Willis Towers Watson Stock

Good morning. Welcome to the WTW earnings conference call. Please refer to wtc.co.com for the press release and supplemental information that were issued earlier today. Today's call is being recorded and will be available for the next 3 months on WTW's website. Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties.

Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law. For a more detailed discussion of these and other risk factors, investors should review the forward-looking statements section of the earnings press release issued this morning, as well as in the most recent Form 10-K and other subsequent WTW SEC filings.

During the call, certain non-GAAP financial measures may be discussed to provide direct comparability with prior periods, all commentary regarding the company's revenue growth results will be on a non-GAAP organic basis unless specifically stated otherwise. For reconciliations of the non-GAAP measures as well as other information regarding these measures, please refer to the most recent earnings release and other materials in the Investor Relations section of the company's website.

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

Good morning, everyone. Thank you for joining us for WTW's Second Quarter 2026 Earnings Call. Joining me today is Andrew Krasner, our Chief Financial Officer; Julie Gebauer, our President of Health Wealth and Career; and Lucy Clarke, our President of Risk & Broking, are also joining us for our Q&A session. In the second quarter, we delivered strong results with 5% organic growth, 100 basis points of adjusted operating margin expansion and $3.35 of adjusted diluted earnings per share, up 17% over the prior year.

It was a quarter defined by both marketplace success and cost discipline with strong enterprise adjusted operating margin expanded despite persistent global market volatility. R&B organic growth of 7% led the quarter, with broad-based strength across geographies and lines of business underscoring the durability of our global specialty model. Health, Wealth and Career delivered 4% organic growth this quarter, in line with our expectations, powered by continued strength in health. We expanded adjusted operating margins, delivered double-digit earnings growth and continue to return capital to shareholders, demonstrating the strategy we've been executing is delivery.

Our strong top and bottom line performance this quarter demonstrates the continued progress we've made in embedding AI and automation across the business to help us deliver more effective and efficient solutions for our clients. While we're encouraged by these early benefits, we see an even greater opportunity to deepen the value of our offerings, accelerate performance and enhance efficiency. As a result, I'm excited to announce Propel our AI acceleration plan, which we expect to be completed by the end of 2028. Before I dive into the details, let me explain how we got here and why we are announcing this now.

Over the past 1.5 years, building on our modernized technology and data foundation, we've invested extensively in creating and bringing in new AI tools, including through the acquisition of New front to enable us to capture the next wave of productivity and growth. With the latest significant AI advancements, we intend to create a step change in performance. We expect to capture efficiencies and generate approximately $400 million in run rate savings through an investment of approximately $625 million, reflecting a disciplined cash cost to achieve ratio of about 1.6x. We plan to reinvest a portion of the savings generated to support growth ultimately delivering $350 million in net run rate savings. Together with our continued gains from operating leverage, this puts us on a clear path to an adjusted operating margin of approximately 30% in 2028.

These gains are not just financial outcomes, they provide their resources to accelerate innovation across our business. We believe Propel represents one of the most compelling investment opportunities available to us. The combination of growth productivity gains and margin expansion, we expect to generate offers attractive long-term returns while further strengthening our position with clients. That's why we're choosing to accelerate these investments now. The efficiencies we previously captured has helped to fund investment in growth, and this plan is designed to amplify that.

On recent calls, we've shared some of the benefits of these investments. In HWC, our Compensation intelligence tool, rewards AI, now serves more than 5,000 client users roughly double the number we cited last quarter, demonstrating the rapid adoption of our AI solutions and the value they're delivering for clients. We've also realized efficiencies in our core retirement actuarial work where standardization, process improvement and automation are allowing us to backfill roles globally at a rate of 9 for every 10 levers. In North America, for example, we reduced the time required for core valuations by 7% in 2025.

Artificial intelligence is already delivering value across BD&O with more than 20 AI capabilities now in production and additional solutions being deployed across service centers, member interactions and administration operations. These technologies, which we package together as our violent suite, are helping to improve service delivery, automate routine work and enhance productivity. With Violet, we've served more than 12 million plan participants while increasing use of benefit decision support by 52%.

We resolving more questions at the point of decision and reducing participant follow-ups by 60%. In R&D, we've been leveraging the capabilities of our AI-powered operating platform, Neuron, which combines our existing technology with Newfront's Navigator system. Willis Navigator enables us to deploy agents that work across multiple legacy systems handling the retrieval and task execution that used to consume hours of manual work. The results are tangible scheduled with an insurance that once took 4 hours are now generated in about 5 bids.

Real estate premium allocations that used to take 2 to 4 weeks are completed in the minutes upon receipt of binders and final premiums and contract reviews that once required lengthy manual redlining are now available on demand with the tool getting smarter over time. And these aren't pilots that are live and in daily use. One of the key insights from our experience to date in both segments is the power of bringing together business and technology expertise.

By forward deploying engineers alongside our client teams to ensure there is both technical and business oversight of the tools we developed, we've been able to not just preserve but enhance client experience and service quality. This file lets us move faster and have more impact than we believe is possible with a silo approach. Propel represents an acceleration of technology adoption already underway across the company. Building on our technology deployment model and our successful experience to date, we plan to more extensively leverage our proprietary data, our process automation experience and our AI capabilities to roll out new tools and solutions across our businesses.

We expect these efforts to drive WTW strategy forward to accelerate performance and to enhance efficiency while delivering innovations that improve client outcomes and reinforce WTW differentiated strength. Beyond these internal efficiencies, let me highlight how we're applying AI and the work we do for clients across our businesses. In Health, Wealth and Career, we're further embedding AI in our workflows for improved data injection and analysis, delivering enhanced insights that will allow our teams to provide solutions more quickly while maintaining the high standards ARC clients expect.

We're also automating high-volume workflows from benefits calculations to claims processing while deploying AI agents to support both internal and external administrative processes and benefit communication delivery. Together, these initiatives will enhance our value proposition as we reduce clients administrative burden, provide faster service and enable our colleagues to spend more time providing high-value advice to clients. We're already putting this strategy into action as demonstrated by the launch of our AI workforce transformation solution in June.

This solution helps clients pinpoint where AI can drive the greatest productivity accelerate change adoption, address workforce management needs, adapt total rewards programs and reflect new workforce skills and expectations. AI workforce transformation is built on our proprietary data, expertise across HWC and tools, including work view and change view and provides precise, actionable advice. And we're excited about our recently executed partnerships with Tech Golf and Softec that will help clients move to action faster than their competition.

Just as importantly, we're applying the solution within our own organization to identify similar opportunities to improve how we operate across WTW. In Risk & Broking, we'll continue to enhance and implement Neuron, our AI-powered operating platform across the entire placement life cycle from client engagement and broker assistance through carrier submission and claims.

Neuron is enabling us to build auditable agent-assisted workflows that simplify complex processes, automate manual work and equip brokers with intelligent tools that improve speed, accuracy and client service. CRB has a number of digital placement propositions already live in select countries and lines, including cyber in North America and international property in the United Kingdom enabling carrier submissions and finding with minimal manual intervention.

Digital placement has been operational for over a year, and we plan to quickly expand to more countries and product lines. In ICT, we see an opportunity to leverage our deep domain expertise, combined with our leading insurance technology to deliver AI-enabled solutions that help ensure enhance underwriting, pricing, portfolio management and claims creating new avenues for technology-driven growth. We're also developing agents to operate our tools within our clients' environments. And we're also enhancing how WTW operates internally by embedding AI across our enterprise functions through investments in AI solutions for finance, legal, HR, sales and marketing and IT we expect to improve speed and decision-making, improved front office support and create a more scalable and efficient company that can deliver better outcomes for our clients, colleagues and shareholders.

As you can tell, I'm excited about the impact we anticipate Propel will help on our business. Let me steal a page from Andrew and share some of the financial highlights. We expect to deliver adjusted operating margin of approximately 30% in 2028 with meaningful benefits in both segments. And we expect a meaningful step-up in our free cash flow margin, commensurate with our operating margin expansion after the conclusion of the plan.

Importantly, as we execute on this plan and realize savings, we'll continue to invest in attractive opportunities over the long term with approximately $50 million of the savings earmarked for growth investments. Altogether, we anticipate the successful execution of Propel will result in significant improvements in productivity, efficiency and long-term growth. Andrew will provide more detail on these numbers shortly.

Finally, I want to emphasize this is not a change in strategy. We're moving faster using technology, automation, data and AI in pursuit of 2 key objectives of our existing strategy, accelerate performance and enhance efficiency. These are mutually beneficial. What we've seen so far is that when we use technology to work more efficiently, it allows us to operate more effectively for our clients. part of why I'm excited about this plan is that it frees our colleagues to focus on the work that delivers the most value, the analysis, judgment and solutions clients count on us to provide. And we see the proof of that in our own performance. time invested in building and expanding client relationships as dividends.

Let me provide you with a few examples from the quarter. In Health, Wealth and Career, our work and rewards team was selected by a Fortune 5 Pulp solutions leader to anchor a multiyear enterprise transformation. What began his executive advisory work on leveling and compensation expanded into a broader mandate to implement our AI-enabled global grading system, build a career framework and design incentive compensation.

In another HWC win, one of the largest banks in the United States selected us to a competitive open RFP to lead an end-to-end assessment of its pension administration model and define a future state road map. We won this engagement against traditional competitors and strategy consulting firms on the strength of our long-standing trusted partnership, our fluency of advising large financial institutions and our proven track record supporting hundreds of pension administration clients and millions of participants.

These wins reflect the strength of our trusted client relationships differentiated technology and deep expertise tailored to our clients' requirements. In Risk and Broking, our specialization strategy continues to be a key differentiator in the marketplace as we deliver value through our technical expertise, global collaboration and client-centric solutions. This quarter, we displaced the incumbent broker at a leading global asset manager who selected us for a 3-year engagement built on our Connected Risk Intelligence platform, which evaluates thousands of unique insurance program options and have identified as trade-offs to maximize program efficiency.

The win followed years of sustained senior-level relationship building and a tailored demonstration for the client's treasury and risk management teams. We're also seeing strong momentum in 2 high-growth sectors, digital infrastructure and Power and Renewable Energy, where our recent investments in specialized talent and placement capacity are converting directly into wins.

In Power and Renewables, we were appointed to build a multi-asset global insurance program for a major infrastructure investor developing a worldwide renewable energy portfolio. A win drawing on close collaboration among our private equity and power and renewables team across the U.K., Italy and France and on a long-standing client relationship in a highly specialized sector. And the digital infrastructure, that same advisory-led relationship-first approach 1 is a large-scale semiconductor fabrication project and a contractor side placement on a multibillion-dollar data center construction project for one of our largest pits.

These wins demonstrate the depth of our relationships and the importance of our specialty focus. Lastly, I want to reiterate our focus on the third objective of our strategy, portfolio optimization. We recently completed our acquisition of SMB Scala & Mansutti a prominent regional Italian insurance broker, strengthening our footprint and specialist broking position in Italy, one of Europe's largest yet least penetrated insurance markets.

Additionally, our new front integration remains on track with cost synergies pacing models ahead of plan. Our disciplined and phased approach is already leading to tangible benefits across our business. For example, as you may have surmised my earlier comments, we've integrated Newfront's Navigator, rebranded as Willis Navigator, now operating as part of our end-to-end Doron platform allowing us to streamline more than a dozen legacy systems into 1.

As part of Propel, we'll continue to evaluate ways to implement this technology in our other areas of our business. As we build the intelligence layer, for insurance risk and [ July ] capital solutions, just as we described when we announced the Newfront acquisition. To be clear, the synergies from integrating Newfront are separate from and additive to the savings we expect from Propel.

Let me conclude by providing some observations on market conditions. Some of the near-term headwinds we called out previously have persisted with conditions in the Middle East and a softer labor market leading certain clients to defer discretionary projects, particularly in career, where we absorbed a nearly 50% decline in project work in the Middle East. That said, we continue to see high health care inflation, regulatory change, rapid technological advancements elevated geopolitical tension, economic uncertainty and market volatility driving robust demand for our advice and solutions.

Our emphasis on specialization, data and analytics and connected advice continues to resonate, especially in a risk environment that's going faster than ever. For example, our latest directors and officer survey found that geopolitical risk now ranks among the top 7 concerns from Boards, up from 15th a year ago. And AI is now cited as a very or extremely important risk by well over happen respondents.

As clients seek to adapt their businesses to these rapidly evolving challenges, they are increasingly leaning on WTW as a trusted adviser who could bring data expertise and technology to the table quickly and efficiently. Thanks to our team's strong strategic execution over the past 5 years, WTW is already well positioned for today's market, leveraging our proprietary data customers expertise and trusted client relationships to deliver better outcomes.

Propel will help us seize the opportunities we see to improve client outcomes, enhance our colleague experience and create value for shareholders. We remain confident in our ability to deliver mid-single-digit organic growth, continued annual adjusted operating margin expansion and improving free cash flow for 2026.

And with that, I will turn the call over to Andrew.

Thanks, Carl. Good morning, and thanks, everyone, for joining us today. I'll first discuss our Q2 financials before I discuss Propel and how that strengthens our financial outlook. In the second quarter, we delivered organic revenue growth of 5%. Our growth figures throughout are on an organic basis, but I'll note that our recent acquisitions are performing well, contributing approximately 3 points to reported revenue growth this quarter at both the enterprise and segment levels. Adjusted operating margin was 19.5%, expanding 100 basis points over the prior year. .

Adjusted diluted earnings per share were $3.35, representing a 17% increase compared to Q2 2025. These results reflect a great client work being performed by our colleagues, our continued commitment to strong operational execution and the benefits of our investments in talent and technology. Turning to our segment results, starting with Health, Wealth and Career Organic revenue increased 4% in the second quarter with growth driven primarily by continued strength in health and a steady performance from wealth.

We remain confident in HWC's full year outlook for mid-single-digit growth and continued margin expansion. Health grew 8% organically, driven by solid performance across all regions supported by new business wins and project work on top of our healthy recurring revenue base. Notably, this builds on the 8% organic growth achieved in the prior year second quarter. We continue to expect high single-digit organic growth in health for 2026, supported by demand driven by high health care inflation and the important role of our specialty solutions in helping clients manage rising health-related cost.

Wealth grew 2% organically, reflecting higher levels of retirement-related activity across geographies. Wealth has delivered 3% organic growth for the first half of the year and we continue to expect growth at the high end of the low single-digit range for the full year 2026 as we anticipate recent trends will persist across the business.

Career revenue was flat as higher levels of communications, change and broad-based pay work were offset by constrained revenue in the Middle East due to the ongoing conflict. It is notable that outside of the Middle East, our Career business grew 3% in the quarter with high single-digit growth outside North America. We expect momentum in Career to improve in the second half of 2026 supported by our expanding pipeline of opportunities, including regulatory-driven activity, a positive outlook for our compensation benchmarking practice and our AI workforce transformation offering that Carl discussed.

We continue to expect low to mid-single-digit growth for the full year for Career. Benefits Delivery and outsourcing grew 1% organically as expanded outsourcing engagements and administration contracts were partially offset by lower individual marketplace commissions outside of the annual enrollment period, which falls in the fourth quarter. This is consistent with our expected pacing for the year. We continue to expect low single-digit growth for BD&O for the full year, driven by fourth quarter activity based on our current pipeline for individual marketplace annual enrollment, client implementations and regulatory-driven project work in our outsourcing business.

HWC's operating margin in the second quarter was 24.1%, an increase of 30 basis points compared to the prior year primarily driven by improved operating leverage and expense discipline. We expect to deliver continued margin expansion in 2026. Moving on to our Risk & Broking segment. Organic revenue growth was 7% for the quarter. Corporate Risk & Broking delivered organic growth of 7% compared to 6% in the second quarter of last year, driven by new business activity, double-digit growth in almost all of our specialty businesses as well as strong client retention globally.

North America led growth from a geography perspective, with particular strength in construction, natural resources, surety and M&A. This quarter's results reflected the sequential acceleration we signaled last quarter as some of the activity that had been delayed earlier in the year moved forward broadly as we expected. The pricing environment remains competitive.

In the second quarter, insurance rates continued to decline across most lines with U.S. casualty a notable exception where rates continue to rise. Despite the softer market, our specialization strategy and the breadth of our specialty offerings position us to keep growing through the cycle. For the first half of the year, CRB generated 4% organic growth, consistent with our full year expectation for mid-single-digit growth.

In the second quarter, Insurance Consulting and Technology grew 6% organically, following 5% growth in Q1, primarily reflecting strong software sales and new business wins, including multiyear deals in our technology practice. We continue to expect low to mid-single-digit growth for ICT for the full year. Turning back to R&B's results overall, we remain confident in our full year growth outlook of mid-single digits and 100 basis points of margin expansion.

R&B's operating margin was 22.2% in the second quarter, an increase of 100 basis points over the prior year, driven primarily by operating leverage on strong revenue growth and continued expense discipline, with no meaningful benefit from foreign exchange.

Now let me turn to our enterprise level results. For the second quarter, adjusted operating margin was 19.5%, representing 100 basis points of expansion versus the prior year reflecting strong operating discipline and expense management. A growing share of this expansion is structural, driven by AI and automation embedded across our operating model. We expect these efficiencies to compound as adoption scales supporting the margin trajectory we have laid out.

Just as important, the capacity of these tools free up is being reinvested into higher-value client-facing work and growth. So the benefit shows up in both our margins and in the solutions we deliver. Foreign currency was a $0.06 tailwind to adjusted diluted EPS for the quarter. Based on our current outlook and spot rates, we expect foreign exchange will create an incremental tailwind of approximately $0.05 in the second half of the year, resulting in a tailwind of approximately $0.35 for the full year.

Our U.S. GAAP tax rate for the quarter was 19.8% compared to negative 6.8% in the prior year and our adjusted tax rate was 19.6% compared to 18% for the second quarter of 2025. We continue to expect our adjusted tax rate to be relatively consistent with the prior year. Free cash flow for the 6 months ended June 30 was $360 million, up $143 million from $217 million in the prior year first half. The year-over-year increase was primarily driven by operating margin expansion.

As a reminder, our free cash flow is seasonally weighted towards the second half of the year, and we expect a significant majority of full year free cash flow to be generated in the second half. For the full year, we continue to expect to expand our free cash flow margin even while we begin funding Propel. This improvement reflects operating margin expansion, which preserves our capacity for continued capital return to shareholders.

During the quarter, we repurchased $450 million of WTW shares, taking advantage of an attractive opportunity to deploy capital at prevailing market prices. We also paid quarterly cash dividends of $90 million or $0.96 per share. Our current capital allocation priorities remain unchanged. We continue to expect share repurchases of at least $1 billion for the full year subject to market conditions and potential capital allocation to organic and inorganic investment opportunities.

We continue to view share repurchases as an attractive and disciplined use of capital, and we retain significant flexibility to return capital to shareholders as our free cash flow builds through the year. Before turning to Q&A, I want to expand on Propel, which Carl outlined.

As we noted, given the benefits we've seen from our technology investments to date, we are accelerating our focus in these areas to drive growth and productivity across the business. We expect to generate approximately $400 million in run rate savings and reinvest a portion of the savings generated to support growth ultimately delivering $350 million in net run rate savings by the end of 2028.

The cash cost to achieve these savings is approximately $625 million and we expect to incur approximately $25 million in noncash charges. The roughly $400 million in savings will be driven primarily by process automation and by redeploying capacity from administrative work to client casing work. As we scale AI and automation across the enterprise, we expect to streamline high-volume work, improve productivity, better align our workforce with strategic priorities and enable our colleagues to focus on delivering greater value for clients.

We also expect to benefit from a simpler operating model, better use of shared capabilities, lower third-party spend and over time, the retirement of duplicative tools and legacy technology. Importantly, we view Propel as a highly attractive capital allocation opportunity. Based on the benefits we expect to generate, the returns on these investments compare favorably with other uses of capital available to us.

While the costs are recognized through the income statement as incurred, we believe investing in capabilities that enhance growth improve productivity and expand margins is the right long-term decision for WTW and its shareholders. While our fiscal 2026 guidance remains unchanged, we're updating our medium-term margin target through 2028 to reflect the benefits of these initiatives.

Let me walk you through those changes. We expect the benefits of Propel to begin contributing meaningfully in 2027 and to compound through 2028, resulting in an adjusted operating margin of approximately 30% in 2028. The pacing of the margin improvement will depend on when we take certain cost actions and make reinvestments to drive growth. As we realize these efficiencies, we expect to reinvest in businesses that we've previously called out as investment priorities where we see durable accretive growth in attractive markets as well as additional analytics and scalable digital solutions that strengthen our client value proposition.

Turning to the segments, let me first level set against our prior outlook. Our prior outlook ran through 2027 and was framed as annual margin expansion of roughly 100 basis points per year in Risk and Broking and continued incremental margin expansion in Health, Wealth and Career. Propel gives us the visibility to extend that horizon and target specific adjusted operating margins of approximately 30% at the enterprise level, approximately 35% in Health, Wealth, and Career and approximately 30% in Risk and Broking, all in 2028.

I want to be clear, these targets reflect more margin improvement than our prior guidance implied, and they build on the goals we laid out previously. While we are already confident in our ability to generate operating leverage, the implementation of Propel introduces an incremental margin expansion opportunity that we are well positioned to capture.

Lastly, a word on free cash flow. As we've said previously, we expect our free cash flow margin to improve in line with our adjusted operating margin. Consistent with that, once the plan is complete and the related cash cost adjusted side in 2029 we expect a significant improvement in free cash flow margin, reflecting the stepped up adjusted operating margin, we'll be generating at that point. Importantly, we do not expect Propel to have a meaningful impact on our near-term capital return plans including share repurchases.

Over time, we expect it to enhance our ability to return capital to shareholders. We believe Propel creates a clear path to a more efficient, technology-enabled operating model, while preserving the expertise and client relationships that differentiate WTW. We will remain disciplined on execution, benefit realization and reinvestment as the program scales. Our second quarter results reflect that same discipline across the business and continued progress against our strategic and financial objectives, reinforcing our confidence in delivering on our commitments.

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

[Operator Instructions] Our first question comes from Michael Zaremski with BMO.

I'll stick with the R&B segment for my question and follow-up. Just thinking about the very healthy acceleration in organic and R&B maybe you can add more texture on what drove that? And just sticking with that acceleration relative to 1Q, I guess should we ultimately think about the new business model, the global specialization model being a bit more maybe volatile or chunky revenue base versus kind of the previous is model?

Yes. Thanks for the question, Mike. And we were very pleased with the 7% organic growth in R&B for the quarter. That's on top of the 6% we delivered in the same quarter last year. CRB also grew 7% organically against the 6% comparable a year ago as well. And we do think our specialization strategy and our investments in talent and technology and innovation are driving the business forward with new business wins and strong client retention. The investments I just mentioned are those that will continue to benefit from Propel adding to the roughly 100 basis point average annual margin expansion we've talked about in the past in R&B and underpinning our new path to about a 30% adjusted operating margin in R&B by 2028. .

