Marsh & McLennan Companies, Inc.

Hello, and welcome to Marsh McLennan's earnings conference call. Today's call is being recorded. Third quarter 2025 financial results and supplemental information were issued earlier this morning. They are available on the company's website at marshmclennan.com. Please note that remarks made today may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties, and a variety of factors may cause actual results to differ materially from those contemplated by such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, including our most recent Form 10-K, all of which are available on the Marsh McLennan website. During the call today, we may also discuss certain non-GAAP financial measures. For a reconciliation of these measures to the most closely comparable GAAP measures, please refer to the schedule in today's earnings release. If you have a question, please press star one one on your touchstone phone. If you wish to be removed from the queue, please press star one one again. If you're using a speakerphone, you may need to pick up the handset before pressing the numbers. Once again, if you have a question, please press star one one on your touchstone phone. I'll now turn this over to John Doyle, President and CEO of Marsh McLennan.

Thanks, Andrew. Good morning and thank you for joining us to discuss our third quarter results reported earlier today. I'm John Doyle, President and CEO of Marsh McLennan. On the call with me is Mark McGivney, our CFO, and the CEOs of our businesses, Martin South of Marsh, Dean Klosura of Guy Carpenter, Pat Tomlinson of Mercer, and Nick Studer of Oliver Wyman. Also with us this morning is Jay Gelb, Head of Investor Relations. Marsh McLennan had a solid third quarter. As we said coming into the year, we anticipated impacts from a changing macro environment and our performance continues to track with our expectations. Overall, we grew revenue 11% in the quarter, reflecting continued momentum in our business and contributions from an active year of acquisitions in 2024. Underlying revenue increased 4% for the quarter, reflecting the impact of lower fiduciary interest income, declining P&C pricing, and economic uncertainty affecting our clients, especially in the U.S. Adjusted operating income increased 13% from a year ago. Our adjusted operating margin increased 30 basis points compared to the third quarter of 2024, and adjusted EPS grew 11%. Earlier this week, we announced that we will change our brand in January from Marsh McLennan to Marsh. Also in January, our stock ticker symbol on the New York Stock Exchange will change from MMC to MRSH. Our businesses will adopt the Marsh brand after a transition period. We also introduced Business and Client Services, or BCS. This unit brings together our operations and technology teams from across the company under Paul Beswick, our Chief Information and Operations Officer. Our new brand strategy, the creation of BCS, and the efficiencies we expect to gain are core parts of a new program we call Thrive. Thrive will also include automation efforts and workforce actions to optimize our scale and specialization. The program is designed to deliver greater value to clients, accelerate growth, and improve efficiency. The efficiencies we gain through the program will support investments in talent and technology. As we increasingly deploy AI, we can deliver even greater value for clients and colleagues. Thrive will also help us continue to expand margins. Let me take a moment to comment on our brand strategy. Marsh will be our new brand and represent our vision to be the most impactful professional services firm in the world. This change will increase our visibility, strengthen our value proposition, and support our business strategy. The Marsh brand is highly regarded and has the broadest global reach among our businesses. Today, Marsh stands for excellence in risk advising and insurance broking. Going forward, the new Marsh will represent the full value of our offerings in risk, strategy, and people. Turning to BCS, our company has a long history of innovation. which has been an important factor in our success for over 150 years. We continue to innovate in the AI era, having invested in large language models for more than two years. And while the full impact of AI is still emerging, we are seeing an increase in opportunities from our use cases. We are focused on developing tools that boost colleague productivity to better support our clients. For example, LenAI, our proprietary GenAI tool for colleagues, responds to about 1 million inquiries per week, fueling efficiency and automation. We are also rolling out new market-facing AI tools, including most recently Ada. This is Mercer's proprietary AI-powered assistant within the Talent All Access portal, which is a global intelligence platform supporting HR decision-making. And prior to Ada, we introduced CentRISC, our AI-enabled supply chain risk assessment platform. We have a vast data set as the global leader in risk strategy and people, and BCS will accelerate our efforts to extract valuable insights through AI and analytics. This enables us to better serve our clients, empower our colleagues, and increase our efficiency. Over the next three years, we expect Thrive