Marsh Stock

Hello, and welcome to Marsh's earnings conference call. Today's call is being recorded. Third quarter 2026 financial results and supplemental information were issued earlier this morning. They are available on the company's website at marsh.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 to this quarter and to our most recent SEC filings, including our most recent Form 10-K, all of which are available on the Marsh 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 Instructions] I will now turn this over to John Doyle, President and CEO of Marsh.

Good morning, and thank you for joining us to discuss our third quarter results. I'm John Doyle, President and CEO of Marsh. On the call with me is Mark McGivney, our COO and CFO; and our business CEOs and Nick Studer from Risk, Dean Klisura Reinsurance; Pat Tomlinson of People and Investments; and Ted Moynihan for Management Consulting. Also with us is Jay Gelb, Head of Investor Relations.

Let me start by commenting on the conditions confronting businesses today. We're clearly in a period of change and uncertainty in the world. This change is structural, not cyclical, and it's happening at pace and all at once. Wars, geoeconomics, extreme weather and AI advances are challenging long-established norms. Businesses require a new playbook, better insights and perspectives and the flexibility to adapt as never before. At the same time, access to information and technology as well as greater focus on resilience offers businesses great opportunity.

It's why Marsh and Bloomberg announced the competitive Resilience Coalition. As knowledge partner for the Bloomberg New Economy, Marsh will co-chair the coalition and bring together business and government leaders to strengthen resilience and help organizations in an increasingly complex environment.

Marsh's vision and capabilities as a professional services firm across risk, strategy, people and investments have us well positioned to help clients be more resilient and to thrive in this moment.

When it comes to AI, we believe it will be good for our country and the global economy. However, we need to deploy the technology responsibly to avoid potentially severe, systemic or irreversible risks. We're particularly concerned about the potential for heightened cyber exposure from AI, and we are working with governments, insurance companies and businesses to create awareness and resilience to this risk.

Responsible AI implementation begins with the developers, but businesses and governments have a role to play in ensuring safeguards are in place. Marsh will be active in helping clients manage the risks and capture the opportunities from AI.

Turning to results. Marsh had a strong quarter, reflecting our market-leading positions, the value we deliver to clients and the commitment of our colleagues around the world. In our Consulting segment, growth was strong in people and investments and management consulting. In RIS, growth accelerated in our risk business, while reinsurance faced continued market headwinds, but executed well. Overall, revenue grew 8% in the quarter. Underlying revenue growth was 5%, adjusted operating income grew 6% and adjusted EPS grew 10%. And we repurchased $500 million of stock in the quarter bringing us to $2 billion year-to-date.

We also made meaningful progress executing our Thrive program and successfully completed our brand transition. When we launched Thrive a year ago, we targeted $400 million in savings. We're now seeing greater opportunities coming from Business & Client Services or BCS, and advances in technology. As a result, we are increasing our Thrive savings target to $600 million. The expanded savings will create additional capacity to invest in sales, new capabilities, our brand and technology.

Let me touch on some of the progress from our reinvestments. Thrive has enabled us to invest in sales capacity at a higher rate this quarter and year-to-date, and we're hiring producers and consultants in areas where we see the greatest opportunity for growth. Our colleague value proposition is strong, and we remain the destination for top talent in our business.

I've been pleased with the strong positive reaction from colleagues and clients to our new brand strategy, the efficiencies we've captured from it and our progress marketing Marsh to prospective clients. As a result of very favorable market research, we accelerated the transition of Guy Carpenter and Mercer to Marsh several months ahead of schedule. We believe we can be the most impactful professional services firm in the world and we're investing in our new brand to reflect that ambition.

Since its introduction last year, BCS has fundamentally changed how we work. An important part of the team's mission is to build shared services for greater efficiency, including in areas such as client onboarding, data ingestion, commercial enablement and operational excellence. BCS is also reengineering our processes and moving work to our capability centers, which is generating additional savings. Overall, our execution of Thrive has been excellent to date, and we're excited about the investments in growth it's enabling.

Turning to AI in our business. We're not thinking about it as something that will be a factor in our business, it already is a factor in our business. It's enhancing our client relationships, how we manage operations and how colleagues work every day. We are focused currently on several areas where AI is driving growth, including building AI-enabled products, consulting on AI transformation, serving the digital infrastructure ecosystem and adding to capabilities and productivity for our producers and consultants.

We've already deployed several AI-enabled products for clients that deliver valuable insights. These solutions tap into our large and expanding proprietary data sets in risk, health and talent. Marsh Risk Companion is a good example. This AI-enabled analytics suite provides actionable insights for client risk programs. We can more easily model and optimize client risk scenarios with the new platform. This is leading to faster, more informed decision-making and reduced administrative burden for the clients' risk management team.

We're also advising clients on AI transformation. For example, Oliver Wyman's fastest-growing practice, Quotient is working with private equity firms to serve their portfolio companies. They're engaging us on everything from a genetic commerce and commercial effectiveness to cost reduction and technology transformation.

Digital infrastructure continues to be a growth driver for Marsh. More and more clients across broad sectors of the economy are asking for our help in risk, capital advisory, credit and consulting in the wake of extensive growth in digital infrastructure.

We are also working to bring the insurance capacity needed to support digital infrastructure. Marsh recently launched the Stratus Exchange, which offers access up to $10 billion in property coverage for the ongoing operations of digital facilities. Stratus is a natural follow-up to Nimbus, our $2.7 billion insurance facility for construction risks.

We're also focused on growth from greater colleague productivity, notably Broker Workbench, launched in Q3 for our U.K. wholesale business. It uses our data and analytics to place the clients' risk faster, matching risk and capital more efficiently. In fact, 93% of our wholesale trading in London is now digital and the time to process placements is reduced from 2 to 4 weeks to a couple of hours with Workbench. Although it's early, and it is early, AI is making us better now in delivering new perspectives and insights more efficiently and with greater impact for our clients.

Now turning to market conditions. According to the Marsh Global Insurance Market Index, primary commercial insurance rates decreased 5% in Q3. This follows a 6% decline in the second quarter. As a reminder, our index skews to large accounts. Rates in the U.S. decreased 1%. Canada, Europe and Asia declined mid-single digits. The U.K., Latin America decreased in the high single digits and the Pacific region had double-digit decreases. Global property rates decreased 10%. Global financial and Professional liability rates were down 3%, while cyber decreased 4%. Global casualty rates increased 1%, with U.S. excess casualty up 13%, reflecting inflationary pressure and loss costs and workers' compensation decreased 5%.

In reinsurance, market conditions led by short tail lines remain soft, driven by abundant capacity from both traditional reinsurers and alternative capital. Property cat reinsurance losses have been relatively benign this year and capital is increasing, adding to a competitive market environment. We expect these conditions to persist through the January 1 renewal cycle.

In casualty reinsurance, capacity is generally adequate. Reinsurers are focused on loss development and their differentiating terms based on claims experience, exposure data and portfolio quality. Our clients continue to explore alternative options to complement traditional strategies, including greater use of third-party capital solutions such as sidecar vehicles for their liability portfolios.

Market conditions remain supportive of our insurance and reinsurance clients even as the cost of risk continues to rise. We are committed to helping clients optimize their risk financing and strengthen resilience in an uncertain environment.

Now to our third quarter financial performance, which Mark will cover in more detail. Consolidated revenue increased 8% to $6.9 billion or an increase of 5% on an underlying basis with 3% growth in RIS and 8% in consulting. Risk was up 5%. Reinsurance declined 6%. People and investments increased 5% and and Management Consulting grew 14%. Adjusted operating income grew 6% and adjusted EPS was $2.03, up 10% year-over-year.

Looking ahead, we continue to expect underlying revenue growth in 2026 similar to last year. We also anticipate another year of margin expansion and solid adjusted EPS growth. Our outlook is based on current market conditions, but the economic and geopolitical environment could change materially from our assumptions.

This is an exciting time for us. We have a new Marsh brand and a business and client services team optimizing how we work. We have long-standing trusted client relationships and the advantage of large proprietary data sets. We're upsizing the Thrive program to drive greater efficiency and investment, and we see new possibilities from AI to better serve clients who strive to manage risk and capitalize on the opportunity of this moment.

With that, I'll turn the discussion to Mark for a more detailed review of our results. Mark?

Thank you, John, and good morning. We had a strong third quarter that showed continued momentum in underlying revenue growth and double-digit EPS growth, reflecting our strong position and great execution. Consolidated revenue increased 8% to $6.9 billion with underlying growth of 5%. Operating income was $1.2 billion, and adjusted operating income was $1.5 billion, up 6%.

Our adjusted operating margin was 22.7%. GAAP EPS was $1.69 and adjusted EPS was $2.03, up 10% over last year.

For the first 9 months of 2026, underlying revenue growth was 5%. Adjusted operating income grew 7% to $6.1 billion. Our adjusted operating margin was 28.1% and adjusted EPS increased 9% to $8.29.

As part of our previously announced brand change, we've updated several business descriptors in our earnings release. Guy Carpenter results are now reported as reinsurance. And M[indiscernible] results are reported as people investments. Within people and investments, wealth is reported as investments in retirement, health as health and benefits and career as workforce and reward.

Looking at Risk and Insurance Services. Third quarter revenue was $4.2 billion, up 7% from a year ago or 3% on an underlying basis. Operating income in RIS was $745 million. Adjusted operating income was $1 billion, up 4% over last year, and the adjusted operating margin was 24.6%. The first 9 months revenue in RIS was $14.1 billion, reflecting underlying growth of 3%. Adjusted operating income increased 5% to $4.6 billion. The adjusted operating margin was 33.2%.

At Risk, revenue in the quarter was $3.7 billion, up 10% from a year ago or 5% on an underlying basis. Despite the headwind from a soft pricing environment, sales and new business growth remains solid in areas such as digital infrastructure and transactional risk are creating demand.

In U.S. and Canada, underlying growth was 4%. In international, underlying growth was 6% with EMEA up 7%, Asia Pacific up 4% and Latin America flat.

The first 9 months of the year Risks revenue was $11.5 billion with underlying growth of 4%. U.S. and Canada grew 4% and international was up 5%.

In Reinsurance, revenue in the quarter was $374 million, down 6% on both the reported and underlying basis. Q3 is a small quarter for reinsurance and revenue was impacted by continued softness in property reinsurance rates as well as a tough comparison to a strong third quarter last year that benefited from nonrecurring items.

Through 9 months, reinsurance is down 1% on an underlying basis, which better reflects our top line performance this year. Significant rate pressure has more than offset strong new business growth and excellent client retention, which remains in the high 90s.

In the Consulting segment, third quarter revenue was $2.7 billion, up 9% or 8% on an underlying basis. Operating income was $563 million, and adjusted operating income was $593 million, up 9%. Our adjusted operating margin in Consulting was 22.1%. For the first 9 months, Consulting revenue was $7.8 billion, reflecting underlying growth of 7%. Adjusted operating income increased 11% to $1.7 billion. The adjusted operating margin was 21.4%.

People and Investments revenue was $1.7 billion in the quarter, up 6% or 5% on an underlying basis.

Health and Benefits grew 5%, reflecting continued growth across our regions. Investments in retirement was up 8%, led by our investments business. Our assets under management were $843 billion at the end of the third quarter, flat sequentially and up 23% from the third quarter last year. Year-over-year growth was driven by new business and the impact of capital markets.

Workforce & Rewards was down 1% with growth in the U.S. and most of international offset by the impact of a challenging environment in the Middle East. For the first 9 months of the year, revenue at People and Investments was $4.9 billion with 5% underlying growth.

Management Consulting generated revenue of $1 billion in the third quarter, up 14% on both a reported and underlying basis. This great result reflected strong demand and delivery across the business, especially in AI-related work.

The quarter also benefited from favorable timing on success fees that we had expected in the fourth quarter. For the first 9 months of the year, revenue at Management Consulting was $2.9 billion, an increase of 11% on an underlying basis. For the full year, Management Consulting is on pace for high single-digit growth, which would imply a roughly flat top line in Q4 due in part to the timing I mentioned.

Fiduciary interest income was $100 million in the quarter, down $9 million from the third quarter last year. Looking ahead, we expect fiduciary interest income will be approximately $94 million in the fourth quarter.

Foreign exchange was a $0.01 benefit in the third quarter. Based on current exchange rates, we expect FX will have an immaterial effect on earnings in the fourth quarter.

Corporate expenses in the third quarter were $68 million on an adjusted basis compared to $71 million a year ago. Looking ahead to the fourth quarter, we expect adjusted corporate expense of approximately $80 million.

Building on John's comments on Thrive, the program is going well, and our early success has resulted in us seeing more opportunities. We now expect to generate $600 million of savings with the vast majority of our actions taken by the end of 2028 and savings realized fairly evenly over the 3 years of the program. We expect costs associated with generating savings will be approximately $750 million. So far, most of our savings have come from simplifying and streamlining our organization, right shoring actions and efficiencies in BCS, we expect further savings in these areas.

We are excited about our progress so far and the benefit we will get from the additional savings. Thrive is enabling us to accelerate investments that would help us sustain growth into the future while we continue to deliver solid results today.

Total noteworthy items in the third quarter were $170 million, including $71 million of costs associated with Thrive. Noteworthy items this quarter also included $144 million relating to the Greensill litigation. As disclosed in our 10-Q this morning, we have settled our involvement in this litigation and do not expect any additional charges relating to the case. Note that total settlement payments and costs are reflected in our statement of cash flows.

Interest expense in the third quarter was $248 million. In our current forecast, we expect $255 million of interest expense in the fourth quarter.

Our adjusted effective tax rate in the third quarter was 24.6% compared to 24.8% in the third quarter last year, with both periods benefiting modestly from discrete items.

When we give forward guidance around our tax rate, we do not project discrete items. Based on the current environment, we expect an adjusted effective tax rate of around 25% for 2026.

Turning to capital management, our balance sheet. We ended the quarter with total debt of $20.5 billion. We had $550 million of euro-denominated senior notes mature in September, and we intend to replace them with new euro-denominated notes in the fourth quarter.

Our cash position at the end of the third quarter was $1.8 billion. Uses of cash in the quarter totaled $1.3 billion and included $476 million for dividends, $288 million for acquisitions and $500 million for share repurchases.

For the first 9 months, uses of cash totaled $4 billion and included $1.4 billion for dividends, $607 million for acquisitions and $2 billion for share repurchases. We continue to expect to deploy approximately $5.5 billion of capital in 2026 across dividends, acquisitions and share repurchases. The ultimate level of share repurchase will depend on how our M&A pipeline develops.

For the full year, we continue to expect underlying revenue growth similar to the levels we generated in 2025, along with another year of margin expansion, solid adjusted EPS growth.

With that, I'm happy to turn it back to John.

Thank you, Mark. Andrew, we are ready to begin the Q&A session.

[Operator Instructions] Our first question comes from the line of Greg Peters with Raymond James.

Thanks for the comments on the AI and the update on Thrive. A couple of your peers have given some detail on how they plan to deploy AI to drive margin expansion. And I think that might be part of what's going on with your raising the Thrive targets. But maybe you could give us some more details on what you're doing with technology and AI to drive the margin expansion.

Thanks for the question. I spoke to it a bit in my prepared remarks. We're quite excited about what these new technologies can mean to our business. And it's not just margin expansion. I also want to reinforce the importance of it to how we serve our clients and what it can mean to our growth over time. I think that's really a critical part of what we're thinking about and how we're investing against it. So we see clear benefits for our colleagues, for our clients and earnings growth in it for our shareholders. We think we're well positioned. I spoke about -- I have spoken not just on this call but on prior calls about long-standing deeply trusted client relationships we have, the data sets, the proprietary data sets, the analytics, the modeling and risk management, all of these things are fundamental to our business model. This period of change is driving a lot of growth in our consulting businesses. So we're quite excited about how we're helping our clients as well.

But yes, it's helping drive some efficiency for us today. We're now not quite 3 years into BCS. We formed BCS almost 3 years ago. It was in the first quarter of of 2024. We're excited about the work that our team is doing there looking at leveraging the best tech not just AI, I would point out, but automating processes, challenging workflows all across the company. And we had areas where we're doing things quite well. And now we're doing the -- we're taking the best from each parts of those companies. And so -- and optimizing our operating model. So Paul Beswick leads all of that for us. He's doing an excellent job. His team is deep and strong. It also allows for more efficient CapEx for us, too.

And so yes, we're -- we feel good about what it can mean to our margins. I'm not going to speak to 2027 on this call, Greg. I'll talk about that in January. But between and not just AI, right shoring, automation and the early returns from AI are all levers for us to drive future efficiency. So we feel good about that.

Do you have a follow-up, Greg?

Of course, I'm going to pivot and it's on M&A. And I know you're not going to talk about your pipeline on a public call. But Ann's done this very large transaction, and there's some concern in the marketplace that you might feel the need to respond with a similar big transaction. So maybe you could spend a minute and tell us about how you view your middle market presence? And when you're looking at M&A, what kind of capabilities are you looking to bolt on to what you already have?

Yes, yes. Sure. Well, look, let me be clear, our interest in the mid-market isn't recent, right? It's been there for quite a long time. We're not following anyone. We have the best middle market business in the industry. I'm incredibly proud of Marsh Agency. It's been thoughtfully constructed over 15 years by acquiring the best regional agencies all across the country. We've done over 130 deals since we began that strategy about 15 years ago. It can't be replicated, and I wouldn't change our business for any business in the market. And I remain very excited about the middle market. We've been bringing scale benefits to those customers, helping them realize other value through our services and help position them -- help position our clients for better growth. It's not, of course, just P&C, it's health and benefits. And so it's a market we like quite a bit.

We expect to continue to invest in that market, both organically and inorganically. Our capital management strategy, Greg, has not changed. It remains the same. We are going to be disciplined, let me be clear. We will be disciplined and balanced in our approach. We do favor investing in the business. Our pipeline is good. There's no question about it. They're -- at least for some strategic buyers, there's a bit of a gap between bid and ask at the moment. And so we announced a deal on the 1st of October, a Midwest Agency, top 100 agency in the Midwest that we're excited about. We closed on Astara earlier in the third quarter.

So we remain very active in the market. But again, we're going to be disciplined about how we deploy our capital. And in our prepared remarks, both Mark and I touched on what we did in the third quarter. We bought back a bit more stock. We're now a $2 billion kind of year-to-date. So hopefully, that's helpful. We have the capacity to do big deals, but we're far more likely to do a string of pearls continue that approach.

Our next question comes from the line of Mike Zaremski with BMO.

Great. I guess I'll start with Oliver Wyman in consulting. We've -- as we kind of dug into the excellent growth, we've some consultants have talked about AI making them much more efficient and then being able to work through their backlogs faster and kind of pull forward revenues. Just curious if that is a dynamic you think is contributing to Marsh's excellent results?

Yes. Thanks, Mike, and it's really terrific results. And as I mentioned in my prepared remarks, it's a great opportunity in this moment of change for us to help our clients position themselves for greater success. So it's not only driving growth for our business, but it's also changing the way we're doing business with our clients as well. And so Ted, maybe you can talk more about that.

Yes, Mike, thank you. I mean we had a great quarter. The performance was strong and pretty broad-based across industries and capabilities and regions is certainly the case that our Quotient AI platform that helps our clients transform around AI was the strongest growing part of the portfolio and has really been contributing to what's a good year for us. I would say we, ourselves, in terms of your question about how we are actually delivering for clients, we've been on that journey for probably 3 years now, transforming how we deliver for our clients. And we're using a very sophisticated range of tools. We've built a lot of agentic solutions ourselves that can create more value for our clients. We've built a lot of specialist capabilities. So across data analytics, forward deployed engineers that are blended into consulting teams.

Increasingly, we partner with technology companies to be that frontier model companies, hyperscalers, cloud providers and so on. And certainly, as our business has shifted from advice 10 years ago today to really generating outcomes for our clients on their transformation journeys, we started to increase the amount of success pricing in our business. Our clients have been encouraging and willing to allow us to participate in the value that we're creating for them. And I think Mark mentioned that, in Q3, some of our performance was pulling forward some success fees that we might have seen in Q4. And so that certainly contributed to the level of growth you see in the numbers there.

Thanks, Ted. Mike, do you have a follow-up?

Yes. A quick follow-up, maybe dovetailing on Greg Peter's question on Thrive. John, you talked about still early days of AI use cases impacting every employee's daily lives. Is it reasonable if we're thinking out into '27 or '28 that whether it's called Thrive or not, that there could be a much larger, broader program that is impacting Marsh when we're thinking about productivity gains?

Yes. Look, I would say, Mike, we're excited about the path that we're on. As I said, it is early. So I don't want to get ahead of ourselves, right? There's a lot involved. And the tools are changing and changing fairly rapidly. We'll see whether they continue to change at the same pace. But it is -- our colleagues are actively using these tools. Our tech team, again, led by Paul Beswick has done a terrific job. We've built a proprietary model that we call LAN AI inside of our company, and we've introduced -- we introduced new tools literally every week to our colleagues. Now every one of those tools impacts different parts of our employee population, our colleague population in different ways. I'm very encouraged by the take-up rate. And so yes, we're transforming the way we operate, and we see certainly efficiency possibilities down the road. But more important than anything else is how we serve our customer and what that can mean to our growth.

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

My first question just on competition in the marketplace. So just thinking about levered private brokers right now, it seems like the softening pricing environment and higher interest rates combo could put some pressure on their business models right now, and it seems like there could be some disruption going on. So I'm just wondering if you think that could help Marsh potentially win some more business in the open market, win on talent or potentially make opportunistic M&A more attractive?

Yes. Thanks, Rob. I want to be careful because there's obviously a range of kind of PE owned or levered backed kind of brokers out there, some are much smaller than others. And of course, they serve kind of different markets. What I would say though is that we're certainly well capitalized. We have the ability to invest in our business, again, and I'm talking about organic investment really here. What I'm excited about is how scale is going to matter through this period of transformation. And that's why I keep reinforcing the deep, long-standing trusted client relationships, the proprietary data sets, the analytics we have, the modeling all being improved with new technology.

I don't think it's debatable that scale matters in this changing time. And so that has us incredibly well positioned. I think it will help us win business, of course, organically in the market, but it's also going to help us probably as the M&A pipeline develops over time as well where others were realized it will be difficult to invest at the same rate that we're investing.

So I'm excited about how we're positioned competitively. It starts with our people. Our people still matter. They are what deliver the insights to our clients, and we have the deepest, best talent in the marketplace.

Do you have a follow-up, Rob?

Yes. And that's helpful. Just maybe on the AI exclusion discussion. I know there's been some media coverage about brokers being against broad AI exclusions and policies. And I was hoping you could unpack that view for us a little bit and any views you guys have on that?

Yes. And I'll ask Nick to talk about it in a second. But AI is embedded in most companies' workflows and lots of different ways and processes and products, right? So broad-based exclusion could create real confusion and uncertainty. We're not trying to poke insurers. We just are really trying to have a thoughtful discussion about how this might change exposures, very limited claim activity to date and really better understand how these risks aggregate. And by the way, kudos to Nick and to Dean for leading on this issue really for the broader marketplace. But Nick, maybe you could talk just back from a conference actually, where we had a lot of engagement on this conversation?

Yes. I do want to emphasize that we see our role here as to advise our clients look out for the best interest of our clients while working with carriers and with the reinsurance markets to make sure that the market is reflecting the risks that are there. And if I unpack it a little bit, there are sort of 2 -- we certainly see 2, and there's probably over time a third category will emerge. The first category is just where AI is an aberration or an evolution of an existing risk apparel. And it will be impossible to unbundle it from the causal pathways to whatever outcome may be. And that's really where we were focused on not excluding things, which we think would lead to uncertainty to contention to gaps in cover.