So R&B's growth and margin trajectory are both strong. And I'd also like to cite the momentum ITT carried into the quarter as well with 6% organic in the quarter. Lucy, can you elaborate.

Sure. Thanks, Mike. As Carl and Andrew mentioned in her opening remarks, we did have a good high-quality quarter, which reflected that sequential acceleration we signaled last quarter. It did include a small amount of delayed activity from Q1 in CRB, which moved forward as we expected. In CRB, we generated strong new business across all global markets. and had double-digit growth in almost every specialty business. We also had strong client retention globally as that specialization strategy you called out continues to resonate. .

By geographies, CRB's growth was led by North America, in particular, in North America, construction, natural resources, surety and M&A, Great Britain grew really well even against significant rate headwinds and Latin America and EMEA were stand out on new business. Globally, we saw meaningful contributions from natural resources, construction, marine, D&S and crisis management.

Another really good quarter in ICT driven by strong software sales and new multiyear deals in our tech process. Just in terms of the outlook for the remainder of the year, we continue to expect softening pricing conditions in all markets with the exception of North American Casualty and just a few specialty pockets. We have monitored our new business pipeline carefully going into Q3, considering the one-off project revenue we called out in Q3 '25, and our pipeline for the rest of the year is strong.

Just reminding everyone that one-off revenue itself is not unusual. It's always an important part of our business. So I don't think that you should think of it any differently than you have before. We have excellent energy in the business, market share to grow into in every geography and every specialty great momentum from Newfront people and tech, outstanding talent, contributing investment hires and an ongoing pipeline of new talent joining plus the excitement of what we expect to achieve during the execution of Propel, our AI acceleration work. And just '26, we remain confident in our full year growth outlook of mid-single digits and the 100 basis points of margin expansion.

Got it. Maybe just quickly, a follow-up on the -- sticking to R&B's organic outlook, maybe nitpicking, but would you be willing to discuss whether lower end or higher end of mid-single-digit growth since that's kind of a wider definition with mid-single digit means. And I know that there's Q3 could be a tough comp because of the project were called out last year?

Yes. Thanks, Mike. I think we'll just stick with mid-single digits, if that's okay. Thanks.

Our next question comes from Elyse Greenspan with Wells Fargo.

I wanted to go back, my first question is also on R&B. So the organic was 7% in the quarter. I think there was -- I think you guys, Lucy, you just said that there was a small impact of timing. So maybe that's like 1%, correct me if I'm wrong. So in the core, I guess, would be like 6%, is that like the right way to think about it? Or is there anything else -- I mean, I understand recognizing last year's comp might be a little bit tough in the third quarter. But is there anything else in relation to thinking about that type of core number that you saw in the business in the quarter? .

Yes. Thanks, Elyse. I'm not going to call out exact percentages, but just to say that it was just a small amount of timing. You will remember in Q1 because I think you are the person that asked me this question that we were off of our own plan just a little bit, although we were further off your expectations. So from our perspective, we are on a good trajectory for the year and happy with where we are at the end of the first half.

And then my second question is on Propel. I guess I was hoping noted just get a little bit more color on what drove the decision to do this plan now? And how would you characterize it as being different on some of the past programs at the company? And if possible, you guys both spoke on it during your prepared remarks, but of the $400 million, can you break it down by like contribution in dollars from people and systems, et cetera, just so we get a greater sense of the ultimate drivers of that $400 million in savings.

Yes. Thanks, Elyse. I guess I'd put it this way, Propel is an acceleration of what's already working for WTW. Our second quarter shows our strategy is working and Propel designed to capitalize on that momentum. As you may be able to tell, I'm pretty excited to be telling you about it today. It's been a while making and it's about creating capacity to invest in growth, right? We're putting proven capabilities in AI directly in the hands of our client-facing teams. And we're investing $625 million of cash to fund capacity take routine manual work out of the day.

And that's going to give our brokers, our advisers, our consultants more time on the advice, the relationships to business that drives growth. In our business, the constraint on growth capacity to do high-value client work and Propel frees up exactly that. And we're going to reinvest more into talent in the high-growth businesses and geographies where we see the greatest opportunity. The time is right, and we're moving at speed as we laid out today. AI is advanced quickly and additive to the value we bring to clients and Propel is going to build on that. Hotel sharpens our advice, it makes us faster and that it creates a durable advantage for WTW. We're proud of the progress we're making. We are definitely excited to be bringing better advice and service to clients. I'll let Andrew kind of address the other thing.

Yes. I want to build on where you ended, which is about creating capacity to invest in growth. because the financial case for Propel is just as much about growth as it is about margin. And the growth comes from how we redeploy that capacity that has generated over time. And what I can put hard numbers on today though is around the margin. So let me take a minute to do that. We expect Propel's investments to generate about $400 million of run rate savings by the end of 2028. And we view that as a disciplined cash cost to achieve ratio of about 1.6x. .

We're deliberately holding back for about $50 million of that to reinvest in growth. So that's about $350 million in net run rate savings that fall the bottom line. And that's what underpins the 2028 adjusted operating margin targets of 30% at the enterprise, 35% in HWC and 30% in R&B. And this is additive, right? It builds on the roughly 100 basis points of annual margin expansion we've talked about in R&B and the continued expansion to HWC.

So Propel really accelerates that trajectory. It's not necessarily replacing it. Two other things I would just point out about the targets first. They were developed from bottoms-up plans built by the team. We're going to end up delivering them. On capabilities that are already live and already producing results across the business. And second, as it relates to capital, Propel has an attractive ROI. It doesn't change our free cash flow margin outlook for 2026 and it doesn't change our capital return plans.

We continue to expect at least $1 billion of share repurchases this year alongside our usual discipline on strategic M&A. And over time, we expect that this will enhance our ability to return capital to shareholders. So we think Propel makes a lot of sense for us. In terms of just the categories of where we expect the expenses to come from, it's about automating more routine and repetitive work. a simplified operating model, lower third-party spend and also retiring duplicative and legacy technology over time.

Our next question comes from Gregory Peters with Raymond James. .

Good morning, everyone. Thanks for the additional detail on Propel -- totally the quick payback period looks really attractive. And you spoke about growth in margins. Can we focus for a second on the expense side of the program? And as we are listening to talk about the opportunity, we're trying to update our models and trying to understand how the expenses are going to flow through the income statement over the next couple of years. And related to that, do you anticipate reporting adjusted earnings, excluding the restructuring investments? Or will adjusted earnings include the restructuring investments, et cetera?

Yes, sure. It's Andrew. Just on the timing of expenses, there'll be in 2026. I think a big majority of it will come in '27 and '28. And the cost savings will follow that spend. The cost will run through the GAAP income statement, but would be adjusted out in our adjusted non-GAAP measures. So you'll be able to see it both ways, we want to try and be transparent as possible here. And then also on a quarterly basis, we'll report out on the progress of the program, both from a cost incurred and a benefit basis, so everybody can keep track as we move on through the program.

And then I just want to keep on the expense side because that ripples through free cash flow. I think you said in your comments that the free cash flow conversion rate and growth will still be positive in '26 despite the headwinds from the investment in this Propel restructuring plan. Would I -- should we assume that when we get to '26 to '28, when the bulk of the expense is flowing through your financials on this program that will see some headwinds to free cash flow before it resumes. I think you said in your comments and '29 the step change with the margin improvement and the ending of the expenses?

Yes. I think you're thinking about that correctly, Greg. I think the margin will step up once the headwinds from the free cash flow expenses -- sorry, the expenses related to Propel subside after the program. we would expect that to step up pretty much commensurate with the amount of margin expansion that we would get the benefit of over the course of that period.

Our next question comes from Andrew Kligerman with TD Cowen.

It sounds from Lucy's comments that there's a real confidence in the pipeline and that vision the mid-single-digit growth. But I'm kind of wondering about the broker facility site I hear a lot about Gemini. I hear about differentiated broking solution and in the broker facility in general at WTW, could you share a little bit on the proportion of business that comes out of the worker facilities at WTW and if there's an ability to grow that? Or are you kind of actually every area of WTW business.

Yes. Sure, Andrew. Thanks for the question. So just to remind you, Gemini isn't even a year old quite yet. But it's a solution for all of our middle market and upwards business. So all qualifying classes go into it. It's a full follow facility and it can take up to 16% of our risk. The facility is almost completely digital, so gets a very good selection of business, although clients can still opt out if they wish to.

The advantage of Gemini is it means that we always have a block of capacity available. Should the market change, we want to make sure that our clients have a dependable capacity available. We could increase that, but right now, we're happy with where it is. But we're also developing a facility for our SME business, so middle market and down called Aquarius, which is also digital and is a panel solution for our global SME business. So yes, room to growth.

That's great. And my follow-up is also on Propel. Just curious think -- I mean just based on Carl's prepared remarks, it sounds amazing. Is sell differentiated from what you're seeing at some of your larger competitor? And how does that play out from a staffing standpoint? Will you be materially able to reduce staffing as we look to 2029 or '30 or wherever?

So I look at it this way. In terms of differentiation, Andrew, Propel is a deliberate entirely choice step up our investment across the enterprise in places where we're seeing growth. It scales what we're already doing across both segments today. And it's an investment in talent and product solution that we know is going to serve clients better. The -- Andrew laid out some of the areas we thought we were going to see some margin efficiencies out of this. And it's true that we'll probably, as we automate less complex high-volume work, see some head count reductions that go along with that.

But we view a central element to Propel reskilling and redeployment in other words, moving capacity towards the client-facing and judgment phase work that's going to drive our growth, right? And that's why we're so excited about the revenue enhancing potential here. But maybe, Julie, Lucy give some examples in your business of how you see this differentiating for us.

Yes. Sure, Carl. In Health, Wealth and Career, we already have a lot underway I think I'll just focus on 3 areas where we've generated some very strong results. And I'll start with BD&O, which I think involves routine tasks like summarizing calls and a lot of time-consuming activities like reviewing complex planned documents. As Carl mentioned in his prepared remarks, we have more than 20 AI capabilities and production already in this business. and the initial productivity enhancements are quite promising.

Our outsourcing service center representatives who are using these tools are spending 1/3 less time on call asset work and we're using these tools for automated document reviews for new clients. System configuration time has gone down 60%. Turning to retirement. Our actuarial evaluations involve a number of complex processes that we've historically connected with manual effort and in several countries in Europe, we've automated much of the work required to connect these processes, and that has compressed the total time expended on evaluation by about 10%.

And turning to a little bit of a different example. Across businesses, we're generating efficiencies with our client-facing AI solutions. So when our clients get the information that they need through an easy-to-use tool our colleagues don't have to spend time answering routine questions. And you heard Carl say 5,000 client users are accessing compensation benchmarking information through rewards AI, so our work in award colleagues can now direct their focus to different, perhaps more complex work for clients.

So with Propel, we'll be able to build on and scale these and a lot of other initiatives that we have underway, then move faster to the next set of opportunities that's going to reduce our costs and allow us to grow faster. Lucy, over to you for R&B?

Yes, sure. Thanks, Julie. So I'll just give you a few examples from CRB by talking about 3 fundamental pieces of the job we do for almost every client. So first of all, something like compiling a scheduled insurance is important, cumbersome and time-consuming job. The teams that are using the new tools have been what would that lease a 4-hour project get done in about 5 minutes at a consistently high accuracy rate.

Second, comparing policy, binders and both now happens in a fraction of the time when the new tools are used. It even catches critical items that a trained I can miss and the combination of our team's verification and the high accuracy rates results in extremely high quality at a much faster pace.

Third, our clients require millions of certificates of insurance per year, and our certificate agent is now running at accuracy scores even higher than we expected turning client turnaround from hours into minutes. Every 1 of these examples gives capacity back to our people to do the work that's more valuable for clients and more rewarding for them. It takes out that manual grind and the guys can put that time back into advice relationships and winning new business. Thanks.

Our next question comes from Rob Cox with Goldman Sachs.

Maybe I could ask on Propel. It sounds like you can quantify the expense saves today, and the much more exciting piece perhaps, it sounds like to you all is the ramp up in revenue and market share gains potential over time. When do you expect we could really start to see that in your results?

Yes. Sure. Why don't I take that one on the giving some thought on the revenue side there. But first Propel makes us more confident, right, in our guidance of the mid-single-digit organic growth -- this is as much growth planned as a margin plan, as I said earlier. And by taking the routine manual work out of the day-to-day, it gives our colleagues much more time on the advice of the relationships and the new business that drives growth and it lets us reinvest in the areas where we see the most opportunity. Some of that is about adding talent. Some of it is about delivering sharper insights and better client experience, which strengthens client retention via the tool that we're building. .

Together with reinvesting in talent and our highest opportunity businesses, geographies, that's what compounds into durable growth over time. As it relates to timing, we're not going to pin this to a single inflection point or a specific growth number to a specific dollar of investment. The revenue benefits will build over time, and the phasing of that depends on the deployment of the $50 million that we're reinvesting the productivity ramp of the colleagues that we add, which take time to reach full contribution and the client retention gains that follow as clients feel the difference through our insight and service. So as Propel takes hold and the benefits show up more meaningfully in the top and bottom line, we will update our guidance appropriately.

What matters is that this growth is sustainable, and we'd rather demonstrate that over time then put a fine point on an incremental amount of basis points today. For now, but for 2026, we continue to feel good about our mid-single-digit guidance for the enterprise in the segment.

And I had a follow-up on talent. I think last quarter, you all mentioned expectations to increase for increased contributions from new hires as we progress through the year. Can you talk about some of those recent talent investments and how that impacted growth in the quarter and what your expectations are going forward?

So let me start and then maybe I'll ask Lucy to add some color. I mean, talent is one of our most important growth engine is not the most intention engine. Our ability to specialize and deliver a better client experience is what sets is a apart for clients and for talent alike and the returns on our investment hires have been strongly been consistent, it's shown up as top and bottom line growth over the past few years and the higher is we're making this year are doing the same. It's a proven playbook. And one of the, again, reasons we're excited about Propel is to let us do more of it from an economic standpoint and as a deployer of choice. We're building on something that already works.

Sorry comment. Please Okay. Yes. Thanks, Carl. So the investment hiring strategy, as you know, has been a key driver of our organic growth over the last few years in CRB. And if I can speak for Julie, also in health within HWC. It's been a highly successful strategy, which we're continuing to execute. We plan to keep adding strategic hires in the geographies and specialties where they have the most impact. So those hires are performing at or above our expectations consistent with prior years. We have a strong cloud start in the first half of '26 within CRB. They are already contributing, and we continued hiring plans throughout the rest of the year and a rich exciting pipeline of talented people that we expect to join us.

The investments we've talked about in AI Propel makes our proposition for people even stronger. People have always been attracted to our brand reputation, the people and the specialty model, but particularly our client-centric positioning and we're confident that by delivering on the AI-enabled tools and tech to really differentiate for clients. We spend a very strong stage, which will continue to attract and retain the very best talent in our industry and we're really excited to have dedicated reinvestments as part of this plan.

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

So thanks, everybody, for joining us this morning. And as usual, I'd like to thank all our WTW colleagues for their hard work, their dedication and their commitment to innovation, which all really showed up this quarter. And thank you to our shareholders as well for their continued support of our efforts. Have a great day, everyone.

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

Good morning. Welcome to the WTW Earnings Conference Call. Please refer to wtwco.com for the press release and supplemental information that were issued earlier today. Today's call is being recorded and will be available for the next 3 months on WTW's website.

Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law. For a more detailed discussion of these and other risk factors, investors should review the forward-looking statements section of the earnings press release issued this morning as well as in the most recent Form 10-K and other subsequent WTW SEC filings.

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

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

Good morning, everyone. Thank you for joining us for WTW's First Quarter 2026 Earnings Call. Joining me today is Andrew Krasner, our Chief Financial Officer; and Spike Lipkin, our Chief AI Officer, who will share his perspective and touch on our integration efforts following our acquisition of Newfront. Julie Gebauer, our President of Health, Wealth & Career and Lucy Clarke, our President of Risk and Broking, are also joining us for our Q&A session.

As a first order of business, I want to note my deep appreciation for our colleagues in the Middle East, who've remained available to address client needs even as their lives have been disrupted by conflict. I also want to express our ongoing commitment to supporting our colleagues and clients as they manage this stressful environment.

Now I'll turn to our results. In the first quarter, we delivered 3% organic growth with adjusted operating margin of 22.3% and $3.72 of adjusted diluted earnings per share. Revenue came in at the low end of our plan as we saw the effects of a more challenging and volatile global market environment during the quarter, particularly considering our meaningful presence in the Middle East region. Despite the slower-than-expected growth, our ongoing efforts to enhance efficiency helped us generate operating leverage and 70 basis points of year-over-year margin expansion.

External conditions in the first quarter were mixed. We saw high health care inflation, regulatory changes and a higher volume of corporate transactions, along with elevated geopolitical risk, economic uncertainty, market volatility and rapid technological change. These conditions created both opportunities and challenges for our business.

Throughout the quarter, clients sought our counsel to better manage cost and risk, asking for advice, contextual judgment and specialized expertise to weather dynamic markets. At the same time, we saw short-term headwinds as conditions in the Middle East caused clients in the region to postpone advisory projects. Unfavorable market movements and uncertainty also weighed in on economically sensitive businesses and led some clients to pause more discretionary spending and delay some decisions.

Nonetheless, we continue to see solid traction in the market for our solutions with our strategic focus on specialization, data and analytics and smart connections resonating with clients. We remain confident in our long-term outlook and our ability to accelerate performance and drive growth through our investments in our solutions, talent, technology and data.

Notably, our AI-enabled solutions are gaining scale and generating growth as they deliver better outcomes for clients. For example, in HWC, Rewards AI, which applies generative AI to WTW's proprietary data for compensation benchmarking, now serves over 2,500 client users.

Our HR AI Assistant Expert was named a 2026 Lighthouse Tech Award winner in the category of practical AI, recognized for delivering measurable efficiency gains and value for HR and Benefits teams. And we expect many clients to undertake AI workforce transformation projects that we will deliver with our newly developed WorkVue agent, which evaluates the automation potential of all roles across an organization.

In Risk & Broking, following 2 successful pilots in the second half of 2025, we're implementing an AI-powered operating system across the business. This accelerates the core technology that we've developed in our broking platform and integrates our risk and analytics modeling tools into our service platforms. The result is radically improved insight on risk and an expedited placement process.

During the first quarter, we also introduced some elements of Newfront's proven technology to enhance the front end and add more agentic capabilities, substantially reducing the administrative burden on our people and transforming our ability to serve our clients. In claims, we're rolling out our digital global claims platform that builds on our broader CRB strategy.

The platform uses AI and advanced analytics to reduce process complexity, shorten claims life cycles and improve outcomes for our clients. It also gives us better insight into claims performance standards across carriers and geographies. These investments use technology to strengthen and scale our human-led judgment, advocacy and accountability. The same applied innovation mindset also extends to how we're helping clients manage complex and fast-moving risk environments.

Recently, our physical risk climate team was recognized for its work with a large semiconductor client for whom we developed new solutions to help manage climate and infrastructure-related vulnerabilities across multiple geographies. These capabilities enable clients across the technology industry to quantify and prepare for risks that fall outside traditional frameworks. Against that backdrop, we saw several notable client engagements this quarter that demonstrate how WTW is helping clients navigate complexity by combining data and analytics insight and technology.

In Health, Wealth & Career, a large global employer in the consumer cyclical sector selected WTW for support on a quick burn project to prepare for a divestiture. The client valued our Divestiture in a Box offering that incorporates prepackaged solutions with technology-enabled delivery.

In another HWC win, the CHRO of a global technology company recognized that HR needed a trusted partner, a partner with deep expertise on work design, jobs and skills to help them develop an AI strategy they could execute. Our work and rewards and employee experience teams were engaged to build an end-to-end solution, including a talent and skills framework, a transformation road map, a process to build newly needed skills, and an overall change management strategy. Our subject matter expertise and our AI tools differentiate us.

In Risk & Broking, we're particularly proud of the team who recently won all lines for a global Fortune 100 company in the U.S. following a multistage process that highlighted our analytics expertise and strong global coordination across our specialties. Starting with a comprehensive property and casualty review in the summer of 2025, we delivered actionable insights that established credibility and set us apart in the RFP with our advanced analytics, global connectivity and technology-enabled service platform. This win underscores the strength of our globally integrated specialty model and our ability to translate analytics into measurable client value and will result in strong revenue growth for us this year.

Another recent win by our surety team highlighted our global reach and ability to solve complex specialty placements. We were selected by a leading global supplier of nuclear technology to address the consolidation of a fragmented surety program previously managed by 2 global brokers. Additionally, we were tasked with structuring and executing a major syndicated surety facility designed to support the client's ambitious $80 billion project pipeline over the next 3 years, one of the largest nonconstruction surety syndications currently in the market. Securing this mandate positions CRB surety as a key strategic partner and provides a robust platform for our continued growth within the nuclear energy sector, where we expect strong growth over the course of 2026.

Finally, we secured a significant win in the rapidly growing AI and digital infrastructure industry with one of the leading companies in the construction and operation of advanced data centers. Our team won the entire program from a broker relationship that spanned over 15 years, covering both construction and operations by showcasing our construction specialty and analytics expertise as well as our ability to advise on complex construction risks in almost every country in the world.

Our support for the client extends beyond core services. For instance, we just assisted with a bond required for a project closure in Europe, filling a gap left by their previous surety broker. The client has appointed us on their next 3 data center projects without a competitive process, and we'll see that work come through in 2026.

Innovation also remains a significant driver of our efforts to enhance the efficiency. WE DO, our enterprise delivery organization continues to support our businesses in deploying automation and AI and optimizing utilization of our global delivery centers. As AI adoption rises across the company, we're seeing increasing benefits to efficiency and productivity. For example, last July, we introduced our [ Call Note Assist ] tool. Since then, it's been used to summarize over 1.6 million calls in our outsourcing contact center, enabling a 33% reduction in post-call wrap-up time.

DocLLM, our proprietary AI document ingestion tool, extracts and organizes key terms such as exposures and insurance clauses, significantly streamlining compliance and portfolio oversight. And our CRB affinity team has used AI to achieve a 90% reduction in endorsement processing time.

With that, I want to step back and underline what we're seeing and expect to see in our business regarding AI. Clients are not choosing between human expertise or technology. They expect both. They want trusted advice and a trusted partner to help them navigate the complex environment, adding analytical rigor and sound judgment to the decisions they're facing. And they want applications and platforms that give them real-time access to data and insights regardless of how difficult it might have been to attain the information or how much effort it would have taken to analyze it previously.