will generate approximately $400 million in savings with a portion being reinvested to drive additional growth. We will incur around $500 million in charges to achieve these savings. Now I'd like to take a moment to talk about talent in the insurance and reinsurance markets. This is a people business, and we have an unmatched depth of talent with over 90,000 colleagues, and we'd love to compete because it makes us better. Colleague mobility is good for our industry. and has served us well because we are an employer of choice with a strong colleague value proposition. Our colleagues can be their best at our company because they work with the top talent in our industry, they manage meaningful client issues, and they have access to market-leading analytics and technology. We make a point of differentiating ourselves through a collaborative team-based model. This is reflected in strong colleague retention and excellent engagement scores. A few competitors have engaged in unlawful and unethical hiring practices and encouraged talent to violate their covenants as a deliberate strategy to build their businesses. In these cases, I believe it's important to call out this behavior and to protect our rights. It's also the right thing to do to sustain the trust that we've built with our clients over a long time. Turning to insurance and reinsurance market conditions, we continue to see a competitive market characterized by slower growth from an uneven economy, stronger carrier ROEs, and continued decreases in overall rates, particularly in property reinsurance and property cat reinsurance. According to the Marsh Global Insurance Market Index, commercial insurance rates decreased 4% in the third quarter, driven by property. This follows a 4% decline in the second quarter of 2025. As a reminder, our index skews the large account business. Overall, rates were down in the U.S. by 1%. Canada was down 3%. The U.K., EMEA, Latin America, and Asia were all down mid-single digits. And Pacific was down by double digits. Global casualty rates increased 3%, with U.S. excess casualty up 16%. reflecting continued pressure in the liability environment. Workers' compensation decreased by 5%. Global property rates decreased by 8% year-over-year, compared with a 7% decline last quarter. Global financial and professional liability rates were down 5%, while cyber decreased 6%. In reinsurance, the market remains resilient. It has responded to an extended period of elevated natural catastrophe losses, as well as ongoing geopolitical and macroeconomic uncertainty. Dedicated reinsurance capital is projected to reach approximately $650 billion by year-end 2025. With ample capacity, increased competition is driving reinsurers to look for profitable ways to deploy capacity. The cap-on market is on pace for a record year of issuance. with over 60 new bonds in the first nine months, generating approximately $17.5 billion of limit. In casualty reinsurance, renewals were largely stable with sufficient capacity. This outcome reflects underwriting actions of primary carriers and increased reinsurer appetite. Across both insurance and reinsurance, we advise our clients on proactive strategies that reflect the risk environment and market conditions. and of course, tailored to their tolerance for volatility. Today, we see decreasing property casualty prices, but also a growing cost of risk. Over time, this trend is unsustainable. With that being said, barring significant changes in large loss activity, as well as the broader macro environment, we anticipate insurance and reinsurance market conditions seen so far this year will likely continue in 2026. Now, let me turn to our third quarter financial performance and outlook, which Mark will cover in more detail. Consolidated revenue increased 11% to $6.4 billion and grew 4% on an underlying basis, with 3% growth in RIS and 5% growth in consulting. Marsh was up 4%, Guy Carpenter grew 5%, Mercer 3%, and Oliver Wyman was up 8%. We had adjusted operating income growth of 13%, and we generated adjusted EPS in the quarter of $1.85, which was up 11% from a year ago. We also repurchased $400 million of our stock in the quarter. Turning to our outlook for 2025, we continue to expect to deliver mid-single-digit underlying revenue growth, solid growth in adjusted EPS, and our 18th consecutive year of reported margin expansion. Of course, this outlook is based on conditions today, and the economic backdrop could turn out to be materially different than our assumptions. In summary, we're pleased with our year-to-date performance in a complex environment. Thrive will amplify our value proposition for clients across all our businesses, and it creates opportunities to invest in talent, growth, AI, and our new brand. Our capabilities are unique, and there is strong demand for our advice and solutions. We've earned our leadership position in our markets through 154 years of innovation and growth. Our disciplined approach to investing for the future, while delivering results in the near term, remains a guiding principle for our planning and capital allocation. Our announcements today and earlier this week align with this philosophy. With that, I'll hand the discussion over to Mark for a more detailed review of our results.