There are places a second category where AI risks will require us to evolve established products or services because the AI exposes gaps or floors in the existing marketplace and there's an evolutionary opportunity there. We're not certain as a third category where there's something totally unique to AI that has never been previously contemplated in the insurance market, but we're open to the possibility. And in all 3 categories, we're working with our clients and looking to work with carriers to help the market evolve.

Terrific. Thank you, Nick.

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

Mark, you mentioned the, I guess, pull forward acceleration of the success fees in Oliver Wyman. I was hoping you could give us a sense as to maybe the revenue and earnings impact of that?

Mark, do you want to take that?

Yes. We wanted to point it out is certainly not explaining the preponderance of growth in Management Consulting. Even without that management consulting at a very strong growth growth quarter. But as Ted mentioned, success fees are becoming a big part -- a bigger part of how we're structuring fees with clients. It's good for us to participate in that gain sharing. And so that was a factor. But Management Consult had strong growth, strong growth year-to-date, but we just wanted to point that out.

You have a follow-up?

Yes, just a quick one. So if we take the commentary from the Marsh index, so it looks like property pricing got a little bit less bad to 10% down from 12%. Are the book of business that renewed in the second quarter comparable to the third?

Yes. Good question. You called it less bad. I want to point out, it's very good for our clients, right? So the rate relief is -- we're trying to have efficient risk financing, right, for our clients. But of course, it does impact our growth. I wouldn't over-index on -- certainly on a quarter, but I would also say, Meher, that even in Marsh Risk, right, more of our property cat renewals exist in the first and second quarter. So yes, there's a bit of a different mix of business here in the third quarter. Hopefully, that helps.

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

I know it's a smaller reinsurance quarter, but the growth there over the last 3 quarters has been -- or at least over the prior 2 has been softer than your peers. And I hear your commentary on the pricing environment likely continuing to be a headwind into next year. Could you just unpack some of the moving pieces there between net new and then the drag from pricing? And if we should expect the same type of growth as we've seen in the first 9 months into 2027 given the pricing environment, sounds like it will continue?

Sure, sure. David, thank you. As Mark noted, we're minus 1 through 9 months, which we think is really kind of reflective of where we are. Mark spoke, of course, about pricing and the impact of that. We're a bit overweight on property cat relative to some others. We're a bit overweight U.S. as well compared to some others. And we had a bit -- it was a noisy quarter in the third quarter, too, a small quarter, but also a bit noisy with some nonrecurring items. We've been hit a little bit by some of the consolidation that's happened in the industry as well during the course of the year. But again, no excuses. We're well positioned. We have, we think, the best reinsurance team in the market. I would also point out to you, David, that some business that we do for the insurance industry and our companies and Oliver Wyman Actuary, Oliver Wyman and some business in March Risk as well.

So it's a critical business to us. It's really important on so many levels. And so we feel like we're well positioned. Dean and the team see good growth, in fact, and M&A advisory, alternative capital, alternative structures and driving opportunities. So we're facing some market headwinds. We've seen them before, but we feel good about how we're positioned over the medium to long term. Do you have a follow-up, David?

I do, yes. Just within the management consulting business, it sounds like the growth there is being driven by Quotient, the AI transformation. It sounds like some competitors are passing through some of the AI efficiencies that they're getting in their business through, I guess, lowering price to improve volume in AI transformation engagements. Is that something that you guys are doing? Is this something you're considering? Just hoping for a little bit of color there.

Yes. Bert, I would first note, David, that our growth is more broad-based than Quotient. So -- and maybe I'll ask Pat to talk about some of the impacts in a second in people and investments as well. But Ted, maybe you can talk about -- I mean we're excited about AI driving kind of greater value of work that we're doing as opposed to driving some pricing change. But Ted, maybe you can start and pass it off to Pat.

Yes, I would just reiterate John's point that the growth was pretty broad-based. To give you another example, we saw pretty good demand, for example, in our M&A business in our post-merger integration business over the last quarter as well. The nature of work is changing and a lot of the AI transformation work that we are doing brings different skills in, the pricing structures change a little bit. As I mentioned, outcome-based pricing is growing a little bit. But we're seeing our clients are really happy to pay for value. One of the points that John drew out in his comments was around the private equity companies that are increasingly bringing us in to look at their portfolio companies and do everything from AI strategy to cost transformation to agentic commerce and so on. So it's really -- I think we see a multiyear transformation for a lot of our client base around AI, and that's why we're very excited about the opportunities for Quotient, for us and for our clients.

Pat?

Yes. Thanks for the question as well. And we're pleased with our overall growth across the People & Investments business and across the various different practices. But on AI, we see that probably the most at this point inside of our workforce and rewards practice. And our overarching view on it is that the potential impact to the business, I would say, is going to be is positive. It's strengthening our opportunity with clients and the value we're delivering. We are seeing clients expecting us to use AI in our work, right? And where I would say the biggest impact we're seeing is we're expecting them to -- they're expecting faster time lines. They expect it to be used responsibly. They expect us to be able to protect their data, but they also expect increased feed to value. I think Ted was hitting on this and the increased speed to outcomes. And that's what we're really seeing the most. We've got proprietary data sets, as John has mentioned in his opening, and those differentiated data sets combined with our AI capabilities that we're building to be able to drive value for clients and with our consultants and recommendations is really allowing us to create more precision, more relevance for clients and getting them the outcomes that they're looking for faster.

I would say also that clients also understand from -- the question was about cost, the clients also understand that AI is not free. They're all seeing it on their side as well. And they expect us to continue to invest in AI tools and invest in the platform to be able to go ahead and deliver them these outcomes in a faster, more consistent basis to where they can go ahead and capture speed to value.

Thanks, Pat. And David, I would add that, as I mentioned, the lens suite of tools that we're introducing to our colleagues are able to handle overwhelmingly the work that we do for our clients and how it's changed our processes internally. We do use frontier models, third-party frontier models when working with our clients, and we build that -- those costs into the pricing of the work that we're doing for our clients. So thank you, David.

Our next question comes from the line of Bob Huang with Morgan Stanley.

One thing I want to just maybe unpack a little bit is the -- if we look at the EMEA business within Risk and Insurance Services, right, you mean not only had a strong quarter. In fact, EMEA had a really strong year. As we think about the drivers here, can you maybe just help us give us a little bit more details in terms of how durable is this business? What's kind of driving it now? And then where are the drivers going from here, right? What is driving the growth?

Yes. Thanks, Bob. Yes, we have an outstanding team incredibly well positioned all throughout that region. And I'll ask Nick to unpack some of the drivers of growth there.

Yes. I think very robust, strong business, quite diversified in the geographic range of the region. We had really strong growth, very high single-digit growth in new business, strong growth in specialties. And actually, so specialty-wise, growth in cyber, credit, marine, we saw growth in PAC, where we work very closely with Dean's teams. We saw growth in capturing some of what had previously been leakage to the wholesale markets through our London wholesaler through [indiscernible] London, growth in facilities, growth across the board.

And I would add, Bob, that obviously, there's a tremendous amount of disruption given the ongoing geopolitical conflict all throughout the region. We have over 2,500 colleagues in the Middle East. And we're incredibly proud of their resilience, their focus on delivering for our clients. So I just want to point out the Middle East part of that territory as we reported and growth has remained resilient for us as a company. Do you have a follow-up, Bob?

Yes. I really appreciate it. My follow-up is a little bit more on on consulting. I know we talked about AI workloads, things in nature. But I want to maybe focus a little bit on the traditional work. As we go into this year so far and going into next year, do you see any visible signs of maybe the traditional non-AI-related consulting work, perhaps facing pressure or cannibalization from AI implementation? Does it make sense that as AI becomes a bigger part of the business, that AI workload will start to cannibalize or become a bigger part of consulting going forward, if that makes sense?

I'm not sure I really understand your question. Would it -- maybe I'll share a couple of thoughts that come to mind, right? So obviously, AI is driving a lot of change inside of companies all around the world and Ted spoke and Pat both spoke about how that's driving some opportunity for us at the moment. What I would also, though, say, in my prepared remarks, I talked about broader change, right, geopolitical conflict, geoeconomics. I didn't talk much about extreme weather. It's been obviously a relatively modest year from a cat risk perspective. But all of these themes, social issues, labor market challenges, all driving lots of change and uncertainty for clients, all of those factors, not just AI, are driving demand for our services, not just in Consulting, but in Risk as well, right?

And so -- and one of the unique attributes about our firm is that we help clients understand their risks, develop a plan to mitigate those risks, help them finance some of those tail risks when that's appropriate, and we do that in lots of different ways. But then we also help them capture the opportunity in this moment. And that's really why we're coming together on one unified brand and why we're excited about not just helping companies build greater resilience in this time of change, but using that resilience as an offensive weapon so that our clients can help grow and thrive in moments like this. Hopefully, that helps.

Our next question comes from the line of Elyse Greenspan with Wells Fargo.

My first question is on the margin guidance for the year. You guys pointed to margin improvement for 2 I just wanted to clarify, do you guys expect margin improvement for the year in both segments or just on an overall basis?

Yes. We -- thanks, Elyse. We don't guide by segment. But as Mark and I both noted in our prepared remarks, we do expect continued margin expansion for the year for the company. Again, we want to balance margin expansion with continued investment in future growth. We want to deliver growth in earnings for our company over the long term, of course. And so we delivered solid growth in adjusted EPS in the quarter and margins were flat, but we do expect to drive margin expansion for the year for the company. Do you have a follow-up, Elyse?

Yes. Then my second question, you guys had called out, I think, transactional-oriented businesses and data centers is benefiting the U.S. and Canada organic growth in the quarter. Can you just give us a sense of the contribution in the Q3 and how that's compared to other quarters this year and just -- and any sense of expectations going forward as well?

Yes. We're not going to give exact revenue contribution from those sectors. And obviously, it's a dynamic economy and we're continuing to invest in areas where we see growth, right? So digital infrastructure has been an area where we've been investing, the active M&A environment has driven some growth for us there, and we continue to invest there. Health care continues to be a strong driver of demand. Private Capital, Ted spoke about it, but it's more broad-based than in our management consulting team. We're seeing real opportunities. In energy, I think I mentioned energy I can't recall, I think I mentioned energy. So we're investing against kind of the fast-moving rivers, if you will, that are out there and both transaction risk, and we just wanted to call out how transaction risk and digital infrastructure continue to be good sources of growth for us. Do you have a follow-up, Elyse?

Our next question comes from the line of Alex Scott with Barclays.

I just wanted to see if you could dig a little more into the transactional risk, construction, digital infrastructure and how that impacted things this quarter and maybe what you're seeing in terms of a little more real time, I think things have maybe slowed down in September and into October. So is that something on any of those fronts that we should be considering into the end of the year?

I'm sorry, Alex, what slowed down in September and October? I didn't hear that part.

I think transactional risk, and I don't know about construction, but rates are certainly up. So I just wanted to see if there's any impact from some of those things?

No. I mean for our business, demand remained pretty strong through the quarter. Our pipelines remain in both of those -- both segments of our business remain strong as well in digital infrastructure, of course, I mentioned in my prepared remarks that the Stratus exchange that we put together, as these data centers transition to being operational risks and so really important transition. So while there can be a nonrecurring aspect to some aspects of construction or a heightened area of -- heightened period of risk, we do serve those clients through the operational phase of those facilities.

I mentioned also in my prepared remarks that there's kind of a broader wake. There's broader investment that happens around data center construction. And so it's driving growth for us in Marsh Agency and other parts of the company as well as other investment happens kind of around this big capital infusion that happens in communities. So we're excited about how we're positioned there. Obviously, lots of politics around data center construction. And as I mentioned also in my prepared remarks, we're all for responsible AI deployment that includes the construction of data centers. And we're working with clients on community engagement and how to show up in the right way so that it can be a win-win for communities, not just here in the United States, but in other parts of the world as well.

Do you have a follow-up, Alex?

Yes. Maybe if I could do a follow-up on just hiring and the saves that you're expecting related to some of the implementation of AI, the Thrive program, et cetera. To what degree is that allowing you to begin investing more in hiring? And how do you balance that versus the margin improvement as we think in the next year?

Yes. It's a good question. And it is a balance, right? We're constantly trying to balance it. It connects back to my comments to Elyse about margin expansion, right? We want to continue to drive growth in the business. And while really margin expansion is an outcome of the way we run the business, it's not really a primary KPI for us inside of the company. Again, we do expect to drive margin expansion this year. I'm very pleased with the state of our talent. We have the best talent in the market hands down. Our retention is strong. Our engagement scores are excellent. We work really hard on our colleague value proposition. We know we have to earn where we stand in the market and earn the time and commitment of our colleagues to the work that we do here.

We have been adding to market-facing talent, both laterally and from an early career point of view. We continue to hire early career at the same rate we have. So I think it might be a little bit different than some others, not in our industry, but broadly in the economy, but we continue to see really strong returns from hiring early career folks. And we've begun to harvest some attrition really in our mid and back office. So it's been part of the process improvement and cost improvement that our team in BCS and some of the automation and workflows. So quarter-to-quarter, when you look at our total colleague headcount, there's going to be ins and outs with M&A and contractors.

But -- so it's a dynamic time, obviously, for people, right? And what we tell our colleagues is that be good users of AI and you're going to become more valuable to us, more valuable to our clients, and that will be a win-win for both our colleagues and for our business.

Thank you. I would now like to turn the call back over to John Doyle, President and CEO of Marsh, for any closing remarks.

Thanks so much, Andrew, and thank you all for joining us this morning. In an active quarter for our industry, I want to recognize our colleagues for their focus and discipline and thank our clients for their continued trust and support. We remain confident in our strategy and energized about what's ahead. I look forward to speaking with you all again next quarter.

Thank you. Ladies and gentlemen, thank you for participating. This does conclude today's program, and you may now disconnect.

Welcome to Marsh's earnings conference call. Today's call is being recorded. Second quarter 2026 financial results and supplemental information were issued earlier this morning. They are available on the company's website at corporate.marsh.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 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 Instructions] I'll now turn this over to John Doyle, President and CEO of Marsh.

Thanks, Andrew. Good morning, and thank you for joining us today to discuss our second quarter results. I'm John, President and CEO of Marsh. On the call with me is Mark McGivney, our COO and CFO, and the CEOs of our businesses; Nick Studer of Marsh Risk, Dean Klisura of Guy Carpenter; Pat Tomlinson of Mercer; and Ted Moynihan of Marsh Management Consulting. Also with us this morning is Jay Gelb, Head of Investor Relations.

To start, I'd like to acknowledge the United States 250th anniversary commemorated earlier this month. Marsh is proud to be a U.S.-based company and of the ideals embodied in our nation's founding. We are also proud of the contributions Marsh has made to the U.S. economy and society, supporting growth since our founding in Chicago, 155 years ago, and we are grateful to our clients for their trust that lets us do the same today all around the world. I would also like to extend our sympathies and concern for the people of Venezuela. We recently celebrated our 70th anniversary in Venezuela, and we have 100 colleagues in the country. We are grateful that they're all safe and we will continue to support them and our clients recovery.

Turning to results. We had a solid second quarter as demand for our advice and capabilities remain strong. Overall, revenue grew 6% in the quarter. Underlying revenue growth accelerated to 5% from 4% in the prior quarter. Adjusted operating income grew 5%, adjusted EPA grew 9% [Technical Difficulty] stock in the quarter, now totaling $1.5 billion for the first half of 2026. I want to spend a moment on our Thrive program, an important part of our strategy. We aspire to be the most impactful professional services firm in the world, and we have the talent, capabilities and market position to it. We are leaders in most markets in which we operate and have a truly unique set of capabilities across risk, strategy, people and investments that differentiates us and drives value for clients.

We're focused on allocating capital and resources to strategic priorities where we see significant growth potential and we remain disciplined in our approach to delivering in the near term while investing for the future. Thrive is designed to accelerate growth by creating the capacity to invest in the Marsh brand expanding our capabilities and sales capacity and leveraging the benefits of our scale in operations and technology through our business and client services team. We've seen a strong positive response to the new Marsh brand. As a result, we're accelerating the transition of Guy Carpenter and Mercer to Marsh in September.

A unified brand strategy signals the value we can deliver together to clients across a range of industries, segments and geographies. Efficiency has allowed us to increase our brand reach, improve marketing ROI and become the official risk partner of Formula 1. F1 increases our visibility among its over 800 million global fans and importantly, its high concentration of C-suite leaders and decision-makers. The precision, data-driven approach to risk and relentless pursuit of excellence is what aligns Marsh and F1's cultures, and I'm excited for the growth possibilities from the partnership.

We're also accelerating our investment in sales capacity through Thrive. We're building new capabilities and adding client-facing talent in sectors where we see meaningful growth opportunity. One example is our work with energy clients in the digital interest ecosystem, where we are creating multibillion-dollar insurance solutions for counterparty credit exposures. These programs integrate traditional insurance and reinsurance side cars backed by third-party capital, which we source for the client.

It's the combination of our capabilities in insurance, consulting and investments as well as deep client relationships and expertise across sectors, which enables Marsh to design these solutions for clients. Our AI plans are also benefiting from Thrive. As I've stated before, Marsh is well positioned to be an AI winner. It's clear that our large proprietary data sets in risk, health and benefits, talent and investments as well as our long-standing client relationships are a significant advantage. Our strategy is to drive AI development in 3 areas: growth, productivity and efficiency.

Related to growth, we recently introduced Marsh Risk Companion at the RIMS Conference in Philadelphia. This new client platform has market-leading analytics insights and capabilities in one AI-enabled application. It will enhance our ability to analyze their risks and develop optimal solutions. And we're excited about our coverage engine platform, which gives producers serving the middle market, the ability to model risk and evaluate coverage options at the point of sale. The AI driven platform can quickly find coverage gaps and analyze and compare quotes for clients, a significant advantage for our producers in the marketplace.

We also introduced Atlas, an AI-enabled platform that delivers real-time insights to support development of client reinsurance strategies. Atlas curates and expedites information including hazard scores, litigation risk, market pricing, economic indicators and other financial data for clients. And finally, our Quotient team is doing extensive work advising clients on AI strategy and transformation. For example, in the last quarter, we launched the build of several new AI native banks in different regions around the world.

We are also introducing AI tools that increase our colleagues' productivity and enhance our colleague value proposition. For example, we rolled out Claims IQ to our 3 professionals. The tool draws anonymized data on millions of claims to help us manage the claims life cycle, and deliver insights to improve client outcomes. Colleagues also now have access to LenWork, an agenetic assistant that builds on our LenAI suite. LenWork helps colleagues develop new product ideas sales, strategies and respond to RFPs among other use cases. It leverages from tier models while being purpose-built for our ecosystem. As a result, LenWork delivers a more secure relevant and agile experience and amid rising token costs, a more cost-efficient approach to enterprise LLM usage.

One of the more exciting AI programs of work launched in the quarter is BCS and Oliver Wyman's partnership with Amazon Web Services to reimagine our mid- and back-office processes. We have already introduced AI into our operations, but this work will push the boundaries to redesign how work is executed to improve efficiency and service. The project is initially focused on pilots to reengineer claim services and the issuance of reinsurance treaties. We expect our Thrive investments in brand, sales capacity and capabilities and new AI tools will support growth and continuous operational efficiency in the years ahead.

Now turning to market conditions. According to the Marsh Global Insurance Market Index primary commercial insurance rates decreased 6% in the second quarter. This follows a 5% decline in the first quarter of 2026. As a reminder, our index skews to large accounts. Rates in the U.S. decreased 2%. Europe and Asia declined mid-single digits. Canada, the U.K. and Latin America were down high single digits, and the Pacific region had double-digit decreases. Global property rates decreased 12% year-over-year, which was an acceleration from the prior quarter. Global Financial and Professional liability rates were down 3%, while cyber decreased 4%. The Global Casualty rates increased 2%, with U.S. excess casualty up 15%, reflecting continued elevated loss experience and workers' compensation decreased 4%.

In reinsurance, persistent soft market conditions driven by abundant capacity and growing reinsurer appetite have led to a favorable market for insurers. As expected, the outcome of the June 1 Florida cat renewals saw rate reductions in the 15% to 20% range from excess supply, partially offset by a modest increase in demand. In U.S. Casualty Reinsurance, renewals reflected adequate capacity and differentiated pricing based on loss experience and portfolio quality. We continue to see record high catastrophe bond issuance with more than $61 billion of limit outstanding through the first half of 2026.

Our clients are exploring alternative options to complement traditional strategies, including through the use of third-party capital solutions. Current market pricing remains favorable for our insurance and reinsurance clients despite the rising cost of risk. We continue to help clients optimize their risk financing and build gradients in a more uncertain world.

Now let me turn to our second quarter financial performance and outlook, which Mark will cover in more detail. Consolidated revenue increased 6% to $7.4 billion, increasing to 5% on an underlying basis with 3% growth in RIS and 8% in Consulting. Marsh Risk was up 4%. Guy Carpenter declined 2%. Mercer increased 5% and Marsh Management Consulting grew 13%. Adjusted operating income grew 5% and adjusted EPS was $2.96, up 9% year-over-year.

Looking ahead, we continue to expect a good year in 2026 with underlying revenue growth similar to last year. We also anticipate another year of margin expansion and solid adjusted EPS growth. Our outlook is based on current conditions, but the economic and geopolitical environment could change materially from our assumptions. In summary, I remain pleased with our performance in the first half of 2026. We are focused on executing our strategy, putting our clients at the center of everything we do and building on our momentum. With that, I'll turn the discussion to Mark for a more detailed review of our results.

Thank you, John, and good morning. We had a good second quarter, reflecting the diversification of our portfolio, our leading position and strong execution. Consolidated revenue increased 6% to $7.4 billion, with underlying growth of 5%, which we achieved despite continuing headwinds from fiduciary interest income and P&C pricing. Operating income was $1.9 billion, adjusted operating income was $2.2 billion, up 5%. Our adjusted operating margin was 29.3%. GAAP EPS was $2.63 and adjusted EPS was $2.96, up 9% over last year.

For the first 6 months of 2026, underlying revenue growth was 4%, adjusted operating income grew 7% to $4.6 billion. Our adjusted operating margin was 30.5% and adjusted EPS increased 8% to $6.25. Looking at Risk and Insurance Services. Second quarter revenue was $4.8 billion, up 4% from a year ago or 3% on an underlying basis. Operating income in RIS was $1.5 billion. Adjusted operating income was $1.7 billion, up 3% over last year, and the adjusted operating margin was 35.3%. For the first 6 months, revenue in RIS was $9.9 billion, reflecting underlying growth of 3%, adjusted operating income increased 5% to $3.6 billion. The adjusted operating margin was 36.8%.

At Marsh Risk, revenue in the quarter was $4.1 billion, up 6% from a year ago or 4% on an underlying basis, reflecting solid performances in the U.S. and across international. In U.S. and Canada, underlying growth increased sequentially to 4%, up from 3% in the first quarter, reflecting strong new business. In International, underlying growth remained solid at 5% with EMEA up 5%; Asia Pacific, up 5%; and Latin America, up 8%. For the first 6 months of the year, Marsh Risk revenue was $7.8 billion, with underlying growth of 4%. U.S. and Canada grew 4% and international was up 5%. Guy Carpenter's revenue in the quarter was $664 million, down 2% on both a reported and underlying basis.

Growth in the second quarter was impacted by a tough comparison to 5% underlying growth last year and continued declines in reinsurance rates, especially in property lines. This headwind from rates had a roughly 6 percentage point impact on Guy Carpenter's underlying growth in the quarter. For the first 6 months of the year, Guy Carpenter generated $1.9 billion of revenue, which was flat on an underlying basis. As a reminder, the first half of the year accounts for roughly 3/4 of Guy Carpenter's annual revenue.