This is why I believe WTW will lead and benefit from AI solutions in the long term. Our position in the industry and our structural advantages give us the opportunity to use AI to drive growth and efficiencies in ways that newcomers, carriers and clients cannot or do not have the incentive to pursue.

Let me explain. First, -- our services are complex, highly specialized and mission-critical for nearly all companies. Clients value working with trusted advisers like WTW because our guidance comes with real accountability. In making complex or important decisions, expert judgment matters and the potential upside of bypassing experienced accountable advice is not worth the downside of getting it wrong and dealing with the repercussions.

Second, AI enhances efficiency but does not enhance trust and alignment. AI streamlines workflows and lowers cost to serve, but it does not deliver the judgment, adequacy and accountability that both clients and carriers expect. AI can inform decisions, but it does not negotiate with carriers, advocate on behalf of insurers in the claims process or provide bespoke advice to help navigate through complexity. For buyers of our offerings, the risk of foregoing that value proposition getting it wrong is considerable.

Third, our structural advantages are hard to replicate. Our aggregated proprietary data, deep relationships and global scale, which have been developed over time, create meaningful benefits for clients and carriers. In HWC, we have decades of longitudinal workforce data, actuarial IP and deeply embedded outsourcing platforms. In R&B, we have proprietary data, which encompasses risk and placement insights across carriers and geographies.

Finally, AI itself is increasing demand. In addition to growing client interest in more sophisticated analytics and advice, including guidance about AI workforce transformation, AI is creating new AI-related risks and amplifying existing risks in cyber and other markets, fueling demand for novel insurance solutions that we believe we are well positioned to create and implement.

To give you deeper insight into this, I'd like our new Chief AI Officer, Spike Lipkin, to share some of his thoughts. As you know, with our focus on portfolio optimization, WTW recently acquired Newfront, a San Francisco-based startup, which grew at the leading AI-powered broking platform. Spike co-founded Newfront and led its efforts to disrupt insurance broking, and as WTW's Chief AI Officer, he'll help shape how AI advances WTW's long-term strategy and integrate Newfront's technology with WTW to create a true end-to-end digital ecosystem. His experience building Newfront and planning and executing this integration gives him a unique and valuable perspective.

With that, I'll turn it over to Spike.

Thanks, Carl. I'm excited to be here because AI is clearly central to WTW's strategy, and it will become a key driver of value for both our clients and our business. Gordon Wintrob and I started Newfront in 2017 because we believe that advances in technology would create new risks around cyber, IP liability, property, which would expand broker revenues and at the same time, reduce the cost of delivering services. While all of this has happened, there's even more opportunity ahead, and we still believe that insurance brokers, especially those with scale and data like us at WTW, will be massive beneficiaries of AI advances.

At Newfront, we built infrastructure to take advantage of these developments to provide better client and colleague experiences. The results are clear. Colleagues who use our technology sell about 50% more than those who do not. And our client attrition rate drops by half when clients use our tools compared to those who do not. However, over 8 years, we found that this highly advanced technology, global reach, expertise and access to proprietary data are still tremendously important. AI is no substitute for WTW's meaningful influence with carriers to drive better client outcomes.

Moreover, AI is most effective when supplied with a vast amount of proprietary data, which WTW has. Our conclusion was obvious. Lasting advantage would accrue to scaled platforms that combine data and specialized expertise with AI to supercharge the entire system. After evaluating a range of options, we made a deliberate decision to move to WTW where we saw the foundation for that advantage in 2 ways.

First, its position as an industry leader in data and analytics; and second, its operational agility that comes from being a genuinely integrated enterprise rather than a collection of siloed businesses. This level of integration is uncommon in the industry and critical for success. As models become widely available, much of the business impact will depend on employee adoption and reskilling. This is much more straightforward in an organization with shared processes, consistent standards and aligned incentives than one fragmented across independent business units.

Moreover, the data lives in one place rather than across a series of disconnected platforms. We believe this gives WTW a significant competitive advantage, which is why we chose to join them and build an end-to-end AI-powered broking platform together.

We're now working at pace to integrate Newfront's technology into WTW's environment to create this intelligence platform that unlocks significant growth and efficiency opportunities for the entire enterprise. Our goal is to allow colleagues to spend more time on client-facing work and less time on administrative tasks. We also believe having the leading technology will attract talent to WTW, especially those in search of novel digital tools to deliver better client outcomes. An AI fluent workforce is a massive competitive advantage in this industry, which has historically lagged in technology adoption.

Our detailed road map to integrate Newfront's existing tech into WTW's business starts with North America. Several tools are implementation ready, and we are embedding engineers with professional teams and seeing early successes. For example, several AI tools are being utilized by client-facing teams, like Coverage Gap Analysis, our AI-powered coverage review tool. We are also quickly rolling out Navigator, which centralizes clients' insurance programs in one platform, and Partner Management, our AI-driven third-party insurance compliance tool. And our Newfront professional teams are already benefiting from the WTW platform with several large notable wins that combine Newfront Tech with WTW resources to bring on clients we never could have won on a stand-alone basis.

For example, a multistate midsized health care provider selected us as their health and benefits broker because of WTW's deep health care expertise and cost management approach combined with Newfront's technology capabilities. In another case, a rapidly growing energy client selected us because of Newfront's technology combined with WTW's energy expertise. Additionally, in CRB, the combined expertise of Newfront and the WTW team enabled us to retain the P&C placement for a high-profile AI developer.

As we shared when the acquisition was announced, we expect momentum to build over time as we build the intelligence layer for insurance. We are keenly focused on implementation as addressing this component is more than half the challenge. This is the most exciting moment our tech team has ever experienced, and we are committed to preserving our early lead. We expect the next few years to be some of the most exciting and impactful in our business, and we're thrilled to be advancing our work at WTW.

Thank you, Spike. We're excited to have you on board as part of the leadership team, and we look forward to sharing more on AI development and our integration progress on future calls.

Before I hand it off to Andrew, I want to reiterate our confidence in our strategy and the investments we're making in AI, talent, innovation and data to both protect and expand our competitive position over time and deliver value to clients and shareholders. Despite the short-term headwinds that impacted the first quarter, we remain confident in our ability to deliver on our near-term goals of mid-single-digit growth, continued margin expansion and free cash flow margin improvement.

With that, I'll turn the call over to Andrew.

Thanks, Carl. Good morning, and thanks for joining us today. In the first quarter, we delivered organic revenue growth of 3%. Adjusted operating margin was 22.3%, expanding 70 basis points over the prior year. Adjusted diluted earnings per share were $3.72, representing a 19% increase compared to Q1 2025.

While revenue came in toward the low end of our plan, our first quarter results reflect our commitment to strong operational execution and the benefits of our investments in talent and technology. Our strategy is resonating despite ongoing macro uncertainty, and we remain focused on executing our strategic objectives and creating long-term shareholder value.

Turning to our segment results and starting with Health, Wealth & Career. Organic revenue increased 3% in the first quarter, with growth driven primarily by continued strength in Health and Wealth, partially offset by softer results in Career and Benefits Delivery & Outsourcing. We remain confident in HWC's full year outlook for mid-single-digit growth and continued margin expansion even with the headwinds from economic uncertainty and geopolitical pressure impacting parts of Career.

Health was our strongest performer this quarter with revenue up 6%. All geographies delivered growth led by strong performances across international and Europe, supported by solid client retention and the strength of new business wins. Overall, Health continues to demonstrate the strength of its recurring revenue base. We continue to expect high single-digit growth in Health for 2026 based on demand driven by high health care costs and the important role of specialty solutions.

Wealth revenue grew 4% in the first quarter, driven by higher levels of retirement work across all regions alongside growth in our investments business. In retirement, growth was supported by continued demand for project work, recurring actuarial services and the expansion of our global Life site offerings. Investments grew with solid new business wins and increased OCIO activity. Overall, Wealth performance continues to reflect the durability of its recurring and regulation-driven revenue base. Wealth is off to a good start this year, and we continue to expect growth at the high end of the low single-digit range in 2026.

Our Career business declined 3% this quarter, primarily due to geopolitical disruption in the Middle East causing a significant pullback on projects. This change in activity did not impact our other HWC businesses, so regional exposure is very modest at the overall HWC level. The Career business also experienced strong growth in Europe and Asia, while seeing somewhat slower pipeline conversion in North America. We expect momentum to improve later in the year based on our expanding pipeline and outlook for our compensation benchmarking practice. We also expect to gain traction with our new AI workforce transformation offering, which is resonating well with clients as they focus on redesigning work and jobs to reflect the transformative impact of AI.

As Carl mentioned, this offering features our WorkVue agent to support business leaders in thinking about the automation potential for different roles. Even so, with the ongoing uncertainty related to the Middle East conflict, we believe it is prudent to expand our guidance range to low to mid-single-digit growth for the full year for Career.

Benefits Delivery & Outsourcing declined 1% this quarter. The results reflected an expected contraction in the Individual Marketplace business, partially offset by continued growth in outsourcing. Individual Marketplace performance was impacted by lower commissions in the first quarter, consistent with our expected pacing for the year. Outsourcing delivered modest growth, supported by expanded projects and administration engagements. Overall, BD&O performance tracked in line with our expectations.

As a reminder, our Individual Marketplace business generates about 80% of its revenue in the fourth quarter due to the timing of the Medicare enrollment period. Given that seasonality and our expectations for 2026, we anticipate that the full year growth from Individual Marketplace will be driven by fourth quarter activity. We continue to expect low single-digit growth for BD&O for the full year based on our unchanged expectations for Individual Marketplace and our pipeline of new client implementations in our Outsourcing business.

HWC's operating margin in the first quarter was 27.3%, an increase of 60 basis points compared to the prior year or 40 basis points, excluding the tailwind from foreign currency, adding to our track record of consistently delivering margin expansion, which we will continue to build on in 2026.

Moving on to our Risk & Broking segment. First quarter revenue growth was 2% compared to 7% growth achieved in Q1 of last year. As anticipated, Q1 was a softer growth quarter for CRB, reflecting an exceptionally strong prior year comparable and the timing of new business activity. Against that backdrop, CRB delivered organic growth of 2% for the quarter or 1% excluding the impact of book of business settlement activity and interest income against the strong 9% growth CRB achieved in the prior year quarter.

While we had expected a slower start to the year, Q1 actuals tracked toward the lower end of our planning range. This was primarily driven by a miss in our new business target, some of which timed into future quarters. To a lesser extent, we also saw a more competitive pricing environment. We had strong client retention and solid growth across specialty lines with notable contributions from our surety, credit risk solutions and M&A specialties.

Construction also delivered a solid quarter, supported by continued momentum in data center programs. It's worth emphasizing that one quarter, particularly Q1, does not define the trajectory of the year for CRB. Given the strength and visibility of our pipeline, we remain confident in our ability to drive profitable growth for the full year. However, reflecting the slower start to the year, we are narrowing our full year outlook for CRB organic growth to mid-single digits. This does not change our long-term expectations for this business. The specialization strategy continues to resonate, positioning us to help clients manage geopolitical volatility while disciplined investments in revenue-producing talent continues to support sustainable organic growth.

Moving on to our Insurance Consulting and Technology business. Revenue was up 5%, marking its strongest performance in several quarters, driven by increased technology sales. Demand for ICT software solutions remains healthy, particularly for Radar, our leading decision engine, where AI-enabled capabilities are increasingly being used to deliver sharper pricing, underwriting and claims insights. Consulting activity remains subdued in some areas, and we do not expect a material pickup in the near term. This was a great start to the year from our ICT team, and we continue to expect low to mid-single-digit growth for ICT for the full year.

Turning back to R&B's results overall. Again, given the slower start to the year, we are narrowing our full year 2026 growth outlook for R&B to mid-single digits. R&B's operating margin was 22.6% in the first quarter compared to 22% in Q1 2025, an improvement of 60 basis points on a reported basis. Excluding the net tailwind from foreign currency, book of business activity and acquisitions, margin improved approximately 10 basis points. We remain committed to delivering 100 basis points of average annual adjusted operating margin expansion over the next 2 years.

Now let me turn to our enterprise level results. For the first quarter, adjusted operating margin was 22.3%, representing approximately 70 basis points of expansion versus the prior year or 30 basis points, excluding the tailwind from foreign currency. This performance reflects strong operating discipline and expense management and the continued benefits from actions we've taken to simplify and streamline the organization.

As we flagged on last quarter's call, we saw a meaningful impact from foreign exchange this quarter, resulting in a tailwind to adjusted EPS of $0.25 for the first quarter. Based on our current outlook and spot rates, we expect foreign exchange will create an incremental $0.10 tailwind in the remaining 3 quarters, resulting in a $0.35 tailwind for the full year.

Our U.S. GAAP tax rate for the quarter was 18.6% versus 21.5% in the prior year. Our adjusted tax rate for the quarter was 20.3% compared to 22.7% for the first quarter of 2025. We continue to expect our '26 tax rate to be relatively consistent with that of 2025.

Free cash flow was negative $65 million for the first quarter of 2026, an improvement of $21 million from the prior year. The year-over-year increase was primarily driven by operating margin expansion and the abatement of transformation program cash outflows, partially offset by increased transaction and integration expenses. For the full year, we continue to expect to expand our free cash flow margin.

During the quarter, we returned $388 million to our shareholders via share repurchases of $300 million and dividends of $88 million. From a capital allocation standpoint, our priorities remain unchanged. We continue to expect share repurchases of at least $1 billion, subject to market conditions and potential capital allocation to organic and inorganic investment opportunities. Share repurchases continue to be our primary form of capital return alongside dividends as we maintain flexibility to invest in the business and pursue disciplined strategic M&A aligned with our long-term priorities.

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

[Operator Instructions] Our first question coming from the line of Elyse Greenspan with Wells Fargo.

My first question is on R&B and the organic revenue slowdown you saw in the quarter. I think you guys said new business was below plan. Can you just expand on that? And was that the full driver of, I guess, the organic deceleration? And within new business, did you see -- was it more pronounced the slowdown in the U.S. and Europe? And I guess, is your expectation, why are you convinced, I guess, that this is just a 1 quarter slowdown and growth will get better over the balance of the year?

Elyse, thanks for the question. So just to put the context here, right, R&B had 2% organic growth in the quarter. That was on top of 7% we delivered in the prior year quarter. As we anticipated, Q1 was a softer growth quarter for CRB, delivering 2% organic growth, 1%, excluding both book of business and interest income. That does reflect an exceptionally strong comparable of 9% with the same exclusion in Q1 of '25 as well as the timing of new business activity. As we indicated, the current quarter results tracked to the low end of our planning range.

However, we do think our specialization strategy and the investments we're making in talent, data and technology are continuing to resonate in the marketplace and driving sustainable growth. And of course, ICT's 5%, we think was a strong result as the technology pipeline conversion improved.

Lucy, anything to comment in terms of this quarter and the outlook?

Yes, sure. And thanks, Elyse. Why don't I start by giving you a little bit of context then give some detail about the results itself and make some comments about the rest of the year. Our expectation for CRB was that Q1 would be our lowest growth quarter of the year. This expectation was largely due to the strength of the comparable, which Carl mentioned. In Q1 last year, CRB had 9% growth ex interest income book of business activity with particularly strong new business generation. We did, though, come in at the low end of our own planning range.

The majority of the below-plan results is due to a miss in our new business target, some of which will time into future quarters. And our early view is that we returned to normalized growth in April. While we don't disclose organic growth rates at the geography level, I can say that North America had the best performance and international trailed the other geographies in the quarter for a couple of reasons: First, international had the toughest comparable because of an outstanding performance in Q1 '25. And second, it's the region that has the most new business exposure to geopolitical headwinds.

To a lesser extent, our growth was also impacted by an even more competitive pricing environment than we expected, particularly in the large and complex segment. Although we have returned to normalized growth in April, given the slower start to the year and those ongoing price headwinds, we are taking a prudent approach and narrowing our full year outlook to mid-single digits.

In terms of the rest of the year, we continue to see healthy client activity, deliverable pipelines in all of our specialties. And of course, we expect increased contributions from our new hires as we progress through the year. We have exciting momentum coming out of the integration of the Newfront team in North America. Newfront brings not only exciting tech developments, which will benefit the production capacity of all the WTW people, but I should also mention the incredibly talented people with important specialist capabilities who we feel very privileged to welcome to WTW.

In terms of strategic hiring, we're continuing with this successful strategy with our strategic hires from previous years continuing to make healthy contributions, and we had a significant cohort of new investment hires start in Q1, giving them the full year to ramp.

And finally, we've returned to normalized growth patterns in April. I would call out, I guess, a specific area of uncertainty, not unique to us, of course, being the Middle East, where we expect decision-making to be slower and projects to be delayed.

As I mentioned, we did see continued deterioration in pricing during Q1. So considering the performance and the rating environment, which we did call out as a potential risk to our path to high single digit in Q4, we think the narrowed outlook of mid-single-digit for CRB is prudent given the evolving macro backdrop, and we continue to expect low to mid-single-digit growth for ICT for the full year.

Overall, we remain well positioned despite the volatile environment, and we're confident we can deliver mid-single-digit organic growth in R&B in '26, along with 100 basis points of average annual margin expansion over the next 2 years. Thankfully.

And then my follow-up question maybe is just picking up where you ended on the margin, right? So I think in the prepared remarks, you guys said ex currency book of business activity and acquisitions that the margin within R&B expanded by 10 basis points. So obviously, right, that is below the 100 basis point average. Can you just help us think through, I guess, what drove that in the quarter and why you would expect the drivers of margin improvement picking up throughout the course of '26?

Yes, sure. Sure, Elyse. We did expand margin by 60 basis points on a reported basis. And as you noted, excluding the net tailwind from foreign currency book of business activity and acquisitions, margin improved about 10 basis points. Looking ahead, we expect our continued investments in technology to provide a strong platform for ongoing operating leverage and efficiency across the business to help achieve the 100 basis points of margin expansion on average over the next 2 years within the segment.

Maybe, Lucy, do you want to provide a little bit more color there?

Yes, sure. Thanks. Elyse, I think our Q1 margin result reflects our ability to lower our operating margin to meet our margin expansion commitments even in a low growth quarter. We are maintaining focus on disciplined expense management and continuing investments in enhancing efficiency while also taking into account a cost base that includes staffing and capabilities built for the stronger growth expected throughout the remainder of the year.

As Carl highlighted in his remarks, we do and our investments in AI and automation continue to be key drivers of that margin expansion across the whole business. One of the specific examples he mentioned was that our Affinity team has achieved a 90% reduction in endorsement processing time using AI enhancements. Advancements like these really improve the client experience and make work more efficient for our people.

And more meaningfully, we are doing some very important work on our own operating system. During the last half of 2025, we launched 2 pilots, one in North America and in the U.K. During Q1, we added some significant new front enhancements and have now started the global launch of our AI-powered operating system, Neuron.

As Carl mentioned, this accelerates the core technology that we developed in our broking platform and integrates our risk and analytics modeling tools into our service platform. This enables our users to do all their work from a single screen with no data entry.

Just one small example to put it into perspective a little bit. Today, in our existing systems, each single piece of data is entered between 3 and 12x. And of course, each single client transaction will have many hundreds of data points, most entered manually. This will have a sizable impact on speed and accuracy. Neuron has been launched in Cyber North America and property in the U.K., and we have launches in other geographies and other lines planned over the next few quarters. This will radically improve the service we give to our clients as well as be a meaningful driver in our ability to deliver operating leverage in our mid-single-digit revenue growth.

Operating leverage and efficiency gains will remain the primary drivers of our expected 100 basis points of average annual margin expansion, and we remain confident in our ability to deliver on this plan. Thankfully.

And our next question coming from the line of Rob Cox with Goldman Sachs.

First question, just staying with the focus on R&B for a moment. Is it fair to characterize the R&B growth as a situation where you're expecting some level of this Middle East uncertainty to persist in growth rates in coming quarters? And to follow up on your question or on your comment on pricing for large and complex business, I was thinking your revenue model would be less susceptible to pricing changes in that segment, but maybe that's not the case in international. Any comments would be helpful.

Yes, sure. Thanks. Just in terms of the first part of the question about the Middle East. To date, in Risk & Broking, we've seen puts and takes with an overall neutral impact, some delays to projects, but offset by some higher activity in some of our impacted specialty lines. But just calling it out as a developing situation that we're monitoring.

In terms of the pricing question, yes, we do have -- in our specialty businesses, we do have some that are susceptible to large and complex pricing, and that's been reflected in what we saw during the first quarter.

Okay. And then I'll just pivot to HWC. I wanted to ask on the outlook there, given the headwinds that you guys called out in that business. What makes you confident that you can deliver the mid-single-digit growth given the uncertainty there? Is it just that the Middle East disruption is focused on the career business and you don't think that will blend or bleed into other businesses?

Yes. Thanks, Rob. So I mean, at the segment level, HWC delivered 3% organic revenue growth for the quarter, and that was driven by primarily strength in health and wealth, and that's despite headwinds from economic uncertainty and geopolitical pressure. Career, as you cited, right, declined 3%. That was lower levels of project activity.

Clients deferred some discretionary work and the situation in the Middle East and some broader economic caution we did see an effect. Demand for advisory services slowed in North America, partially offset by some regulatory-driven work and strength in some select international markets. We do expect momentum to improve in career as pipeline conversion increases and regional headwinds moderate later in the year.

Julie, do you want to talk a little bit more about what you're seeing in career and in this segment?

Yes. Sure, Carl. And thanks for the question, Rob. Look, we did face these headwinds in career, the Middle East geopolitical situation and the caution around discretionary spending. And we do view those as temporary. We know they're not going to go away immediately, but we expect them to have less of an impact later in the year.

Then I think it's important to highlight a few things that did not impact Q1 that we expect to impact the rest of the year positively. And there are 3 of them. First, results don't yet incorporate the strength that we expect to see in product revenues. We've got good participation in our compensation surveys, and that's a leading indicator for benchmark revenue growth later in the year. We also have a positive outlook for Embark portal implementations.

The second thing is that we've built healthy pipelines, especially in Europe and Asia, healthy pipelines for technical advisory support on things like EU Pay Transparency, M&A transactions and total rewards. And as we think about timing of that pipeline, those pipeline conversions, we expect revenue in these areas to contribute to growth over the rest of the year.

And then third, our teams are also focused on a new area of emerging demand, and it's related to the impact of AI on an organization's work in workforce and total rewards. We're building a really strong pipeline for new offerings in this area. This AI workforce transformation solution, which you heard both Carl and Andrew mentioned in their prepared remarks, is a terrific solution. It features our WorkVue agent, which evaluates the automation potential for all roles across an organization, and we expect to see meaningful growth in this area in the latter part of the year.