Thank you, John, and good morning. Our third quarter results were solid, reflecting our strong position and execution despite a more challenging environment. Consolidated revenue increased 11% to $6.4 billion, with underlying growth of 4%, which came despite a headwind from fiduciary interest interest. Operating income was $1.2 billion, and adjusted operating income was $1.4 billion, up 13%. Our adjusted operating margin increased 30 basis points to 22.7%. Gap EPS was $1.51, and adjusted EPS was $1.85, up 11% over the last year. For the first nine months of 2025, underlying revenue growth was 4%, Adjusted operating income grew 11% to $5.7 billion. Our adjusted operating margin increased 20 basis points, and adjusted EPS increased 9%, $7.63. Looking at risk and insurance services, third quarter revenue was $3.9 billion, up 13% from a year ago, or 3% on an underlying basis. Operating income in RIS was $750 million. Adjusted operating income was $965 million, up 13% over last year. The adjusted operating margin was 24.7%. For the first nine months of the year, revenue in RIS was $13.3 billion, with underlying growth of 4%. Adjusted operating income increased 12% to $4.4 billion. The adjusted operating margin was 33.3%. At Marsh, revenue in the quarter was $3.4 billion, up 16% from a year ago, or 4% on an underlying basis. The 16% growth at Marsh is impressive and reflects the contribution from McGriff, where integration seems to go well. In U.S. and Canada, underlying growth was 3% for the quarter, reflecting good new business growth overall and continued momentum in MMA. And international underlying growth remained solid at 5%, with EMEA up 5%, Asia Pacific up 6%, and Latin America up 3%. The first nine months of the year, Marsha's revenue was $10.7 billion, with underlying growth of 5%. U.S. and Canada grew 4%, and international was up 6%. Guy Carpenter's revenue in the quarter was $398 million, up 5% from a year ago on both a gap and underlying basis. Growth remained solid despite softer reinsurance market conditions and came on top of 7% underlying growth in the third quarter of last year. For the first nine months of the year, Guy Carpenter generated $2.3 billion of revenue and 5% underlying growth. In the consulting segment, third quarter revenue was $2.5 billion, up 9% or 5% on an underlying basis. Consulting operating income was $501 million, and adjusted operating income was $545 million, up 11%. Our adjusted operating margin in consulting was 22.1%, up 40 basis points from a year ago. For the first nine months, consulting revenue was $7.2 billion, reflecting underlying growth of 4%. Adjusted operating income increased 9% to $1.5 billion, and the adjusted operating margin increased 50 basis points to 21.2%. Mercer's revenue was $1.6 billion in the quarter, up 9%, or 3% on an underlying basis. Health grew 6%, reflecting continued strong growth across all regions. Wealth was up 3%, led by investment management. Our assets under management were $683 billion at the end of the third quarter, up 2% sequentially and up 25% compared to the third quarter of last year. Year-over-year growth was driven by our acquisitions of Cardano and Secor, positive net flows, and the impact of capital markets. Career was flat year-over-year on an underlying basis, reflecting continued softness in project-related work in the U.S. and Canada, offset by sustained demand in international and good growth in our workforce products. For the first nine months of the year, revenue at Mercer was $4.6 billion, with 3% underlying growth. Oliver Wyman's revenue in third quarter was $886 million, up 9% or 8% on an underlying basis, reflecting growth in each of our regions. The third quarter benefited from favorable timing, so we expect moderating growth for Oliver Wyman in the fourth quarter. For the first nine months of the year, revenue at Oliver Wyman was $2.6 billion, an increase of 5% on an underlying basis. Fiduciary interest income was $109 million in the quarter, down $29 million compared with the third quarter last year, reflecting lower interest rates. Looking ahead to the fourth quarter, based on the current environment, we expect fiduciary interest income will be approximately $85 million. Foreign exchange had a de minimis impact on adjusted EPS in the third quarter. Based on current rates, we anticipate FX will be a four-cent benefit to adjusted EPS in the fourth quarter. Turning to our Thrive program, as John mentioned, we are excited about this significant new step in the evolution of our firm, which should enable us to continue to deliver exceptional results while we invest for sustained growth. We began executing the program in the third quarter and expect to generate $400 million of total savings, a portion of which will be reinvested for growth. Although we will see a modest benefit in the fourth quarter, the vast majority of the savings will be realized over the next three years. We expect to incur approximately $500 million of charges to generate the savings. The majority of savings will result from efficiencies created by BCS. with a significant portion coming from further optimization of our global operating model. We have mature capability centers in locations around the world, and our plans over the next three years will accelerate this journey. Today, we have over 19,000 colleagues in cost-effective locations across BCS and our global functions. Through this program, we expect to further optimize our model by shifting more work to these locations. In addition, we're excited about the possibilities of AI-enabled enhancements in client service, insights, and efficiency as we look to take our AI journey from experimentation at scale to business impact. A substantial portion of the work in DCS will be driving savings through efficiency in process and automation, including through the use of AI. This will also be an area where we increase investments. These initiatives in BCS are closely linked. In order to capitalize on the full value of emerging technology, we need to concentrate more of our operations work in locations with scale. A critical enabling step in this journey is combining the distributed operations across our businesses into a single team. We also anticipate significant savings by continuing to streamline our organization. We have a long track record of executing for efficiency and have consistently demonstrated our ability to drive near-term results while investing for sustained growth.