Despite the challenging market conditions, Guy Carpenter executed well and delivered double-digit new business growth in the first half as well as high 90s client retention. In the Consulting segment, second quarter revenue was $2.6 billion, up 10% or 8% on an underlying basis. Consulting operating income was $502 million, and adjusted operating income was $533 million, up 11%. Our adjusted operating margin in Consulting is 20.5%. For the first 6 months, consulting revenue was $5.2 billion, reflecting underlying growth of 7%. Adjusted operating income increased 12% to $1.1 billion, and the adjusted operating margin was 21%.

The Mercer's revenue was $1.6 billion in the quarter, up 7% or 5% on an underlying basis. Health grew 3%, reflecting continued growth across our regions, especially in international. Wealth was up 8%, led by our investments business. This was the best quarter of growth in wealth since we started reporting on this basis in 2016. Our assets under management were $846 billion at the end of the second quarter, up 16% sequentially and up 26% compared to the second quarter of last year. Year-over-year growth was driven by new business and the impact of capital markets. Career was up 2% and was led by growth in international. For the first 6 months of the year, revenue at Mercer was $3.3 billion, a 5% underlying growth.

Marsh Management Consulting generated revenue of $1 billion in the second quarter, up 15% or 13% on an underlying basis. This was the fastest quarter of growth in over 2 years, reflecting strong demand and delivery across the business. For the first 6 months of the year, revenue at Marsh Management Consulting was $1.9 billion, an increase of 10% on an underlying basis. Looking ahead to the third quarter, we expect underlying growth for Marsh Management Consulting will likely be in the mid- to high single digits. Fiduciary interest income was $88 million in the quarter, down $11 million compared with the second quarter of last year, reflecting lower interest rates.

Looking ahead, we expect fiduciary interest income will be approximately $95 million in the third quarter. Foreign exchange was a $0.02 benefit in the second quarter. Based on current exchange rates, we expect FX will have an immaterial impact on earnings in the third quarter and the rest of the year. Corporate expenses in the second quarter were $67 million on an adjusted basis compared to $66 million a year ago. Looking ahead to the third quarter, we expect adjusted corporate expense of approximately $75 million. We continue to execute well on our Thrive program and remain on track to deliver $400 million of total savings, a portion of which will be reinvested for growth. We continue to expect to incur approximately $500 million of charges to generate the savings.

Total noteworthy items in the second quarter were $130 million, including $52 million of costs associated with fraud. Interest expense in the second quarter was $250 million. Based on our current forecast, we expect a similar level of interest expense in the third quarter. Our adjusted effective tax rate in the second quarter was 24.4% compared to 25.3% in the second quarter last year, with both periods benefiting modestly from discrete items. When we give forward guidance around our tax rate, we do not project discrete items. Based on the current environment, we continue to expect an adjusted effective tax rate of between 24.5% and 25.5% in 2026.

Turning to capital management, our balance sheet. We ended the quarter with total debt of $20.6 billion. Our next scheduled debt maturity is $550 million of euro-denominated senior notes in the third quarter, which we anticipate refinancing with similar euro-denominated notes. Our cash position at the end of the second quarter was $1.7 billion. Uses of cash in the quarter totaled $1.4 billion, included $438 million for dividends, $230 million for acquisitions and $750 million for share repurchases. For the first 6 months, uses of cash totaled $2.7 billion and included $878 million for dividends, $319 million for acquisitions and $1.5 billion for share repurchases. We now expect to deploy approximately $5.5 billion of capital in 2026 across dividends, acquisitions and share repurchases, up from $5 billion previously.

The ultimate level of share repurchase will depend on how our M&A pipeline develops. Earlier this month, we announced a 10% increase in our quarterly dividend making this our 17th consecutive year of dividend increases, reflecting our solid earnings growth and confidence in our outlook. Turning to our outlook for 2026. We remain well positioned for another solid year. We continue to expect underlying revenue growth will be similar to the levels we generated in 2025, along with another year of margin expansion and solid adjusted EPS growth. For modeling purposes, we expect more margin expansion in the fourth quarter than in the third quarter.

With that, I'm happy to turn it back to John.

Thank you, Mark. Andrew, we're ready to begin Q&A. .

Certainly. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Greg Peters with Raymond James.

So for the first question, I want to zero in on organic revenue growth at Risk and Insurance Services. I certainly appreciate your pricing commentary and, I guess, the impact on Guy Carpenter. As we look forward, maybe you can help sort of reconcile how you're seeing the drag from pricing presumably with offsets of new hires and new business wins that helps you get to your organic revenue guidance of similar to last year. .

I'll share a couple of comments and then maybe I'll ask Nick and and Dean to add some color. I thought it was a good solid first half at Marsh Risk. It was a good quarter -- we've seen some improvement in our growth in the United States, which we're excited about. It's been an area of focus for us where we've been hiring production talent there. So it was a good first half of the year for us in adding lateral talent in the United States and elsewhere, but we're particularly focused there in the U.S. And it was a very strong new business quarter for us in the U.S.

In Reinsurance, of course, it's not the outcome we want. But as Mark noted, our execution was really strong, big pricing headwinds, but again, we're delivering for our clients. Retention is strong, very strong. New business was excellent in the first half. And I'd add that market consolidation, some M&A wasn't helpful to us in the quarter. And we have the largest cap portfolio -- cap property portfolio in the market. But there's a lot of opportunities for us to grow in reinsurance and Dean and the team are focused on that. And so we're excited about what's in front of us in the second half. So maybe, Nick, you can talk a bit about the growth prospects at Marsh Risk.

Very pleased with the performance in the face of those rate headwinds that you mentioned. The really solid organic growth represents a continued focus on innovation for clients as well as on efficiency and execution. If I sort of walk you around the business a little bit. In the U.S. and Canada, accelerated growth, ,high single-digit new business growth, which John talked about. That was actually double digits in Marsh Risk. Coming from a range of businesses, specialties, double-digit growth in marine, in transactional risk and construction in aviation, in Energy & Power a very robust pipeline in digital infrastructure, which affects a number of those specialties, which is beginning to make a meaningful contribution to growth.

But also, as you noted, continued growth in our sales capacity, strong hiring in the market, strong growth of sales leaders, a trend which we expect to continue into the second half. And then really underpinning the fact that our growth is very broad-based. International GAAP revenue growth of 7%, underlying growth, 5% on top of 7% a year ago with strong growth in LAC in Asia and in EMEA, really driven by the U.K., which has been growing strongly. And the highlights in international, our facultative reinsurance alongside Marsh Re, double-digit growth, specialty similar to the U.S. and Canada, double-digit growth in Transactional Risk and Construction, marine and cyber and really strong new business growth in Pacific and really beginning to leverage some of our wholesale capabilities and Marsh Risk capabilities like McGriff MMA in London.

So all of that makes us confident in our strategy. While pricing is down, our clients see more risk, more uncertainty and more volatility. They have more lumpy problems they need our help with. And we're confident in our strategy and investing in our middle market business and building in fast-growing sectors like digital infrastructure, but I could add defense and security and many others, hiring and cultivating producer talent, building our facilities, building fast track, where utilization is progressing well. And really seeking to be both a game-changing risk adviser and all connected risk intermediary.

Thank you, Nick. Dean?

Thanks, John. And Greg, maybe a little bit of context for you on Guy Carpenter's results and the reinsurance marketplace. Our negative growth in the quarter and our flat growth for the first half of the year, as John noted, we're clearly driven by declining property cat pricing. Our property cat rate online Index, which you see every quarter, was down 16% at midyear, accelerating down from negative 12% at the January 1 renewal. And the steepest year-over-year decline we've observed since the index was created 25 years ago. And as you know, as John noted, property is 50% of our global portfolio, and we have the largest property cat book in the global marketplace.

We continue to deliver strong execution in a very challenging market. And as John noted, despite pricing headwinds, we see strong opportunities to grow moving forward. We had record new business in the first half of the year, strong double-digit new business growth. Our RFP win rate has never been stronger. And outside of property, we have a number of businesses that are performing very well. As Nick mentioned, our International Facultative business is growing double digit. Our casualty business continues to grow strong mid-single digits. Capital and advisory continues to deliver strong double-digit growth in M&A advisory structured deals, sidecars and other capital structures.

And we led 20 cat bond issuances in the first half of the year, totaling $5 billion of limit, a record for Guy Carpenter. We continue to invest in top production talent around the world. We've grown our head count for 5 straight years, and demand for our advice and solutions from clients has never been stronger. So what I would sum it up, Greg, by saying, despite our growth challenges in the first half, we feel great about our talent, our platform and our prospects for growth moving forward.

Thanks, Dean. So Greg, hopefully, that was helpful. Some unsurprising headwinds for us from a pricing point of view, but execution is strong, and we feel good about our growth prospects. And do you have a follow-up?

I do. That was good detail. I noticed, John, in your comments, you mentioned token costs, and you talked about AI driving growth, productivity and efficiency. I'm just curious how you're looking at the rising costs of technologies, infrastructure investment. And how it might deliver on improving efficiency gains. It seems like from some of the headlines that we're reading, it might -- the rising costs might entirely offset the efficiency gains, but what are you seeing at your company, please?

Yes. Thanks for -- it's an important one. And again, I want to reiterate, obviously, there's been lots of questions in the investor community about AI. We're very excited about AI. The impact it can have on the value that we deliver for our colleagues, for our clients and for shareholders. And we think we're exceptionally well positioned to be a winner. And I've talked quite a bit about why. But -- and we're an early mover and our CIO, Paul Beswick has done a terrific job really building the foundation for us to create the value that we talked about. .

We expected rising costs to become a challenge for us over time. It's why I talked about LenWork in my prepared remarks, which essentially -- it's an in-house model that's built on third-party LLMs. It's a couple of months behind frontier models in terms of its capabilities, but it's more than adequate. In fact, it's quite capable to do the overwhelming amount of work that our colleagues need from AI at the moment. And so it's a low-cost, very efficient model for us, and we're quite excited about that. Now of course, when we need to do other work that requires the most contemporary models in the marketplace, and that happens probably most inside of Oliver Wyman and at Mercer will supplement our work by engaging with third-party model. So we're excited about the path we're on.

So far, the growth from AIs mostly come from -- come into Oliver Wyman. As Nick pointed out, we're starting to see more and more growth and opportunity in digital infrastructure and that ecosystem is driving some good growth for us. But we're also excited about the efficiency gains. I talked about the partnership between our team at OW and AWS to really attack some of the mid- and back-office work that we do. And so it's early days on that front, but we're excited about it.

Andrew, next question please?

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

In terms of some of your comments today and earlier in the year about kind of reinvesting in growth, any texture you'd be willing to provide on kind of producer head count growth? Are you targeting kind of mid-single digits, high-single digits? And do those producers -- should we think about them, their -- the contribution to organic kind of phasing in over the next 1 to 2 years? Or is it more front-end loaded, et cetera?

Yes. Thanks, Mike, for the question. As I mentioned briefly in Greg's question, it was a good first half for us in attracting production talent in key markets. Our brand for talent is excellent in the markets that we operate in and compete. We have the best talent here in our company, but we see the opportunity to get even stronger. I would point out our colleague retention is very strong. Our colleague engagement is excellent and it's all anchored by a very strong and deliberate and transparent colleague value proposition of conversation that we have with our colleagues and with talent that's considering to work here.

And our investments in AI are another example of how we can make it even more attractive to work at our company. As I said, I don't want to get into every quarter reporting on kind of how many people and all of that. But it was a good first half, and we expect that to continue. Our pipeline for talent remains quite strong. So we're going to continue to get at that. That's not the only source of improving the growth rate of the company, of course. We do other things that will drive growth, including expanding capabilities and including through M&A, but it is an important source of growth for us, and we did have a good first half. Do you have a follow-up, Mike?

Yes. Also in your prepared remarks, you continue to highlight some of the I think some risk manager facing analytics capabilities you all are investing in, 1 of your direct competitors publicly talked about seeing a 40% higher sales win rate using their newer upgraded analyzers, but that seems like a big jump in an RFP win rate. Just curious, are you all continuing to kind of invest and analyze in your analytics and continue to upgrade them to kind of keep up with competitors? Or do you feel like you're in a great spot. Just any -- curious of any more texture there.

Yes. I haven't seen anybody in the market report 40% growth rate. So I'm a little bit skeptical there. But we're not trying to keep up with the market. We're leading the market and continuing to extend our leading spot in the market. I talked about the suite of analytics under the brand of companion, the Marsh Risk Companion Suite that we rolled out at RIMS, an AI-enabled application. So I think another great example is why as an incumbent and a market leader, we're positioned to be an AI winner. The feedback we got from the rollout of that was tremendous.

And I was actually in our cafe at RIMS to witness it firsthand and to sit through some demos with some clients. So we're continuing to invest in that. We have a big advantage in data, as I mentioned, and AI just creates new opportunities for us to help our clients understand their risks, model those risks, benchmark those risks compared to anonymized, of course, but compared to others in the industries that they compete with set their risk appetites, right? And then think about risk financing. And then when we finance risk, we do it through captives. We do it through traditional insurers. We do it through alternative capital. And so these are all the reasons why we're so well positioned to continue to deliver for our clients.

Our next question comes from the line of Brian Meredith with UBS.

John, first question, I'm just curious with respect to capital management here and investing capital. If I look at your M&A in the first half, it's been relatively modest, let's call it, versus the free cash flow. As we look out second half of the year, do you expect maybe a pickup here, maybe as bid-ask spreads, call it, narrow? Is there anything in the first half that may be caused or maybe a little lighter than expected?

I hope it gets narrow but -- gaps get narrow, but I'm not sure I'm ready to call that yet. In fact, I would say there's still a bit of at least between what I think strategics might consider the right price and maybe some financial sponsors. But we'll see. I would point out, I mean we had previously announced Baltimore Cam and alt manager that we're excited to add to our Investments business at Mercer, that's expected to close in the second half subject to regulatory approval. .

On the first of July, we closed on Asterra business in Spain that we had a minority stake in previously. So we're excited about both of those businesses. We're very active in the market. But aside from the gap growing, we've even assets just off the market entirely. And of course, we're going to remain as disciplined as we've always been. Our strategy is the same, right? We have a balanced approach. We do want to invest in our business that's going to drive growth going forward.

So obviously, we increased buybacks in the first half. We also announced an increase in our dividend by 10%. As Mark noted in his prepared remarks, we expect to deploy now $5.5 billion of capital throughout the year. And so the strategy remains the same. We're -- again, we're going to continue to be active in the market. But you're right, it was a bit slower in terms of what we were able to close out in the first half. Do you have a follow-up, Brian?

Yes, absolutely. So Marsh Management Consulting, thanks for the guidance on third quarter, Mark, but maybe a little more color on second quarter. Were there any kind of 1 big onetime success fees? Or is related the big organic revenue growth in the quarter?

Yes. Brian, we're very excited, obviously, about that growth. Ted and the team have been executing well. It's an incredibly complex environment that businesses are operating through. So the opportunities for us to not only help clients understand the risks and manage those risks more effectively, but to capitalize on the opportunities amidst the complexity and all the change that drives opportunity for us in our consulting businesses and we're doing quite well at it. And Ted, maybe you can share a bit of color on what's driving demand.

Yes. Sure, Brian. Look, to answer to your question, actually, it was pretty broad growth. We saw growth in all regions. We saw growth in most business lines. The strongest growth was in Europe and in Asia by region, energy insurance, telco, transportation. If you look at the kind of service offering side, for sure, our strongest growth by some distance was in Quotient, which is in our AI strategic advisory team. But we also saw a lot of activity in efficiency-related work more broadly, several deals in M&A where we're doing pre-deal work and post-merger integration, and we saw significant growth in private equity and capital deployment as well. So pretty broad based. .

Our next question comes from the line of Rob Cox with Golden Sachs.

I just wanted to ask about the strong growth in international within Marsh Risk. It's positive mid-single digits and I know Marsh is by no means a pricing index, but the pricing headwinds for at least the larger accounts in the international geographies seem to be a pretty strong headwind that you're growing strongly against. So is it fair to say the average client in your client base is seeing lower rate decreases than some of these numbers that you guys have quoted in the indices? And how should we think about organic growth resilience there?

Yes. Thanks, Rob. Actually, the rate change is down more or price change is down more in international generally speaking. Obviously, it's not 1 market. It's a collection of markets, by geography, by product and there's a range of issues, of course, driving price competition. But broadly speaking, pricing in international is down more. Of course, in the U.S., I talked about excess casualty pricing still up in the mid-teens, which is really a reflection of the very challenging litigation environment and liability environment here in the U.S. Of course, there are bigger protection gaps in the U.S. We're attacking the middle market more in other parts of the world, all driving big opportunities for us to grow.

And so we're excited about how we're positioned. And Nick, I don't know if you have any more color you want to add to that?

Yes, Rob, I'd just say it's similar to my comments earlier on, our clients face a really complicated world. So while pricing is down, and that's good for our clients after quite a few years, previously of tougher market pricing. They have big messy challenges. You take something like Pacific where we saw very strong new business growth. As John alluded to, pricing headwinds were pretty high, led by property, but really across the board. But there's no one more capable of solving large risk management and risk transfer type problems. And so those are the things that are driving growth.

I also think that we are just working more smartly across regions and across capabilities to make sure we're connecting our clients' risks to all the available sources of capital, which we can connect them to. So Dean and I both talked about the fact. We talked about -- I talked about some of the wholesale market activity, which we've been seeking to channel to MMA McGriff London and those kind of things. So just in general, we're working the system harder. But yes, there's lots of risk out there, and we're seeing growth, I listed out earlier, but across a range of products and specialties.

Thanks, Nick. Rob, do you have a follow-up? .

Yes, that's very helpful. And if I could just follow up on international, I think last quarter, you guys mentioned impact from the Middle East conflict overall on results. How did that trend this quarter? And if you have any expectations for the back half of the year?

Yes. Thanks, Rob. I mean, first and foremost, I want to give a shout out to our over 2,500 colleagues throughout the region. I mean I can't be more proud of their resilience. I talked about the tragedy that unfolded in Venezuela, more recently with the earthquakes. But our colleagues in all throughout the Middle East have just been incredible, and they continue to deliver for our clients there. The mix of business for us is different in that region. Our consulting business is much larger than -- or meaningfully larger anyway than our risk business. Sales slowed a bit in the second quarter, and that fed a little bit into what we pointed to in terms of second half growth in consulting.

But we're still working our way through what's quite a healthy backlog. And the impact so far has been limited and that continued through the second quarter. But if current conditions persist for many months, that obviously could change over time. And what I would also say, apart from our colleagues resilience, it's our clients' resilience and is remarkable, too. I mean they're all doing the best they can to proceed as if business is as usual. Of course, it's not, but it's really remarkable what we're seeing across the region. And so, so far, so good. And again, we're incredibly well positioned in that region, and we're excited about the growth from that region for our business over time. And we'll see how it goes, but it's been quite manageable so far.

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

Mark, can you get a little color on what underlies that $500 million increase in deployable capital?

Meyer, when we come into the year, there's a lot of uncertainty in the outlook. So we start with a number we feel good about. And as we've talked about through 6 months, our results are tracking really well with our expectations. We also came into the year with a little extra cash on our balance sheet. It's really as simple as that. You got more conviction about our outlook for the year. And so at this point, we see more like $5.5 billion than the $5 billion we guided to earlier.

Do you have a follow-up?

Just a quick one. I was hoping you can get an update on the percentage of the Marsh book that's represented by the Marsh Pricing Index. .

Well, it's effectively kind of ex MMA, right? Now I mean, we do have data into MMA where in the U.S., pricing is relatively stable. And at least historically, that market has operated within kind of a tighter band up and down from year to year. And so effectively, that's what's excluded from it. .

Our next question comes from the line of Alex Scott with Barclays.

First one I had for us on the competition for talent. And just if you could provide commentary around the margin improvement expectations you have? And how much are expecting from some of the efficiency initiatives that you've got going on versus maybe an offset from this war for talent that we've all been hearing about?

You're doing 2 for 1 here. I'll go on the talent front, I'll start with that, and I mentioned this earlier. We have the best team in the market, and we're excited about that. We had a good first half in terms of adding production talent in key markets. And I love the fact that you all are asking about people because people do matter, that's what makes our company -- that's what makes our company go. But our brand for talent and attracting talent in the market is excellent. And we have a colleague value proposition that, again, leads to a very transparent dialogue. And it's about our culture. It's about the work that we do. It's about the learning and development opportunities, mobility, of course, rewards, important part of why we all come here. And fundamentally, what we talk about is we want our colleagues to be their best at Marsh. And so that's what it's all about. .

Lots of headlines and trade press about talent wars. Our colleague retention data wouldn't support that there's something new from like that would say that it's a war compared to kind of other markets for talent. It's a competitive market for talent. That's good. I'm good with that. I like how we're positioned to compete in that respect. Of course, there's been team rates and unethical conduct in the market, which I think is probably what's really behind some of those headlines. But we feel very good about how we're positioned and how we attract talent in the market.

In terms of margin, Mark talked about it in his prepared remarks. We expect margin improvement for the year. We've always cautioned in the past about over indexing on any quarter results. We had expected to make some investments in the first half of this year, and we did that, as I just talked about, talent investments primarily. And we also expected the property market to be a bit challenging and a property reinsurance market, I mean, and of course, that was the case.

But we've talked in the past about BCS, our data, ops and tech team that's really coming together under the leadership of Paul Beswick the team there is doing a terrific job. So we've been doing more right shoring, automation and in my prepared remarks, I talked about some of the productivity and efficiency gains from AI. And so we're excited about all of that, and we're going to obviously look to deliver here in the second half.

Next question, Andrew.

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

John, I was hoping maybe you could just talk a little bit specifically about retention within Marsh Risk U.S. Canada specifically. I think over the past few quarters and this quarter as well, you've talked about strong new business, but I haven't heard much on the retention front. So I was hoping you could comment on that.

Yes. Retention has been solid. It's not been something to crow about. I think the bigger achievement has been for us in new business strength. And so of course, it's a very active M&A market, not just in the insurance market, but in fact, it's much more active outside of insurance markets, that's created some retention challenges. But overall, retention remains quite solid. In the U.S. and outside of U.S., I would note. Do you have a follow-up, David?

Yes. And maybe just on the health business within Mercer this quarter. I was surprised the 3%, that's the first sub-4% growth quarter we've had in several years and below the 6% where you guys have been running on an organic basis. So I know you guys called out international as being strong, so that implies the U.S. may have been a little weak. But just hoping to get some color around what specifically decelerated within the health...

Sure, sure. It's probably a good example of where new business has been quite strong and retention has just been kind of more ordinary in a market where, obviously, medical inflation is creating lots of strain for employers. But you're right, David. Our growth in international is good. Let me -- I'll ask Pat to talk a bit more about it.

Sure. And thanks, David, for the question. Listen, we've been pleased with the growth momentum that we've had in health over the last several years, as you highlighted, right, with the -- we've actually had 5-plus percent growth over the last years each quarter. And while this quarter did go to 3%, right, and it is below that. Let me start by cautioning against extrapolating too much from any single quarter. We think that the 5% that we delivered in the first half is probably a better reflection of the underlying growth profile of the overall business.

Overall, from a strategy perspective, we're out there providing innovative and tailored solutions to our clients. There's a lot of demand for them. We're expanding the functionality of our digitally enabled tools. We're now live in over 100 countries. You highlight international as part of your question, and we have been very active in expanding our tools and our capabilities around the world to enable the consultants to be able to drive this technical advice in real time with them, be able to sharpen their focus on the client segmentation in different areas around the world, both multinational, large and mid-market.

You highlighted international and U.S. I want to talk a second about multinationals because we have an awful lot of U.S. multinationals that we're spending a lot of time with driving growth and winning global benefits management deals with. We built facilities around the world that are leveraging that large global broad network that we've built, where we've got best-in-class brokerage locally in the countries I would say the solutions are really resonating with our larger global benefits management opportunities, both in Continental Europe, but as well as really in the U.S. with the large employers, driving more value for those clients bringing together the local and multinational advisory capabilities that we built, combination of brokerage and consulting to really help them navigate costs and then access to care around the world.