So when we combine those positive developments with a tougher start to the year, our outlook for career is to reach low to mid-single-digit growth for the year. And as Carl said, this does not change our mid-single-digit guidance for the segment overall.

[indiscernible] Health, which we had 6% organic growth, that was driven by solid client retention, wins in global benefits management and local brokerage appointments along with double-digit health care inflation. We've got a very healthy pipeline there, and momentum is building for specialty solutions and cost management projects. So we expect growth to accelerate throughout the year, and that will lead to high single-digit organic growth for the full year. And then we've got the positive impact of Newfront on top of that when we look at total growth.

And then in Wealth, we had strong performance in our retirement businesses in all regions. We have new actuarial clients, new LifeSight clients. We're doing more technical support for things like data cleanup, derisking, workforce management activity. And alongside that, our investments business also grew this quarter, and that came on the strength of new funds that we introduced last year, new business wins and OCIO activity.

And these trends in Wealth, we expect to continue across the businesses, and we think that will result in organic growth at the high end of the low single-digit range. And again, here, we've got total growth where we'll benefit from the close of our Flowstone deal in early April and the expected close of our Cushon acquisition this quarter.

And then in BD&O, we performed as we expected in the first quarter. And just an important reminder, as Andrew pointed out earlier, that individual marketplace in this business generates approximately 80% of its revenue in the fourth quarter, and that's what's going to drive annual growth. So for the year, in BD&O, we're holding to our guidance of low single-digit growth. And overall, put this all together, we're very confident in our outlook for HWC to deliver mid-single-digit growth and will add to increase margins again this year.

Our next question coming from the line of Andrew Andersen with Jefferies.

I wanted to go back to HWC, and you had called out stronger international health growth. Are you seeing any regional divergence in demand trends more broadly or pricing or even any changes in client practices around compensation approaches?

No. I mean we're seeing strong demand for our services for health across the globe, particularly strong in international markets. Do recognize that our North America business is a mix of consulting and brokerage and the consulting arrangements are typically less sensitive to health care inflation. So there is that nuance.

Yes. And Carl, I just might add that we do see health care inflation projected to increase across all regions at an average of more than 10%, and that's due to higher volume and higher cost. And we don't expect to see that decelerating in the near term. And as you said, the cost increases are going to most directly impact the revenue for fully insured clients. And for other clients, it is driving greater demand for our technical advisory services.

And then maybe Spike, how should we think about some of the tangible impacts of AI? Where do you expect it to show up first, whether it be margin expansion or revenue growth? And maybe what are some milestones we can look out for as you scale into this new role and strategy?

Yes. So let me describe Spike's new role for everybody, and then I'll let him gladly comment on that. So after leading key pieces of the ongoing integration of Newfront WTW, Spike is going to serve as our Chief AI Officer, reporting to me and working to set our overall enterprise AI strategy. Spike's Co-Founder, Gordon Wintrob, is going to be our Head of AI Acceleration, and he'll focus on accelerating enterprise-wide adoption of AI capabilities.

The track record here speaks for itself. Spike and Gordon helped build the industry's largest AI broking platform and delivering a smart, fast and efficient client experience through the combination of deep specialty expertise and cutting-edge technology. And Spike's new role will help define our enterprise ambition for AI and further embed it into WTW's overall strategy, operating model and culture. He'll also help shape how we use AI to advance our competitive positioning and create long-term value for our clients and shareholders. And now [indiscernible].

Great. So maybe I'll -- thank you. And maybe I'll start just talking a bit about the vision and then some of the near-term integration focus. So the vision is very straightforward. WTW becomes the intelligence layer for insurance, risk and human capital solutions. Every client interaction will be backed by a large proprietary comprehensive data set surfaced by AI and delivered through an expert who is aligned with client outcomes.

This strategy is durable for WTW for 3 reasons: First, AI compounds with proprietary data and our HWC and R&B assets built on almost 200 years of client work are very hard to replicate. Second, firms that win with AI will be those whose data workflows and incentives are aligned across the enterprise rather than siloed across business units. WTW's integrated operating model is a real advantage here. And third, through Newfront, we now have a working playbook and engineers who have built it for what an AI-native broking actually looks like in production.

Our strategy at WTW has as much to do with how we work as it does with what we build. A key skill we've developed over 8 years in business is how to successfully embed engineers with professional teams to build useful technology. The tools we built at Newfront were heavily used by our team and also used by 1/4 of our clients on a monthly basis.

Tactically, we're running 2 tracks in parallel. We're scaling purpose-built agentic products like Coverage Gap analysis, Navigator and Partner Management, and we're driving AI adoption across the workforce. Those reinforce each other and AI fluent workforce is what compounds the value of each new model release.

And it's Andrew. Maybe I'll just comment on the margin part of the question. So we're already capturing AI-driven efficiencies. They contributed to the margin expansion we delivered in 2025 and the forward trajectory that we've committed to across both of our segments.

Qualitatively, here's how I think about the time horizons for the continued impact. In the near term, the upside is what we do and similar programs are already producing, workflow automation, delivery center productivity, contact center efficiency, things of that nature. That's in the run rate.

In the medium term, the larger opportunity is scaling Newfront's agentic products and driving AI adoption across the workforce. We expect that to compound as adoption deepens. Long term, the most durable benefit isn't really cost reduction at all, right? It's the advantage of combining proprietary data and integrated operating model and an AI-fluent workforce, which we believe is hard to replicate. The last point I'd note is that we are reinvesting a portion of these savings in growth, talent, technology and capability so not every dollar of efficiency will immediately drop to the bottom line and to the margin.

And our next question coming from the line of David Motemaden with Evercore ISI.

I wanted to stick with the organic growth in R&B, the 1% growth this quarter on a core basis. Could you just talk about some of that new business that, Lucy, I think you said it was timing related. Could you just size how much of a drag that was in the quarter? And is that conversion of those -- of some of those deals? Is that what's coming back a little bit here in April?

Thanks, David. Well, I'm not going to size it for you exactly, but I will reiterate that the -- there was a particularly strong performance in international in Q1 '25. And that was where we saw some of our challenges. But that -- what we're seeing in April gives us confidence that we're good for mid-single digits for the full year.

Got it. And I'm assuming that means I think you had said April is normalized growth. So sorry to be super short term here, but I was a little surprised at just how much it decelerated this quarter. I mean is normalized growth, is that -- is it back at 5% this quarter? I mean -- or in April, I guess -- and what gives you the confidence that, that's going to continue?

Understand your surprise, and it is mid-single digit or better in April.

And I'm sorry to be short term.

And our next question coming from the line of Andrew Kligerman with TD Cowen.

I guess -- do I have 1 or 2 questions? I don't know, it seems like we're getting to the end here, but I'll ask, number one, an executive at one of the very largest carriers suggested that broker commissions are excessive and that they will come down in time. And I'm very curious as to what you think about that and how it will play out for Willis Towers?

And then just in case I don't get to squeak it in. You've given great detail on HWC and R&B and why you think things are going to get better. When you say mid-single digit for both, it feels like it might be skewed toward the lower end of mid-single digit. Am I thinking about that wrong?

So thanks for the question or questions, Andrew. Let me address the first one. Carriers talking about broker commissions is not a new thing. And I guess the way we look at it is brokerage pricing has historically reflected risk transfer complexity and advisory value and not just cost plus economics. In fact, if you look at commission levels over time, you'll see steady levels in spite of significant technology advances as it's based on the value intermediaries bring to both clients and carriers.

And so I look at it this way, while AI can reduce manual effort, it doesn't reduce the compliance burden of distribution, doesn't change the incentive structure between carriers, brokers and clients, and it doesn't diminish the value of brokers scale and relationships. And this dynamic is not new to our industry. Technology has consistently driven efficiency gains in insurance broking and advisory services over many decades.

And through each successive innovation, WTW successfully adapted and continue to deliver organic growth and margin expansion over time. And AI represents just the next phase of this evolution. It enables productivity improvements while reinforcing the value we bring of human judgment, advice and client relationships.

And just on the growth question, we're not going to sort of pinpoint an exact sort of spot within mid-single digits going forward, but the mid-single-digit guide is across the enterprise and across both of the segments.

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

Two ones here. First, just on R&B growth one more time here. I'm wondering if you maybe you can frame how much of your business is actually exposed to this Middle East conflict? And if it continues here going forward for the remainder of the year, what does that mean for your organic growth? Could you have to guide down here again?

Yes. Thanks. In terms of how much we could be exposed, I would just say it's one of our smallest geographies. And so while we think it's important to call it out, we don't expect it to have a major impact on our results.

Very helpful. Thanks, Lucy. And then second one, maybe for Andrew. Given your stock is down about 26%, 27% year-to-date now, maybe you can frame kind of your capacity for share buyback this year? I know you said it's going to be greater than $1 billion, but maybe frame kind of how big could it potentially be given obviously your stock has been hit pretty hard.

Yes. So we've said $1 billion or greater for the year. That guidance hasn't changed. We looked at our cash position regularly, lean in from an absolute dollar perspective and also from a timing perspective when it's appropriate.

And our next question coming from the line of Mark Marcon with Baird.

My question was answered. I was curious as well about just the size of the Middle East since you ended up talking about that quite a bit upfront. So interesting that it's relatively small. Can you talk a little bit about how you're thinking about longer term, just the impact of AI on the margin improvement, particularly on the R&B side. Like you've already been talking about the 100 basis points of improvement. But how -- longer term, how much more efficient could we end up becoming? And how significant could that be?

Yes, sure. We're not necessarily going to quantify the impact over the longer term. I called out earlier a couple of places where we think it helps both from the cost side and the revenue side as it relates to the 100 basis points of margin expansion within R&B, technology advances and process efficiencies have always been a core part of that. I think AI is just playing a larger part in that than maybe we had anticipated when we sort of frame that at the end of 2024 at our Investor Day.

And that is all the time we have for our Q&A session. I will now turn the call back over to Mr. Carl Hess for final remarks.

So thank you all again for joining us. I appreciate the hard work of our WTW colleagues globally who helped us navigate the start of the year. And thank you to our shareholders as well for their continued support of our efforts. Have a great day.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Good morning. Welcome to the WTW Earnings Conference Call. Please refer to wtwco.com for the press release and supplemental information that were issued earlier today. Today's call is being recorded and will be available for the next 3 months on WTW's website.

Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law. For a more detailed discussion of these and other risk factors, investors should review the forward-looking statements section of the earnings press release issued this morning as well as in the most recent Form 10-K and other subsequent WTW SEC filings.

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

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

Good morning, everyone. Thank you for joining us for WTW's Fourth Quarter and Full Year Earnings Call. Joining me today is Andrew Krasner, our Chief Financial Officer. Julie Gabauer, our President of Health, Wealth & Career; and Lucy Clark, our President of Risk and Broking, are also joining us for our Q&A session.

We closed the year with another strong quarter, driven by our focused strategy and a steady execution by all our WTW colleagues. Throughout the year, our strategic efforts to accelerate performance, enhance efficiency and optimize our portfolio has strengthened our business, enabling us to achieve our financial objectives for 2025 and positioning us for continued success in 2026. Our strategic investments in talent and innovation in 2025 have accelerated performance.

In Risk & Broking, our specialization strategy continues to fuel new business momentum. In Health, Wealth & Career, our focus on smart connections and innovative recurring solutions has translated into steady growth. And across the entire business, our digital platforms and advanced data and analytics continue to differentiate WTW. We do our enterprise delivery organization and our relentless focus on right work, right place, right tools and right space continue to enhance our efficiency, help us modernize how we operate and drive further margin expansion.

And finally, in 2025, we strengthened our business portfolio, starting the year without TRANZACT and ending it with acquisition announcements, including Newfront, Cushon and Flowstone Partners. These transactions demonstrate our commitment to optimizing WTW's portfolio for growth and profitability in a disciplined and thoughtful way. Let me share more details about our strong financial performance. In the fourth quarter, we generated 6% organic growth, 80 basis points of adjusted operating margin expansion and adjusted EPS of $8.12.

As a reminder, TRANZACT contributed $0.80 to adjusted EPS in Q4 of 2024. Excluding this contribution, adjusted EPS increased 13% year-over-year. For the full year, we had organic growth of 5%, in line with our mid-single-digit target. We expanded adjusted operating margin by 130 basis points year-over-year to 25.2% and delivered adjusted diluted earnings per share of $17.08. In the fourth quarter, Health, Wealth & Career organic growth accelerated from earlier in the year to 6%, and the segment delivered 30 basis points of operating margin expansion, excluding TRANZACT.

In Risk & Broking, we generated 7% organic growth in the quarter and expanded adjusted operating margin by 120 basis points. The 8% organic growth in our Corporate Risk & Broking business marks the 12th consecutive quarter that the business has recorded high single-digit growth, excluding the impacts of book of business activity and interest income despite a more challenging pricing environment.

I'm particularly pleased with the strong results in our CRB North America business, which grew by high single digits, driven by increased M&A activity and new business across several specialty lines, including construction and surety. As evidenced by our fourth quarter performance and new business wins, we saw attractive returns on our investments in talent and innovation in 2025, and we'll continue to prioritize investment opportunities that further accelerate our performance.

A good example of this is our strong and growing presence in the digital infrastructure space, where we're proud to support 5 of the 10 largest data center developers globally. We recently added 1 of those 5 in a competitive RFP process for their master builders' risk placement. The client chose us for the breadth and depth of our expertise in construction, energy, technology and other specialties as well as our global capabilities in connectivity.

As that win shows, our specialization strategy underpins our ability to support clients across the full data center life cycle from planning to operation. We have a track record of supporting the largest developers with our industry-leading analytics. This, along with our deep subject matter expertise across cyber, contracts, environmental and property risks, allows us to deliver comprehensive risk management solutions for every aspect of data center development and operation.

Our Construction Specialty business is seeing strong results in CRB North America. Recently, WTW was selected as the commercial insurance broker for 2 major U.S. bank headquarter renovation projects collectively valued at well over $1 billion. These high-profile wins underscore our team's strong expertise in technical proficiency and construction and our unified and highly analytical approach to helping solve our clients' challenges.

I also want to mention a large win across both RMB and HWC from a leading Nordic industrial company, supporting insurance, benefits and pension programs the company had previously handled in-house. This success reflects our ability to make smart connections across segments and leverage our relationships and expertise to devise solutions that clients cannot achieve on their own.

In HWC, our commitment to smart connections, technical depth and product innovation continues to drive growth across our businesses. For example, our health and benefits and retirement teams connected to [indiscernible] incumbent of a U.K.-headquartered global engineering company to win a comprehensive benefits project to ensure competitive and cost-effective coverage for private medical insurance and other employee benefits and pensions.

In another example, a leading financial services company with employees in all the EU member states chose us to procure them for the EU pay Transparency directive. Our sophisticated pay equity analysis that incorporates the value of benefits, our proven career framework and our communication and change management approach were the differentiators that helped us secure the business.

Finally, our new products and solutions like LifeSight continue to gain market share. In a notable example, a Fortune 50 technology company chose LifeSight as its Master Trust pension program in the U.K. due to their confidence in our investment proposition and our differentiated member experience. This appointment added GBP 400 billion of assets under management to LifeSight.

As you see in our fourth quarter and full year results, we delivered margin expansion along with our growth. We do continues to be a major driver of our growing profitability. In particular, we do enabled AI and automation are central to enhancing our efficiency across the company, maintaining operational discipline and creating lasting cost savings. These capabilities are already embedded in our enterprise operating model and global delivery centers, enabling teams to solve real business challenges, accelerate priority initiatives and unlock new sources of value.

Building on this momentum, we're advancing smarter, more efficient solutions that enhance client service, including partnerships with leading Agentic AI innovators to explore high-impact use cases. Our approach is focused on solutions that complement human expertise, boost productivity and simplify operations, all while maintaining robust governance and alignment with WTW standards. We do was a critical driver of our operating margin expansion in 2025, and we expect to see continued benefits as we scale automation, expand our delivery centers and further embed these capabilities across WTW.

Finally, I'd like to highlight our progress in optimizing our portfolio. We've shared our inorganic priorities, improving our business mix, expanding our reach across the value chain and enhancing our growth, margin and free cash flow profile. We advanced these priorities in 2025, which was highlighted by our recent acquisition announcements and the divestiture of TRANZACT.

Going forward, we'll continue to evaluate potential opportunities to optimize our portfolio. As we announced last week, we closed the Newfront acquisition on January 27, and the business is now operating as part of WTW. Newfront brings a modern technology-enabled approach to middle market broking, combining deep specialty expertise with a proprietary digital and AI-driven platform. Their approach aligns closely with our focus on specialization, innovation and efficiency, and we're proud to welcome the Newfront team to WTW.

During 2026, we'll be laser-focused on seamlessly integrating Newfront's team and technology into WTW, retaining and empowering talent, bringing our resources, scale and global footprint to Newfront clients and combining our highly complementary technology and capabilities to deliver an integrated end-to-end technology platform that will drive growth, enhance efficiency and better serve our clients. Spike Lipkin, Newfront's CEO and Co-Founder, will be focused on integration, client development, talent acquisition and technology.

We're taking a deliberate and thoughtful approach to ensure we maintain continuity for Newfront clients and minimize disruption. We've established a dedicated integration management office to oversee the transition and to carry out a disciplined and phased approach to integration. We continue to see meaningful opportunities to generate synergies over the next 3 years.

I also want to highlight other transactions that will further optimize our portfolio and reinforce our capabilities in high-growth markets. During the fourth quarter, we announced the acquisition of Cushon, a cutting-edge U.K. fintech pensions and savings provider, which will strengthen our position in the fast-growing U.K. defined contribution master trust market. Cushon's innovative technology-led solutions complement LifeSight and enhance our Master Trust offerings. We expect to complete the acquisition of Cushon in the first half of 2026.

We also agreed to acquire FlowStone Partners, a private equity secondary specialist that will expand access to private markets for individual and institutional investors. We expect to complete the FlowStone acquisition later this quarter. Taken together, these transactions reflect a disciplined and deliberate approach to portfolio optimization, aligned with the strategic priorities and financial framework we laid out at our 2024 Investor Day.

As I look at the year ahead, I feel confident in our position and our positive outlook for 2026. This outlook aligns with our long-term guidance of mid-single-digit organic growth, adjusted operating margin expansion and free cash flow margin expansion and is supported by the same core tailwinds that contributed to our success in 2025. We have strong momentum in the market. We continue to make steady progress executing our strategy and the political and regulatory environment worldwide remains highly dynamic, driving clients to seek our advice and solutions to protect and strengthen their businesses.

While we remain positive about current macroeconomic and market conditions, of course, we're closely monitoring potential headwinds to our business in the year ahead so that we can respond appropriately. That said, given our competitive advantages and momentum across the business, I'm confident in our ability to deliver on our goals.

With that, I'll pass it to Andrew for a more detailed discussion of the financials and 2026 outlook.

Thanks, Carl. Good morning, and thanks, everyone, for joining us today. In the fourth quarter, we delivered solid organic revenue growth of 6% and expanded adjusted operating margin by 80 basis points year-over-year to 36.9% or 30 basis points of year-over-year improvement when excluding TRANZACT. Adjusted diluted earnings per share were $8.12, which is an increase of 13% over the prior year when excluding TRANZACT.

For the full year, our strong results were in line with our long-term financial framework. We delivered organic revenue growth of 5%. Adjusted operating margin expanded 130 basis points to 25.2%, reflecting 80 basis points of year-over-year improvement, excluding TRANZACT. Adjusted diluted earnings per share were $17.08, up 13% over the prior year when excluding TRANZACT.

Our fourth quarter results reflect the benefits of our investments in talent and technology as well as the commitment and diligence of our colleagues. Our strategy continues to resonate despite ongoing macro uncertainty, and we remain focused on executing our strategic objectives and creating long-term shareholder value.

Turning to our segment results. Health, Wealth & Career revenue grew 6% compared to the fourth quarter of last year. For the full year, HWC revenue grew 4%, in line with our outlook of mid-single-digit organic growth. Our Health business achieved solid growth of 4% this quarter. This was on top of the 18% growth rate achieved in the prior year quarter. Excluding book of business settlement activity and interest income headwinds, growth was 6% for the quarter and 7% for the full year, primarily driven by double-digit increases in international and strong performance in Europe.

Results in International were driven by new business acquisition, successful renewals, health care inflation and market expansion. In Europe, the strength of new business and renewals generated growth. In North America, growth was offset by a book of business sale in the prior year fourth quarter. We continue to expect strong demand across the global business, driven by health care inflation and employers' continued focus on managing costs while maintaining competitive employee benefits. As a result, we expect Health to deliver high single-digit growth in 2026.

Wealth had strong growth of 5% in the fourth quarter, primarily from increased levels of retirement work globally. Demand for our core defined benefit work, including new client appointments and support for regulatory changes and data projects remains strong. We also saw growth from project work to support pension surplus utilization and workforce management. New solutions in Europe, including an innovative pension risk transfer solution in Germany and early retirement services in Spain also contributed to growth.

Our investments business grew due to new products alongside enhanced capital market conditions and client wins. With good momentum in the wealth business, we expect growth at the high end of the low single-digit range in 2026.

Career growth was 10% in the fourth quarter, primarily driven by robust demand for broad-based advisory services, compensation benchmarking survey work and the impact of a change in survey delivery patterns, which we highlighted on the Q3 call. This dynamic shifted some revenue from last quarter into this quarter. In addition, a book of business sale contributed to Career's revenue growth this quarter.

For 2026, we expect mid-single-digit growth for career based on our continued focus on product and technology offerings, recurring services and increased demand for a wide range of advisory services, including those related to implementation of the EU Pay Transparency Directive. Benefits Delivery and Outsourcing, or BD&O, grew 5% versus last year's fourth quarter, primarily driven by increased commission revenue in our Individual Marketplace business.

As we had indicated on our prior calls, this was expected as BD&O generates almost half its revenue during the fourth quarter, primarily due to the timing of commissions and onboarding of new clients. Global Outsourcing also grew revenue this quarter from core administration engagements and expanded project work. While we expect BD&O to achieve mid-single-digit growth over the long term, we are projecting low single-digit growth in 2026 as we absorb the impact of changes in the Medicare market.

In line with the revenue pattern I mentioned, growth will be concentrated in the fourth quarter and rates in the first 3 quarters could fluctuate considerably. HWC's operating margin in the fourth quarter was 44.3%, an increase of 240 basis points compared to the prior year or an increase of 30 basis points, excluding the impact of the TRANZACT divestiture.

For the full year, HWC's operating margin grew 230 basis points or 60 basis points, excluding the impact of the TRANZACT divestiture compared to the prior year. This result demonstrates our ability to consistently deliver incremental margin expansion regardless of cyclical macro conditions and supports our expectation of continued margin expansion in HWC in 2026.