The Thrive program will enable us to continue to invest while we drive earnings and margins higher.

Total noteworthy items in the third quarter were $136 million and included charges related to McGriff as well as restructuring costs associated with Thrive. Interest expense in the third quarter was $237 million, up from $154 million in the third quarter of 2024. Based on our current forecast, we expect interest expense will be approximately $235 million in the fourth quarter. Our adjusted effective tax rate in the third quarter was 24.8%. This compares with 26.8% in the third quarter last year. Excluding discrete items, our adjusted effective tax rate was approximately 25.5%. We continue to expect an adjusted effective tax rate of between 25% and 26% in 2025, excluding discrete items. Turning to capital management and our balance sheet, we ended the quarter with total debt of $19.6 billion. Our next scheduled debt maturity is in the first quarter of 2026, when $600 million of senior notes mature. Our cash position at the end of the third quarter was $2.5 billion. Uses of cash in the quarter totaled $1 billion and included $445 million for dividends, $200 million for acquisitions, and $400 million for share repurchases. For the first nine months, uses of cash totaled $2.6 billion and included $1.3 billion for dividends, $366 million for acquisitions, and $1 billion for share repurchases. We continue to expect to deploy approximately $4.5 billion of capital in 2025 across dividends, acquisitions, and share repurchases. The ultimate level of share repurchase will depend on how our M&A pipeline develops. For the full year, we continue to expect mid-single-digit underlying revenue growth, margin expansion, and solid growth in adjusted EPS. Note that this outlook is based on conditions today, and the economic backdrop could be materially different than our assumptions. Overall, we are pleased with our third quarter and year-to-date results and are excited about the opportunity that our new brand and Thrive will bring. With that, I'm happy to turn it back to John.

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

Certainly. We will now begin the question and answer session. If you have a question, please press star 1-1 on your touchtone phone. If you wish to be removed from the queue, please press star 1-1 again. If you're using a speakerphone, you may need to pick up the handset before pressing the numbers. Once again, if you have a question, please press star 11 on your touchstone phone. And in the interest of addressing questions from as many participants as possible, we ask that participants limit themselves to one question and one follow-up question.

One moment, please. Our first question comes from the line of Greg Peters with Raymond James. Good morning, everyone.

I'd like to, for the first question, focus on the comment during the call and in your branding press release about the lower growth environment. John, I know you mentioned that you expect mid-single digit growth this year. Do you think you know, with the government shutdown, with the uncertainty that we might be on this glide path to low to mid single digit as we look out over the next 24, 36 months, especially in the face of a more challenging pricing environment for property casualty.