So I would say, overall, we have a very positive outlook on the growth trajectory of the business. We expect the growth momentum to continue. We've got good strong macros and client demand supporting the value that we bring to clients. .

Yes. Thanks, David, for that question. Our outlook remains positive in health.

SP1 Our next question comes from the line of Elyse Greenspan with Wells Fargo.

My first question, just going back to Guy Carpenter. You guys were obviously unable to offset the rate headwind on that business like in prior quarters. So just given the current pricing environment, would you expect negative organic within that business for the foreseeable future?

Thanks, Elyse. As I mentioned, it wasn't just price, of course. We were impacted a bit by market consolidation, so -- which wasn't helpful to us. But Dean mentioned some of the opportunities for growth not just in the second half, but looking ahead, in fact, in casualty and M&A advisory, all the alternative capital work. And so we're excited about that. And so I wouldn't look too far forward in terms of what happened in the second quarter and a flat first half. And even in the second half, our mix of business is different than what it was. It's obviously a much smaller second half, but it's a different mix of business than the first half.

Do you have a follow-up, Elyse?

Yes. And then my second question was on the U.S. and Canada. I was just hoping to get a little bit more color on the contribution just from data centers as well as M&A transactional type business in the second quarter and how you think about both of those contributions going forward? .

Yes. Both digital infrastructure and TR transaction risk were important drivers of growth for us in the first half and in the second quarter. So we feel good about it. Digital infrastructure has been -- we've been in the TR business obviously for many, many years. the growth and investment, obviously, in the digital infrastructure ecosystem is also an area that has been a focus of ours for some time. And not just insurance, I would point out, our consulting business, our investment operations and Mercer investments had an outstanding quarter. We're very excited about how that business is positioned.

But we have a unique capability set. And so advising on contracts and SLAs between the various parties is an important part of it. Business interruption mapping and modeling is important work. I talked in my prepared remarks about some of the energy-related issues and the counterparty credit exposures that utilities have to some of these data center owners. And so it was a good contribution in the second quarter, and we have a very -- as Nick pointed out, a very robust pipeline going forward.

Andrew, 1 more. .

Our next question comes from the line of Pablo Singzon with JPMorgan.

I wanted to follow up on one of your comments about leveraging more of your internal wholesaling capabilities. And I'm actually more interested in how your counterparties are acting as you're internalizing more of that function, right? So any commentary you can provide on the willingness of E&S insurers to deal with you directly rather than a wholesaler and sort of -- how is your relationship with the wholesaling community involving?

Yes. I mean, of course, it's not a robust moment for the E&S market as property pricing is under pressure and more business has migrated back to the admitted marketplace. But I think Nick mentioned when he was talking about some of the growth opportunities for us. So when we acquire agencies in the middle market here in the United States, we typically pick up a trail of third-party wholesale business and some of those -- some of those companies have chosen to compete with us in places. And so we created a desk for MMA and McGriff in the London market, which has been driving a bit of growth for us and enable us to bring back some business from third parties in the London market.

So we're not looking to build a third-party wholesale business, but -- and we have exceptionally specialty talent. And so the third-party wholesale do a nice job for us, but we want to use them when we need to use them. Do you have a follow-up, Pablo, before we wrap up?

Yes. Just 1 quick one. On the wealth business, how much of the revenues there are tied to markets and just generic type fees that are maybe dioceses or headcount?

Thanks for that question. It was an excellent quarter. And obviously, markets were strong, but we had an excellent new business quarter, Pat, very briefly.

Yes. Listen, we're really pleased with where we were on the wealth business. We've been able to build on a lot of the recent acquisitions we've made to enhance our capabilities over the last couple of years. We've also done a great job increasing the partnership across the firm working with Guy Carpenter, Marsh Risk, Marsh Manager, Consulting to raise capital and develop different solutions. Mark mentioned the AUM growth. We're pleased with the AUM growth of 26% up to $846 million. But I will highlight, we also continue to see really strong growth in investment consulting, where assets under advisement, not paid for basis points, more fees is up to $16 trillion, right? So we are having a big impact in the market.

Thank you, Pat. Thank you, Pablo. Thank you all for joining us this morning. I want to thank our colleagues for their dedication to Marsh and our clients for their continued support. We thank you all very much, and we look forward to speaking with you again next quarter. Andrew, back to you.

Ladies and gentlemen, this does conclude today's program, and you may now disconnect.

Welcome to Marsh's Earnings Conference Call. Today's call is being recorded. First quarter 2026 financial results and supplemental information were issued earlier this morning.

They are available on the company's website at corporate.marsh.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 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 Instructions]

I'll now turn this over to John Doyle, President and CEO of Marsh.

Thanks, Andrew. Good morning, and thank you for joining us today to discuss our first quarter results. I'm John Doyle, President and CEO of Marsh. On the call with me is Mark McGivney, our COO and CFO; and the CEOs of our businesses, Nick Studer of Marsh Risk; Dean Klisura of Guy Carpenter; Pat Tomlinson of Mercer; and Ted Moynihan of Marsh Management Consultant. Also with us this morning is Jay Gelb, Head of Investor Relations.

Let me start by highlighting recent changes to our Executive Committee. Mark was named Chief Operating Officer of Marsh in addition to serving as our CFO. In this expanded role, Mark will take on more responsibility for evolving our strategy and working across our business to drive execution of top priorities, support collaboration and accelerate pace.

We also announced Nick as the CEO of Marsh Risk. Nick is a proven growth leader as demonstrated by his record as CEO of Oliver Wyman. His experience advising corporate and public sector leaders on the topics of risk and strategy positions Nick well to deliver on our growth ambitions. Nick succeeded Martin South, who is now our Chief Client Officer.

Martin will focus on elevating the client experience across the company and help us better leverage AI to support clients. And Ted succeeded Nick as CEO of Marsh Management Consulting. Ted has more than 3 decades of leadership experience at Oliver Wyman, and he is a respected adviser to business and government leaders. I look forward to him driving continued growth at Marsh Management Consulting. Congratulations to Mark, Nick, Martin and Ted. These leadership changes are all about growth, enhancing the client experience and helping us capture the benefits of Thrive.

Turning to results. Our performance in the first quarter reflects solid execution despite challenging market conditions. Overall, we grew revenue 8% in the quarter. Underlying revenue increased 4% despite lower fiduciary interest income and continued downward pricing pressure in insurance and reinsurance. We are seeing strong sales across our business, and we are pleased with the sequential improvement in the growth at Marsh Risk. Adjusted operating income grew 8% from a year ago, and adjusted EPS also grew 8%.

Turning to the ongoing conflict in the Middle East. Our primary concern has been the safety and well-being of our colleagues and clients and helping them navigate the challenges in the region. The impact on our business and the broader insurance industry has been limited. The economic issues related to the conflict in the gulf are not about insurance. While certain lines like marine coverage may experience price spikes for war risks, ultimately, the gating issue is the escalation. A sustained conflict in the region will create more uncertainty and risk for the world's economy.

Broadly Marsh is advising clients on how to build greater resilience in their business planning, we're helping them address supply chain issues, review their cyber exposure and we are advising on investment decisions. And of course, we are working with clients to manage insurable risks, particularly in marine, aviation and energy. We've also engaged with governments as they work to minimize economic disruption and maintain global trade, particularly in energy, fertilizer and other commodities.

Challenging events like this underscore the purpose of our work. It's also why we believe Marsh provides a unique value to clients who need strategy, talent, investment and risk advice in complex times. I'd like to take a moment to discuss our AI strategy and why we believe Marsh will be an AI winner. Our strategy leverages our scale and capacity to invest in AI to drive even greater value from our proprietary data assets and our role as our clients' trusted adviser.

We are focused on 3 main pillars. The first is growth. We are building AI-enabled applications and services that are generating new revenue streams as well as enhancing world-class capabilities and data-driven insights in insurance, health, human capital and investments. Examples of these products include ADA, Centrus, UCLI and GC Quotebox, and many more of these applications are in development.

We also see significant AI growth opportunity in consulting. Oliver Wyman's AI Quotient team created to help clients deploy their own AI strategies is its fastest-growing practice. We're advising clients in multiple sectors, such as banking, energy, government and manufacturing around AI and workforce transformation. We've already advised on more than $50 billion of capital investment in AI deployment. And Mercer is working with clients to assess and inventory skills and redesign jobs as AI is integrated into ways of working.

Our second pillar is productivity, which focuses on deploying AI capabilities to boost the performance of our colleagues. This is showing up in hundreds of different ways across a wide variety of roles. A good example of our work is to embed AI our client management tools and to develop AI agents to help colleagues source and prequalify leads to support sales productivity.

The final pillar is efficiency. Across our business, we are starting to see the impact of AI automation. A critical reason for creating our business and client services unit, or BCS, is to exploit the efficiency potential of AI. By consolidating our back-office operations and technology into scalable centers, BCS is accelerating the pace of AI-driven automation and process reengineering. For instance, our document ingestion capability is now handling thousands of documents weekly already improving efficiency in these processes by 20% and enhancing the quality of the data and its usability to further support clients with valuable insights.

We are beginning to reduce the cost and time associated with upgrading code to modernize applications. For example, we recently used AI to turn a legacy tool into a newly designed broker workbench in days saving months of team effort. We have deployed agentic AI in our IT help desk, significantly reducing inquiries, improving colleague experience and creating downstream efficiencies in our support centers. And in our policy renewal center, AI has enabled us to transform a traditionally manual e-mail heavy process into a streamlined digital solution in weeks, a project that otherwise would have taken many months.

AI-enabled savings will fuel additional growth investments, including in producer talent and new capabilities while building our confidence in continued margin improvement. It's important to remember that Marsh is not selling commoditized products or simply procuring insurance at the lowest possible price. That's not who we are or what we do. AI will help us serve our clients who have bespoke and complex needs even better. It will not replace the trusted advice, expertise and capabilities with which we deliver value to clients.

In our risk business, we help clients identify and understand their exposures, implement loss prevention strategies and provide data and insights to make real-time decisions. And after developing the strategy, we help them finance their risk through self-insurance, traditional insurance, capital markets or captive management solutions to achieve their goals. Similarly, in consulting, we provide high-impact services to help organizations confront their biggest strategy and talent challenges. And we service trusted advisers to executive leadership in their company's transformative moments.

Our client relationships, data and insights and the expertise of our professionals worldwide built over 155 years of market leadership is why we see AI as a powerful accelerator and enabler in delivering value to our clients, colleagues and shareholders.

Now turning to market conditions. We continue to see a competitive insurance and reinsurance environment. According to the Marsh Global Insurance Market Index, primary commercial insurance rates decreased 5% in Q1, driven largely by property. This follows a 4% decline in the fourth quarter of 2025. As a reminder, our index skews to large accounts. Rates in the U.S. were down 1%. Europe, Asia and Canada declined mid-single digits. U.K. and Latin America were down high single digits, and the Pacific region had double-digit decreases.

Global property rates decreased 9% year-over-year, which was the same pace as last quarter. Global Financial and Professional liability rates were down 5%, while cyber also decreased 5%. Global Casualty rates increased 3% with U.S. excess casualty up 18%, reflecting ongoing pressure in the liability permit, and workers' compensation decreased 1%. In reinsurance, there is substantial capacity to support client demand as reinsurers pursue growth. Throughout the first quarter, market conditions were generally consistent with what we saw at January 1. The strong reinsurer profitability, high ROEs and increased capital levels have resulted in ample supply of property cat capacity and meaningful rate reductions.

It was also another active quarter for cap bond issuance. U.S. property cat reinsurance rates remain competitive for the April 1 renewal period. Rates for non-loss impacted accounts were down 15% to 20%, a slight acceleration from the January 1 renewal season. In U.S. Casualty Reinsurance, we continue to see a range of outcomes depending on loss experience with primary cares demonstrating limit, rate and underwriting discipline. In Japan, April 1 property cat rates overall were down 15% to 20% on a risk-adjusted basis.

Early signs for June 1 Florida cat renewals point to similar market conditions characterized by rate reductions and excess supply as seen in January and April. There are early indications that Florida's legal reforms will contribute to further risk-adjusted decreases. Our clients are benefiting from the current market conditions. And as always, we continue to advise them on designing the best risk programs aligned to their goals.

Now let me turn to our first quarter financial performance and outlook, which Mark will cover in more detail. Consolidated revenue increased 8% to $7.6 billion, growing 4% on an underlying basis, with 3% growth in RIS and 5% in Consulting. Marsh Risk was up 4%. Guy Carpenter grew 2% and Mercer increased 5% and Marsh Management Consulting grew 6%. Adjusted operating income grew 8% and adjusted EPS was $3.29, up 8% year-over-year. We also repurchased $750 million of our stock.

Looking ahead, we are well positioned for another solid year despite headwinds from lower interest rates and decreasing insurance and reinsurance pricing. We continue to expect underlying revenue growth in 2026 to be similar to last year. We also anticipate continued margin expansion and solid adjusted EPS growth. Our outlook is based on current conditions and the economic and geopolitical environment could change materially from our assumptions.

In summary, we're off to a solid start in 2026. Despite challenging market conditions, we remain focused on executing our strategy and continuing our track record of strong results. The Thrive program will drive growth through investments in talent and AI, strengthen our brand and generate greater efficiency. We're excited for AI's potential and committed to being an AI winner through growth, productivity and efficiency gains. Marsh is a resilient business that provides critically important advice and solution particularly in complex times such as these. We have proven our ability to deliver across cycles, and I am confident in Marsh's future.

With that, I'll turn the discussion to Mark for a more detailed review of our results.

Thank you, John. Good morning. Our first quarter results represented a solid start to the year, reflecting strong execution despite a challenging environment. Consolidated revenue increased 8% to $7.6 billion with underlying growth of 4%, which came despite a headwind from fiduciary interest income and declining P&C rates. Operating income was $1.8 billion and adjusted operating income was $2.4 billion, up 8%.

Our adjusted operating margin was unchanged at 31.8%. GAP EPS was $2.36 and adjusted EPS was $3.29, up 8% over last year. Looking at Risk & Insurance Services. First quarter revenue was $5.1 billion, up 6% from a year ago or 3% on an underlying basis. Operating income in RIS was $1.3 billion. Adjusted operating income was $1.9 billion, up 7% over last year, and the adjusted operating margin was 38.3%, up 10 basis points from a year ago.

At Marsh Risk, revenue in the quarter was $3.7 billion, up 8% from a year ago or 4% on an underlying basis. Growth increased sequentially despite the more challenging market conditions, reflecting solid performances in the U.S., including MMA and across international. In U.S. and Canada, underlying growth was 3%. In international, underlying growth was 5%, with EMEA up 6%; Asia Pacific up 5% and Latin America up 2%. Guy Carpenter's revenue in the quarter were $1.2 billion, up 3% or 2% on an underlying basis, a good result considering the current pricing environment.

Growth was impacted by softer reinsurance market conditions and a tough comp to 5% underlying growth in the first quarter of last year. However, Guy Carpenter executed well and drove strong new business despite the tough market conditions. In the Consulting segment, first quarter revenue was $2.6 billion, up 11% or 5% on an underlying basis. Consulting operating income was $525 million and adjusted operating income was $552 million, up 13%. Our adjusted operating margin in Consulting was 21.6%, up 40 basis points from a year ago.

Mercer's revenue was $1.7 billion in the quarter, up 11% or 5% on an underlying basis. Health grew 6%, reflecting continued growth across our regions, especially in international. Wealth was up 5%, led by our investments business. Our assets under management were $727 billion at the end of the first quarter, up 5% sequentially and up 19% compared to the first quarter of last year. Year-over-year growth was driven primarily by new wins, the impact of capital markets and acquisitions.

Career was down 2%, reflecting continued softness in project-related work in the U.S. partially offset by sustained demand in International. Marsh Management Consulting generated revenue of $897 million in the first quarter, up 10% and or 6% on an underlying basis, reflecting solid demand across most regions and sectors. Fiduciary interest income was $85 million in the quarter, down $18 million compared with the first quarter of last year, reflecting lower interest rates.

Looking ahead to the second quarter, we expect fiduciary interest income will be approximately $80 million. Foreign exchange was an $0.11 benefit in the first quarter. Based on current exchange rates, we expect that FX will have an immaterial impact on earnings in the second quarter and the rest of the year. Corporate expense in the first quarter was $74 million on an adjusted basis compared to $81 million in the fourth quarter. Looking ahead to the second quarter, we anticipate corporate expense of approximately $90 million, which includes some one-off timing items. We're making good progress on executing our Thrive program. We remain on track to generate $400 million of total savings, a portion of which will be reinvested for growth and incur approximately $500 million of charges to generate the savings.

Total noteworthy items in the first quarter were $521 million, including $37 million of costs associated with Thrive. Noteworthy items this quarter also include a $425 million charge relating to litigation stemming from the collapse of greenfield capital in 2021. As we have previously disclosed, Marsh served as greenfields insurance broker starting in 2014. The charge in the quarter represents the best estimate of our liability in this case, and was influenced by a recent court sponsored mediation among the parties involved.

Our 10-Q filed earlier today includes further information on this matter and the charge. As you can appreciate, this litigation is ongoing, so we aren't able to comment further at this time. Interest expense in the first quarter was $240 million. Based on our current forecast, we expect interest expense in the second quarter to be approximately $245 million. Our adjusted effective tax rate in the first quarter was 25.1%. This compares with 23.1% in the first quarter last year, which benefited from discrete items, most notably a meaningful benefit related to share-based compensation. When we give forward guidance around our tax rate, we do not project discrete items.

Based on the current environment, we expect an adjusted effective tax rate of between 24.5% and 25.5% in 2026. Turning to capital management and our balance sheet. We ended the quarter with total debt of $20.6 billion. Our next scheduled debt maturity is in the third quarter with $550 million of euro-denominated senior notes mature. Our cash position at the end of the first quarter was $1.6 billion. Uses of cash in the quarter totaled $1.3 billion, included $440 million for dividends, $89 million for acquisitions and $750 million for share repurchases. We continue to expect to deploy approximately $5 billion of capital in 2026 across dividends, acquisitions and share repurchases.

The ultimate level of share repurchase will depend on how our M&A pipeline develops. Turning to our outlook for 2026. Despite the challenging environment, we remain well positioned for another solid year. We continue to expect underlying revenue growth will be similar to the levels we generated in 2025 along with another year of margin expansion and solid adjusted EPS growth. For modeling purposes, we expect to generate more margin expansion in the second half of this year than in the first half.

With that, I'm happy to turn it back to John.

Thank you, Mark. Andrew, we are ready to begin the Q&A session.

Certainly. [Operator Instructions] Our first question comes from the line of Greg Peters with Raymond James.

I wanted for my first question, to focus on our margin results. John, I know we're quite proud of the 18 years of consecutive margin expansion and presumably, you're going to hit your 19th year in 2026. But because of these results, it's caught the attention of many about where the ability to generate future margin expansion will come from?

And maybe it's embedded in your AI comments. But with your margin results being so high, curious about the risks of AI disintermediation across the various businesses that you have?

Sure, Greg. Let me hit the margin part of that and then maybe I can talk to AI disremediation risk. So sure, AI, and I gave you a bunch of examples right in my prepared remarks around efficiency gains and some that we're already seeing today. Let me remind everybody, of course, we've guided to year '19 of margin expansion this year, and we fully expect to do that. Thrive, of course, is broadly an important lever for us. BCS I think in the broader kind of AI discussion in the economy and amongst businesses and governments, AI often is being used as a term for broad-based automation, but I distinguish the 2.

So we're -- we still have real possibilities around and are actively building out our capability centers and using kind of more traditional digitizing strategies to drive efficiency gains. So there's a lot in front of us there. And so we're excited about the path that we're on. As I said in my prepared remarks, we expect to be an AI winner, we moved early on AI, and we're excited about how it's already making us better and how it's going to make us better in the future. And our scale and data and insights enable us to move more quickly. I would say to you, we've competed with early-stage tech-enabled startups for a long time. We've competed with direct insurers for a long time and competed successfully with them.

When I think about the attributes that we have is that we're in the early days of what's possible around AI, our trusted client relationships matter. Our data matters, our modeling, it matters, our ability to advise on risk, not just by insurance, really matters. Our ability to connect to a complex ecosystem of risk financing really matters. We don't just buy insurance for our clients. We do so much more than that. So when I think about all the attributes that we have and what our ability is to be an AI winner, I can't think of a better place to be -- to start and to begin the early days of what's possible around AI than here.

Do you have a follow-up Greg?

Yes, I do. And I'm going to pivot to capital management. the public brokers, the stock prices, everyone's reset lower, I'm not sure on the M&A side that the prices or valuations of acquisitions have reset lower yet. So I'm just curious on how you're thinking about the allocation or difference between growth through M&A versus repurchase of your own stock considering the reset and value of the stock price?

Yes, it's a great question. What I would say is our strategy remains the same, right? We want a balanced approach to capital management. We favor investing in our business, whether it's organically or inorganically. Our goal remains to increase our dividend each year. And buybacks ultimately will depend on M&A. And as I mentioned in my prepared remarks, we did $750 million of buybacks in the first quarter. And we expect to deploy -- Mark mentioned we expect to deploy about $5 billion worth of capital this year. We're active in the market. Our pipeline is strong. So I feel terrific about that.

And just as a reminder for everyone, 18 months ago, we closed on the biggest deal in our history, right? So not so long ago. And last year, we deployed about $850 million to M&A. And we did a meaningful deal at MMA in the fourth quarter in Hawaii, as most of you would remember. We did a couple of small deals, 3 small deals in the first quarter. We also actually closed on the sale of an admin business in the Pacific. I'd point that out to you. And we announced the acquisition of AltamarCAM. It's a private market asset manager with about $20 billion of AUM. That's kind of regulatory approval. So we expect that to close sometime later in the year.

So we're likely to continue with our string of pearls approach. We do have the capacity to do larger deals, who knows what the marks are PE-backed assets. I will say, over the course of the last couple of quarters and some conversations we've had, there's been growing gaps between bidding -- bid and ask. We'll see how that materializes over the rest of this year. We've seen financial sponsors be a bit more aggressive than strategics. And Greg, we're going to, as always, be disciplined about how we deploy our capital.

Andrew, next question, please.

Our next question comes from the line of Mike Zaremski with BMO.

Great. Just 1 question on maybe around the AI conversation, specifically on the value-add services that you offer your clients. Curious a couple of your peers have talked about the Claims Advocacy Group, and they've offered some stats around the how the Claims Advocacy Group has made sure your clients get their claims paid in a timely manner. Just curious if you see that as one of the bigger value adds and if yes, if there's any stats or anything you'd like to share?

Yes. Sure, Mike. And maybe what I'll do is I'll ask all of our business leaders just to share some thoughts on how we're investing in AI and how it impacts the value that we deliver. But we have the largest claim group -- Claims Advocacy Group in the industry by some measures. So maybe I'll start with Nick. Maybe you could share some thoughts, Nick?

Yes. Mike, thank you for the question. Maybe let me start on the claims advocacy question. As John said, we have a very large team plus additional specialists to handle highly complex claims. And the important thing to state, first of all, is that policy drafting and placement that creates contract certainty is the first stepping point here, so that you don't have rejected claims, which then require advocacy. But when you do our advocacy is strong and if you take an example like Claims IQ, which is our AI-enabled toolkit, we've got several thousand colleagues now drawing an AI-enabled analysis of almost $200 billion of loss information, which helps them support much better advice decision-making and advocacy.

But if I take a few more examples tapping into John's prepared remarks, this is a bespoke fragmented, highly complex ecosystem from client service and a advice all the way through to placement. And A lot of the focus is on AI, but this is an ecosystem, which is digitizing steadily, and that digitization is critical to deploy the AI. There's lots more work to do just on digitization. And we still see human relationships and human judgment continuing to be central. But the AI investments are, I think, massively enabling of growth and of productivity and of efficiency.