Moving to Risk & Broking. The strong revenue growth of 7% in the fourth quarter reflects the continued momentum in the business. Our specialization strategy and investments in talent, data and technology continue to drive sustainable growth. For the full year, R&D revenue grew 6% -- excluding the impact of book of business settlement activity and interest income, growth was 7% for the full year. Corporate Risk & Broking grew 8% for the quarter.

For the full year, CRB revenue grew 7%. Excluding the impact of book of business settlement activity and interest income, growth was 8% for the full year. This was on top of the 9% growth rate CRB achieved in the prior year. CRB's growth this quarter was primarily driven by our global specialization strategy, which continued to support new business wins and client renewals despite more challenging rate environment.

We recorded significant new business activity across all regions this quarter with notable contributions from construction, surety, marine and credit risk solutions. As expected, we continue to see a challenging growth environment with rates softening across various lines. Nonetheless, our specialization strategy is resonating in the market, and we are pleased by the results. We continue to expect mid- to high single-digit growth in CRB for 2026.

In our Insurance Consulting and Technology business, revenue declined 1% versus last year's fourth quarter when ICT delivered 11% growth. Full year growth was 1% compared to 4% last year. Our combined approach of consulting and technology continues to add value. However, the trends we've highlighted in the last 3 quarters still persist with continued weakness as expected in the consulting environment and clients remaining cautious about making large multiyear technology implementation decisions.

We continue to shift the balance of our business from consulting to technology over time. We are encouraged by our pipeline on the technology sales side and do not expect to see a meaningful pickup in consulting activity in the short term. For 2026, we continue to expect low to mid-single-digit growth in the business.

Turning back to RMB's results overall. We are pleased with our momentum entering 2026, which gives us confidence in our ability to deliver mid- to high single-digit growth for the full year. R&B's operating margin was 34.7% for the fourth quarter, a 120 basis point improvement over the prior year. This was primarily driven by operating leverage from strong organic revenue growth, coupled with continued expense discipline.

Foreign exchange rates were a tailwind of 10 basis points to operating margin in the fourth quarter due to the weakening U.S. dollar. For the full year 2025, we achieved 100 basis points of operating margin improvement in RMB or 120 basis points, excluding the impact of foreign currency. We remain committed to delivering 100 basis points of average annual adjusted operating margin expansion over the next 2 years. As Carl highlighted earlier, the investments we've made in our technology and our WE DO capabilities continue to create value and provide a strong platform for us to deliver ongoing operating leverage and efficiencies across the business.

Lastly, let me provide some additional color on our enterprise level results. Adjusted operating margin for the fourth quarter was 36.9%, an 80 basis point improvement over the prior year, reflecting strong margin expansion in the segment. This result includes a 50 basis point tailwind from the TRANZACT divestiture. As we enter the first quarter of the full year, all our businesses will continue operating with discipline and rigor, giving us confidence in our ability to continue to expand margins.

Foreign exchange was a tailwind to adjusted EPS of $0.18 for the quarter. Based on our current outlook and at current spot rates, we expect foreign exchange to be a tailwind of approximately $0.30 to adjusted EPS for 2026. The impact is primarily expected to occur in the first quarter due to the seasonality of our euro-denominated revenue. Our U.S. GAAP tax rate for the quarter was 20.8% versus 26% in the prior year. Our adjusted tax rate for the quarter was 20.8% compared to 21.1% for the fourth quarter of 2024. For 2026, we expect the full year adjusted tax rate to be relatively consistent with 2025.

We generated free cash flow of $1.5 billion for the 12 months ending December 31, 2025, an increase of $279 million from the prior year, bringing our free cash flow margin to 15.9% compared to 12.8% in the prior year. This was driven primarily by reduced transformation program cash costs and operating margin expansion. We expect to continue expanding our free cash flow margin in 2026 from operating margin expansion and the absence of transformation program cash costs with partial offsets from transaction and integration expense related to our recently announced acquisitions.

During the quarter, we returned $439 million to our shareholders via share repurchases of $350 million and dividends of $89 million. For the full year, we returned $2 billion in capital to shareholders. We continue to view share repurchases as one of our primary methods of capital return and an attractive use of capital to efficiently deliver value to WTW shareholders. Looking ahead, we expect to allocate at least $1 billion to share repurchases in 2026, subject to market conditions and potential capital allocation to organic and inorganic investment opportunities.

We're confident our balanced and disciplined capital allocation approach will generate long-term shareholder value. We'll continue to be selective as we invest in talent and in our platform to ensure we're driving sustainable growth and margin expansion. As part of our investment program, we will continue to make investments in our reinsurance JV as it scales its newly launched commercial operations. We expect this to be a headwind of about $0.30 to adjusted EPS this year.

In closing, we are pleased by our strong performance in 2025. We are increasingly seeing the execution of our strategy yielding tangible results and generating strong momentum as we enter 2026.

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

[Operator Instructions] Our first question comes from Elyse Greenspan with Wells Fargo.

I was hoping to spend more time on the drivers of organic growth within R&D in the quarter and just to get more sense of the revenue growth by line and geography. And in particular, I'm looking for a broad-based answer, but also just in particular, some color on North America, right, which I believe went from something around 1% in the Q3, right, to high single digits in the fourth quarter.

Yes, sure. Elyse, it's Carl, and thanks for the question. Let me begin with that broad-based answer and then let Lucy zoom in. R&D delivered strong 7% organic growth in the quarter. That's on top of a 7% in the prior year, and that reflects continued momentum we see in the business. CRB delivered 8% organic revenue growth and 8% when excluding both book of business activity and interest income this quarter. Our specialization strategy, our investments in talent, data and technology continue to drive sustainable growth. Lucy?

Yes, sure. Thanks, Carl. Thanks, Elyse. Yes, we were really happy with another good quarter overall. In CRB, we generated significant new business in every global market, notable contributions from Construction and surety, credit, marine and natural resources. In CRB North America, specifically, like you mentioned, we were really happy with the high single-digit organic growth. And I would call out growth in several specialty lines there, including M&A.

And just if we look at the full year, I do want to say how proud we all are of the 2025 performance with 6% organic growth or 7% excluding book of business and interest income, which reflects the ongoing success of our specialization strategy and in particular, the commitment of our people. Particularly CRB, good year with full growth of 7% or 8%, excluding both book of business activity and interest income. And for the full year, I would call out significant contributions from D&S.

So that's our Specialty Property and Casualty and fact team, construction and surety, credit and natural resources. We're really happy with the performance in the quarter, the performance in the full year and the momentum we have coming into this year. Our specialization strategy continues to resonate, positioning us to help clients manage persistent trade and geopolitical volatility, while disciplined investments in revenue-producing talent continues to support sustainable organic growth. We are well positioned for the current environment and are confident we can continue to deliver mid- to high single-digit organic growth in R&D during 2026.

And I guess I'm going to keep my follow-up, sticking with the topic of organic and maybe Lucy where you ended, right, the mid- to high single-digit guide for R&D in '26. Last quarter, you guys sounded a little bit more cautious saying if the competitive pricing environment persisted, it might make the high single digit harder. But then it sounds like your pricing commentary this quarter is the same as last quarter, but some new growth opportunities, be it on the specialty side with M&A, et cetera, is offsetting that, which enables you to keep the guidance for '26 of mid- to high single digits. But can you just expand on that a little bit more?

Yes, sure. Of course, we do expect pricing to continue to improve for our clients. that could be a factor in our ability to reach high single digits. But like you mentioned, our growth is driven by high retention rates, new business, the impact of all of those hiring investments and the success of the specialty strategy. Carl talked a little bit about the opportunity in digital infrastructure, including the build-out of data centers, which is a big opportunity for us. But I think really that concentration on specialty allows us to focus on a number of opportunities.

And I would call out electrification, which is one of our big strategies. And we've highlighted that where there's a real need for global specialty capabilities is where we can really perform. And we have been investing meaningfully in our capabilities across the power sector. This is a significant area of growth for us, and we've already demonstrated our commitment by combining some of our specialist capabilities and announcing a single unified proposition covering both construction and operational needs as our clients increasingly require coordinated support across development, construction, financing, operations and resilience. This is already having an impact.

We recently completed one of the largest insurance placements to date for a significant electrification initiative that was testament to the collaboration of our teams across Australia, Spain and London. The team was able to secure comprehensive coverage under exceptionally demanding market conditions, reinforcing our reputation for outstanding client service in large-scale infrastructure projects and just one example of the opportunity we see ahead. So yes, absolutely, we expect pricing to continue to improve for clients, but we think the opportunity outweighs that.

Our next question comes from David Motemaden with Evercore ISI.

I wanted to stick with the RMB organic growth outlook. And maybe actually just zooming in a little bit on this quarter. Just seeing if you guys could size the benefit of some of those tailwinds that you called out, including the digital infrastructure and M&A activity? And then maybe if you guys have a rough sense for your market share within the digital infrastructure market.

Yes. I mean, thanks for the question. Again, we're seeing the business firing on a lot of cylinders, including some of those you enable. But as we pointed out during our response to Elyse, right, we're seeing good growth across the portfolio, including North America. And so this isn't just a data center story. While we're very happy with our profile in that sector and some other places that Lucy has been talking about. We think that the hiring strategy and the specialization strategy in general is what's been paying off for us. So I think we look forward to seeing that momentum continuing into 2026.

Got it. And then maybe just a question for Andrew. On the 80 basis points of margin improvement in 2025, excluding TRANZACT. Just wondering if you could walk us through some of the puts and takes that you think about heading into 2026, I guess, not only for margin, but also as we think about for adjusted EPS because I think there are a few puts and takes there, too.

Yes. Why don't I just start with the margin at a high level. That was primarily driven by strong margin expansion within the segment, coupled with prudent expense management across the enterprise, really enabling us to drive greater operating leverage. I think as Carl mentioned in his prepared remarks, we do continue to be a significant contributor to that margin expansion as we leverage generative analytical technologies to drive efficiencies and things of that nature.

As we look ahead as it relates to margin, we've talked about the 100 basis points within Broking, the incremental margin for HWC translating into margin expansion at the enterprise level. In terms of the sort of puts and takes related to EPS, first, we expect to deliver mid-single-digit organic growth at the enterprise level. That's mid-single-digit organic growth in HWC, mid- to high within R&D, plus we'll have the revenue from Newfront. In terms of the operating margin, it is consistent with what I just said between the segments contributions.

And then interest expense, that's going to increase compared to 2025 due to the recent financing activities, which primarily relate to the Newfront acquisition. With that additional debt, we expect annual interest expense to be roughly $320 million in 2026. The tax rate for 2026 should be relatively consistent with 2025. That's about 21.1%. The Willis Re joint venture is projected to be a headwind of about $0.30 as results appear in the interest and earnings of associates line. We expect no significant impact from the other activity reported in this line.

Share repurchases of $1 billion or greater will factor into that. And of course, we'll have some foreign exchange tailwinds there, approximately $0.30 on adjusted EPS in 2026, most of that coming in Q1. So when we look through all of that and put all that together, we expect some healthy year-over-year EPS in 2026.

Our next question comes from Robert Cox with Goldman Sachs.

You guys mentioned talent or hiring has been a contributor to the success this year. I'm curious, if we look at 2026, how do you expect talent benefits to materialize in organic growth versus 2025? And then also, how do you expect the level of talent investment in 2026 to trend compared to 2025?

Yes. Thanks for the question, Rob. We remain focused on executing our strategy, and that means ensuring we have the right talent across our businesses, and it's key in supporting that. So, so far, we've been really pleased by the attractive returns on our prior talent investments. So we're going to continue to look for opportunities to invest strategically in talent. Alongside our investments in innovation, talent has remained a key driver of our ability to drive sustainable and profitable growth and create value for the business.

Lucy, do you care to add any color on what you might see from our talent investments in the segment?

Yes, sure. Thanks, Carl. Yes, Rob, I mean, as you know, our business is really all about the people. And this focus for us has been a real key driver of our organic growth and particularly new business over the last few years. Those strategic hires that we've made continue to perform at or above expectations. And of course, they're now important embedded members of our existing team.

We're planning to continue to complement our existing talent by making strategic hires in the areas where we think they'll be most impactful within both geography and specialty, proven to be a successful strategy for us, and so we're going to continue to execute on that.

And just a follow-up on the reinsurance business. I just wanted to ask if there's any insights learned from the progress on the reinsurance JV at 1/1. And just as a follow-up to that, I'm just curious if a fully operational reinsurance business would make you incrementally competitive in winning some of this digital infrastructure business or at least allow Willis to capture more of the economics over time?

Yes, sure. It's Andrew. Why don't I start with the first part. So we're very happy with the trajectory of the build-out of Willis Re. It is going according to plan. And the business was able to participate in the 1/1 renewal cycle, and we're very happy with how that went from a business and operational perspective.

I'll hand it over to Lucy to maybe address the second part of your question.

Yes, sure. I'm just going to touch on the digital infrastructure part of the question. And in terms of will the reinsurance business be supportive? Sure. But I mean, we already have a ton of work in that segment and really using the work that we've done with some of our largest global owners and developers plus many of the top data center construction companies the guys have just announced that they've developed an integrated global risk framework to respond to this sector's risk profile, one that is increasingly systemic, interconnected and difficult to address through traditional insurance solutions by themselves.

Their framework is designed to address the full spectrum of risk facing data center owners, operators and investors across the entire life cycle of the project from development and construction through steady-state operations. The framework really gives a holistic view of both current and emerging risks, including those that are systemic, difficult to model or still evolving. So we continue to see high demand for our offering from new business, of course, but also from the strong pipelines that are developed by our existing clients.

Our next question comes from Mark Hughes with Truist Securities.

In BDO, you talked about changes in Medicare influencing the organic growth outlook, low single digits because of the changes. Is that just a 1-year phenomenon? Do you think that will extend into 2027? Could you maybe just give a little more detail on that?

Yes, sure. It's Julie, Mark. I'll take that up. As we said, BD&O grew 5% in the fourth quarter, and that was primarily due to increased commission revenue in our individual marketplace business, the Medicare business, but also new clients and expanded work in benefits outsourcing. We also had a modest uplift from our ICRA solution, which is an individual marketplace solution for active employees. Growth was somewhat lower than expected due to changes in Medicare, but also due to lower headcount for some clients.

For the full year, it was -- growth was 3%. That just missed our mid-single-digit long-term organic growth range. For 2026, we expect these headwinds to be modest, but we expect it to carry over just for the short term. Counterbalancing that, we see strong and growing demand for our retiree marketplace. We see an opportunity to gain share in what is currently a dynamic outsourcing market, and that's because of our strong financial position and our leading AI technology.

So overall, as we said, we're expecting BD&O to grow low single digit in 2026. Beyond '26, we expect the challenges to dissipate and the momentum from the new Medicare marketplace and IPRA clients to pick up and support mid-single-digit growth.

Yes. And then the Newfront acquisition, you talked about their AI capabilities. Anything you can call out in terms of how they're doing things differently on the expense side and how you might be able to leverage that across your broader platform?

Yes, sure. I think at a very high level, there's 2 ways we think about that. One, the technology can enhance the productivity of people in the front office, so they're able to focus on the right activities. And the second piece is the ability because of the technology to get more flow-through on operating leverage because you may require less people for volumes of business, et cetera. So that helps with process and operating efficiencies.

Our next question comes from Andrew Anderson with Jefferies.

Within Health, you did 6% organic for the full year, and you're talking about high single digit next year. Can we kind of break apart how much you're expecting to come from health care inflation versus new business wins or improving retention?

Yes. Thanks, correct. Our health business continued to achieve solid growth. When you exclude book settlement activity, interest income, 6% for the quarter, 7% for the year, and that's on top of some strong comps, especially for Q4. Overall, our strategy is yielding meaningful results. We see strong new business and client renewals, and we expect to see strong demand across the global business driven by an existing strong pipeline and support of external trends, which Julie is going to elaborate a bit. We delivered high single-digit underlying growth in '25. We expect to do the same for 2026. Julie?

Yes. Just to pick up on your point about new business and strong client retention, we grew our market share for global benefits management. We had a very high win rate in the middle market with some recently enhanced solutions for that market segment. We expanded work for existing clients with new specialty solutions and additional forecasting and analytical work. And then to build on some of the comments about the external environment, we've got high health care inflation basically everywhere around the world, and that's projected to continue.

We're projecting a global average of over 10% for 2026. And as I mentioned on our call last quarter, we don't expect that to drop quickly because of the high cost of new technology, new prescription drugs, gene therapies, plus the fact that people are using health care systems a lot more. So that means planning for managing those cost increases is a top priority for employers virtually everywhere. And we are very well positioned to help with that given our core consulting and brokerage offerings.

We've also introduced new solutions like an Rx direct access offering that helps employers reduce prescription drug costs without shifting cost to their employees. So for 2026, we're expecting more of what we saw in '25, commission increases, more revenue with existing clients, new client appointments and that makes us confident in delivering high single-digit growth for '26.

And then just on career, it's bounced around a little bit and it has been a little bit lighter. But how are you thinking about the macro and the demand for project work in the first half of '26 against some easier first half '25 comps for career?

Yes. Thanks. I mean Career's 10% growth this quarter was principally driven by robust demand for broad-based projects. That demand has been building throughout the year as well as compensation benchmarking survey work. Growth also reflected the favorable impact of a change in survey delivery patterns as we called out on the third quarter call as well as the book of business sale.

Excluding that book of business sale, Career's growth was still a strong 8% in the quarter. In 2026, we expect our continuous focus on our product and technology offerings, recurring services and in-demand advisory services like an M&A to drive mid-single-digit growth for Career.

Julie, can you dive into what you're seeing a bit more there?

Yes, sure. I first want to start out by pointing out that our career businesses grew every quarter of 2025. And that mid-single-digit growth that we achieved for the year is consistent with what we have done for the last 5 years, and that's been across a range of macroeconomic environment. And these results are due to the focus that we have in this business. It's a focus on digital solutions, recurring revenue and project work that's strategically important to organizations.

Our core work was solid. We had a net increase in compensation committee appointments, EMBARK portal implementation and comp survey participation. We did a lot of work to help with EU pay transparency requirements and M&A activity. And these are the primary factors that drove our strong growth, though we did have that benefit that Carl mentioned from the change in survey delivery timing and the book of business sales.

Looking forward, we are focused on all of these and other areas where we see emerging demand, like there's a lot of interest right now in work redesign to related to AI implementation. With all of this, we've got strong pipelines across our geographies and expect that mid-single-digit growth again in '26.

Our next question comes from Brian Meredith with UBS.

First question, I guess, for Julie. Can you maybe talk a little bit about what the impact of any PRT work was in the fourth quarter? And what your outlook is for 2026, particularly in light of some of these lawsuits have been going on, on fiduciaries?

Yes, sure. Look, our wealth businesses did well in the fourth quarter. Overall, we -- from a pension risk transfer perspective, we saw an increase in activity. And in the U.S., based on published information, we placed about 35% of the transactions. We're also seeing an increase in derisking readiness work like data cleanup, also workforce management projects and work to support adoption of new legislation, and we expect these trends to continue for wealth overall.

And I just might take the opportunity to mention that in the defined contribution area, which is also under the wealth area, we are now live with LifeSight solutions in 12 countries. We're continuing to add clients there and assets under management. Over 2025, our assets under management across our Master Trust arrangements increased from $36 billion at the beginning of the year to over $46 billion at the end of the year. And we've got another $3 billion lined up to be added in the coming quarters with clients that we've already contracted.

And Carl mentioned in his opening remarks, we've announced the acquisition of Cushon, and that sets us up to grow even more in the GP market because it's perfect for the fast-growing mid-market where we don't yet have a big presence.

Great. And a follow-up question. I'm just curious, there's been a lot of talk about the impact of AI on kind of routine type consulting services. I know you've talked about the benefits you're seeing just as far as productivity and stuff. But I'm curious, do you anticipate any headwinds in any of your businesses as a result of AI?

No, I think we see AI as an opportunity for the organization. Some of the well-publicized headlines around consulting, I think, have been on the more management consulting type activities. And if you look across what we do, a lot of it is driven by regulatory requirements and results of recurring services that are extremely robust and there's demand for them. And we've taken steps over prior years to make sure we focus activity in our businesses around the places we see the most long-term demand growing. So I feel like this is an opportunity for...

Our next question comes from Yaron Kinar with Mizuho.

First question, just looking at the capital deployment guide for '26 with $1 billion plus in repurchases expected. I think that would suggest that the lion's share of generated free cash flow in '26 will be deployed towards buybacks. And I'm just curious as to your thoughts on M&A and why that would not be a greater priority.

Yes, Andrew, I'll start and then maybe if Carl wants to add anything. So we've been, I think, very clear that the capital allocation approach that we're looking to take is balanced. So we are targeting $1 billion of share repurchases throughout the year. That could change, as we've noted, depending on inorganic opportunities that we might decide to pursue. In addition to that, we also have additional financial flexibility, right, on top of just free cash flow that we can deploy into inorganic opportunities from where we sit from a leverage perspective.

Yes. Let me -- thanks, Andrew. Let me talk a little bit about appetite. The store has not closed. Our M&A strategy has not changed. We're continuing to evaluate opportunities. We are going to remain thoughtful and patient in our approach. And let me drill a little bit down, right? We're interested in bolt-on acquisitions that nicely fit our specialty strategy. in CRB. In the wealth space, we see the market being fast. It's expanding.

So we're particularly interested in wealth management and defined contribution capabilities in growing markets. And we're going to continue to evaluate larger opportunities to enhance our presence in select geographies or market segments. I mean, ultimately, right, we have leading data and technology. Our platform is bolstered by our acquisition of Newfront, and we have a unique culture that those assets should make sense for any business that's looking to join us.

So to be a little more specific, we're aiming to increase our business mix in broking and wealth through M&A. We see it as a key opportunity expanding into high-growth, high-margin areas of our core business. Secondarily, we see opportunities to play across the insurance value chain like the reinsurance JV with [ Bain ] to accelerate growth. And third, a combination with WTW needs to have a compelling financial story enhancing our margins and our free cash flow profile, making Andrew [indiscernible].

That's helpful. And then for my follow-up, I just wanted to dig a little bit deeper into talent, just given the headlines we're seeing for the industry. Can you talk about retention rates that you're seeing for your own workforce on the one hand? And then maybe also touch on new hires. Are those picking up or steady state? And maybe you could also quantify the impact to organic growth coming from new hires?