Good morning, Greg, and thank you for the question. I wasn't trying to project, you know, into, you know, 2026 or 2027, of course. Every year comes with its different opportunities, different challenges. But as we guided earlier this year, we knew there would be some pressures from the macro environment and P&C-related pricing pressures. So we guided to mid-single-digit underlying revenue growth. I like how we're positioned. I am very excited about Thrive and what that can mean for our growth over time. And so, you know, we're confident in our ability to execute across different economic cycles and different PNC cycles. We, you know, we have a playbook and again, a real track record of doing it. So, you know, we'll see what next year brings and, you know, we'll guide to, you know, our thoughts at that point. You know, it feels like a pretty uneven economy to me, you know, for sure. That's kind of what our data suggests. And so, but we're not pessimistic about growth. We like our position. We've been reshaping the mix of business in the company over a long period of time and focused on being a better growth company.

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

Were you talking about MMA or more broadly?

Yeah, MMA, the MMA London Wholesale Program.

Yeah. Well, actually, let me address it kind of more broadly. I'll start with that and then get to MMA. We're not looking to build a third-party wholesale business here. We have exceptional specialty talent inside of this company, the market-leading specialty talent. And we don't want to be outsourcing an important part of our value proposition when it's not necessary. Some E&S markets require us to go through a wholesale broker to access them. So So we'll build some of that capability. And where we need access and in very unique circumstances, we need capability, we'll use third-party wholesalers. We do that today. And they serve us and our clients well. As it relates to MMA, yes, we've created a new desk in London. Reed Davis, the CEO of McGriff, is working with Lizzy Howe in London today. We have just absolutely top specialty talent in the London market, of course, have been there for a long, long time serving our clients and serving March clients globally. But particularly in the U.S., we bring a lot of risk originates in the U.S. that we bring to the London market. So, you know, when we were coming together with the team at McGriff, we saw an opportunity to bring in some of that business from third-party wholesalers. And so, You know, again, it's an important part of what Reed is focused on. So, you know, it's a revenue synergy for us at McGriff. And, you know, we're excited about those possibilities in 2026. So thank you, Greg. Andrew, next question.

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

Hey, great. Good morning. On the – thanks for the details on the Thrive expense process. program um just the math um 500 million dollars of of costs for 400 million dollars of savings that's uh i think that's a really good ratio versus many of your peers and maybe even you all historically so is there maybe you can on you know um usually like there's more uh more costs for uh for the for the savings ratio um any any kind of things you can to unpack on why you're going to get so much savings for that level of cost? And then also, historically, how much have you reinvested into the business on the savings? I know you said you mentioned you're going to reinvest some as well.

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

Sure. Hi, Mike. So, Mike, we've as you pointed out, we've got a pretty good track record in terms of payback in these programs. And as I described, this is a lot of continuation of work that we've been doing. I talked about we've got a meaningful amount of low-cost location penetration today, and this is extending it. So a lot of the costs are just associated with severance and just the costs associated with transitioning work and Other things we're doing just to simplify the organization. So we've got a pretty high degree of confidence in the savings and charges, although over time these estimates might move a little bit. But yeah, we're going to get good payback on the investment that we're making.

And the majority will go to earnings.

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

Okay, great. My quick follow-up is I'm honing in on organic in the U.S., probably on the RIS side. You know, Johnny, per remarks, you talked again about economic uncertainty, especially in the USA. You mentioned some unlawful and unethical business practices. You know, you talked about pricing likely decelerating a bit. So I guess you'd be, you know, you kind of kind of telling us we should be kind of expecting at least the US side of organic to be kind of running along the current trend line for the first in the near term.

Look, I guess first, the talent headlines over the summer were nearly 95,000 people. It's more than 90,000 people, $25 billion in revenue annualized for the company overall. Not a material impact at all. As it relates to the U.S., we're seeing a bit of hesitancy from our larger clients in the U.S., you know, like to think certainly as, you know, some of the possible tail risk scenarios around trade and the economy begin to come in a little bit that, you know, and I think you're beginning to see it a bit with, you know, obviously the pickup in the M&A market, but, you know, that things will clear up. But, you know, there's still a lot, you know, obviously out in the macro economy, there's still a lot to settle out from a trade perspective. But, Overall, I'm very pleased with our growth. I mean, we had 11% growth in the quarter. I think Marsh's gap growth was 16%, right? So, you know, absolutely terrific. You know, 4% growth at Marsh, 5% year-to-date. You know, again, given all the pricing pressures and other challenges in the economy, you know, I feel good about that. And I know we're positioned well and we're executing well in the market. Thank you, Mike. Andrew, next question, please.