So value-added services, as you said, we're investing heavily in our digital client experience. We have a suite of tools, which you may have seen for many years in Blue[i] and Centrus, which we've talked about before, we're evolving these into what we call the Marsh risk companion, which will help clients understand and analyze their risks and their options across a wider range of their activities. But what's really crucial about the suite of tools is they're now all feeding off a new analytics engine. It's built from the ground up to leverage AI at scale. One of the things here is you're able to leapfrog with AI. And we call it the Marsh Risk cortex, but it really pulls together everything we need from our massive data sets and our most advanced models.

And the crucial thing, I think, is not what features have we got, but it's the speed and the flexibility with which we can launch new applications because our clients' needs are evolving rapidly, and new needs are emerging. The first application is powered by the risk cortex, including our renewal companion, our captives companion, they're going to be launched in a couple of weeks at RINs. And then you should expect to see more flowing from that data set and analytical tower.

And then maybe just to give a couple of more examples, we've talked before about our general proprietary AI suite just within Marsh Risk and up to more than 2 million prompts a month. So that helps productivity across the organization. But I know you're looking for sort of specific examples, too. So if I take something like we've rolled out tools to aid coverage gap analysis and quote comparison across our risk management and the Marsh agency businesses.

And in the areas where we pilot that, we see the amount of work that, that takes off our client teams drive a 50% increase in sales velocity in the pilot. And we think some of that gain is scalable across the whole organization. So really lots going on, lots of activity to support our client-facing colleagues and our operations colleagues in work.

Thank you, Nick. You're starting to sound like an insurance broker. Dean? Any thoughts from Guy Carpenter?

Thanks, John. And Mike, you heard John in his prepared remarks, mentioned GC Quotebox, which is an AI-driven document ingestion tool. This is really a game changer for Guy Carpenter in our business. We get huge quantities of unstructured data from our clients, and this tool helps us ingest all of that data and makes it more efficient to match risk and capital through this tool, which will certainly improve turnaround times, make our teams, our brokers more efficient and deliver better turnaround times and more efficiency for our clients.

Perfect, dean? Pat, how are you using AI Mercer?

Let me go 1 of those examples and maybe give you 1 where we're using it directly with clients. So Mercer Fiber is one of the tools where we're leveraging the broader AI stack that we have at Marsh to kind of further enable our existing digital tools. So health consultants leverage fiber when they're working directly with the client. It enables them to have these real-time iterative discussions on all aspects of their benefit programs, an incredibly powerful scenario planning and modeling during strategy sessions.

What we do is we use fiber throughout the year as well to help with budget tracking, with updates with benchmarking, other plan management activities. And what it does is it allows us to visually display these insights and the data from across our health and benefits practice and then it combines it with the client's actual population and their actual claims data. And that allows us to understand and show clients directly the geographic differences in health care cost and quality based on their actual data, and we could do that live.

And it allows us to really work to identify the most effective health care options for a specific population, right? And this is differentiating us in the market, really by showcasing the capabilities we've got the insights in a single integrated platform to be very client specific because it's very targeted to them and very client-centric.

Thank you, Pat. Ted, welcome to the call. You want to share some thoughts on why we're excited about AI at Oliver Wyman.

SP26858316 Thank you, John. Thank you. And you mentioned already that our AI platform Quotient is our fastest-growing capability right now. And AI is developing into a very large opportunity for us as a consulting business that works on strategy and transformation. Let me mention a few examples. -- all of our work around performance transformation, where we're helping our clients improve how their businesses work and there's a ton of reengineering of processes and systems around AI.

In industries, I would mention like banking, like health care, like advanced manufacturing, we're seeing the volume of work there really start to grow quickly. Growth and strategy work where we're helping our clients rethink kind of customer service and distribution channels. We've -- we've helped a number of clients already build new apps and chat GPT, a very new change to the way commerce is working, and we think going to be very transformational in industries like media, retail, communications, that's really a big deal.

And you mentioned, I think, in your introductory remarks, but with governments, with investors, we've been helping to mobilize capital, where governments and investors are investing in AI skills and capabilities and new AI start-ups and new cost. And look, it's also changing the way we deliver our work and it's allowing us to -- AI is helping us deliver more value to clients. And just to give you one example in our private capital business, where Quotient diligence is changing the way we help our clients invest in businesses. And we're using very sophisticated tools to do market analysis, competitive analysis, growth opportunity analysis, and that allows our clients to make better investments and sometimes if they want to quicker investments in the private capital world.

Thank you, Ted. Sorry, Mike, for that long answer, I just want to make sure everyone realizes why we're so excited and why we think we're best positioned to deliver greater value than we ever have to our clients and to our shareholders. So do you have a follow-up, Mike?

Yes, really quick. That was helpful follow-up. Just on the the pace of Marsh's hiring in terms of the producer level, do you expect that trajectory to change materially in 2016 and has higher or lower?

Yes. No. Thanks, Mike. We had a good quarter, attracting production talent to the team in key markets, our brand in the market for town and in the areas where we compete and deliver for our clients is very, very strong. We start with the best talent and the most talent in the markets that we compete with. Would also maybe not your question, but our colleague retention is strong, our colleague engagement is outstanding. And so it's all anchored by a colleague value proposition, which is a really important way in which we try to convince people to stay and to give big parts of their career to our company. So thank you, Mike.

Next question, Andrew?

Our next question comes from the line of Brian Meredith with UBS.

A couple of them here for you, John. First one, I'm just curious, given the level of rate decreases that we're seeing out there. What are you seeing with respect to client demand at Marsh, given this uncertain kind of macro environment, are you using savings to purchase more coverage? Are they kind of holding back right now to see how the year kind of unfolds?

Yes. I don't know it's very -- thanks, Brian, for the question. I'm not sure it's a very helpful answer, but sometimes, I guess would probably be the -- some of it. The market obviously got modestly more competitive in the first quarter. I talked a bit about the strong returns on the reinsurance side, but obviously, insurers and reinsurers have posted strong underwriting results. They're all looking for more growth, right, as a result. And so maybe another point I'd make here, Brian, is not directly on your question is, although rates are down, the cost of risk is clearly increasing.

And I would think at a magnitude probably 2x GDP with liability inflation, medical cost inflation, cyber risk, certainly accelerating with AI, the frequency of extreme weather and how much more of the economy and society is exposed to those events. So it's maybe a more important driver of demand for us over the medium term. But maybe I'll ask Nick and Dean to just talk about a couple of market observations and what clients are doing in terms of purchasing. Nick?

Yes. I mean, as John said, the answer is sometimes. But in general, I think, yes. We've also seen continued trend and a rising trend in new business growth. And if I look at, say, the U.S. and Canada, highlights there include double-digit new business growth, continued strong growth at Marsh Agency, and double-digit growth in the specialties business. So transaction risk and construction, both growing strongly. And all of that with the -- across globally new business trending up for 4 quarters. But we're cautiously optimistic as we go through the rest of the year.

Dean?

Yes. Thanks, John. And Brian, maybe I'll just touch on kind of new business opportunities overall. And despite the property market and everything that John and Mark talked about which was a clear growth headwind for Guy Carpenter in the quarter. We're seeing record new business across our platform. We grew double-digit new business growth in every region in business globally in the quarter. I was really pleased with that. As Mark and John noted, we continue to see a really strong cat bond market and ILS market overall. We issued 7 cat bonds in the quarter, a record for Guy Carpenter.

We've seen some $2 billion of new third-party capital flow into the market, just chasing casualty side cars, whole account quota shares and other similar vehicles. We've gotten several new mandates around those, very, very promising. I've talked in prior calls about our capital and advisory business, our investment banking boutique. We've never received more M&A mandates -- M&A advisory mandates, forming new side cars, as I mentioned, raising capital for MGA's Lloyd's platforms, our structured credit business, our MGA business.

And in the last call, we talked about data centers, right? And just a couple of headlines there. I mean there's 50 deals that have been in the marketplace looking for more than $7.5 billion of capital to put these together. And all of my clients, Guy Carpenter's clients want to write more data centers, but they all need additional reinsurance protections. And I think the newest element of it, Brian, is clients now are talking about issuing cat bonds and leveraging third-party capital to write more data center business. And so I would say, overall for Guy Carpenter, there's more diverse new business opportunities that we've seen in several years.

Thanks, Dean. SP1 Brian, do you have a follow-up?

Yes, absolutely. So John, it's clear that AI is going to have productivity benefits,, it's going to benefit client experience and growth, et cetera. But 1 of the debates I'm having with investors is how much of the productivity gains is Marsh going to be able to keep and see a benefit from a margin perspective versus protects being competed away or giving back to clients. Maybe give us your perspective on that.

Yes. It's a great question, Brian. And I talked about where we see efficiency opportunities -- Productivity opportunities, new sources of revenue generation. So -- we don't think anybody is better positioned to capitalize on these developments in technology than we are. And so I'm quite excited about that. Our fees have been for a long time, stable as a percentage of premium, and they're quite small compared to the cost of risk that we help our clients manage.

And so we feel good again about how we're positioned and what that would mean. I think some of us on this call have talked about in the past and I mentioned in my prepared remarks, if you think we're a discounted insurance broker, yes, I might be a little bit worried, but we're not. That's not what we do. And so we feel good about what this technology will meet to our business.

Thanks, Brian. Andrew, next question.

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

First question I had for you was just going back to the capital deployment and M&A side. I'm just curious how, if at all, AI is changing the M&A strategy. Are you staying away from certain businesses pivoting towards others and have your technology requirements or anything else changed?

No. We -- it's a good question, Rob. We've had some opportunities and have looked at some businesses that have pitched kind of AI as part of their value. And I think there was a very significant gap between how some of those businesses for trade their tech value relative to how we saw their tech value. And so -- but I do -- and I recognize you can't plan around hope. So I say this with that in mind. But I'm hopeful that actually the scale benefits that we bring to investing in AI and the data sets and client relationships and all the advisory work will create opportunities for us to consolidate smaller brokers over time who are going to struggle to compete and to invest in these technologies.

And even where they're able to make space for investment, they just don't have the data assets and the other capabilities that we have. And so I'm optimistic over time that will be a driver of M&A for us.

Do you have a follow-up, Rob?

Yes, that's very helpful. Just had a follow-up on the MMA business. I understand you guys don't break that out. But just curious if you would characterize that business as a tailwind to organic growth for the RIS business and if it is, like, do you think it could continue to be a tailwind despite more pricing pressure for a commission-based model here?

Yes. For -- the answer is yes, right? So MMA has been a tailwind to our growth for most years and most quarters, not all, but for most, as we've talked about in the past, we still have relatively modest penetration into the middle market. And so while Dave and the team have made a tremendous amount of progress, and we couldn't be more excited about the business we've built. In many respects, I feel like we're just getting started. We absolutely have the possibility for much greater growth.

What I would say about pricing for for a number of, I think, rational reasons, pricing in the middle market has been -- has been more stable through cycles. That continues to be the case right now. It's one of the areas where we're delivering some of the productivity tools to help make our producers even better. And so we're really excited about the opportunity in the middle market. And by the way, not just in the United States, where we've learned a great deal in the last 15 years in building out that business and from some very talented executives we brought on, and it's helped making us better and capitalize on middle-market opportunities in other economies around the world.

Thank you, Rob. Andrew, next question.

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

Great. First question for John. I completely get the increasing benefits that you're going to be able to -- or increasing value that you're going to be able to bring to clients and carriers through AI. Are commissions still the right way to be compensated for that? Or do you expect compensation to become more transparently tied to the individual services?

Look, Meyer, we have a broad risk of -- or broad range, excuse me, of the way we get compensated today. We have fees, we have commissions. We have success fees, right? I'm sure there are other things I'm not even thinking about. We're very transparent with our clients about how we get paid. And so -- so anyway, I mean, we'll see how those conversations evolve over time. I wouldn't -- I would suggest to you, I see no -- zero trend kind of around that. And so -- but again, we're happy to get paid in any form. We think we created outstanding value for our clients, and we think we get deserve to get paid well for that, assuming we deliver and execute on behalf of them.

And as I mentioned before, our commissions and fees are a relatively small part of the overall cost of risk. And as a percentage of premium, they've been quite consistent over a long period of time.

Do you have a follow-up, Meyer?

Yes, just a quick modeling question. Is there any way of teasing out roughly how much of the wealth revenues come directly from assets under management?

We haven't disclosed that historically, but it's obviously a range of, as we call it, AUDM or delegated management AUM and advisory fees. We're excited about how we're positioned in the investment advice business globally. We have -- we advise on close to $17 trillion assets around the world. And as a leading adviser in pension and retirement markets for a long time all over the world, we're very, very well positioned. I would also note, we're the largest OCIO, Outsourced Chief Investment Office in the market, and we continue to see a lot of possibilities for growth there. And I mentioned AltamarCAM and, maybe, Pat, you can talk about AltamarCAM and some of the investments we're making in our businesses make us even stronger.

Yes. Thanks. And listen, quickly on the wealth side in our business. Obviously, Mark had talked about the growth, we're pleased with the growth. It was led by our Investments business, in particular, our OCIO offering. So I understand the spirit of the question. We also will highlight our really seeing solid growth in our investment consulting business, right, which is not based on the AUM, based upon volatility in the market and clients seeing significant demand and need.

And we have been to the point you're asking, diversifying our overall business and our AUM away from DB Vence, right? So it has been moving -- but we've been building out actively our deep defined contribution solutions around the world, and we've really been advancing our capabilities around nonpension clients, and that's been a major focus for us. insurers, endowments and foundations, family office and wealth management. And I think that goes into the spirit of the M&A and the AltamarCAM announcement that John kind of teed up from where we agreed to acquire AltamarCAM.

They're specialists in private markets from an asset management solution perspective. They've got about EUR 20 billion AUM, we think it's going to significantly increase and expand our capabilities in the private markets platform. It's going to add a certain expertise in secondaries and co-investments, in bespoke accounts in evergreen vehicles, and that's going to allow us to offer much more comprehensive multi-asset private market solutions to clients. right? So we definitely feel that this is an area that we've been investing in heavily, you've seen from our announcements over the deals we've done as a firm over the last several years. And we've also been consciously making organic investments and trying to build out our capabilities broadly around being a main investment player.

Thanks, Pat. Thanks, Meyer. Andrew, next question please?

Our next question comes from the line of Elyse Greenspan with Wells Fargo.

My first question is on Guy Carpenter. So you guys were at 2% for the quarter, and I think you did point out, right, the elevated comp at 5% last Q1. I believe you were at 5% right throughout last year. So does the 2% feel like where this business should trend, I guess, at least in the near term, given it sounds like your pricing views or, if anything, right pointing to things getting a little bit worse post the [ 11 ] renewals.

Yes. Elyse, as we've talked about, it's a very soft property cat reinsurance market. And so we're confronting that. We're particularly exposed to that in the first quarter. In the second quarter a bit as well with Japan and Florida, as we talked about. What I would say to you, Elyse, is that I'm quite pleased with our execution in spite of the kind of current market headwinds. And again, these market headwinds are good for our clients, right? So we're delivering for our clients in the moment.

But client retention was strong, and we had an excellent new business quarter. And so I feel terrific about how the team is executing, what's a challenging market. It's not likely to be Guy Carpenter's best growth year this year, right? And so we've been planning for that and guiding to that.

Do you have a follow-up, Elyse?

Yes. My second question is just on capital, right? You guys were more active in the Q1 relative to prior first quarters. Obviously, we've seen a pullback in the stock price and just the group in general. As you guys think about balancing right M&A potential as well as where your stock is, could this be a year, I guess, where you continue to front-load I guess, more buybacks, even a little bit more independent of what's going on, on the M&A side?

Sure. Maybe I'll ask Mark to jump in here, Elyse.

Elyse, as John said earlier, there's no change in strategy. Our strategy of balanced capital deployment with a bias to reinvest and grow the business through high-quality acquisitions remains. But as we've consistently said, two, where our goal is not to build cash on the balance sheet. We're generating a lot of capital these days. And so where we see M&A light, we'll ramp up share repurchase. We did that in the fourth quarter. We bought back $1 billion and we started the year with $750 million. But the pipeline remains active. Our commitment to grow through M&A remains. It was relatively light M&A spending in the first quarter.

But as John mentioned, this AltamarCAM transaction, which is a nice chunky deal that will close sometime later in the year. So -- so we did start the year with a heavy amount of share repurchase. But ultimately, what we end up deploying to share repurchase will depend on how the M&A pipeline develops through the year.

Thanks, Mark, and thank you, Elyse. Andrew, maybe time for one more here.

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

Just had another follow-up question on AI? And maybe just a refresher, John, could you just remind us how much you guys are spending on AI just broadly within the tech budget. And I guess, who are you partnering with? What LLM providers are you partnering with? What tools are you using? That would be helpful.

Yes, David. It wouldn't be a refresher because we've not shared that data in the past. We have a healthy tech CapEx budget. We take a hard look at that. It's, I think, another example where our scale matters, we're able to spend more and invest more. So we feel good about the investments we're making. I think, again, AI, I think the broad-based community needs to be careful about what AI even means. So -- but we're investing heavily and improving our tech stack in our utility of and in other parts of our efforts to digitize workflows and digitize how we engage with our clients.

And so again, we feel good about how we're positioned there. We work with lots of different providers. So we're -- and I think one of the things about AI is it's of a lot of different things. There are many different possibilities for us to to extract value from these new technologies. So it's not about pick a hyperscaler and plugging them into our data set and it all of a sudden solving every inefficiency or productivity opportunity that exists in the world. And so we're working with a number of different major tech players and trying to pick and choose where we see the greatest value depending upon what it is we're trying to accomplish.

Do you have a follow-up, David?

Yes. Maybe just a quick one in the interest of time. In Marsh, I'm just sort of wondering what's your exposure to in terms of revenues from personal lines, brokerage or micro commercial, where like you guys are only placing a single policy or as low dollar value and could be considered less complex?

Yes. I'm not ready to concede by the way, that placing somebody's personal insurance isn't complex. If you're -- you have a client that's personally exposed and working with them to help manage risk and advise on their most precious assets. We certainly don't approach the client experience kind of in that way. where people are trying to buy commoditized products, those things exist already. I mean there's direct digital distribution. It's been that way. I would imagine for the direct markets, AI is going to create opportunities for them to improve their client experience with their customers. That's not who we serve.

In personal lines, it's almost entirely a high net worth personalized client. It's an exciting area of growth for us. It's not a material part of our business, but we continue to grow. So if you're a restaurant on -- in small town U.S.A. there is a lot of complexity. And I'm not quite sure, by the way, we have very little of this business, almost none of this business. But I'm not ready to concede that it is something that some entrepreneur wants to prompt an app for hours and hours and hope that they get it right. So anyway, -- as I said, we're very excited. We don't think anybody is better positioned to take advantage of the developments on the technology front. We have to execute, but that's been the case for 150 years.

And so we're excited about the path we're on and looking forward to accelerating our growth.

Andrew, we have run over . Can you wrap us up here. I want to thank everybody for joining us today and thank our colleagues for their dedication to Marsh and our clients for their continued support and confidence in what we do for them.

Ladies and gentlemen, this does conclude today's conference. You may now disconnect.

Hello, and welcome to Marsh's earnings conference call. Today's call is being recorded. Fourth quarter 2025 financial results and supplemental information were issued earlier this morning. They are available on the company's website at corporate.marsh.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 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 Instructions] I'll now turn this over to John Doyle, President and CEO of Marsh.

Thank you, Andrew. Good morning, and thank you for joining us to discuss our fourth quarter results which we reported earlier today. I'm John Doyle, President and CEO of Marsh. Joining me on the call are Mark McGivney, our CFO; and the CEOs of our businesses: Martin South; Dean Klisura; Pat Tomlinson; and Nick Studer. Also with us this morning is Jay Gelb, Head of Investor Relations.

2025 was another good year for Marsh. We executed well against our strategic objectives and delivered solid financial results. Total revenue grew 10% to $27 billion with underlying revenue growth of 4%. Adjusted operating income increased 11% to $7.3 billion. This is on top of 11% growth in 2024. Our adjusted operating margin improved 30 basis points, marking our 18th consecutive year of reported margin expansion, and adjusted EPS grew 9%.

We generated 25% growth in free cash flow and achieved our capital deployment objectives. We invested approximately $850 million in acquisitions and returned significant capital to our shareholders. This included a 10% increase in our quarterly dividend and a $2 billion in share repurchases, the largest annual amount in our history.

We also successfully completed the integration of McGriff, our largest acquisition ever, launched our new brand and announced the Thrive program, all of which improve our growth profile in the years ahead.

I want to take a moment to talk about our strategy and the opportunities we see. Marsh is a market leader with a proven track record of growth and exceptional performance. Our success is driven by the unique strengths of our businesses, market-leading positions, a data and analytics advantage, and most importantly, the talent and dedication of our colleagues.

Looking ahead, we see an opportunity to deliver even greater value to our stakeholders. Our vision is to be the most impactful professional services firm in the world, not just in insurance, but across risk, reinsurance and capital, health and talent strategies, investments and management consulting.

Our clients face increasingly complex challenges and new opportunities. They rely on our expertise across critical areas where we are market leaders and where our scale and specialization are a distinct advantage.

Last quarter, we introduced Thrive, a growth program aligned with our vision and core principles. We expect it to provide greater financial flexibility and organizational agility over the next 3 years. Thrive is already unlocking the capacity to invest in emerging areas with meaningful economic opportunity such as digital infrastructure, health care, private capital, insurance capital strategies and energy. It's also enabling us to increase investment in frontline talent and integrated solutions across our businesses. With Thrive, we can more powerfully and efficiently invest in one brand.

Two weeks ago, we officially launched the new Marsh, ringing the closing bell at the New York Stock Exchange and introducing our new ticker symbol MRSH. Our new expanded Marsh brand better supports our business strategy and simplifies our value proposition for clients. This was highlighted at the World Economic Forum meeting in Davos last week, where Marsh colleagues met with government and business leaders. Together, we discussed geoeconomic confrontation, AI and digital infrastructure, health and longevity, investment strategies, and resilience and transformation in an uncertain environment. The client and even societal impact that we can have when we bring our full capabilities together under the Marsh brand is a sustainable advantage.

Another important part of Thrive is the formation of Business and Client Services. Through BCS, we're building a data and technology ecosystem that harnesses AI and advanced analytics to improve client outcomes and drive operational excellence. While we've improved efficiency through technology and moving workflow to cost-effective locations over the years, BCS is a fundamental change in our operating model, and it accelerates expense savings and investment in AI and automation.

BCS has introduced dozens of AI-driven productivity tools and we're ramping up adoption to give our colleagues an edge. We're also focused on launching one-of-a-kind technologies, client-facing technologies, such as Sentrisk and Aida, which I've mentioned on prior calls. We see strong growth potential in client-facing technology, virtual agents and chatbots. I look forward to continuing to share our progress on Thrive in the quarters ahead.

Turning to market conditions. We continue to see a competitive insurance and reinsurance environment. According to the Marsh Global Insurance Market Index, primary commercial insurance rates decreased 4% in Q4, driven largely by property. This follows a 4% decline in the third quarter of 2025. As a reminder, our index skews to large account business.

Rates in the U.S. were flat. U.K., Canada and Latin America were all down 7%. Europe and Asia declined mid-single digits and the Pacific region had double-digit decreases. Global property rates decreased 9% year-over-year, compared with an 8% decline in the prior quarter. Global financial and professional liability rates were down 4%, while cyber decreased 7%. Global casualty rates increased 4%, with U.S. excess casualty up 19%, reflecting ongoing pressure in the liability environment. And workers' compensation decreased 1%.