Yes. So with regard to retention, it remains towards the low end of the range we're aiming for. So we're very happy with our ability to keep in the organization. We continue to hire strategically with a focus on bringing in accretive talent and specifically with our specialty lines and geographies. And more broadly, we continue to invest in the fastest growing areas of business that have the most growth potential. And so that is helping us realize significant opportunities to accelerate profitable growth and enhance margin.

Our next question comes from Katie Sakys with Autonomous Research.

A quick one for me. I was wondering if you guys could give us a little bit more color on how much of the new business that your specialty operations saw in the quarter came from recurring revenues versus like onetime revenues? I think last quarter, you had talked about shifting into more recurring new business contributions in CRB. And I'm curious how that dynamic played out this quarter? And then more broadly, how you guys are expecting that to continue in 2026 and ultimately support the mid- to high single-digit organic growth guide?

Andrew, why don't I start and then maybe you can add some more color with regard to recurring versus nonrecurring, as we said last quarter, the nature of our work is always a combination of recurring and one-off work. One-off project work is not a key driver of organic growth in the fourth quarter. Maybe Lucy want to comment on some other trends there?

Yes. I think just picking up on Andrew's comment, we called it out last quarter because we had a significant amount. There's nothing to call out this quarter. All across our business, we have one-off and recurring revenues. So nothing particular to call out this quarter, Katie.

And our final question comes from Meyer Shields with Keefe, Bruyette, & Woods.

Two quick questions, hopefully. First, if you go back to like the Medicare concerns, obviously, we've seen a lot of, I guess, we would call bad news recently. I was hoping you could frame sort of the uncertainty in the low single-digit forecast. Are there things that you still need to find out in terms of which products carry commissions, commission rates and so on?

Yes. I'm going to start with just a comment on some of the announcements we've heard recently, just highlighting that the final Medicare terms that we end up living with are often more favorable than the advanced proposals that are released. So for example, last year, when the final increase landed at 5% and the advanced proposal was 2%. And I think probably more importantly, the level of reimbursement doesn't have a direct impact on our revenue. So overall, we expect the latest proposal to be relatively neutral for us.

The modest drag is from underlying changes in coverage and cost. The reason for the neutrality of the proposal is, first of all, the majority of our existing customers on our retiree marketplace are covered by what we call Medicare supplement policies, and those are not impacted by the recent announcement at all.

Secondly, while there were prices for Medicare Advantage policies that are likely to go up because of that announcement, our marketplace has dozens of options for retirees so they can find the right policy at the price they can afford. And that switching of policies is actually helpful to us. in terms of being able to place new insurance. And then we expect this position to drive significant price increases for group Medicare plans.

So employers that are still offering the group plans will likely want to consider an individual marketplace as what we think is a more affordable alternative that doesn't just shift cost to their retirees. And we expect this last point to be a positive impact for us beyond 2026.

Okay. That was very helpful. And then just final question, I guess, for Andrew. I was hoping we could get sort of annual revenues for cushion and FlowStone for modeling purposes.

Yes. So we expect those to depend for the year depending on when the closing dates are. So that's something that we can share, I think, on the next update. But in aggregate, somewhere around 300 for those.

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

So thank you, everybody, for joining us this morning. I once again want to extend my thanks and appreciation to all our WTW colleagues globally. Their dedication and commitment made '25 such a success. I look forward to their maintaining that momentum into 2026 with that same focus on execution and discipline that's guided us to date. In the meantime, have a great day, everyone.

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

Good morning. Welcome to the WTW Acquisition of Newfront Announcement Call. Please refer to wtwco.com for the press release and supplemental information that were issued earlier today. Today's call is being recorded and will be available for the next 3 months on WTW's website.

Some of the statements in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law. For a more detailed discussion of these and other risk factors, investors should review the Forward-looking Statements section of the press release issued this morning as well as in the company's most recent Form 10-K and other subsequent WTW SEC filings.

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

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

Good morning, everyone. Thank you for joining us today as we announce the acquisition of Newfront. On the call with me is Andrew Krasner, our Chief Financial Officer.

As you've seen this morning, we announced an agreement to acquire Newfront, a top 40 U.S. insurance broker that combines deep specialty expertise with cutting-edge proprietary technology. Newfront's fast-growing middle-market broking business, exposure to high-growth specialty markets and unique technology capabilities make this an attractive fit for WTW. We are excited to welcome the Newfront team.

Let me explain why this acquisition is so compelling. First, it improves our business mix by expanding our reach in the U.S. middle market and enhances our presence in high-growth specialty areas, including technology, fintech and life sciences. It also broadens our producer base with more than 120 producers supporting our growth ambitions.

Second, Newfront possesses proprietary technology and agentic AI capabilities. Combined with WTW's strong technology foundation and our recent strategic investments in data and analytics, AI and digital services, this acquisition will enable us to create an end-to-end platform that will let us serve clients faster, smarter and more efficiently. This has been a goal of both Newfront and WTW, contributing to the strong strategic rationale and alignment of this combination.

Third, this acquisition is well aligned with our disciplined capital allocation priorities. By enhancing our broking capabilities in the key U.S. market and accelerating the realization of an end-to-end platform for the critical middle market, this acquisition will support continued revenue growth and margin expansion across the company.

And lastly, the transaction structure offers a compelling financial return profile, which Andrew will elaborate on with the net purchase price representing approximately 12x Newfront's estimated 2026 pro forma adjusted EBITDA, inclusive of run rate synergies. Put simply, we're confident this acquisition will drive shareholder value creation.

That value proposition starts with a great asset. Newfront is a highly regarded U.S. broker with an impressive track record of growth. It's delivered a 20% organic revenue growth CAGR from 2018 to 2024 and is expected to generate an approximately 26% pro forma adjusted EBITDA margin in 2026. Its success has been driven by its 650-plus employees, including more than 120 producers serving approximately 14,000 clients and strong technology. More on that later.

Newfront's 2 operating segments, Business Insurance and Total Rewards, are a natural complement to our core Risk & Broking and Health, Wealth & Career businesses. Business Insurance is Newfront's specialized broking platform that focuses primarily on middle market clients, representing roughly 60% of total revenue. Like our Corporate Risk & Broking business, Business Insurance focuses on high-growth verticals, and we expect Newfront to enhance our specialty offerings and expand our U.S. footprint.

Newfront's Total Rewards business comprises roughly 40% of revenue and provides holistic coverage ranging from benefit plan management and administration to specialty services, including supporting clients' provisions of benefits as they expand globally. This business mostly fits within our Health business, and there's an attractive opportunity to bring HWC's broader range of services to Newfront's clients.

Newfront's mission to modernize broking was set out by its Co-Founder and Chief Executive Officer, Spike Lipkin, whose work I've watched and admired for many years. Newfront has executed successfully on that mission and has delivered impressive growth and truly innovative technology. From a cultural standpoint, Newfront's commitment to innovation and client service makes it a natural fit for WTW. I'm looking forward to the impact Spike, his co-founders, Brian, Gordon and Kurt and their team will have on our combined organization in the years to come.

As you can see, Newfront's business and capabilities will amplify our strategy to accelerate performance, enhance efficiency and optimize our portfolio. By combining our scale and resources with their producers, tools and capabilities, we have an opportunity to further accelerate our middle market growth.

In addition, Newfront's technology complements our existing investments and expedites our technology roadmap, allowing us to further differentiate our client and colleague experiences to serve clients faster, smarter and more efficiently.

And lastly, this acquisition shifts our portfolio mix further toward broking and increases our exposure to high-growth specialties in the U.S. middle market.

Let me elaborate on what makes Newfront's technology capabilities special and how they complement our investments and accelerate our strategy. Newfront's deep specialty expertise is underpinned by a robust proprietary AI-enabled technology platform that has rapidly evolved since the company is founded as well as the strong tech and engineering talent base that's built it and continues to expand its capabilities.

At the center of Newfront's technology is Navigator, a data-rich client-facing platform that provides a single digital interface with real-time insights into insurance, risk data and benefits. Navigator helps clients, colleagues and carriers better navigate program complexity, streamlining coverage management and risk decisions. Navigator is one of many proprietary tools Newfront has developed to support an improved client experience and more efficient scale to serve the middle market.

In addition to the Navigator tool, we're excited to complement WTW's broking platform in Neuron technology with the agentic AI-enabled placement technology Newfront has created. As part of their end-to-end client journey, the data of master Navigator is shared to an intelligence layer to prepare and enrich client submissions during the placement process. This intelligence layer helps to bring transparency to the risk decision-making process by automating the administrative, but very important part of the client journey.

These placement automation solutions enable brokers to serve clients more productively than traditional models allow by automating high-volume, lower-complexity workflows, these tools enable smaller teams to broadly deliver exceptional service and risk management. Pairing Newfront's Navigator and AI solutions with WTW's risk and analytics capabilities, our broking platform for global placement and client servicing and our digital trading platform, Neuron, we're creating an end-to-end technology platform.

This platform will enable all our brokers to serve clients of all sizes with greater speed, efficiency and intelligence. This combination will simplify the broker and client experience, improve sales productivity, enable us to expand more quickly in the middle market, unlocking cross-selling opportunities and bolster our technology talent base. I am incredibly excited about what WTW and Newfront can achieve together. This acquisition has clear benefits for our colleagues, clients and shareholders, enhancing our existing strategy while also driving shareholder value creation.

And now, I'll pass it over to Andrew for a more detailed discussion of the transaction terms and financials.

Thanks, Carl. Good morning, and thanks, everyone, for joining us today. Let me start with an overview of the terms of the transaction. These details are also provided in the slides posted on our website, and I'd encourage you to reference them.

Under the terms of the agreement, WTW will pay an upfront purchase price of $1.05 billion comprised of approximately $900 million in cash funded with new debt and approximately $150 million in equity to Newfront employee shareholders. In addition to this upfront payment, the transaction includes up to $250 million in contingent consideration payable after the third anniversary of closing. This is primarily equity-based and requires the achievement of certain operational targets. This brings the total consideration to $1.3 billion, which is roughly 12x estimated 2026 pro forma adjusted EBITDA, inclusive of estimated cost synergies, which I'll touch on shortly.

In addition, there is a potential upside earn-out of up to $150 million, payable in WTW equity after the third anniversary of closing, contingent upon achievement of above-target revenue growth objectives. The merger agreement also includes long-term retention incentives totaling $100 million of WTW restricted and performance-based equity to promote colleague and client retention in alignment with WTW's broader strategic objectives.

We expect this transaction to be roughly $0.10 dilutive to adjusted EPS in 2026 and accretive to adjusted EPS in 2027. We remain committed to $1.5 billion of share repurchases for 2025, in line with our focus on a balanced capital allocation approach.

Following the receipt of certain regulatory approvals and other customary closing conditions, we anticipate closing in the first quarter of next year. As you can see, this transaction is thoughtfully designed to foster alignment, retain talent and drive long-term growth within a financially disciplined structure that rewards strong ongoing performance.

Next, let me provide some color on estimated synergies and integration costs. As Carl highlighted, the integration of Newfront's proven tech-enabled model will expand our mid-market broking capabilities helping WTW drive efficiencies and accelerate growth in a fast-growing market. That said, we are not including any revenue synergies in our projections, but we have identified cost synergies that we will deliver across Newfront and WTW.

We are estimating approximately $35 million of run rate cost synergies by the end of 2028, primarily from technology-driven efficiencies and overhead optimization. Our enterprise delivery organization we do, which led our successful transformation program, will play a large role in executing on these synergies. We expect to realize 5% of these cost synergies in 2026, 55% by 2027 and 100% by 2028.

One-time transaction and integration costs are estimated to be roughly $125 million over the next 3 years. Of these cash costs, $7 million will be incurred in 2025 and $53 million in 2026, with the rest spread ratably over the following 2 years. In addition, one-time noncash asset write-offs of approximately $30 million will be spread over the next 3 years. Within the next 3 years, we will have enhanced our client experience, improved productivity and efficiency and accelerated our technology roadmap.

To close, I'd like to come back to our disciplined approach to M&A that we laid out last year. This acquisition checks all of the boxes. It sharpens our focus on our core businesses, strengthening our position in high-growth specialty markets. Newfront and WTW have shared values and clear strategic alignment, and the deal structure reinforces that alignment and helps us retain and empower top talent.

As Carl shared, our businesses and our technology capabilities are highly complementary and our disciplined approach and redo capabilities will minimize disruption. We're enhancing our growth profile and accelerating our use of technology to drive efficiencies, margin and free cash flow.

Finally, the disciplined performance-focused transaction structure and attractive post-synergy multiple are designed to ensure that we achieve a compelling financial return profile for shareholders.

With that, let me turn it back over to Carl for some closing remarks.

Thanks, Andrew. Before we move to Q&A, I want to reiterate how this transaction advances the strategy we laid out at our 2024 Investor Day. Newfront's business and technology are fully aligned with our focus on accelerating performance, enhancing efficiency and optimizing our portfolio and strategic position. As Andrew shared, this acquisition is a disciplined and thoughtful step forward in delivering on our balanced capital allocation strategy, and I'm confident it will drive shareholder value creation.

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

[Operator Instructions] Our first question comes from the line of Mike Zaremski from Bank of Montreal, BMO.

I had -- my first question, and hopefully, there's time for follow-up is on the earn-outs. Maybe you can kind of elaborate on them, including the details on when and how they might get paid out over time?

Yes. Sure. It's Andrew. Let me start by quickly walking through the deal structure. So upfront, we're paying $1.05 billion. That's comprised of approximately $900 million in cash and $150 million in equity. The $150 million of equity is going to Newfront employee shareholders and will invest over a multiyear period. For that, we believe this creates the right alignment of interest to drive growth across the combined company.

The contingent consideration of up to $250 million is payable after the third anniversary of closing. This is primarily equity-based, and it requires the achievement of certain operational targets. And together, those components represent $1.3 billion in total consideration, where WTW and Newfront share the risk and rewards with significant value creation opportunities for WTW shareholders.

In addition, there is a potential upside earn-out of $150 million payable in WTW equity after the third anniversary of closing. And that is contingent upon the achievement of above-target revenue growth objectives.

And then finally, in addition to the consideration and earn-out mentioned, there's a $100 million of equity for employee retention through 2031. And we designed the deal in a way that we believe will retain talent, reinforce alignment and incentivize a seamless combination across our organizations.

With respect to the earn-outs, as I mentioned, the $250 million contingent consideration is based on revenue performance. We believe this is achievable based on revenue retention. And secondly, the $150 million upside earn-out is based on, as I said, above target revenue objectives and exceptional outperformance. We'd love nothing more than to hit these targets. Importantly, the additional consideration would be primarily paid out in equity to further reinforce employee retention and alignment of interest.

Okay. My follow-up -- that's helpful, probably for you as well, specifically on the $125 million of transaction and integration costs, if we put it in a ratio relative to the $35 million of cost synergies, and we benchmark it to pretty much all your peers now have announced deals in the past, the ratio, $125 million over $35 million, it's much, much higher than peers. So I guess, on one hand, it makes us, at least me, feel comfortable that your synergy guidance is potentially conservative. But on the other hand, just trying to understand why that ratio -- why that $125 million is relatively large. Perhaps there's something you would like to call out and elaborate on that's in that $125 million.

Yes, sure. I think the first thing I'd mention is the $125 million that you're referring to consists of transaction expenses in addition to the cash cost to achieve. So if we focus just on the cash cost to achieve, it's about $100 million. That ratio relative to the synergies is about 2.8x. That is relatively consistent with what we saw during our transformation program. So feel very comfortable about how we're thinking about the cost to achieve relative to the synergies.

In terms of the cost to achieve, it's going to come across a couple of areas, but a lot of it is going to have to do with the integration of technology platforms and things of that nature to drive the $35 million of synergies, which is going to be rationalization of overhead efficiencies as well as leveraging technology to improve productivity and efficiency.

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

I was hoping to start off on organic growth. Just if you could give us a sense of -- I know you gave a longer time period CAGR, but of more recent organic growth trends at Newfront, maybe '25, even if '24 is helpful. And how you're thinking about the outlook? And then, I also want to confirm because there has been some inconsistencies across how companies have done deals that this will be, I guess, within M&A and not organic for 12 months post-close.

And then, I know you guys, right, had said on your last quarter's call that maybe the competitive market, right, makes R&D more mid-single digits versus high-single digits. Does this change that view once this business gets within your organic, I'm assuming, 1 year post-close?

Okay. I'll try and get to all of the aspects of that question, Elyse. So let me begin with sort of the organic growth perspective. While we're not going to guide to Newfront's longer-term growth, it's worth noting that they've grown organically at a 20% CAGR between 2018 and 2024. And we're anticipating about 10% organic for them for 2026. I think that's a strong growth record. We find it impressive. And I think it's a testament to Newfront's specialization strategy, their technology and their talent, and all that aligns well with WTW's objectives.

Like we've always said, we intend to grow -- invest in high-growth and high-margin businesses like Newfront, but equally important, the 2 organizations share similar ambitions, values. We think there's opportunity to extrapolate each other's strengths. The specialties and skills that we have in CRB and Health and our world-class client servicing capabilities, they're highly attractive assets to their business. So while we've taken a thoughtful approach to this strategy and the transaction that we think aligns really well with our overall M&A strategy, we wouldn't have made this deal unless we had strong conviction about the strategic rationale and about Newfront's potential to improve our overall growth profile.

Yes. And just on the second part of your question, the results will stay out of organic growth for the first 12 months. And just the impact on RMB's organic growth rate overall, I think it's important just to keep in mind the relative scale and size of the 2 components, where we do expect it to have an impact over time, but the relative size of the revenue base will sort of make that, I think, a bit modest overall relative to the size of the whole segment.

I guess, one last part. I'm sorry, Elyse recognize that the numbers I was quoting on growth includes both segments.

Our next question comes from the line of Paul Newsome from Piper Sandler.

Is there any cyclicality that we should note for Newfront's business? Do they tend to have it all, the [ PME ]? Or is it sort of ratable year over the year?

Yes. The seasonality of the business is relatively consistent with our broking businesses.

That's great. And when we're thinking about the 100 basis point goal for the risky broker business that, margin improvement goal, does this sort of reset the base a little bit for prospectively? Or how should we think about that?

Well, we're not going to give specific margin guidance at this time relative to this. We do believe there are long-term margin opportunities, and we'll provide additional color about that on our '26 outlook in our upcoming full year earnings call. But let me just maybe hit a few points that Carl already mentioned, which includes sort of the unique technology that we think Newfront brings and the positive financial impact that we're going to see by expanding the technology adoption across our combined client base.

We do see significant opportunities to drive sales productivity, potentially improving producer validation and a path to long-term margin improvement, especially in the middle market. And we are committed to delivering on the financial framework that we communicated at our Investor Day, where we expect to deliver the 100 basis points of margin improvement for R&B and build on HWC's strong track record with some marginal -- margin improvement there.

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

I just had a question on the revenue growth and the organic revenue growth of Newfront. So it looks like -- at least when I'm looking at the historic revenue growth here, it looks like revenue growth slowed to 13% in '24 from like 34% in '23 and further based on the projections to 7% in 2025. And it looks like you guys are now thinking that it will accelerate to 10% in 2026. So I was just hoping to get some detail what's behind the slowdown, and then, the acceleration in revenue growth.

Yes, sure. I think it's important to keep in mind a couple of things here. One is the relative size maybe that they were growing from during parts of that period, so you would expect to see, I think, some higher growth rates there. And the other thing that's been happening over the past bit of time is just -- and we've talked about it on some of our earnings calls, regarding just the rate headwinds in certain parts of the market.

Yes. I mean, I think, David, I'd point out that Newfront does have meaningful D&O business. It's part of the Business Insurance business. And despite meaningful pressure in the D&O market, the business maintained its strong growth in recent years. And we believe that they can maintain high single-digit organic growth despite the pressure in the current market. Just like WTW, Newfront has proven to be resilient despite the uncertainty, and we're excited to be able to build on that consistency, but also amplifying our ability to win new business, enhance our client servicing capabilities and better serve our combined client base.

And in the near term, we do expect some tailwinds from some producer hiring investments that Newfront has made.

Our next question comes from the line of Andrew Andersen from Jefferies.

I think the current North American middle market business for you is about $1.5 billion of revenue. And I think it's a little bit more casualty weighted. Could you maybe just share a bit about how the business mix is within Newfront? And I imagine a lot of this is commission-weighted business.

Andrew, I think if you look at our North America business, I think you're quoting the total number. Mid-market is a large part of that, but it's not all mid-market. And just -- we -- I think I'd characterize our business as mid -- upper mid-market, skewing in both directions from there. Newfront is a mid-market business with some upper mid-market business as well. So just a little bit of characterization there.

Our business is quite balanced between property and casualty. I think you'd find a mix with Newfront that's probably got similar characteristics. I called out D&O a while ago, but they've got a significant casualty book, cyber, property, personal lines, and a variety of other things sort of make that up. But it's quite balanced in nature.

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

A couple of quick questions here for you. First, Andrew, the $100 million of equity-based retentions, is that going to be expensed through earnings in the next couple of years? Or is that going to go below the line, at least just in the EPS line? How is that going to be accounted for?

Yes, it will end up as below the line given it's related to the transaction.

That makes sense. And then the second one, I'm just curious, Newfront had a pretty efficient operating model given all the technology investment they have in the Navigator system. Your $35 million of cost savings, does that include any potential applicability of the Navigator system or whatever on Willis' kind of existing cost base? Or are there additional opportunities for further efficiencies and stuff as you implement Newfront systems into Willis?

It does include some of those efficiencies. And the efficiency number that -- the synergy number that we quoted is for the run rate we expect after 3 years. We do expect the impact of the technology platform and the digital ecosystem to continue to have impact beyond that time period as well. So we do think there's further enhancements that can come from leveraging that technology.

Our next question comes from the line of Josh Shanker from Bank of America.

As I was reading the press release, I was pleased to see that the Newfront acquisition is on what you view as the cutting edge of agentic AI. When I talk to a lot of agents and brokers, generally, the conversation is that the agent-customer relationship is sacrosanct and AI is not going to create a big impact had changed that situation, but here's a business you're acquiring that appreciates that future. I'm wondering if you can talk about the scope of what you think the agentic AI proposition is? What kind of policies that will affect? And what the market opportunity and risk is here?

Yes. I think the 2 propositions you put upfront there, Josh, are actually quite compatible. There is -- we're not saying that there is no human element here. We think that's actually an important part of the equation. And we're really impressed how Newfront has been able to balance that out and how they approach doing business. So we think that they provide us a unique opportunity to accelerate our technology roadmap. And really importantly, their technology nicely complements the technology we've been investing in.

In particular, their client-facing interface, Navigator, you cited, and the agentic AI-driven property and casualty placement solutions, those accelerate speed to market, and they provide more scalable client solutions in an efficient manner. And we see applicability to that across our portfolio of businesses, even beyond broking over time. So meanwhile, our investments in our CRB technology platforms have focused more heavily on data and analytics, trading and connectivity, global placement and client servicing, and we showed a bit of that in the supplemental materials.

