter.

[Operator]

Ladies and gentlemen, this concludes today's program. Thank you for participating, and you may now disconnect.

Participants

Executives

• John Doyle, President and CEO
• Mark McGivney, CFO
• Martin South, President and CEO
• Dean Klisura, President and CEO
• Martine Ferland, President and CEO

Analysts

• Elyse Greenspan, Managing Director and Senior Equity Research Analyst at Wells Fargo
• Jimmy Bhullar, Managing Director, Equity Research Analyst at JPMorgan
• Nick Studer, CEO at Oliver Wyman
• Mike Zaremski, Managing Director and Senior Equity Research Analyst at BMO Capital Markets
• David Motemaden, Managing Director and Senior Equity Research Analyst at Evercore ISI
• Rob Cox, VP of Equity Research at Goldman Sachs
• Meyer Shields, Managing Director of Equity Research at KBW
• Scott Heleniak, Insurance Analyst at RBC Capital Markets
• Bob Huang, VP of Equity Research at Morgan Stanley
• Ryan Tunis, Partner at Autonomous Research