In reinsurance, the property cat market continued to soften as reinsurers pursue growth by deploying more capital. Price decreases accelerated at January 1. Cedents achieved double-digit rate reductions for non-loss impacted cat placements. Demand increased 5% to 10%, depending on region and segment, with buyers seeking better risk sharing such as aggregate and other covers.

In casualty, we continue to see price increases driven by rising rates in the primary market, which has made it an attractive growth opportunity for reinsurers.

The cat bond market had another record year with 86 new bonds issued totaling more than $24 billion in limits. Dedicated reinsurance capital is projected to increase 9% to $660 billion at the end of 2025, driven by growth in traditional and alternative capital. With ample capacity, including new casualty sidecars, reinsurers are seeking profitable ways to deploy capital.

Turning to health trends. Our surveys indicate medical costs are expected to continue to rise in 2026. In the U.S., we are estimating a 7% increase, while other regions of the world will experience high single to low double-digit increases. We continue to help clients balance cost reduction measures with their need to maintain high-quality benefit plans. As always, our focus remains on helping all of our clients navigate these dynamic market conditions.

Now let me turn to our fourth quarter financial performance and outlook, which Mark will cover in more detail. Consolidated revenue increased 9% to $6.6 billion, growing 4% on an underlying basis, with 2% growth in RIS and 5% in Consulting. Marsh Risk was up 3%. Guy Carpenter grew 5%, Mercer increased 4%, and Marsh Management Consulting, which was formerly reported as Oliver Wyman Group, grew 8%. Adjusted operating income grew 12%. And adjusted EPS for the quarter was $2.12, up 10% year-over-year. We also repurchased $1 billion of our stock in the quarter.

Looking ahead, despite headwinds from lower interest rates and decreasing insurance and reinsurance pricing, we are well positioned for another solid year. We expect underlying revenue growth in 2026 to be similar to last year. We also anticipate continued margin expansion and solid adjusted EPS growth. Of course, this outlook is based on current conditions and the economic environment could change materially from our assumptions.

In summary, we're pleased with our 2025 performance. We executed on our strategic objectives and continued our track record of strong results. The Thrive program will drive growth through investments in talent and AI, strengthen our brand and generate greater efficiency.

I would add that this is my 40th year in the business world, and I've never seen such a complex environment for our clients. While we are not facing one global crisis, we are in an era of polycrises. Ground wars, trade wars, culture wars, social unrest, AI disruption, and extreme weather are all creating enormous challenges for businesses. But there is also opportunity in the complexity if clients can anticipate the environment, seize the potential of AI while managing the risks and have the right advisers to guide them.

It's why I'm so optimistic about Marsh's future. Our perspective shaped by 155 years of helping clients build the confidence to thrive sets us apart. Our ability to see the risks and opportunities and support clients with advice and solutions will benefit them and make our relationship invaluable.

With that, I'll turn the discussion to Mark for a more detailed review of our results.

Thank you, John, and good morning. Our fourth quarter results represented a solid finish to the year, reflecting our strong position and execution despite a more challenging environment.

Consolidated revenue increased 9% to $6.6 billion with underlying growth of 4%, which came despite a headwind from fiduciary interest income. Operating income was $1.2 billion, and adjusted operating income was $1.6 billion, up 12%.

Our adjusted operating margin increased 40 basis points to 23.7%. GAAP EPS was $1.68 and adjusted EPS was $2.12, up 10% over last year. For the full year, underlying revenue growth was 4%. Adjusted operating income grew 11% to $7.3 billion. Our adjusted operating margin increased 30 basis points and adjusted EPS increased 9% to $9.75.

Looking at Risk & Insurance Services. Fourth quarter revenue was $4 billion, up 9% from a year ago or 2% on an underlying basis. Operating income in RIS was $830 million. Adjusted operating income was $1.1 billion, up 11% over last year, and the adjusted operating margin was 27.6%, up 60 basis points from a year ago. For the full year, revenue in RIS was $17.3 billion with underlying growth of 4%. Adjusted operating income increased 12% to $5.5 billion, and the adjusted operating margin was 32%.

At Marsh Risk, revenue in the quarter was $3.7 billion, up 10% from a year ago or 3% on an underlying basis. Marsh Risk's underlying growth in the quarter faced tough comparisons to last year's fourth quarter due to elevated claims activity in our Torrent flood business and the renewal of 18-month policies in Latin America.

In U.S. and Canada, underlying growth was 3%, reflecting good new business growth overall and continued momentum in MMA. In International, underlying growth was 4%, with EMEA up 6%, Asia Pacific up 2% and Latin America down 4%, reflecting the impact of the 18-month policy renewals. For the full year, Marsh Risk's revenue was $14.4 billion with underlying growth of 4%. U.S. and Canada grew 3% and International was up 5%.

Guy Carpenter's revenue in the quarter was $215 million, up 7% or 5% on an underlying basis. Growth remains solid despite softer reinsurance market conditions and came on top of 7% underlying growth in the fourth quarter of last year. For the full year, Guy Carpenter generated $2.5 billion of revenue and 5% underlying growth.

In the Consulting segment, fourth quarter revenue was $2.6 billion, up 8% or 5% on an underlying basis. Consulting operating income was $483 million and adjusted operating income was $550 million, up 10%. Our adjusted operating margin in Consulting was 20.8%, up 10 basis points from a year ago. For the full year, Consulting revenue was $9.8 billion, reflecting underlying growth of 5%. Adjusted operating income increased 10% to $2.1 billion, and the adjusted operating margin increased 40 basis points to 21.1%.

Mercer's revenue was $1.6 billion in the quarter, up 9% or 4% on an underlying basis. Health grew 6%, reflecting continued growth across our regions, especially in international. Wealth was up 5%, led by our investments business.

Our assets under management were $692 billion at the end of the fourth quarter, up 1% sequentially and up 12% compared to the fourth quarter of last year. Year-over-year growth was driven primarily by acquisitions and the impact of capital markets.

Career was down 2%, reflecting continued softness in project-related work in the U.S. and Canada, partially offset by sustained demand in International and good growth in our workforce products. For the full year, revenue at Mercer was $6.2 billion with 4% underlying growth. Marsh Management Consulting generated revenue of $1 billion in the fourth quarter, up 8% on both a GAAP and an underlying basis, reflecting solid demand across most regions and sectors. For the full year, revenue in Marsh Management Consulting was $3.6 billion, an increase of 6% on an underlying basis.

Fiduciary interest income was $92 million in the quarter, down $20 million compared with the fourth quarter of last year, reflecting lower interest rates. Looking ahead to the first quarter, based on the current environment, we expect fiduciary interest income will be approximately $83 million.

We're making good progress on executing our Thrive program. We continue to expect to generate $400 million of total savings, a portion of which will be reinvested for growth, and incur approximately $500 million of charges to generate the savings. Total noteworthy items in the fourth quarter were $210 million and included $112 million of costs associated with Thrive.

Interest expense in the fourth quarter was $235 million. Based on our current forecast, we expect interest expense will be approximately $240 million in the first quarter. Our adjusted effective tax rate in the fourth quarter was 22.1%. This compares with 21.3% in the fourth quarter last year.

For the full year, excluding discrete items, our adjusted effective tax rate in 2025 was 25.3%, compared with 25.9% in 2024. When we give forward guidance around our tax rate, we do not project discrete items. Based on the current environment, we expect an adjusted effective tax rate of between 24.5% and 25.5% in 2026. Also note that our adjusted effective tax rate in the first quarter last year included a meaningful discrete benefit related to share-based compensation. Based on our current estimates, we do not expect to see a benefit in Q1 this year.

Turning to capital management, our balance sheet. We ended the quarter with total debt of $19.6 billion. Our next scheduled debt maturity is in the first quarter of 2026, with $600 million of senior notes mature. We generated strong free cash flow in 2025 of $5 billion, up from $4 billion a year ago. This reflects the underlying strength of our business and discipline in managing working capital.

Our cash position at the end of the fourth quarter was $2.7 billion. Uses of cash in the quarter totaled $1.9 billion and included $444 million for dividends, $481 million for acquisitions and $1 billion for share repurchases. For the full year, uses of cash totaled $4.6 billion and included $1.7 billion for dividends, $847 million for acquisitions and $2 billion for share repurchases.

I want to take a minute to reiterate our approach to capital management. We've consistently followed a balanced capital management strategy that helps us deliver solid performance in the near term while investing for sustained growth over the long term. We prioritized investment in our business, both through organic investments and acquisitions. We favor attractive acquisitions over share repurchases and believe they are the better value creator for shareholders and the company over the long term. However, we also recognize that returning capital to shareholders generates meaningful returns for investors over time. And each year, we target raising our dividend and reducing our share count.

Looking ahead to 2026. Based on our outlook today, we expect to deploy approximately $5 billion of capital across dividends, acquisitions and share repurchases. The ultimate level of share repurchase will depend on how the M&A pipeline develops.

Turning to our outlook for 2026. We are well positioned for another solid year. We currently expect underlying revenue growth will be similar to the level we generated in 2025. We also anticipate another year of margin expansion and solid adjusted EPS growth.

With that, I'm happy to turn it back to John.

Thank you, Mark. Andrew, we're ready to begin the Q&A session.

[Operator Instructions] And our first question comes from the line of Gregory Peters with Raymond James.

So for the first question, I'd like to go back to your comments on AI and digital infrastructure. And I guess I'm curious how you think the trends of investment in these areas by your clients could affect the long-term revenue outlook for RIS, for the Consulting business and the health business, where I guess there could be some potential rising employment volatility?

Yes. Thanks, Greg. We're excited about the investment in the digital infrastructure world. We expect roughly $3 trillion of investment over the course of the next 5 years or so. It's been an area of focus for us for some time. We have a digital infrastructure practice and a global leader and head of it. The investment comes from lots of different parts of the economy, not just hyperscalers, of course. And so we've been focused on it, and we're quite excited about the investment there.

I think you're right, the job market is soft, right? So at least many labor markets are soft. And so this is a good area for us to be focused on. And our focus, of course, risk advisory, risk financing, but also capital management, workforce strategies, energy solutions, community engagement, right? There's real complexity to the build-out of all this infrastructure. So it is a big opportunity.

And maybe, Greg, what I'd -- maybe what I'd do is have our business leaders talk to you a little bit about each area and kind of what we're focused on. Martin, maybe you could talk a little bit about what we're doing at Marsh.

Of course, John. Thank you.

Marsh Risk, I should say.

Thank you. Yes. Marsh Risk has long been a leader in the technology sector, and we continue to build on that legacy with a very strong presence in the digital infrastructure landscape. This includes the fabrication plants, data centers, ancillary services, builders, designers, communities. And beyond that, power and energy and supporting operations.

Over the next 5 years, it's estimated that between 2,000 to 3,000 data centers will be constructed worldwide, and we're already well on the way to establishing our preeminence in this ecosystem as a trusted partner. From our calculations, in '25 alone, Marsh U.S. handled the leading market share of the $205 billion in data center construction values. In Asia, we're the clear leader serving 6 of the largest foundry businesses, the 4 largest memory IDMs and the largest semiconductor tool manufacturers clients.

As a trusted risk adviser, our capability support clients with builders' risk and property insurance, ongoing coverage in capital facilitation. We're supporting clients with asset revenue and contract, what we're calling our life cycle work, supply chain issues, assessing revenue streams and reviewing contractual obligations.

We recognize the insurance capital is -- capacity is a critical factor in supporting growth. And to address this, we're collaborating with Guy Carpenter and insurers to develop innovative capacity solutions. For example, Nimbus, our facility, which just this week, doubled its capacity to $2.7 billion.

All of this underscores our preeminence in the digital infrastructure space and our commitment to helping clients manage the risk in one of the most dynamic and fast-growing sectors globally. We see tremendous possibilities ahead and are very well positioned to capitalize on that.

Thanks, Martin. Dean, how are you supporting the effort at GC?

Thanks, John. Greg, as Martin said, I think this is a significant new business opportunity in 2026 for both cedents and reinsurers. There's been estimates of up to $10 billion of new premium entering the market in 2026 because of these opportunities. And the market needs more capacity. No cedent is going to put up billions of dollars of capacity for a single location risk. So that's a real issue. All of our clients want to write data centers across 10-plus products globally, but they require additional reinsurance protections.

Everybody is concerned with accumulations in portfolios, and we're solving that right now for our clients. And I think we need to bring new capital to the market. It's not going to just be traditional reinsurance capital. The introduction of third-party capital and securitizing some of these risks via sidecars and other vehicles is going to be critical. And these are going to have to be deep-pocketed investors given the size of these risks. But we think this is the single biggest new business opportunity in 2026.

Yes. Thanks, Dean. So Greg, I talked about the abundant capacity in the market driving price down a bit, but there are segments where the industry is stressed.

Pat, how about at Mercer? What are we doing there?

Yes. Thanks, John. And thanks, Greg. I appreciate the way you asked the question and how it had to do with employment and talent. On the data center infrastructure side, in that ecosystem, what we're seeing is, we're seeing employers, they need to think really strategically about their talent to be able to drive these large programs. The unique skills that are involved are evolving fast. Critical talent is in limited supply. So things that we're doing are -- things like workforce planning projects, skills assessment and development, a lot of mobility and rewards and health care plan designs, all on top of clients' minds out in the field right now.

Martin had mentioned in Asia specifically. And I will say that's an area where there's heavy, heavy focus on this. A couple of examples of some of the things we're doing for clients on project size. We're working on -- in the semiconductor industry around large global mobility policy redesigns to enable overseas expansion. If you think about the expansion inside of the data center ecosystem and the fact that it's going much more global, and whereas a lot of that was more local before for the Asian companies, they're really thinking about those global mobility and how to get people with the right skills to the projects that they need all over the world.

And then you also think about the talent change that's happening and upskilling the current talent. So we've also done some really large technical skills design projects for some of the clients to assess and develop the skills they'll need in the workforce. And that goes across the ecosystem. It's not just the data centers themselves. But if you think about the manufacturers of a lot of the supplies that go to building chips, the gases, the raw materials, we're seeing projects really across the spectrum there.

Great. Thank you. And Nick, how about at Marsh Management Consulting? How are we helping our clients?

Yes. I think it's well covered by my colleagues, but maybe just to sort of put a wrapper around it, our portfolio is totally unique, both in terms of the advisory businesses that exist across all 4 of our businesses, but also the strength and depth of Marsh Management Consulting within which sits Oliver Wyman Marsh business.

We have the ability to be very integrated, not just in the construction of new data centers, but in the 90% of existing data centers that are needing to become AI-enabled. So we're working with colleagues across our businesses to help manage that transformation, integrating strategy, risk and execution planning. And we're also seeing strong demand in our energy practice around power, around grid strategy, around supply chain resilience, around the navigation of regulation. And one of our biggest capability practices is around cost. Most of the cost work we're doing at the moment is being done to fund investments in growth and to fund investments in both resilience and in AI and in this whole space. So we really bring a uniquely integrated set of capabilities.

Thanks, Nick. So sorry, Greg, that was probably a little longer than you expected, but we're excited about the space. We have a unique breadth of capability, and we see it as a real meaningful opportunity going forward. Do you have a follow-up?

I absolutely do. That was good detail. So I guess I'd like to zero in on the headline in reinsurance, in particular, in property, more broadly speaking, where we're seeing some pretty strong rate reductions. And of course, that's excellent news for your cedents. But on the other hand, when we're sitting back here on the outside looking in, that looks kind of scary from the potential of organic revenue growth. So I'm mindful that you talked about increased demand, but I'm hoping you can just reconcile the moving parts as we process these pretty dramatic rate decreases in reinsurance.

Yes. Yes. I'll -- thanks, Greg. I'll ask Dean to talk a little bit about -- obviously, we don't guide by business, but we're -- we had a decent finish to the year and a good year overall at Guy Carpenter in what was a soft market last year. And so we expected a challenging market into 2026. And certainly, the first of the year would indicate that we're getting kind of what we expected.

As you mentioned, it's good for our cedent clients, which is terrific. We have seen demand pick up in some spots, which we didn't see much of last year. So we're excited about that. But we're also focused on some different areas to advise clients on in the reinsurance and capital space.

So Dean, maybe you can talk a little bit about what you're seeing.

Yes. Thanks, John. And Greg, you touched on the headlines. They've been well articulated. Property cat pricing rate environment will certainly be a headwind as we move through 2026. In addition, the interest rate environment. That said, I remain really upbeat on the fundamentals of our business with our talent and capabilities. Our data and analytics platform is a key differentiator. We continue to attract top talent at GC. We've grown our headcount for 5 years in a row and made some really big time hires in the marketplace that are making an impact on the business.

Despite all this, Greg, we had record new business in 2025 and a really strong fourth quarter of new business, and we feel good about that momentum. I would highlight a couple of things. We're seeing a lot of diverse areas of new business. I've spoken in the past about capital and advisory, our investment banking group, never more impactful for our clients, [ keeping ] the flow of third-party capital into the marketplace right now. I highlighted that in data centers.

We're winning impactful engagements from our clients around M&A advisory, raising third-party capital, fairness opinions. You've read a lot about sidecars, billions of dollars of new capital flowing into the market for the creation of casualty sidecars. We're right in the middle of that. A lot of client interest, as you know, around Lloyd's platforms, quite a bit written about that, structured solutions, obviously, a red hot cat bond market.

So there's a lot to kind of think about that. And we think -- more broadly, we think the casualty market now is a clear growth opportunity for brokers and reinsurers. Even though renewal outcomes were in line with expectations, we think this is a true area of growth. I mean you think about -- Martin talked about 19% rate increases in casualty in the fourth quarter. That's flowing straight through to quota share contracts in our portfolio, which is the majority of our portfolio.

You think about casualty sidecars, third-party capital, everything happening in the casualty world, we're seeing strong growth in our casualty portfolio at 1/1. So we think we have plenty of sources of new business growth and opportunities for growth that maybe didn't even exist a year ago.

Thanks, Dean. So lots for us to work on there, Greg. And we will have headwinds, obviously, from the pricing market in property cat, but lots of areas of growth for us to get focused on.

Our next question comes from the line of Mike Zaremski with BMO.

Maybe back to thinking about all your good commentary, both today and in the past about kind of AI and just [ expense ] initiatives, including Thrive. When we think about Thrive, would you say that that encompasses a lot of the new AI technologies that you all are deploying? Or is there -- should we kind of expect kind of more to come?

You've had a number of companies kind of specifically guide to how AI could change their headcount numbers. So just curious if there's overlap there or maybe you'd expect something, a separate announcement in the coming quarters or years?

Well, Thrive is -- as I mentioned, Mike, is -- it's a growth program, right? It will certainly fuel efficiency and help us with margin expansion, but it's also going to enable us to accelerate investment. You're asking about AI specifically, but also investment in market-facing talent that will help us grow -- continue to grow our company.

But bringing BCS together, our operations and technology teams together, under the leadership of Paul Beswick and learning from and exploring the best technologies that have existed in each of our businesses, bringing them together, bringing some scale benefits to it, will accelerate the path that we're on.

We're excited about that path on AI. We've introduced, as I mentioned, dozens of productivity tools to our colleagues. We're an early mover on this. Paul and his team have done a terrific job. We'll continue to introduce new productivity tools, but also we're quite focused on ramping up production. We need more of our colleagues to become power users of those tools, and that will drive further efficiency for us.

And then on the growth side, we're excited about that, too. I mentioned Sentrisk and Aida during 2025, 2 market-facing tools. We have others in development that are SaaS-like models that will drive revenue growth for us over time. So we're excited about that and also investing in tools that will make our producers more efficient.

In terms of jobs, clearly, there are job families that will be more impacted than others. But for the most part, these tools are going to make our people better and more efficient and able to serve clients in a better way.

Okay. That's helpful. My follow-up is on your organic growth comments for the coming year. I think good to hear sentiment fairly poor on the overall sector. So if we -- is it fair for us -- if we look at the current kind of quarterly organic trend line, should we expect Consulting to lead the pack on organic while maybe risk runs a bit lower given the backdrop in P&C? Or would your enthusiasm about data centers, for example, or et cetera, offer upside to brokerage as '26 progresses?

Yes. Look, obviously, we had a slower growth in the fourth quarter in RIS than we did earlier in the year, but it's a quarter. We had a good year of growth overall. I mean you think about Marsh -- Marsh Risk, excuse me -- make sure I get this right. Marsh Risk, it's 155-year-old business, maybe more relevant than it's ever been. We had 15% GAAP growth in Marsh Risk last year and 4% underlying growth. So we know how to grow our businesses. Now every year creates it's kind of different challenges and opportunities. I wasn't trying to guide to strength in one area. We see good opportunity across all of our businesses.

I think maybe a little bit more color on 2026. I mean, as I said, I see a similar environment to 2025. From what I see, it's an uneven economy. I mentioned some areas of focus. We talked about digital infrastructure, for example. But I talk about health care and energy and some other areas, private capital that we see areas for real growth there. We will see headwinds from pricing and interest rates. We expected that. It's the good and the bad of the geopolitical environment, right?

For any of us who may have hoped for a calmer 2026, I think less than a couple of weeks in, we knew that, that wasn't going to be the case, right? So -- but we've all built muscles and skills around navigating those environments. So I'm optimistic about 2026, whether it's the -- again, the industry sectors that I talked about. MMA is strong and front-footed. We've now got the team from McGriff that makes us better and stronger, and the team has settled there. Thrive, again, is that capacity engine for us to drive earnings growth, but also investment in talent and technology that will sustain our growth over time.

The complex macro environment. I mean our unique capability set -- as I mentioned, I was in Davos last week. A lot of discussion, of course, about our risk businesses and our clients are quite satisfied with the work that we do there, but a lot of discussion was around our capabilities at Marsh Management Consulting and Mercer. So a lot of good discussion there.

And so -- and then we have a strong balance sheet, I would point out as well. And as you know, M&A is a core competency of ours. We have a strong pipeline. So we're excited about that. And I think there's a lot for us to get after in 2026.

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

John, you spoke last quarter just about the talent situation, some teams that have left. And I'm wondering if we're seeing any of that impact in the results this quarter, specifically within U.S. and Canada? And then how we should think about that in 2026? But also thinking about some of the teams that -- it sounds like you guys are going to be hiring. So I'd be interested in what are some of the focus areas to maybe offset some of that headwind from the teams that you lost?

Yes. Thanks, David. Look, overall, from a talent perspective, we have an excellent brand in the market. We're 95,000 people strong and growing, by the way. Our colleague retention remains strong. In fact, it's above historic norms. Our colleague engagement scores, and we're in the business of advising clients around colleague engagement. Our colleague engagement scores are exceptional.

Our talent strategy, which is supported by a colleague value proposition, it's all about making our colleagues be their best at Marsh, be their best inside of our company. And so I feel terrific about that, and I'm very, very confident that we have the best and deepest teams on the field.

We have a culture that sets us apart. We're collaborative and team-based and our colleagues are supported with the best teammates in the world and the best tools in the world. And so we're not a place for mercenaries, to be clear. And we embrace a competitive market for the talent. We added to market-facing talent in the aggregate last year. Obviously, it's up and down in different parts of the world. We try to manage that according to opportunity.

The team dynamics that happened over the course of last summer aren't helpful, of course, but they're not material to our results. And so it becomes a bit of a distraction. And of course, again, given our brand, we're able to get back at it. So we added the talent last year. We're going to add again to the market-facing talent on the field. And so I feel good about how we're positioned.

And I would also note that if there are folks out there that are either going to violate their covenants or steal information from us, I'm going to call you out, and I'm going to do everything I possibly can to hold you accountable.

Do you have a follow-up, David?

Yes, I do. And then just on the -- I think I heard $205 billion in data center construction values that Marsh U.S. handled the leading market share in 2025. I mean was that -- it didn't look like that had a meaningful impact on the results with the, call it, 3% underlying growth for the year.