So when we bring together Newfront's technology with WTW's broking platforms, our Neuron digital trading, our risk models, our data analytics, we'll be creating an end-to-end platform that enables us to service clients of all sizes more efficiently. And similarly, Newfront's benefits management technology, like the Navigator client portal and Benji, which is their benefits assistant, they're much more effective in serving the middle market. And WTW's health benefits management and enrollment platforms are tailored to global and large market clients. So the combination, again, is highly complementary. We see opportunities to accelerate our ability to bring large market solutions to middle market clients and vice versa.

And do you foresee any risk to the current relationship situation that there will be some business that goes digital and the market share of the relationship sort of oriented business will change?

Look, I think this is a business where a human touch is appreciated. I think the ability to make that human touch more effective and more efficient through agentic AI and other technology is going to be significant, and we're really delighted how this combination is going to accelerate our ability to do that.

Our next question comes from the line of Tracy Benguigui from Wolfe Research.

It feels like you're a bit later in the larger M&A bandwagon, and I'm wondering why now. Is this deal specifically that you like? Or do you feel like you've made good progress on your specialization strategy where you're ready to focus your efforts on M&A?

I think there's a combination of things here, Tracy. One is when -- back in '21, we announced the strategy for the organization and the transformation program, we were very, very clear during that period that we wanted to make sure we focused on the successful outcomes of the transformation program, and transformative M&A would be detracted from that. And so we deliberately took a time out from doing that.

As we referenced during our Investor Day last year, a mission accomplished with respect to transformation, and we did signify our pivot to a more balanced strategy, reflecting continued driving organic progress in the organization as well as looking to augment what we could do through targets that could advance the proposition we have. And we are very convinced that Newfront does exactly that. We're doing exactly what we said we would do.

All right. Very good. And also, I noticed you still have healthy debt headroom post deal. So how are you thinking about future M&A?

Yes. So I mean we said this before, so I apologize for repeating myself, but we take a thoughtful and disciplined approach to evaluating inorganic opportunities. We applied that same framework to this transaction. We're going to continue to do so as we assess opportunities that could strengthen our portfolio and advance our long-term strategy. So I'm not going to comment on hypotheticals, but we're only going to pursue opportunities if the expected returns and value creation potential are compelling versus other capital allocation options.

When we see something that meets that bar and we believe we can execute on it without disrupting the business, we'll be fully prepared to act. So our overall M&A philosophy that we talked about last year remains unchanged, and we're operating from a position of strength, and we'll move decisively when the right opportunities arise.

Our next question comes from the line of Mark Hughes from Truist Securities.

You talked about the Navigator technology. Is that something that you might be able to kind of target a little smaller market strata if it's a little bit more of a direct model perhaps? Does that widen up your kind of aperture for the size of client you might pursue in the broking space?

Well, I think Navigator is certainly a more efficient interface as we approach the mid-market and smaller end of the mid-market. That was an attractive feature for us, Mark, and as we evaluated the combination here. So I think your thesis is correct. I mean, there is probably a lower limit to that at some point, where to one of the earlier questions, digital might make sense for very small organizations and personal lines. But we think this clearly expands our capability to efficiently operate in a broader space than we had as a standalone organization.

And is that part of the integration strategy with this one? Is it to roll out or make the Navigator accessible to your wider platform? Is that part of the current strategy?

Absolutely. It absolutely is Mark. And that's not just necessarily with -- that's not just a U.S. comment, right? As I said earlier in the call, we see applicability to Newfront's technology across our portfolio. We'll take a thoughtful measure, not try and do everything at once, right? But we see the ability to have this apply across that spans of the WTW business, whether that's our different lines or our different geographies.

Our next question comes from the line of Meyer Shields from Keefe, Bruyette, & Woods.

I'm wondering, is it possible that you'd end up paying the $150 million earn-out on revenue growth without maxing out on the $250 million of contingent consideration? Are those co-dependent?

It's possible, but relatively unlikely that, that combination of events would transpire.

Okay. Understood. And for 2025, I guess, the original $1 billion, now $1.5 billion of capital deployment, that was, as I understand it, intended to cover M&A and repurchases. Since the cash component of this deal is being funded by debt, is that $1.5 billion a good starting point for 2026 capital deployment?

Yes. So we talked about the commitment for 2025 of $1.5 billion. And we still have meaningful deployable capital available on our balance sheet. And, of course, our businesses generate a substantial amount of free cash. We're not going to give specifics on '26 right now, and we'll do that on our full-year '25 earnings call, as we typically do.

As we've always said, we'll evaluate all options for capital allocation, which includes share buybacks, internal investments in, of course, the carefully considered strategic M&A like this transaction. And with that approach, it ensures we are maximizing value creation for our shareholders.

Our next question comes from the line of Katie Sakys from Autonomous Research.

I just kind of wanted to circle back to the projected pro forma adjusted EBITDA margins for Newfront in 2026. I think 2 points about that of year-over-year expansion is quite impressive. And I was wondering if you could just kind of walk us through a little bit more detail on where exactly you think the drivers of that expansion are coming from for Newfront? And really what you think are the biggest risks to that expansion over the course of the next year might be?

Yes. So first, let me start by saying we feel fairly comfortable about that margin for 2026. And it's really being driven by 2 things: one, the increasing scale of the business and the organic growth that they're achieving, naturally creates some operating leverage. And over the past year, they have taken some cost management measures, which will flow through their P&L in 2026.

Okay. And does that also contemplate the producer investments that you had previously mentioned in Newfront made over the course of this year?

Yes, it does. And this is a dynamic we, of course, saw play out during -- if you look at '22, '23, '24 for us, as you invest in talent, you monitor and realize that return in talent, it's an industry dynamic, we're very comfortable with, and we're happy to see it playing out for Newfront as well.

Our next question comes from the line of Ryan Tunis from Cantor.

A couple for me. First one, just big picture. When I think about Newfront historically, it's kind of been kind of in the anti-bolt-on, right? You got a management team that's really invested organically and the talent that's gone there is sort of done so to get away from the bolt-on noise elsewhere. I guess, I'm curious if Willis kind of shares that same ethos on how to expand middle market from here? Is it -- for you guys, is it more of an organic growth exploration? Or would you consider incremental bolt-on M&A from here?

Well, I think -- first of all, I think you've characterized the Newfront approach very well. And I think it's worked very well for that organization. We want to continue the momentum they've been able to build, so the 120 producers they are bringing to the table that has been an organic build and very successful, and we look forward to their ability to be even more successful within WTW.

Yes. And we don't view the Newfront platform as the beginning of a roll-up machine.

Got it. And then a follow-up. I'm just trying to figure out if I'm thinking about this right. I would guess that the producer CAGR over that time period, it's probably somewhere in the same ballpark as the 20% organic revenue growth. And if that's the case, I would think that the way to think about organic going forward for Newfront would be probably most impacted by incremental growth in producer count. Just curious if I'm thinking about that right.

I'm not sure I quite buy that all the way, right? And that one of the Newfront's features that we found very attractive is the ability for their technology to improve sales velocity and producer productivity. And I think that's reflected in the growth rate. It's not just a headcount story.

Our next question comes from the line of Mitchell Rubin from Raymond James.

Could you please provide some color on the step down in valuation for Newfront from its funding round in 2022, which valued the company around $2.2 billion?

Yes, sure. I don't think we can opine on the valuation of prior rounds of financing, but we're very comfortable with the consideration and the structure that we've put together for the Newfront shareholders and the employee shareholders.

All right. And could you give us an idea of the free cash flow conversion on a pro forma basis for the company?

Yes. Newfront has a run rate free cash flow margin, which is relatively consistent with ours. As we realize the synergies from the transaction, bring our intellectual capital and technology together and scale in the high-growth and high-margin areas, which we've talked about, we expect to drive adjusted operating margin expansion with that. So that in conjunction with the abatement of integration costs over time will drive free cash flow margin expansion over time.

As we look beyond the completion of this deal, the capital management strategy that we've set out remains unchanged. As I mentioned before, we've got a lot of flexibility on our balance sheet. Our leverage profile is still within target, and we generate strong free cash flow.

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

I wanted to expand actually on couple of the questions there from Ryan. I had also sort of had the perception that Newfront had sort of an interesting angle on being able to acquire talent. Maybe a little more based on the technology, the entrepreneurial atmosphere, et cetera, versus maybe some of the team lifting that happens at the big brokers, there might be more compensation motivated and so forth. So I guess the question I want to ask is, well, how do you maintain that? Like how do you maintain that edge? Can you still achieve that kind of special sauce when it's part of a bigger organization like Willis? And what are you doing to achieve that? Will it be more siloed? Like what Spike's role going to be at the company? Can you help us think through all of that?

Yes. A lot of dimensions, but we have put a lot of time and energy thinking about that. I might take a little bit of exception as to your characterization of being broker culture. I think we've got something at WTW that's pretty special in terms of teamwork, in terms of staying close to clients and in terms of intellectual capital development. So that's one of the reasons we think that the organizations are highly complementary here, and this is a real win-win for both clients and for colleagues within both organizations.

We've put a lot of thought into structuring the transaction to retain, to align, incentivize the entire Newfront team, both production staff and technological talent. We view this as critical. And I think both sides are really excited about being able to incorporate the strengths of both organizations in a way that preserves strengths, enhances capabilities and focuses on state-of-the-art delivery and development practices. That will enable us to accelerate the execution of both organization strategies.

With respect to the Spike to Gordon to Brian to Kurt, the co-founders, we have tremendous respect for what they have done and the business they've built. They are going to transition to WTW at close. The process of bringing our organizations together is going to be collaborative. That means we're going to be working together with the leadership team at Newfront to facilitate a seamless transition to find roles and maximize Newfront's potential as part of WTW. And just on a personal line, I'm really looking forward to welcoming the Newfront team and the impact Spike, his cofounders and their team going to have on our combined teams over the years to come.

That's helpful. I know you mentioned earlier, revenue synergies weren't in the projection, but just wanted to get a feel of what could those look like? And maybe even if you're not willing to quantify anything, just what are some of those opportunities? And then how will you drive those revenue synergies over time?

Yes, sure. So Newfront is a great business that has generated significant organic growth in recent years. If you think about their market-leading technology, the producer base that complements our strategy and our market footprint well and leveraging sort of the capabilities in the middle market and the high-growth industries that we mentioned. Like you said, we're taking a conservative approach and not forecasting any revenue synergies.

But I think, as you can gather, we're very excited about the opportunity for the combined teams and expanding the use of the technology. So we see opportunities to strengthen the growth profile, enhance producer productivity, particularly in the middle market. You heard Carl talk about sales velocity and efficiencies earlier. And we also see opportunities to cross-sell as we think about bringing sort of the full suite of WTW capabilities to Newfront clients and to the middle market, especially in HWC, where we have a very broad offering. So we think the opportunities are exciting.

I would now like to turn the conference back over to Carl Hess for closing remarks.

Thank you all for joining us this morning on relatively short notice. I am very excited about the opportunities this transaction unlocks, and I am once again going to say how delighted I am to welcome the Newfront team to WTW. And as always, we want to thank our shareholders for their continued support.

Have a great day, everyone.

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

Good morning, and welcome to the WTW Third Quarter 2025 Earnings Call. Please refer to the wtwco.com for the press release and supplemental information that was issued earlier today. Today's call is being recorded and will be available for the next 3 months on WTW website.

Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law. For a more detailed discussion of and other risk factors, investors should review the forward-looking statements section of the earnings press release issued this morning as well as in the most recent Form 10-K and other subsequent WTW securities filings, SEC filings.

During the call, certain non-GAAP financial measures may be discussed to provide direct comparability with period -- prior periods all complement regarding the company's revenue growth results will be on a non-GAAP organic basis, unless specifically stated otherwise. For reconciliations of the non-GAAP measures as well as other information regarding these measures please refer to the most recent earnings release and other materials in the Investor Relations section of the company's website.

I'll now turn the call over to Carl Hess, WTW Executive Officer. Please go ahead, sir. Carl Hess, you may begin.

Good morning, everyone, and thank you for joining us for WTW's Third Quarter 2025 Earnings Call. Joining me today is Andrew Krasner, our Chief Financial Officer; Julie Gebauer, our President of Health, Wealth & Career; and Lucy Clarke, our President of Risk & Broking, are also joining us for our Q&A session.

We delivered another quarter of solid results, driven by consistent and strong execution of our strategy. In the third quarter, we generated 5% organic growth, 230 basis points of adjusted operating margin expansion and adjusted EPS of $3.07, up 11% year-over-year. We've sustained our momentum in the market and remain on track to deliver our full year financial objectives. I want to thank all my WTW colleagues for their hard work and dedication to achieving our strategic and financial goals.

As these results show, the strategy we laid out nearly 1 year ago to accelerate performance, enhance efficiency and optimize our portfolio continues to drive value for all our stakeholders despite the volatile macroeconomic environment. Against that backdrop, I'd like to provide some observations on current market conditions. Concerns about global trade, inflation and geopolitical conditions remain, creating both opportunities and challenges. On one hand, some clients are looking for support to manage the related people and risk issues, and on the other, some companies are continuing to limit discretionary spending. We continue to monitor relevant economic indicators such as employment levels, which may affect our business prospects over the short term. In addition, we're facing headwinds from declining rates in certain segments of the commercial insurance market across various geographies. In the face of this dynamic environment, our businesses continue to be resilient as we remain intensely focused on providing relevant services that deliver value to our clients.

Health, Wealth & Career career delivered steady 4% organic growth or 5% when excluding book of business settlement activity and interest income with strong margin expansion. These results reflect our diversified and recurring revenue base and disciplined cost management. Like last quarter, we saw robust demand for our solutions that help clients manage their health care costs, derisk their defined benefit pension plans and adapt to new legislative and regulatory requirements such as the EU pay transparency directive. We also experienced an increase in M&A due diligence and integration work as well as in workforce management support. Our suite of technology tools continues to be a prominent factor in our success.

For example, our talent flow analysis utilizes web crawling and data mining to identify clients' real competition for talent, which is essential for meaningful benchmarking. And our Health and Benefit Scout tool informs health plan design through an in-depth evaluation of health care access, quality and cost based on a client's workforce location, demographics, claim experience and more. Through predictive analytics, we help forecast benefits cost and attrition risks, identify skills gap and detect pay equity issues. We're also using AI tools to improve the employee experience.

In Risk & Broking, we generated 6% organic growth in the quarter and expanded adjusted operating margins by 70 basis points. This marks the 11th consecutive quarter that our Corporate Risk & Broking business recorded high single-digit growth, excluding the impacts of book of business activity and interest income. I'm pleased with the strong returns on our investments in talent and innovation, and we continue to look for opportunities to invest further. In particular, our investments in digital tools, AI and automation have helped R&B capture growth opportunities and create efficiencies. As declining rates continue to pressure certain areas of the market, the impact of these investments has been increasingly valuable in driving meaningful efficiency gains and advancing our progress on delivering 100 basis points of annual average adjusted operating margin expansion in R&D over the medium term. We continue to launch a steady cadence of new tools and products that support our growth and margin objectives.

For example, we recently launched the newest version of Radar, an end-to-end rating and analytics software widely used by insurers. Radar 5 brings advanced capabilities, including GenAI techniques, to provide greater speed and agility for pricing, portfolio management, claims and underwriting, enabling insurers to unlock smarter data-driven decision-making at scale. We also launched Gemini, our global digital placement facility in the quarter. This innovative solution provides efficient access to additional insurance capacity, addresses the increasing complexity of risk and market volatility, offers competitive pricing declines at a guaranteed discount and is backed by A+ rated void syndicates.

Now I'll turn to some of our new business wins in the quarter. In Health, Wealth & Career are customer-centric solutions, differentiated technology and focus on making smart connections continue to drive growth across all our businesses. In a notable example, we unseated the long-time incumbent providing global actuarial work for our Fortune 250 engineering company, not only because of consistent actuarial expertise and tools across our global network, but also because of the innovative ideas we brought them to better manage pension risks around the world and to address retirement readiness for their workforce.

In a win featuring smart connections across HWC we were selected to support the planned spin-off of a global Fortune 50 company with overall program management, communication and change management and the implementation and administration of a new U.S. health plan. We won this business, which encompasses 40,000 employees after building a strong reputation as a trusted partner to the parent organization. Another innovative HWC win involves the extension of our Embark Employee Experience portal to potential new hires of a health system to showcase their total rewards and culture with the aim of boosting new higher acceptance rates.

In Risk and Broking, our specialization strategy and our ability to offer differentiated value through our technical expertise, global collaboration and client-centric solutions continue to be key factors in bringing in new business. For example, in CRB, despite a challenging risk environment, we covered property damage, business interruption and liability insurance for an energy portfolio in Eastern Europe. The client reached out to us directly as our technical knowledge of these types of assets and our global industry relationships are well known in the marketplace, highlighting the value of our specialization strategy. We also secured a significant new mandate in Europe covering property damage and business interruption for a leader in the electric vehicle sector. Teams from different regions coordinated to identify and address gaps in the clients' coverage while achieving a premium reduction all in just 3 weeks. This win underscores our ability to deliver cost-efficient solutions to support high-growth, innovation-driven clients with complex coverage needs.

Before turning it over to Andrew, I want to provide an update on we do, our enterprise delivery organization. We were especially pleased with the margin expansion we delivered this quarter across the business. Over the past quarter and as we look ahead, we do is helping us continue to improve how we operate, leveraging automation and AI to enhance efficiency and deliver savings. Our approach combines generative and analytical technologies to identify opportunities, design more efficient solutions and automate processes. With we do back automation projects, we've streamlined billing, collections and payments to drive stronger margins and free cash flow, which were reflected in our results this quarter.

Overall, I'm pleased with how we performed this quarter. We delivered solid financial results in line with our expectations with mid-single-digit organic growth and meaningful margin expansion across both segments. We have good momentum across the business, giving us added confidence in our ability to deliver on our 2025 targets.

And now I'll pass it on to Andrew for a more detailed discussion of the financials.

Thanks, Carl. Good morning, and thanks, everyone, for joining us today. In the third quarter, we delivered solid organic revenue growth of 5% and expanded adjusted operating margin by 230 basis points year-over-year to 20.4% or 120 basis points of year-over-year improvement when excluding TRANZACT. Adjusted diluted earnings per share were $3.07, which is an increase of approximately 11% over the prior year. As a reminder, we completed the divestiture of TRANZACT on December 31, 2024. And for the full year 2025, this will create a headwind to adjusted diluted earnings per share of $1.14.

As Carl discussed, our solid third quarter results reflect the strong foundation we've built and the benefits of our investments in talent and technology. Our strategy is resonating with clients and colleagues and our businesses remain highly resilient despite the macro uncertainty. We remain firmly focused on our strategic objectives and the financial framework outlined at Investor Day to create long-term shareholder value.

Turning to our segment results. Health, Wealth & Career revenue grew 4% compared to the third quarter of last year. Excluding the impact of book of business settlement activity and interest income growth was 5%. Our results for the third quarter are in line with our expectations, and we remain on track to deliver mid-single-digit growth and margin expansion for HWC in 2025. As a reminder, the vast majority of HWC's business is recurring, with only a small portion being more economically sensitive and discretionary. Our Health business achieved strong growth of 7% this quarter or 8% growth, excluding the impact of book of business settlement activity and interest income. This growth was primarily driven by double-digit increases in international and solid performance in North America. Results in International were driven by new global benefit management and local appointments, successful renewals, health care inflation and market expansion. In North America, focused sales efforts generated growth across all market segments. In Europe, growth was offset by a significant book of business sale in the prior year third quarter.

Excluding the impact of interest income and book of business settlement activity, Health has grown 8% year-to-date. We continue to expect strong demand across the global business driven by health care inflation and employers continued focus on managing costs while maintaining competitive employee benefits. With a healthy pipeline for the remainder of the year, we continue to expect high single-digit growth for the full year, even with a high double-digit growth rate in the fourth quarter of last year.

Wealth had revenue growth 5% in the third quarter primarily from strong levels of retirement work in Great Britain and North America. Demand for our core defined benefit work, including financial forecasting, compliance support and data projects remain strong. We also saw growth in project work to support pension derisking, surplus utilization and workforce restructuring. Our investments business delivered growth primarily from new products and client wins. We continue to expect low single-digit growth in the Wealth business for the year.

Career growth was 2% in the third quarter, with solid growth in Europe, driven by strong demand for EU pay transparency support and employee communication projects. While compensation benchmarking survey work increased across all regions, a change in the survey delivery pattern limited growth this quarter when compared to the same period last year. We are confident revenue growth will increase meaningfully in the fourth quarter due to this change in the pattern combined with the continued demand for advisory work related to the EU pay transparency directive that goes into effect mid-2026. We continue to expect Career to grow low to mid-single digits in 2025. Over the long term, we expect mid-single-digit growth based on our track record and continued focus on product and technology offerings alongside recurring services.

Benefits, Delivery & Outsourcing, or BD&O, grew 2% versus last year's third quarter, driven by growth in outsourcing due to increased project and core administration work in Europe which was partially offset by lower commission revenue in the individual marketplace, our B2B2C Medicare Exchange business. Keep in mind that our Medicare Exchange generates about 80% of its revenue in the fourth quarter due to the timing of the Medicare enrollment period. In combination with the timing of new business, BD&O overall generates nearly half of its revenue in the fourth quarter. Accordingly, we forecast BD&O growth to be strongest in the fourth quarter of the year, reflecting the expected timing of commissions, new client implementations and new projects to support regulatory changes. We continue to expect BD&O to grow at mid-single digits for the year.

HWC's operating margin in the third quarter was 28.6%, an increase of 390 basis points compared to the prior year or an increase of 100 basis points, excluding the impact of the TRANZACT divestiture. This result demonstrates our ability to consistently deliver incremental margin expansion regardless of cyclical macro conditions and supports our strong track record of margin expansion in HWC.

Let me move on to Risk & Broking, which had revenue growth of 6%, underscoring the continued momentum in the business. Our specialization strategy and our investments in talent, data and technology continue to drive sustainable growth. Corporate Risk & Broking grew 6% or 7% when excluding both book of business activity and interest income. This was on top of the 10% growth rate achieved in the prior year comparable quarter. As Carl mentioned, this is the 11th consecutive quarter of high single-digit growth when excluding both book of business activity and interest income.

CRB's growth this quarter was primarily driven by our global specialization strategy which continued to support expansion amid the more challenging rate environment. Of note, we generated significant new business across a number of markets this quarter as well as project revenue recognized in our Global Specialty businesses, with notable contributions from construction, surety and credit risk solutions. This illustrates that our commitment to global specialization continues to generate value for clients and drive growth.