Our next question comes from the line of Jimmy Buehler with J.P. Morgan.

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

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

Thank you, John. Thank you, Jimmy. Yeah, best quarterly growth in six quarters, but I would point out the comp was a one. And as Mark said, we did benefit from some favorable timing on things like success fees. So I do think we expect moderating growth in the fourth quarter. But overall, we're pleased and we think we're executing well in what is generally a slower market. As Mark indicated, we grew across all of our regions, fastest growth in Asia, but the Americas grew pretty well. And some of that is fueled by work on performance transformation, both top line and bottom line efficiency work, which tends to be a little bit counter-cyclical. From a practice perspective, Our consumer telecoms and technology practice, which we newly brought together at the beginning of the year, growing very, very strongly. Our insurance and asset management practice alongside our actuarial practice, which I've talked about a lot on these calls, working really well together, continuing very high growth. They keep up at this rate. They're becoming a real juggernaut. And our transportation and advanced industrials practice also went into double digits. On the capability side, customer innovation and growth. Interestingly, it's, you know, we see work in restructuring, we see work in finance risk, we also see work in customer innovation and growth going well. And I think some of that really rests on the work we're doing in our quotient platform around AI. I'm sure we'll talk about that maybe later on the call, but, you know, we're helping a lot of clients think through how to both enhance their capabilities and reduce costs driven by AI. And our sort of How do you increase your AI quotient as a client is how we came up with our quotient name, and that's how we go to market on AI. All of which is looking pretty good. And then just for the pipeline, sales continue at a decent rate. We go up and down every quarter, every month. But I'm pretty optimistic going through the rest of the year and into next year.

Terrific, Nick.

Thank you. Jimmy, do you have a follow-up? Jimmy, are you there? Maybe we lost Jimmy. There he is.

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

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

Thanks, Jimmy. Andrew, next question, please.

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

Hey, thanks. Good morning. Just had a question on the Thrive program. Thinking through some of the $400 million of gross saves and how you're thinking about whatever portion of that you're going to reinvest, I guess I'm thinking, how are you thinking about what you will be reinvesting in? I think some of your peers have been a little bit more front-footed on adding talent. You mentioned, John, in your prepared remarks, some noise with your existing talent base. You guys have been prolific in the past on adding talent. We haven't heard much on that front, especially given McGriff. But is that something where you guys think about adding talent heading into next year using some of the gross cost saves associated with the Thrive program?

Yes. That's where the investment will come. The investment will also be in accelerating our AI journey as well. You know, I... We've continued to invest in talent, both organically and inorganically. It doesn't necessarily generate the headlines that you see through the tactics that others use, but we've continued to invest in 2025. Thrive is all about growth. David, I'm excited about Thrive and all the components of it. It's, by the way, not a strategic shift for us. nor is it about organizational or structural changes. We're always looking to improve. Our vision to be that most impactful professional services firm in the world, all these changes that we announced this week support that. We're very proud of our legacy brands, for sure, but we have the opportunity to build a new Marsh and simplify our story to show up in the market in a better connected way. I talked about the complexity you know, of the environment today. We didn't do this for today, but I think the timing of it, given the complex operating environment, is great. So, you know, we're going to showcase the unique attributes of the firm, the breadth of capability we have, the depth of our talent. You know, I talked about data. You know, part of what we're investing in is, you know, we've got a new data leader across the firm. We've got some exciting new tools around data ingestion that will accelerate data are already market leading analytics. You know, adding all this to a culture, you know, that is, as I said in my prepare remarks, team based and client first, you know, I'm really excited about it. BCS, you know, Paul Bestwick is, you know, an important, really critical leader in our company, bringing together ops and tech under his leadership and working with the business leaders that you know well from this call. You know, it's all about leveraging the best technology and automation across our businesses. And, you know, as Mark talked about in his remarks, optimizing that operating model. So, you know, we see a lot of possibility there. It will allow for more efficient CapEx across the company. And so there's a lot for us to dig into. And, you know, we're excited about how that can accelerate our growth over time.