Is that something -- I mean we can all look at the hyperscaler CapEx and try to do the math. But is that something you think is going to have a material impact on the growth in 2026, and is it just going to sort of get offset somewhere else? But I guess, I'm just trying to kind of square some of the comments that you made just with the sort of stable underlying revenue growth outlook.

Yes. Look, David, it's hard to -- in this environment, it's hard to look that far ahead given -- think about all the things that have happened just in the last 30 days. But we're excited about the investment in digital infrastructure more broadly. We very much believe that we're the market leader in it. Some of the investment that happened -- last year happened and we're 4% or better underlying growth in all of our businesses last year. So it was a factor in our results last year, but there's much more in front of us than is behind us in that build-out. And so we think we're well positioned to help clients invest and invest in a wise way. So thank you.

And our next question comes from the line of Brian Meredith with UBS.

John, I was hoping you could talk a little bit about ex the whole data infrastructure stuff, what are clients', call it, insurance budgets looking like in 2026? Are they looking to maybe increase the amount of coverage they're buying given some of the price breaks they're getting in property and particularly given a lot of the uncertainty in the world vis-a-vis '25 or maybe there's some more uncertainty?

Brian, it's -- I mentioned that it's an uneven economy, right? And so obviously, there's -- you look at the U.S. economy, for example, which is where we're most exposed to an economy around the world. The growth ex digital infrastructure is not inspiring, right? And so I mentioned that as background because our clients are all over the map in terms of what they're ready to spend.

What I would say more broadly, we talked a bit about pricing in the market, and that's welcome certainly to our retail clients, but also our cedents as well at Guy Carpenter -- welcome relief after several years of price increases. But it is quite clear that the cost of risk is continuing to rise, right? I mentioned excess casualty pricing in my opening comments. That is a market that's obviously exposed to the liability environment in the U.S. So liability costs are going up. More and more of the economy are exposed -- is exposed to extreme weather. And then I talked about health care costs.

So all of those factors, while prices may be down, at least in the property casualty markets and reinsurance markets in the moment, eventually, those costs will have to catch up with inflation. We're advising our clients to buy more coverage, particularly in casualty, given what's happening and the increase in the number of nuclear verdicts, growth in lit funding and all the factors that are driving meaningful inflation in liability-related costs.

So we're advising them, Brian, but many don't, right? Many are looking to harvest the savings. And if they're in an industry that's in a lower growth mode, trying to generate decent earnings in a tougher growth environment. I hope that helps, Brian.

Yes, that's very helpful. And then the next question, going back to AI. I mean I'm hearing some -- in the marketplace that for -- the Management Consulting business, formerly Oliver Wyman, that there could be some project-related stuff that actually goes the way of AI and maybe a headwind. Maybe you could kind of talk about that. Is that true? What are the potential maybe revenue losses that you could see at Oliver Wyman?

Sure. Sure. Thanks, Brian. So obviously, Oliver Wyman had a terrific year last year and a very, very strong finish to the year and demand is strong. As I mentioned, we had great conversations with both our commercial clients and government clients last week in Davos. But Nick, maybe you could talk a little bit about outlook and also the impact of AI in our business.

Yes, for sure. Maybe just on outlook, first of all, over the last 5 years, it's been a pretty volatile, fast-changing environment for clients, but also for management consultants. I think I'm tickled that we just registered our first $1 billion quarter. Five years ago, we were just [indiscernible] for the year. So 75% growth over that period. And we think the outlook is robust.

If anyone else wants to ask a question, I'm happy to talk about the different segments of the business. But in the interest of time, we've had 3 of our best ever sales months over the last 5 months. The pipeline is pretty good. And ultimately, I think in the whole AI transformation of industry, there's a lot of sort of shenanigans going on. There's a lot of people claiming AI as a driver for different changes, for headcount reductions, and so on.

What we see in our business is that the use of AI tools and agents has had a significantly positive effect on productivity. We have leveraged our Consulting teams better. But frankly, we're not really being paid for the things that AI can do at this stage. We're paid for helping clients deliver outcomes rather than for assembling third-party available information or things like that.

So within the business, maybe 30% of our work draws on advanced analytics and AI. We've been using AI in that space pre-LLMs, machine learning and so on for decades. And we've responded to that piece of the trend by launching our DNA business. It stands for Data and Analytics, but we think that this kind of analysis is in our DNA. So there's a pun there.

The second piece is our Quotient platform, which delivers AI work for clients, AI transformation for clients. And we do that in partnership with many players in AI infrastructure with hyperscalers, with start-ups. We have a number of execution and delivery partnerships. And that is the fastest-growing part of Oliver Wyman within Marsh Management Consulting.

The third is this area you're talking about, which is support for the enhancement and evolution of our own delivery model through proprietary agents and assistance. That is replacing some tasks. But actually, at the moment, I expect to hire the same or more junior staff members because they are quite AI literate and they are able to use these tools very, very well in the support of our client work.

And then finally, and I think this is a massive trend. We're doing a lot -- as I indicated earlier, a lot of work on performance transformation on cost and efficiency, which is driven by the need for firms to invest in growth and invest in AI. So an industry influx for sure, but not one at the moment which is experiencing headwinds -- revenue headwinds because of this.

Thanks, Nick. Brian, thanks for those questions.

And our next question comes from the line of Jimmy Bhullar with JPMorgan.

So John, you mentioned a couple of times, I think you expect organic growth in '26 to be similar to last year. My question is specifically on the Marsh Risk business. You've seen a slowdown in growth over the last 3, 4 quarters from, I think, 5% in 1Q to 3% in the fourth quarter. And you had been highlighting the last few quarters some of the headwinds that the business was facing. But it seems like from your comments that you're not expecting an incremental slowdown from here, and I think you're implying that it should be somewhat stable, but is that correct or not?

Thanks for the question. Again, we're 4% at Marsh Risk for the year. We cautioned you in the past not to overindex on any single quarter, and 15% GAAP growth at Marsh Risk for the year. So we feel good about that and, obviously, a tougher environment. Yes, there's some ups and downs in different parts of the world.

But as I mentioned earlier, we're adding to the talent on the team. We're using AI to boost productivity, but also to make our producers better. We'll see what the economy brings us. I mentioned a number of sectors where Marsh Risk and more broadly, we're investing in. So we have -- we're optimistic about our prospects next year. And as I mentioned earlier, MMA, which is a huge part of our business there now is very much front-footed and executing very well.

Do you have a follow-up, Jimmy?

Yes. Just on -- and maybe for -- just on buybacks. You did a lot more than you've done on a quarterly basis, I think, the last several years. And not sure if that was partly a function of the stock price being lower, but maybe just give us some insight into why the buyback amount was as high as it was in 4Q?

Yes, sure. Maybe I'll ask Mark to jump in on it, but we've continued with our balanced approach to capital management overall and returning capital to shareholders is an important part of that. But Mark, maybe you can talk about the buybacks in particular?

Yes. Jimmy, thank you. So we did ramp up buyback, obviously, in the fourth quarter. It's purely a function of the M&A pipeline. So as you saw, we had an active year on the M&A front. We completed 20 transactions or 20 acquisitions, but they were all relatively small. So we only deployed about $850 million of capital to M&A.

One of the reasons I reiterated our capital management philosophy and approach in my script was just to highlight that there's been no change in strategy. So as we think about the $5 billion we're going to deploy this year -- we have our targets for reducing our share count, increasing our dividend. But our bias is to deploy a lot of capital to high-quality accretive acquisitions and our pipeline is very active. So we're hopeful we're going to have an active year.

We did 3 acquisitions-related kind of businesses in Hawaii that we closed on in the 1st of December that are part of MMA. So very excited about welcoming that team to our company. And as I mentioned briefly earlier, our pipeline is strong. And so we're excited to see what opportunities present themselves in 2026. So thank you, Jimmy.

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

John, sort of a big picture question. Obviously, there's been a lot of news about team lifts and the like. And I'm wondering, are you seeing any increase in the cost of brokerage talent, assuming that even if it's not impacting Marsh's results terribly, we're seeing a lot more movement between brokers?

No. Meyer, thanks for the question. I don't see broadly any more pressure in terms of inflation for comp and ben related inflation from this. I think what we've all seen, over the course of the last year, is some PE-backed businesses that are using, in my view, unethical and often illegal practices or -- yes, practices to build their businesses out. And so -- so anyway, it's an unfortunate thing.

As I said, I love to compete broadly and we think mobility for talent in the industry is a good thing. There's no question. I mean we want to have a not just a good front door and a welcoming front door to top talent, but a measure of turnover is useful to the organization. But let's compete in a fair way, ultimately, and it's been scaled up of late. And so the best thing for us to do is continue to focus on our clients, building that colleague value proposition that makes us the most attractive place to work in the markets that we operate in and win on the field, and that's what we're focused on.

Okay. That's very helpful. And I guess another pricing question. We've seen, I think, a significant deterioration, over the last couple of years, in the valuation of publicly traded insurance brokers from an M&A front. How long does it take before that filters into M&A multiples?

Yes. That's a really good question. It's a -- the market has changed a bit, right, as public company comps have come down over the last 6 to 9 months or so. So I would say the bid-ask gap has probably grown. We've seen some pretty meaningful assets come off the market. We've seen at least one pretty good-sized deal trade at, I think, what was a pretty disappointing outcome for the sellers.

High-quality assets, though, are still kind of insisting on higher multiples. And so probably contributed to a little less deal flow overall in our sector last year. And yes, it will be interesting. And I would say to -- I mean it's a generalization, so be careful with it, but financial sponsors versus strategic buyers, that's kind of generally speaking, kind of where the gaps fall out.

So we'll see what the market brings this year. Again, we're quite excited about our reputation in the market, the relationships we've developed, and we see a number of different possibilities. So thank you, Meyer.

Andrew, we need to bring this call to a close. And I want to thank all of our colleagues for -- I want to thank you all for joining us this morning. I also want to thank the best professional services colleagues in the world for their dedication to Marsh, to one another and to our clients. So thank you all, and we look forward to speaking to you again next quarter.

Hello, and welcome to Marsh & McLennan's earnings conference call. Today's call is being recorded. Third quarter 2025 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 Instructions].

I'll now turn this over to John Doyle, President and CEO of Marsh & McLennan.

Thanks, Andrew. Good morning and thank you for joining us to discuss our third quarter results reported earlier today. I'm John Doyle, President and CEO of Marsh & McLennan. On the call with me is Mark McGivney, our CFO; and the CEOs of our businesses: Martin South of Marsh, Dean Klisura of Guy Carpenter; Pat Tomlinson of Mercer; and Nick Studer of Oliver Wyman. Also with us this morning is Jay Gelb, Head of Investor Relations.

Marsh & McLennan had a solid third quarter. As we said coming into the year, we anticipated impacts from a changing macro environment, and our performance continues to track with our expectations. Overall, we grew revenue 11% in the quarter, reflecting continued momentum in our business and contributions from an active year of acquisitions in 2024.

Underlying revenue increased 4% for the quarter, reflecting the impact of lower fiduciary interest income, declining P&C pricing and economic uncertainty affecting our clients, especially in the U.S. Adjusted operating income increased 13% from a year ago. Our adjusted operating margin increased 30 basis points compared to the third quarter of 2024, and adjusted EPS grew 11%.

Earlier this week, we announced that we will change our brand in January from Marsh & McLennan to Marsh. Also in January, our stock ticker symbol on the New York Stock Exchange will change from MMC to MRSH. Our businesses will adopt the Marsh brand after a transition period.

We also introduced Business and Client Services or BCS. This unit brings together our operations and technology teams from across the company under Paul Beswick, our Chief Information and Operations Officer. Our new brand strategy, the creation of BCS and the efficiencies we expect to gain are core parts of a new program we call Thrive.

Thrive will also include automation efforts and workforce actions to optimize our scale and specialization. The program is designed to deliver greater value to clients, accelerate growth and improve efficiency. The efficiencies we gained through the program will support investments in talent and technology. As we increasingly deploy AI, we can deliver even greater value for clients and colleagues. Thrive will also help us continue to expand margins.

Let me take a moment to comment on our brand strategy. Marsh will be our new brand and represent our vision to be the most impactful professional services firm in the world. This change will increase our visibility, strengthen our value proposition and support our business strategy. The Marsh brand is highly regarded and has the broadest global reach among our businesses. Today, Marsh stands for excellence in risk advising and insurance broking. Going forward, the new Marsh will represent the full value of our offerings in risk, strategy and people.

Turning to BCS. Our company has a long history of innovation, which has been an important factor in our success for over 150 years. We continue to innovate in the AI era, having invested in large language models for more than 2 years. And while the full impact of AI is still emerging, we are seeing an increase in opportunities from our use cases. We are focused on developing tools that boost colleague productivity to better support our clients.

For example, LenAI, our proprietary GenAI tool for colleagues, responds to about 1 million inquiries per week, fueling efficiency and automation. We are also rolling out new market-facing AI tools, including most recently Aida. This is Mercer's proprietary AI-powered assistant within the Talent All Access Portal, which is a global intelligence platform supporting HR decision-making. And prior to Aida, we introduced Sentrisk, our AI-enabled supply chain risk assessment platform.

We have a vast data set as the global leader in risk strategy and people, and BCS will accelerate our efforts to extract valuable insights through AI and analytics. This enables us to better serve our clients, empower our colleagues and increase our efficiency.

Over the next 3 years, we expect Thrive will generate approximately $400 million in savings with a portion being reinvested to drive additional growth. We will incur around $500 million in charges to achieve these savings.

Now I'd like to take a moment to talk about talent in the insurance and reinsurance markets. This is a people business, and we have an unmatched depth of talent with over 90,000 colleagues, and we love to compete because it makes us better. Colleague mobility is good for our industry and has served us well because we are an employer of choice with a strong colleague value proposition. Our colleagues can be their best at our company because they work with the top talent in our industry, they manage meaningful client issues, and they have access to market-leading analytics and technology.

We make a point of differentiating ourselves through a collaborative team-based model. This is reflected in strong colleague retention and excellent engagement scores. A few competitors have engaged in unlawful and unethical hiring practices and encourage talent to violate their covenants as a deliberate strategy to build their businesses. In these cases, I believe it's important to call out this behavior and to protect our rates. It's also the right thing to do to sustain the trust that we've built with our clients over a long time.

Turning to insurance and reinsurance market conditions. We continue to see a competitive market characterized by slower growth from an uneven economy, stronger carrier ROEs and continued decreases in overall rates particularly in property reinsurance and property CAT reinsurance. According to the Marsh Global Insurance Market Index, commercial insurance rates decreased 4% in the third quarter, driven by property. This follows a 4% decline in the second quarter of 2025.

As a reminder, our index skews the large account business. Overall, rates were down in the U.S. by 1%. Canada was down 3%, the U.K., EMEA, Latin America and Asia were all down mid-single digits, and Pacific was down by double digits. Global casualty rates increased 3% with U.S. excess casualty up 16%, reflecting continued pressure in the liability environment. Workers' compensation decreased by 5%. Global property rates decreased by 8% year-over-year compared with a 7% decline last quarter. Global Financial and Professional Liability rates were down 5%, while cyber decreased 6%.

In reinsurance, the market remains resilient. It has responded to an extended period of elevated natural catastrophe losses as well as ongoing geopolitical and macroeconomic uncertainty. Dedicated reinsurance capital is projected to reach approximately $650 billion by year-end 2025. With ample capacity, increased competition is driving reinsurers to look for profitable ways to deploy capacity. The CAT bond market is on pace for a record year of issuance with over 60 new bonds in the first 9 months, generating approximately $17.5 billion of limit.

In casualty reinsurance, renewals were largely stable with sufficient capacity. This outcome reflects underwriting actions of primary carriers and increased reinsurer appetite. Across both insurance and reinsurance, we advise our clients on proactive strategies that reflect the risk environment and market conditions and, of course, tailored to their tolerance for volatility. Today, we see decreasing property casualty prices but also a growing cost of risk. Over time, this trend is unsustainable.

With that being said, barring significant changes in large loss activity as well as the broader macro environment, we anticipate insurance and reinsurance market conditions seen so far this year will likely continue in 2026.

Now let me turn to our third quarter financial performance and outlook, which Mark will cover in more detail. Consolidated revenue increased 11% to $6.4 billion and grew 4% on an underlying basis, with 3% growth in RIS and 5% growth in Consulting. Marsh was up 4%. Guy Carpenter grew 5%; Mercer, 3% and Oliver Wyman was up 8%. We had adjusted operating income growth of 13%, and we generated adjusted EPS in the quarter of $1.85 which was up 11% from a year ago. We also repurchased $400 million of our stock in the quarter.

Turning to our outlook. For 2025, we continue to expect to deliver mid-single-digit underlying revenue growth, solid growth in adjusted EPS and our 18th consecutive year of reported margin expansion. Of course, this outlook is based on conditions today and the economic backdrop could turn out to be materially different than our assumptions.

In summary, we're pleased with our year-to-date performance in a complex environment. Thrive will amplify our value proposition for clients across all our businesses, and it creates opportunities to invest in talent, growth, AI and our new brands. Our capabilities are unique, and there is strong demand for our advice and solutions.

We've earned our leadership position in our markets through 154 years of innovation and growth. Our disciplined approach to investing for the future while delivering results in the near term remains a guiding principle for our planning and capital allocation. Our announcements today and earlier this week align with this philosophy.

With that, I'll hand the discussion over to Mark for a more detailed review of our results.

Thank you, John, and good morning. Our third quarter results were solid, reflecting our strong position and execution despite a more challenging environment. Consolidated revenue increased 11% to $6.4 billion with underlying growth of 4%, which came despite a headwind from fiduciary interest income. Operating income was $1.2 billion, and adjusted operating income was $1.4 billion, up 13%. Our adjusted operating margin increased 30 basis points to 22.7%. GAAP EPS was $1.51 and adjusted EPS was $1.85, up 11% over last year.

For the first 9 months of 2025, underlying revenue growth was 4%. Adjusted operating income grew 11% to $5.7 billion. Our adjusted operating margin increased 20 basis points and adjusted EPS increased 9% to $7.63.

Looking at Risk & Insurance Services, third quarter revenue was $3.9 billion, up 13% from a year ago or 3% on an underlying basis. Operating income in RIS was $750 million. Adjusted operating income was $965 million, up 13% over last year. The adjusted operating margin was 24.7%. For the first 9 months of the year, revenue in RIS was $13.3 billion with underlying growth of 4%. Adjusted operating income increased 12% to $4.4 billion, the adjusted operating margin was 33.3%.

At Marsh, revenue in the quarter was $3.4 billion, up 16% from a year ago or 4% on an underlying basis. The 16% growth at Marsh is impressive and reflects the contribution from McGriff, where our integration continues to go well. In U.S. and Canada, underlying growth was 3% for the quarter, reflecting good new business growth overall and continued momentum in MMA. In international, underlying growth remained solid at 5%, with EMEA up 5%, Asia Pacific up 6% and Latin America up 3%. The first 9 months of the year, Marsh's revenue was $10.7 billion with underlying growth of 5%. U.S. and Canada grew 4% and international was up 6%.

Guy Carpenter's revenue in the quarter was $398 million, up 5% from a year ago on both a GAAP and underlying basis. Growth remains solid despite softer reinsurance market conditions and came on top of 7% underlying growth in the third quarter of last year. For the first 9 months of the year, Guy Carpenter generated $2.3 billion of revenue and 5% underlying growth.

In Consulting segment, third quarter revenue was $2.5 billion, up 9% or 5% on an underlying basis. Consulting operating income was $501 million and adjusted operating income was $545 million, up 11%. Our adjusted operating margin in consulting was 22.1%, up 40 basis points from a year ago. For the first 9 months, Consulting revenue was $7.2 billion, reflecting underlying growth of 4%. Adjusted operating income increased 9% to $1.5 billion and the adjusted operating margin increased 50 basis points to 21.2%.

Mercer's revenue was $1.6 billion in the quarter, up 9% or 3% on an underlying basis. Health grew 6%, reflecting continued strong growth across all regions. Wealth was up 3%, led by investment management. Our assets under management were $683 billion at the end of the third quarter, up 2% sequentially and up 25% compared to the third quarter of last year. Year-over-year growth was driven by our acquisitions of Cardano and SECOR, positive net flows and the impact of capital markets.

Career was flat year-over-year on an underlying basis, reflecting continued softness in project-related work in the U.S. and Canada, offset by sustained demand in international and good growth in our workforce products. For the first 9 months of the year, revenue at Mercer was $4.6 billion with 3% underlying growth.

Oliver Wyman's revenue in the third quarter was $886 million, up 9% or 8% on an underlying basis, reflecting growth in each of our regions. The third quarter benefited from favorable timing, so we expect moderating growth for Oliver Wyman in the fourth quarter. For the first 9 months of the year, revenue at Oliver Wyman was $2.6 billion, an increase of 5% on an underlying basis. Fiduciary interest income was $109 million in the quarter, down $29 million compared with the third quarter last year, reflecting lower interest rates. Looking ahead to the fourth quarter, based on the current environment, we expect fiduciary interest income will be approximately $85 million.

Foreign exchange had a de minimis impact on adjusted EPS in the third quarter. Based on current rates, we anticipate FX will be a $0.04 benefit to adjusted EPS in the fourth quarter.

Turning to our Thrive program. As John mentioned, we are excited about this significant new step in the evolution of our firm, which should enable us to continue to deliver exceptional results while we invest for sustained growth. We began executing the program in the third quarter and expect to generate $400 million of total savings, a portion of which will be reinvested for growth. Although we will see a modest benefit in the fourth quarter, the vast majority of the savings will be realized over the next 3 years. We expect to incur approximately $500 million of charges to generate the savings.

Majority of savings will result from efficiencies created by BCS with a significant portion coming from further optimization of our global operating model. We have mature capability centers in locations around the world, and our plans over the next 3 years will accelerate this journey.

Today, we have over 19,000 colleagues in cost-effective locations across BCS and our global functions. Through this program, we expect to further optimize our model by shifting more work to these locations.

In addition, we're excited about the possibilities of AI-enabled enhancements in client service, insights and efficiency as we look to take our AI journey from experimentation at scale to business impact. A substantial portion of the work in BCS will be driving savings through efficiency in process and automation, including through the use of AI. This will also be an area where we increase investment.

These initiatives in BCS are closely linked. In order to capitalize on the full value of emerging technology, we need to concentrate more of our operations work in locations with scale. A critical enabling step in this journey is combining the distributed operations units across our businesses into a single team.

We also anticipate significant savings by continuing to streamline our organization. We have a long track record of executing for efficiency. And have consistently demonstrated our ability to drive near-term results while investing for sustained growth. The Thrive program will enable us to continue to invest while we drive earnings and margins higher.

Total noteworthy items in the third quarter were $136 million and included charges related to McGriff as well as restructuring costs associated with Thrive. Interest expense in the third quarter was $237 million, up from $154 million in the third quarter of 2024. Based on our current forecast, we expect interest expense will be approximately $235 million in the fourth quarter.

Our adjusted effective tax rate in the third quarter was 24.8%. This compares with 26.8% in the third quarter last year. Excluding discrete items, our adjusted effective tax rate was approximately 25.5%. We continue to expect an adjusted effective tax rate of between 25% and 26% in 2025, excluding discrete items.

Turning to capital management and our balance sheet. We ended the quarter with total debt of $19.6 billion. Our next scheduled debt maturity is in the first quarter of 2026 when $600 million of senior notes mature. Our cash position at the end of the third quarter was $2.5 billion. Uses of cash in the quarter totaled $1 billion and included $445 million for dividends, $200 million for acquisitions and $400 million for share repurchases.

For the first 9 months, uses of cash totaled $2.6 billion and included $1.3 billion for dividends, $366 million for acquisitions and $1 billion for share repurchases. We continue to expect to deploy approximately $4.5 billion of capital in 2025 across dividends, acquisitions and share repurchases. The ultimate level of share repurchase will depend on how our M&A pipeline develops.