From a macro perspective, and relative to last quarter, we are seeing a more challenging growth environment as market rates continue to soften across various lines. Nonetheless, our specialization strategy is resonating in the market and we are pleased by the results we are seeing from our Global Specialty businesses. We continue to expect mid- to high single-digit growth in CRB for 2025. While industry-wide pricing pressure is making high single-digit growth harder, we believe it is still attainable.

In our Insurance, Consulting & Technology business, revenue was flat versus last year's third quarter when ICT delivered 7% growth. Our combined approach of Consulting & Technology continues to add value. However, trends we highlighted last quarter persist as the consulting environment has remained weak and clients continue to demonstrate caution for making large multiyear technology implementation decisions. While we are encouraged by our pipeline on the technology sales side, we do not expect to see a meaningful pickup in consulting activity in the fourth quarter. For the full year, we continue to expect low to mid-single-digit growth.

Turning back to R&B's results overall. We are pleased with our momentum year-to-date, which gives us confidence in our ability to deliver mid- to high single-digit growth for the full year. As I mentioned a moment ago, although the path to achieving high single-digit growth is more challenging given the current pricing environment, we believe it is still possible. R&B's operating margin was 18.8% for the third quarter, a 70 basis point improvement over the prior year or a 100 basis point improvement when excluding the impact of foreign exchange rates. This was primarily driven by operating leverage from strong organic growth performance, coupled with continued expense discipline. Foreign exchange rates were a headwind of 30 basis points to R&B's operating margin in the third quarter due to weakening U.S. dollar, but we expect the full year foreign exchange impact to be slightly more modest.

So far this year, we achieved 90 basis points of operating margin improvement in R&B or 120 basis points, excluding the impact of foreign currency and we are committed to delivering 100 basis points of average annual adjusted operating margin expansion over the next 3 years. As Carl highlighted earlier, investments we've made in our technology capabilities continue to provide value and provide a strong platform for us to deliver ongoing operating leverage and efficiencies across the business.

Finally, I will give some additional color on our enterprise level results. Adjusted operating margin for the third quarter was 20.4%, a 230 basis point improvement over the prior year, reflecting strong margin expansion in the segments and prudent business expense management supported in part by our WE DO initiative. This result includes a 110 basis point tailwind from the TRANZACT divestiture. As we enter Q4, our seasonally strongest quarter of the year, all our businesses are operating with continued discipline and rigor, giving us confident in our ability to continue to expand margins. Foreign currency was a $0.04 tailwind to adjusted EPS for the quarter and a $0.05 headwind year-to-date in 2025. The U.S. dollar has been weakening during the quarter. So I want to give you some additional color on foreign exchange.

At the current spot rates, we expect a foreign currency tailwind to adjusted EPS of approximately $0.15 in the fourth quarter and approximately $0.10 for the full year. Of course, the impact may fluctuate throughout the remainder of the year. Our U.S. GAAP tax rate for the quarter was 19.7% versus 16.1% in the prior year. Our adjusted tax rate for the quarter was 22.4% compared to 19.7% for the third quarter of 2024. We expect our full year 2025 tax rate to be relatively consistent with the prior full year rate. We generated free cash flow of $838 million for the 9 months ending September 30, 2025, an increase of $114 million from the prior year. This was driven by operating margin expansion and reduced transformation program cash costs.

The favorable second half setup we anticipated began to play out this quarter. As we previously noted, the remaining transformation costs continue to abate and the divestiture of TRANZACT will act as a tailwind to free cash flow as we lap the prior year fourth quarter in which that business recorded net cash outflows. We remain on track to deliver our objective of annual free cash flow margin expansion.

During the quarter, we returned $690 million to our shareholders via share repurchases of $600 million and dividends of $90 million. We continue to view share repurchases as one of our primary methods of capital return and an attractive use of capital to efficiently deliver value to WTW shareholders. We continue to expect share repurchases to total approximately $1.5 billion in 2025, subject to market conditions and potential capital allocation to inorganic investment opportunities. Looking ahead, we're confident our balanced and disciplined capital allocation approach will generate long-term shareholder value. We'll continue to be selective as we invest in talent and in our platform to ensure we're driving sustainable growth and margin expansion.

In closing, we are pleased by our performance year-to-date in 2025. We are increasingly seeing the execution of our strategy manifest in our results, giving us solid momentum as we enter the fourth quarter. We remain confident in delivering on our 2025 financial objectives of mid-single-digit organic growth, adjusted operating margin expansion, adjusted EPS growth and ongoing improvement in free cash flow margin.

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

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

So for the first question, I'm going to focusing on the Risk & Broking organic revenue results. I appreciate the color, both you made, both you, Carl and Andrew made specifically on the new business. And I guess what I'm getting at is how much of the third quarter result reflected sort of unusual wins that won't recur or come at it a different way. You mentioned project-based placements. Were those unusual relative to other quarters? And maybe you can just build on that by line of business? Is there something nuanced or geographies that's driving what I would characterize as a better-than-market result?

Thanks for the question. We were really pleased with the 6% growth we achieved for the R&B segment. That was on top of, right, a 10% for a solid growth result in Q3 '24. CRB delivered 6% organic or 7% when you exclude both book of business activity and fiduciary income. I think our specialization strategy and our investments in talent, data and technology continue to drive sustainable growth.

Lucy, can you give us some color commentary on that?

Yes. Sure, Carl. Yes, let me just start by reiterating we had another good quarter overall. Within CRB, we've generated strong new business in all of our global markets and across almost every single specialty line. We saw particularly meaningful contributions from construction, M&A, surety, credit risk solutions and remain committed to delivering mid-single-digit to high single-digit growth in R&B for the year. As you know, of course, our clients are benefiting from an improving rate environment, which can translate to a revenue headwind for us. Naturally, this industry-wide dynamic will make the path to high single-digit growth for the year more challenging but not out of reach.

In terms of the project-based placements, it's just important to keep in mind that the nature of our work in specialty is always a combination of recurring and one-off work. So as we noted in those prepared remarks, we did see increased contributions from placements for multiyear projects undertaken by some of our clients. Normal part of growth in our specialty businesses, particularly in construction, M&A, surety and natural resources. That specialization approach has been a key driver of growth for us in R&B, and we expect that to continue. Thanks, Greg.

I'm going to follow up just because it's important. I know part of your expectation going forward is to expand your margins in Risk & Broking each year and both Andrew and Lucy now have reviewed that it's becoming more difficult to get to the higher end of your organic revenue results in Risk & Broking. Should we be worried that if we go from mid-single digit to high single digit, just to mid-single digit, that there might be some pressure on your ability to generate that 100 basis points of margin improvement in the next 2 years?

Greg, it's Andrew. I'll take that one. So we did see a strong margin improvement in the R&B segment of 70 basis points or 100 basis points, excluding the impact of foreign currency. So year-to-date, 90 basis points of operating improvement or 120 basis points, excluding the impact of foreign currency. We're not going to sort of guide to a specific number for the full year, but we do remain absolutely committed to what we laid out yesterday of the 100 basis points on average over the next 3 years per year. And we feel like we're on track to achieve that.

It's really driven by some of the investments in technology that we've made really looking at process improvement, things of that nature, that's really going to help drive those efficiencies. So I think despite the top line, we feel like we have the appropriate tools and levers to be able to get there.

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

My first question was on free cash flow. If you can just provide more expectations for the year and the fourth quarter. I think in your prepared remarks, you commented about how the favorable second half began to play out this quarter. I just was hoping to get more comments there.

Yes. Perfect. Thanks, Elyse. Our view has not changed from what we shared last quarter. The favorable second half setup that we flagged continues to play out. Through the third quarter year-to-date, we had $838 million in free cash flow, which is $114 million year-over-year increase, that was driven by operating margin expansion and reduced transformation cash costs. Looking at the fourth quarter, the remaining transformation cash cost will continue to abate and the divestiture of TRANZACT will act as a tailwind as we lap the prior year fourth quarter.

So taken together, we remain confident in our ability to deliver free cash flow margin expansion, not just in 2025, but beyond as well and just continue to build on that momentum.

And then my second question, I was just hoping you guys could provide what the insurance pricing headwind was in the third quarter? And also, was that similar to the second quarter or worse?

Elyse, it's Lucy. Thanks for the question. So sure, pricing pressure has continued in certain areas of the market, and it's becoming more meaningful as we make progress through the year. From our perspective, property is the most impacted class, particularly in the large and complex segment but most lines are showing softening other than, of course, North American casualty where pricing continues to rise.

Important to remember that these pricing improvements follow 5 years of pricing increases. So many of the markets still see these levels as rate adequate, and it's a welcome relief for our clients. So we're still expecting mid- to high single-digit organic revenue growth and Risk & Broking for the year in spite of any of the pricing developments.

And our next question comes from the line of Rob Cox from Goldman Sachs.

First question on HWC margins. I think if we exclude the impact of TRANZACT, the margins improved 100 basis points, as you all mentioned. If we do that in the first half of 2025, I think the margins contracted. So I was just curious sort of what changed in the quarter and how you guys are thinking about margin expansion, excluding TRANZACT in the fourth quarter and beyond?

Yes, sure. I mean, as we laid out in Investor Day, we're committed to incremental margin improvement across that sector over the long term. Over the full year here, we'll have some tailwinds, right, from the divestiture of TRANZACT, but everything is playing out exactly as we expected.

And maybe, Julie, you want to comment on some of the drivers of sort of how we're going to sustain that performance going forward.

I would, Andrew. But first, I want to highlight that so far this year, excluding the TRANZACT divestiture, we added 40 basis points of margin in Q1, 20 basis points in Q2 and now 100 basis points in Q3, as you mentioned, in line with our commitment to build on our strong track record. We've been able to do this consistently over a lot of years for a few reasons, and that the foundation of this performance is the way that we focused our portfolio. We got businesses where we can not only differentiate but also scale and generate leverage. And then on top of that, we have a really clear view of our top line and a firm command of our cost structure. We take a very disciplined approach to resource management.

And then finally, we still see opportunities with process optimization, automation and right shoring to add to margin. So while we take pride in what we like to say are industry-leading margins in HWC, we are very confident in our ability to build on that.

Great. And then I just want to follow up on the BD&O business. It sounds like the guidance is being maintained for mid-single-digit organic growth for the full year. Just looking at what you guys have done year-to-date, it looks like you might need something like high single digits organic in the fourth quarter. Could you tell us what gives you confidence on the improvement there?

Yes, Rob, I'll take that. I'm going to start with a reminder that BD&O overall generates nearly half of its revenue in the fourth quarter. And in addition to typically our outsourcing clients going -- new outsourcing clients going live in that quarter. About 1/3 of our revenue in this business comes from our individual marketplace business, and in that business, we generate about 80% of our revenue in the fourth quarter, as Andrew mentioned, during open enrollment that happens from October until early December. And given the new clients that we've added, our expectations for Medicare retirees to review and switch coverage during that enrollment period, we expect to see increases in commissions and fees and solid growth in the quarter ahead.

So overall, we expect mid-single-digit growth for the full year and over the longer term.

And our next question comes from the line of Michael Zaremski from BMO.

Looking at the interest income levels, very healthy, better than expected. Is that the run rate or any one-timers we should be considering?

No specific one-timers, but I just -- it's important to keep in mind that some of the investment income is driven by sort of where the cash balances are held across jurisdictions and interest rates vary by geography. So sometimes geographic mix of business can have an impact there. So I think that's the only nuance I'd call out there.

Okay. So we'll -- I guess I'll take it as a kind of use it as directionally at the run rate. A follow-up to Greg Peter's question earlier and just not trying to split hairs and we love when you give extra color. But in the R&B segment, when you mentioned the project based placements in specialty, which is great color. It just leads to the question, is project-based mean like more nonrecurring or onetime that we should kind of be considering in our run rate on a go forward? So just wanted to try to ask that one last time to make sure we're not new wording.

It's just one last time. It's Lucy. Thanks for the question. Yes, you're right, it does mean onetime revenue. But we always have onetime revenue. The nature of our work in specialty is a combination of recurring and onetime revenue. We just saw increased contributions from the placement of multiyear projects in the quarter, so we hold it out. It's a normal part of the growth in Specialty business.

And our next question comes from the line of Paul Newsome from Piper.

I was hoping you could talk a little bit about the war for talent. We see a lot of headlines, particularly on the property casualty side of the house about books getting hired back and forth. And where do you think Willis fits within that? And do you think we're seeing a heightened level of poaching back and forth?

Yes. Thanks for the question. We are really happy with our ability to attract and retain top talent. As Lucy shared after she joined last year, right, the success of our strategy over the last 4 years and the world-class resources we've developed to serve clients, they're highly attractive to prospective employees. We continue to hire strategically with a focus on bringing in accretive talent, especially within our specialty lines and geographies. More broadly, we continue to make investments in the fastest-growing and most profitable areas of our business. And so we remain very excited about the innovation fostered by both these investments and the new talent in the organization. It's helping us realize significant opportunities to accelerate profitable growth and to enhance our margins.

So do you think you're getting kind of more than a fair share at this point? Or do you think you've sort of reached a point where you're kind of at your steady state of continued growth?

I'll just pick up on that. Thanks. So of course, our people are it for us, and our business is built around talent. Incredibly proud of the people who work here and how they look after our clients. That really strong focus on talent has been the key driver of our organic growth and, of course, particularly for new business growth over the last few years. We will continue to complement our existing talent by making strategic hires in the areas we think that they'll be most impactful both in terms of geography and specialty. It's proven to be a real successful strategy for us, and we'll continue to execute on that.

And our next question comes from the line of David Motemaden from Evercore ISI.

I had a question just on some of the R&B commentary just around the path to achieving the high single-digit growth, just getting more challenging, given the current pricing environment. And I'm not so much focused on fourth quarter, but just thinking bigger picture about the mid-single-digit to high single-digit growth targets you guys had laid out at your Investor Day about a year ago within R&B. Just given the current environment and the direction of travel, I guess, how are you thinking about that target? Is it still that mid-single to high single, mid-single, is low single digit on the table? Just interested in your thoughts on that.

Yes. I mean, stepping back, right, our solid performance this year reflects the success of the specialization strategy and demonstrated by 6%, the solid 6% we got out of CRB, that 7% we do exclude book of business and fiduciary income for the quarter. Given our performance year-to-date, we remain committed to mid- to high single-digit growth in R&B for the year. But as we've said, right, we acknowledge that high single digits, a bit more challenging now with the current environment.

Yes. Let me just add to that. Thanks, Carl. Yes, so we've made the comments about where we expect '25 to end up. And obviously, we're not going to comment on '26 until next quarter. But we still have plenty of room to grow across Risk & Broking. We expect client demand and the attractiveness of the specialty structure to continue to generate growth rates that continue to lead the market. So we see a lot to be optimistic about, but we'll talk about '26 next quarter.

Got it. Okay. And then just following up, just seeing an economy that looks like capital spending and spending is still solid, but then employment growth, which Carl, you mentioned that's slowed a bit. And I hear you loud and clear that HWC is vastly recurring in nature, if I think about their revenues. But could you just help me think about just general employment levels and how that might impact some of the contracts that you have, particularly in BD&O even if it is recurring. Are there different bands there that can tweak up and down based on your client employment levels? Or could you just help me think through the sensitivity of your businesses to that?

David, I'll pick up on that one. Look, overall, we haven't seen softening employment impact our revenue overall. And I can tell you that even with a softening employment landscape, we expect to deliver mid-single-digit revenue growth in HWC this year. And while it's worth noting that employee turnover has dropped across industry, there is still high competition for certain jobs and skills. We've got -- we do these talent intelligence reports that found that organizations are investing heavily in technology, talent, data roles, customer service jobs.

And then balancing that alongside other external factors like things I've mentioned before have been mentioned before, health care inflation, healthy pension-funded status new legislation where our clients need support, we believe that overall environment is generally favorable for our HWC services, and that includes BD&O that you specifically mentioned.

And our next question comes from the line of Mark Hughes from Truist.

In the Health business, I talked about the strong pipeline. How much of that do you think is you're taking share versus there's just a lot of movement, a lot of folks looking for solutions given health care inflation.

Thanks for the question. Just to take this one step back, right? The Health business at 7% for the quarter, and that's 8% before when you exclude book settlement and really reflecting broad-based growth across all regions. We think our strategy is continuing to yield meaningful results. This is the sixth consecutive quarter of growth in the high single digits range. Our expectation is that demand is going to remain solid for the rest of the year driven by a very solid pipeline and supportive external trends. And though we do recognize we have a strong comp in Q4. We continue to expect to deliver high single-digit growth for the full year.

But maybe if Julie could give a bit more commentary about what we're seeing in Health.

Yes. Sure, Carl. And Mark, to pick up on your point, I'll start with the external environment. Health care inflation is still front and center for a lot of organizations due to the higher cost driven by things like increased utilization, technological advances, prescription drug cost increases and the list goes on. In fact, we've done some recent research that shows that 73% of company, 73% are feeling more cost pressure in this area than at any point in the last 10 years.

So it isn't a surprise that they're turning to us for help in managing these costs, whether that's to take health plans out for competitive bids or considering more significant changes. So this environment has been favorable. And we've been successful with focused sales efforts and a strong service and that has generated strong retention new business and good results for some of our solutions like global benefits management and our middle market offerings. And so our pipeline is strong. And to repeat what Carl said, we are confident in delivering high single-digit growth for the full year.

Very good. And then on the -- in the retirement business, what is the prospects for continued project work if interest rates are going to be declining here? Presumably, most pension funds are pretty -- doing pretty well. But what is -- how does 2026 shape up relative to 2025 on that front?

Yes. And again, let's ground is where we're starting from. Wealth generated 5% organic for the quarter, driven by strength in retirement. New clients and core DB services and LifeSight to your point, expanded project work for existing clients, right? Our investments business is delivering growth from new products and client wins. We continue to expect low single-digit growth for the year and over the long term.

And Julie, what are we seeing on the ground and what do we think about the future?

Yes. Yes. I'd like to actually break this into 3 pieces. The core defined benefit work emerging work in the defined contribution area and then developing product solutions in the investments area. So starting with core defined benefit, we have added more clients in our target market. And to the point that's been made already conducted more project work. That includes not only derisking, which is interest rate dependent, but derisking readiness for the future, doing things like data cleanup, helping clients with workforce management projects and doing work to support the adoption of new legislation. We have very good momentum going in this area, and we expect these trends to continue.

Now in defined contribution, we are live with our LifeSight Solution in 12 countries now, and we continue to add clients and assets under management. At the end of the quarter, last quarter, our assets under management across our Master Trust type arrangement with over $42 billion. And then we've seen strong performance in our new product launches in our investments business. I want to highlight what I think is a really exciting example where we launched funds in collaboration with BlackRock for our clients' international defined contribution pension plans. And that has been seeded with over $1 billion in assets from a client headquartered in the Middle East.

So with developments like this, we expect our Wealth businesses to grow revenue steadily in the short to medium term. Growth is expected to accelerate over the medium to long term as we build in some of these faster-growing areas that I've mentioned. And I'll just close with the momentum that we have this year, we're expecting results to be at the top end of the low single-digit range.

Our next question comes from the line of Ryan Tunis from Cantor.

Just one for me. So in Risk & Broking, the 7% organic. Can you give us some idea of geographically, how the U.S. fits in there versus international?

Yes. So we saw growth across all of our geographies. We're happy with how all of the businesses performed but don't get into the detail on geography by geography basis. The U.S. is about less than half of the total portfolio that we have within that business. So again, well diversified across geographies, lines of business markets and property casualty splits, and that's served us well.

Sorry. But like seems like broadly, that's where we're seeing some pressure on brokerage organic just on the U.S. side. So you're saying that we should assume that U.S. is running somewhere in your 7% organic?

No, that's not what we're saying. We saw particularly good performances from the U.K. and our GB and international, and we had some outperformance there.

And our next question comes from the line of Mark Marcon from Robert W. Baird.

One for Julie and one for Lucy. Julie, just with regards to the health insurance pressures that employers are facing. Typically, when we go through these time periods, how long do you see elevated levels of continued requirements for help from your clients? It seems to me like it would be a multiyear process to try to optimize benefit plans and things of that nature. But I'm wondering what your perspective is on that.

And then for Lucy, obviously, we all know that we're going into a softer cycle, how would you characterize this softer cycle relative to others? And to what extent does that impact your ability to gain new clients from competitors?

Mark, thank you. On the health care front, you're right that this is typically a multiyear phenomenon where we have higher health care inflation around the world. We're already looking out at estimates for 2026, and it is still expected to be high.

Lucy, you want to comment on...

I would love to Julie. Thank you. Yes, thanks Mark, for the question. So how would I characterize this soft cycle compared to other soft cycles? I guess I would just make the note that we are talking about it being a softer cycle, but it's important to remember where we've come from. We had 5 years of rating increase. And so where we are is softer, but it is still considered rate adequate in most -- by most carriers.

And in terms of how does it affect our ability to attract clients. Well, I mean, clients aren't only looking for the lowest price. They will get better pricing from brokers across the board. But we think that the biggest thing we have to offer clients is the differentiation in our specialization strategy.

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

Two quick ones, hopefully. And I apologize if this has been covered before. But given the fact that he's done $1.3 billion of repurchases year-to-date and fourth quarter is the strongest free cash flow quarter. Why is $1.5 billion the right number for 2025 [indiscernible], shouldn't it be higher?

Yes, sure. So as we mentioned in the prepared remarks, we're still targeting $1.5 billion in subject to market conditions and, of course, potential capital allocation to organic or inorganic investment opportunities.

In terms of timing and potential upside, we continuously monitor our cash levels and market conditions to take advantage of opportunities to accelerate repurchases. And will lean in if the opportunity presents itself, and we think it's a prudent thing to do. As we always have, we evaluate all of our options for capital allocation, which does include share buybacks, internal investment and carefully consider strategic M&A to make sure that we're maximizing value creation for our shareholders.

Okay. That's fair. Second question, with the survey-related results or revenues that are being deferred to the fourth quarter, were the associated expenses still booked in the third quarter?

Yes. The simple answer to that question. So we expect some revenue to bleed over into Q4 related to that sort of temporary shift in timing.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Carl Hess for any further remarks.

Thanks, everyone, for participating today. Before we wrap up, I'd like to acknowledge the destruction caused by Hurricane Melissa and express our deepest sympathy to all of those affected. For our clients and business partners in the areas impacted our thoughts are with you, and we'll continue to lend our support through this difficult time.

Thank you all for joining us this morning. I do want to thank once again all our WTW colleagues again for their hard work and dedication, and thank you to our shareholders for their continued support of our efforts. Have a great day.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.