For the full year, we continue to expect mid-single-digit underlying revenue growth, margin expansion and solid growth in adjusted EPS. Note that this outlook is based on conditions today, and the economic backdrop could be materially different than our assumptions. Overall, we are pleased with our third quarter and year-to-date results and are excited about the opportunity that our new brand and Thrive will bring.

With that, I'm happy to turn it back to John.

Thank you, Mark. Andrew, we're ready to begin Q&A.

[Operator Instructions] Our first question comes from the line of Greg Peters with Raymond James.

I'd like to, for the first question, focus on the comment during the call and in your branding press release about the lower growth environment.

John, I know you mentioned that you expect mid-single-digit growth this year. Do you think with the government shutdown, with the uncertainty that we might be on this glide path to low to mid-single digit as we look out over the next 24 or 36 months, especially in the face of a more challenging pricing environment from property casualty?

Thank you for the question. I wasn't trying to project into 2026 or 2027. Of course, every year comes with its different opportunities, different challenges. But as we guided earlier this year, we knew there would be some pressures from the macro environment and P&C-related pricing pressure. So we guided to mid-single-digit underlying revenue growth.

I like how we're positioned; I am very excited about Thrive and what that can mean for our growth over time. And so we're confident in our ability to execute across different economic cycles and different P&C cycles. We have a playbook and again, a real track record of doing it. So we'll see what next year brings and we'll guide to our thoughts at that point.

It feels like a pretty uneven economy to me. For sure, that's kind of what our data suggests. And so -- but we're not pessimistic about growth. We like how we're positioned. We've been reshaping the mix of business in the company over a long period of time and focused on being a better growth company. Do you have a follow-up, Greg?

Okay. Yes, I do, of course. In one of the previous announcements from your company, I think you -- the company announced its intention to start a wholesale business. Maybe you could spend a minute and talk about what you're thinking about that? Is it just for internal related opportunities? Or do you think you might branch that off and do other -- work with other retailers and other organizations as well?

Were you talking about MMA or more broadly or either?

MMA London wholesale.

Yes. Well, actually, let me address it kind of more broadly. Maybe I'll start with that and then get to MMA. We're not looking to build a third-party wholesale business here. We have exceptional specialty talent inside of this company, the market-leading specialty talent. And we just want -- we don't want to be outsourcing an important part of our value proposition when it's not necessary.

Some E&S markets require us to go through a wholesale broker to access them. So we'll build some of that capability. And where we need access and in very unique circumstances, you need capability, we'll use third-party wholesalers. We do that today, and they serve us and our clients well.

As it relates to MMA, yes, we've created a new desk in London, Read Davis, the CEO of McGriff, is working with Lizzy Howe in London. We have just absolutely top specialty talent in the London market, of course, have been there for a long, long time, serving our clients and serving Marsh clients globally, but particularly in the U.S., we bring a lot of -- a lot of risk originates in the U.S. that we bring to the London market.

So when we were coming together with the team at McGriff, we saw an opportunity to bring in some of that business from third-party wholesalers. And so again, it's an important part of what Read is focused on. So it's a revenue synergy for us at McGriff, and we're excited about those possibilities in 2026. So thank you, Greg. Andrew, next question.

Our next question comes from the line of Mike Zaremski with BMO.

On the -- thanks for the details on the Thrive expense program. Just the math, $500 million of costs for $400 million of savings. That's -- I think that's a really good ratio versus many of your peers and maybe even you all historically. So is there -- maybe you can -- usually like there's more costs for the savings ratio. Any kind of things you can unpack on why you're going to get so much savings for that level of cost? And then also, historically, how much have you reinvested into the business on the savings? I know you said -- you mentioned you're going to reinvest some as well.

Yes. Thanks, Mike, for the question and for taking note of the program details. But maybe I'll let Mark talk a little bit about the cost estimates and charge estimates at this point.

Sure. Mike, we -- as you pointed out, we've got a pretty good track record in terms of payback on these -- in these programs. And as I described, this is a lot of continuation of work that we've been doing. I talked about we've got a meaningful amount of low-cost location penetration today, and this is extending it.

So a lot of the costs are just associated with severance and just the costs associated with transitioning work and other things we're doing just to simplify the organization. So we've got a pretty high degree of confidence in the savings and charges, although over time, these estimates might move a little bit. But yes, we're going to get good payback on the investment that we're making.

And the majority will go there.

Yes. And as I said earlier, there's some reinvestment, but as we've demonstrated before, we generate a lot of value out of these programs, and we expect the majority of the savings is going to flow through to the bottom line.

Okay. Great. My quick follow-up is honing in on organic in the U.S. probably on the RIS side. John, in your prepared remarks, you talked again about economic uncertainty, especially in the U.S.A. You mentioned some unlawful and unethical business practices. You talked about pricing likely decelerating a bit. So I guess should be -- are you kind of telling us we should be kind of expecting at least the U.S. side of organic to be kind of running along the current trend line for the -- in the near term?

Look, I guess, first, the talent headlines over the summer we're nearly 95,000 people, right? It's more than 90,000 people, $25 billion in revenue annualized for the company overall, not a material impact at all. As it relates to the U.S., we're seeing a bit of hesitancy from our larger clients in the U.S.

I'd like to think, certainly as some of the possible tail risk scenarios around trade and the economy begin to come in a little bit that -- and I think you're beginning to see it a bit with, obviously, the pickup in the M&A market, but that things will clear up. But there's still a lot obviously out in the macro economy. There's still a lot to settle out from a trade perspective.

But overall, I'm very pleased with our growth. I mean we had 11% growth in the quarter. I think Marsh's GAAP growth was 16%, right? So absolutely terrific. 4% growth at Marsh, 5% year-to-date. Again, given all the pricing pressures and other challenges in the economy, I feel good about that, and I know we're positioned well, and we're executing well in the market. Thank you, Mike. Andrew, next question please?

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

So first, I just had a question on -- maybe start with Oliver Wyman. I think everybody has been assuming that there will be a slowdown there given economic uncertainty and geopolitical issues. But the business continues to perform well. So maybe talk a little bit about the pipeline that you're seeing there? And do you feel that you could continue this level of growth in -- despite the environment?

Yes. Thanks, Jimmy. Again, given all the uncertainty, we're quite pleased with the growth at Oliver Wyman to date, this year. And obviously, we had a very, very strong quarter. Mark talked a bit about the timing, flattering the third quarter a bit. But we have an outstanding team at OW. It is a complex operating environment for our clients. And in many cases, they're looking for our team at OW to help them navigate it. So Nick, maybe I'll ask you to talk a little bit what you see in the demand funnel and pipeline.

Thank You, John. Thank you, Jimmy. Yes, best quarterly growth in 6 quarters, but I would point out the comp was a 1. And as Mark said, we did benefit from some favorable timing on things like success fees. So I do think we expect moderating growth in the fourth quarter. But overall, we're pleased, and we think we're executing well in what is generally maybe a slower market. As Mark indicated, we grew across all of our regions, fastest growth in Asia, but the Americas grew pretty well. And some of that is fueled by work on performance transformation, both top line and bottom-line efficiency work, which tends to be a little bit countercyclical.

From a practice perspective, our consumer telecoms and technology practice, which we newly brought together at the beginning of the year, growing very, very strongly. Our insurance and asset management practice alongside our actuarial practice, which I've talked about a lot on these calls, working really well together, continuing very high growth. If they keep up at this rate, they're becoming a real juggernaut. And our transportation and advanced industrials practice also well into double digits.

On the capability side, customer innovation and growth, interestingly, it's -- we see work in restructuring, we see work in finance risk. We also see work in customer innovation and growth growing well. I think some of that really rests on the work we're doing in our Quotient platform around AI. I'm sure we'll talk about that maybe later on the call. But we're helping a lot of clients think through how to both enhance their capabilities and reduce costs driven by AI. And our sort of how do you increase your AI Quotient as a client is how we came up with our Quotient name, and that's how we go to market on AI.

All of which is looking pretty good. And then just for the pipeline, sales continue at a decent rate. We go up and down every quarter, every month. But I'm pretty optimistic going through the rest of the year and into next year.

Terrific, Nick. Thank you. Jimmy, do you have a follow-up? Jimmy, are you there? Maybe we lost Jimmy.

Pardon me, I'm still...

Look, there he is.

I'm here. Along similar lines, maybe on Marsh and MMA, is the environment for your business improving a little bit, given the uptick in capital markets, M&A, IPOs or is that not enough of a tailwind to where investors would see that in your reported results over the next few quarters?

We definitely saw an uptick in M&A activity in the quarter that was certainly helpful to growth in the quarter. Our middle market business is not MMA, but not just in the United States, but all over the world are performing a bit better growth up market -- or excuse me, growth in the middle market is better than growth upmarket. And so we feel good about how we've deployed capital and have invested in our capabilities and our exposure to markets. But MMA had a good quarter of growth, and we expect that, that will continue. Thanks, Jimmy. Andrew, next question please?

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

Just had a question on the Thrive program and thinking through some of the $400 million of gross saves and how you're thinking about whatever portion of that you're going to reinvest. I guess I'm thinking how are you thinking about -- how -- what you will be reinvesting in?

I think some of your peers have been a little bit more front-footed on adding talent. You mentioned, John, in your prepared remarks, some noise with your existing talent base. You guys have been prolific in the past on adding talent. We haven't heard much on that front, especially given McGriff, but is that something where you guys think about adding talent heading into next year using some of the gross cost saves associated with the Thrive program?

Yes. That's where the investment will come. The investment will also be in accelerating our AI journey as well. We've continued to invest in talent, both organically and organically -- inorganically. It doesn't necessarily generate the headlines that you see through the tactics that others use, but we've continued to invest in 2025. Thrive is all about growth.

I'm excited about -- David, I'm excited about Thrive and all the components of it. It's, by the way, not a strategic shift for us, nor is it about organizational or structural changes we're always looking to improve. And our vision to be that most impactful professional services firm in the world, all these changes that we announced this week support that. We're very proud of our legacy brands for sure. But we have the opportunity to build a new Marsh and simplify our story to show up in the market in a better-connected way, I talked about the complexity of the environment today. We didn't do this for today, but I think the timing of it, given the complex operating environment is great.

So we're going to showcase the unique attributes of the firm, the breadth of capability we have, the depth of our talent. I talked about data. Part of what we're investing in is we've got a new data leader across the firm. We've got some exciting new tools around data ingestion that will accelerate our already market-leading analytics.

Adding all this to a culture that is, as I said in my prepared remarks, team-based and client first, I'm really excited about it. BCS, Paul Beswick, who's an important really critical leader in our company, bringing together ops and tech under his leadership and working with the business leaders that you know well from this call.

It's all about leveraging the best technology and automation across our businesses. And as Mark talked about in his remarks, optimizing that operating model. So we see a lot of possibility there. It will allow for more efficient CapEx across the company. And so there's a lot for us to dig into, and we're excited about how that can accelerate our growth over time.

Great. And then just a follow-up and just on Marsh in the U.S. and Canada. I guess it feels like things are pretty stable economically, at least I had thought the economy kind of ticked up a little bit in 3Q. I think pricing may be a little worse, M&A, a little bit of a tailwind. The comp was the same. Can you just help me think through like what was causing the deceleration in organic in U.S. and Canada this quarter? Is it some of that talent stuff that's really just coming through a little bit? I know it's not like a huge impact on the entire company, but specifically within that business.

Yes. Again, for the company overall, it's not an impact at all. Look, I think we have a 4% growth at Marsh in the quarter. We have 5% year-to-date, given the pricing pressure. It doesn't feel like an economy that is better than 90 days ago, it feels quite uneven. And I -- we'll see obviously what happens. I think you saw a softening of labor markets in the quarter. And so it is quite uneven out there. And I think, again, up market, which is where we see more softness in growth, we have a client on average that's being a bit more defensive in this environment. And so that's okay.

As I talked about as well, I was trying to highlight while pricing may be down, and the economy may be slowing and interest rates may be declining. The cost of risk, whether it's the economy's exposure to extreme weather, the rapidly rising cost of liability in some markets, including here in the U.S., health care costs, those are big pressure points. Those are all increasing at a rate much higher than GDP, and it's good for our business over time. It may not be good for the overall U.S. economy, but that's a different story. But the demand for our services and helping clients navigate those issues will be quite resilient. I'm very confident in that. Thank you, David. Andrew, next question?

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

I just wanted to ask about the international versus the U.S., it seems like pricing is sort of decelerating in a lot of geographies, but I was curious if you're more sensitive to pricing in certain geographies versus others.

Yes. It's a good question. I'll ask Martin to comment on it a bit, Rob. There's no question. It's a competitive market. In my prepared remarks, I talked about insurance ROEs being quite strong. And as a result, insurers are looking to grow, and they're looking to grow in an economy that's again, uneven and perhaps softening in a few places.

Again, over time, price will have to catch up with the growth in risk. But -- and I would also note before I hand it off to Martin to talk about markets around the world. we're really working with our clients about thinking medium to longer term. Again, there's a mismatch between price today and loss cost inflation. And I think the earlier that our clients can get ahead of that and manage proactively, they will be better positioned when markets do turn. But Martin, maybe you could talk about rates overall around the world, give a little...

Well, I'll just put it into context of our international growth, which I was very pleased with during the quarter, is 5% on top of 7% in 3Q '24 and underlying growth year-to-date is 6%. Asia Pacific growing 6% in the quarter and 5% year-to-date and really strong performance there from Japan and Korea, where we've been investing and see great opportunities for us to play a bigger role in the market there.

EMEA grew 5% and 7% year-to-date. With really interesting country growth in the United Arab Emirates, Saudi, India, France, Spain, all growing in nearly double digits. Latin America grew 3% on top of 8% in 3Q '24, slightly impacted by 18-month policies in 3Q '24. But year-to-date, Latin America grew 5%. So in the quarter, it saw strong double-digit new business growth, capital markets growth across international credit specialties and cyber, very strong growth.

So we're very well positioned, confident in our strategy and lot of market share and opportunity for us to take. But you're right, the rates are slightly more down in international. So an outlier, I think, is the Pacific, down 11%, for the second quarter in a row. But we have a lot of share to take and great positions in our marketplace and not overwhelmingly does rates play through to our revenue at all.

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

Yes. I just wanted to follow up on the Thrive program. Clearly, there's a lot of growth ambitions underlying the Thrive program in addition to the savings. But I'm curious if you think this program, combined with the environment over the next couple of years, give you guys an opportunity to expand margins at an above-average rate? Or is this more like this helps in the context of potentially slowing organic to deliver similar levels of margin expansion as the past?

I think the challenge in your question is what is the average margin expansion, right? But look, yes, I mean, we all know we're operating in a lower growth environment for sure, at least in 2025, and we'll again talk about 2026 in January when we meet in about 90 days. But there's no question Thrive will help support margin expansion into the future. And we're excited about some of the things we've learned already as Paul has worked with the teams from each of the businesses and bringing them together and really leveraging the best technology, the best solutions.

Mark talked about talent, moving talent to our capability centers that are lower cost. And again, as we continue to deploy AI in our workflow, I'm very excited about the possibilities around that. And we've got 18 consecutive years of margin expansion when we round out this year. So we've got a track record through economic and P&C cycles to continue to deliver. So again, Thrive will be an important element and an important part of our focus as a leadership team over the course of the next couple of years. Thank you, Rob. Andrew, next question?

Our next question comes from the line of Brian Meredith with UBS.

John, a couple of first here. First, I wonder if you could talk a little bit about the insurance brokerage M&A environment right now, given we're kind of in the softening market. Are you seeing bid-ask spreads continue to narrow? And then maybe on that as well, we're kind of almost a year into the McGriff. Do you still have appetite and willingness to do, call it, larger scale M&A at this point?

Yes. Thanks, Brian. So by the way, just a quick update on McGriff. Everything is moving according to plan, continue to be incredibly excited. I mean this is a passionate, talented group of people coming together within our MMA operation. And as I mentioned before, Read Davis working with Dave and Matt Stadler, on some really important opportunities for us as a company. So very, very pleased about that.

Do we have the appetite and ability to do a larger scale deal? Absolutely. I think it's more likely that we'll continue our string of pearls approach to the market. But again, we work hard at examining all possibilities, and it's not just about getting bigger, of course, it's about getting better and finding the right fits for us on a cultural basis. And so we remain very active in the market. We've done a bunch of small deals this year. It was a quiet quarter in the third quarter. But again, we're working on a number of different possibilities, and we'll continue to do that.

In terms of the bid-ask spread, given the slower growth environment, I don't know maybe the bid-ask spread might be widening, Brian, is kind of what comes to mind at least in a couple of conversations that we've had. And not just in insurance brokerage, I think, in the MGA market as well. I'm seeing some dynamics there emerge.

So anyway, I think PE buyers seem to be maybe more willing to pay a higher multiple than some strategic, at least that's what I'm taking for the moment. So anyway, I hope that's helpful, Brian. Do you have follow-up?

Very helpful. Yes, absolutely. And just back on the McGriff, we're going to see it, I guess, partially inorganic in the fourth quarter. What does organic look like at McGriff right now? And is it similar to what's going on in the Marsh U.S., Canada business or better or worse?

Yes. We won't report separately on McGriff's organic or for that matter, MMA is either it's an important part of our U.S. business. So -- but it's a huge part of our U.S. business with MMA now more than $5 billion in annualized revenue.

What we see every time we do a deal pretty much is slowing organic in the first couple of quarters, 2, 3 quarters, it's a lot for people to digest, system changes, even broader technology changes, right? New laptops, all this kind of stuff, in some cases, real estate changes. So our folks can be a bit -- can be -- our new folks can be a bit distracted during that period of time. That's what we've seen with McGriff as well.

But we expect it to be a really important contributor to MMA as we go forward. And as Martin and I both mentioned, MMA had a really good quarter in the third quarter, and we expect that to continue. So we feel great about how we're positioned in the middle market in the United States. Thank you, Brian. Andrew, next question please?

Our next question comes from the line of Elyse Greenspan with Wells Fargo.

My first question, I guess, just given your commentary on market conditions this year persisting into next year. And I think you're also just talking about the slowing economy as well. Does this mean just from a high-level perspective that the organic revenue target for next year, it just feels like it should -- it would probably be similar to this year, right, mid-single digit? I know in the past; it's been mid-single digit or greater. I'm just trying to think about just your view, it seems like if we think about everything kind of staying the same that the guidance would be consistent this year to next year.

Elyse. Again, we'll talk about 2026 in 90 days. We thought this year was quite prudent. When you go back to 2024, our guidance was mid-single digits or better. And as we were doing planning this time 12 months ago, looking at a likely softening insurance and reinsurance market, looking at likely impacts from fiduciary income and likely softening in the economy. And again, remember, we're coming out of an unusual period of growth in all the stimulus and in markets all over the world coming out of the pandemic.

To us, it was quite prudent. I think we got a little bit of criticism for it, particularly throughout the first quarter, but to guide to mid-single digits underlying revenue growth. And so we're doing all that work right now for next year. As it relates to insurance markets and reinsurance markets, again, is a -- it will be a year, again, with more than $100 billion of insured CAT again this year. Pretty quiet third quarter, I suspect you'll see some of that in the underwriting results that are released over the course of the next few weeks.

But -- and there's still obviously a quarter to play, but it looks to us like January 1 in reinsurance is likely to look like it did entering about 12 months ago. So anyway, that's what we see at the moment. But again, we'll give you a broader update. And a lot is happening in the world, too, right? So things continue to evolve. It's a very dynamic and complex environment. Do you have a follow-up, Elyse?

Yes. I guess my second question, just going back to the rebranding of the company. And I know the Thrive program outlined today, I guess, in conjunction with that looks as a way to drive incremental revenue. With getting rid of some of the other brands away from Marsh, is this -- are you trying to drive more cross-sell, say, between Marsh and Mercer because I always thought just in general, the cross-sells were not super large there. And I'm just trying to think about how that angle fits into the rebranding that you guys are outlining?

Yes, thanks. I don't like the way you said get rid of deal. We love our legacy brands. We're quite proud of them and what they've represented in the market. The reason, by the way, there is a transition period of 2026 is to make sure that we transition the equity in those brands, in Guy Carpenter, in Mercer into the new Marsh brands.

We're going to build a new Marsh brand. And what that's about -- it's not about cross-selling per se. We cross-sold before, and we actually cross-sell quite a bit. It's an important part of how we show up today, but it's not about a cross-sell program. But it is about simplifying our story, showing up in a more connected way to our clients.

Too many markets aren't aware of the breadth and capability that we have, some of the unique attributes of our firm, the depth of talent, again, the vast data set, market-leading analytics and building that brand in the market and showcasing our talent and our culture, the team-based approach that we take.

We're excited about what that can mean for our colleagues, we're excited about what that means for our clients, and we're excited about what that means for shareholders. And so it's obviously a decision we didn't take lightly. We've been working towards this for several years, right? I mean we -- we've aligned around a common purpose inside of the company, a common colleague value proposition. We brought together the operations and technology teams.

And we have a joined-up strategy. I can tell you it was a celebration in the building here over the course of the last couple of days, our colleagues are excited about it. They see the possibilities in the future. And so we look forward to delivering for our key stakeholders. Andrew, next question please?

Our next question comes from the line of Alex Scott with Barclays.

I wanted to come back to the Thrive program. And I guess the question I have is around how it affects your potential appetite for M&A and just how you're viewing your ability to probably invest more than maybe some of the more fragmented areas of insurance brokerage and whether this could allow you to accelerate consolidation over the next handful of years?

No -- Alex, I'm not sure I see it as a meaningful impact. I mean we have had technology teams -- or excuse me, operations teams in each of the businesses. Our M&A activity from time-to-time crosses businesses, particularly at Marsh and Mercer, but for the most part or -- actually, I should say, Marsh and Guy Carpenter too from time to time. But for the most part, they're within each one of the 4 businesses.

So as I said before, we continue to be very active in the market. We're more likely to continue to do smaller to midsized deals that make us better in markets that we're underpenetrated. We're looking for businesses that are well led, have strong growth fundamentals and are a good cultural fit for us, and we've been really successful at building value in that way. So we're going to continue to get at it. Do you have a follow-up, Alex?

Yes, I do. I think earlier, you mentioned middle market, you're seeing better growth. I mean it sounds like the pricing, in particular, is probably holding up better there. I'm just interested in your views on what you're seeing in the large market, maybe why it's not going down into the middle market or upper middle market? How do you expect that to progress into 2026?

Yes. Look, we're -- as I said earlier, very excited about how we're positioned in the middle market. We've got more exposure to that market segment globally. It can be a bit uneven country to country, but globally now, we have more exposure. We've learned a lot from building out the MMA business over the last 15 years and how we can perform effectively in that market segment.

And at a high level, we bring real scale benefits to -- I don't want to oversimplify it, but in many cases, you've got a lot of relationship selling carrying the day. And while we're good at that, we can also bring great analytics, great specialty capabilities, a global reach that is unique in those markets. And so we continue to be excited about that.

We bring all those things in the large account market as well. We're higher penetrated there. So it's about finding new ways to advise clients. And we didn't talk about AI a lot on the call, but Sentrisk, a great example, right, where really helping clients think through supply chain risk and exposure to global trade negotiations, right? So an example of innovation that we bring to a market that we penetrated well.

Thank you, Alex. I appreciate that. Andrew, I think it's time to wrap up. I want to thank everybody for joining us on the call this morning. In closing, I want to thank our colleagues for their hard work and dedication. I also want to thank our clients for their confidence and trust in our teams. And I want to thank you all very much for taking the time to join us, and we look forward to speaking to you again in about 90 days.

This concludes today's program. You may now disconnect.

Thank you, Andrew.