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

Yeah. You know, again, you know, for the company overall, it's, you know, it's not, you know, not a, not an impact at all. Yeah. Like I think we have a 4% growth at Marsh in the quarter, you know, um, we have 5%, you know, year to date, given the pricing pressure. It doesn't feel like an economy that is better than 90 days ago. It feels quite uneven. You know, and I, you know, we'll see, obviously, you know, what happens. I think, you know, you saw a softening of labor markets, you know, in the quarter. And so, you know, it is quite uneven out there. And, I think, again, upmarket, which is where we see more softness in growth, we have a client on average that's being a bit more defensive in this environment. That's okay. As I talked about as well, I was trying to highlight while pricing may be down and the economy may be slowing and interest rates may be declining, the cost of risk, whether it's the Economies, exposure to extreme weather, the rapidly rising cost of liability in some markets, including here in the U.S., health care costs, those are big pressure points. Those are all increasing at a rate much higher than GDP. And, you know, that's good for our business over time. It may not be good for the overall U.S. economy, but that's, you know, that's a different story. But, you know, the demand, you know, for our services and helping clients navigate those issues, we'll be quite resilient. I'm very confident in that.

Thank you, David. Andrew, next question?

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

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

Yeah, it's a good question. I'll ask Martin to comment on it a bit, Rob. There's no question, it's a competitive market. In my prepared remarks, I talked about insurance ROEs being quite strong, and as a result, insurers are looking to grow, and they're looking to grow in an economy that's, again, uneven. and perhaps softening in, you know, in a few, you know, in a few places, you know, again, over time, you know, price will have to catch up with, you know, with the growth and risk. But, and I, you know, I would also note before I hand it off to Martin to talk about markets around the world, you know, we're, we're really, you know, working with our clients about thinking, you know, medium to longer term. Again, there's a mismatch between price today and lost cost inflation and, I think the earlier that our clients can get ahead of that and manage proactively, they'll be better positioned when markets do turn. But Martin, maybe you could talk about rates overall around the world.

Well, I'll just put it in the context of our international growth, which I was very pleased with during the quarter. It's 5% on top of 7% in 3Q24. And underlying growth year-to-date is 6%. Asia Pacific growing 6% in the quarter and 5% year-to-date, and really strong performance there from Japan and Korea where we've been investing and see great opportunities for us to play a bigger role in the market there. EMEA grew 5% and 7% year-to-date with really interesting country growth in the United Arab Emirates, Saudi, India, France, Spain, all growing in nearly double digits. Latin America grew 3% on top of 8% in 3Q24. slightly impacted by 18-month policies in 3Q24. But year-to-date, Latin America grew 5%. So in the course, it saw strong double-digit new business growth, capital markets growth across international, credit specialties and cyber, very strong growth. So we're very well positioned, confident in our strategy, and a lot of market share and opportunity for us to take. But you're right, the rates are slightly more down in international. So then outlier, I think, is the Pacific, down 11%. for the second quarter in a row. But we have a lot of share to take and great positions in our marketplace, and not overwhelmingly does rate play through to our revenue at all. Thanks, Warren. Rob, do you have a follow-up?

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

The challenge in your question is what is the average margin expansion rate? But look, yeah, I mean, we all know we're operating in a lower growth environment, you know, for sure, you know, at least in 2025. And, you know, we'll, again, talk about 2026 in January when we meet then in about 90 days. But there's no question Thrive will help, you know, support margin expansion, you know, into the future and, We're excited about some of the things we've learned already as Paul has worked with the teams from each of the businesses in bringing them together and really leveraging the best technology, the best solutions. Mark talked about talent, moving talent to our capability centers that are lower cost. And again, as we continue to deploy AI technology, in our workflow, I'm very excited, you know, about the possibilities around that. And, you know, we've got 18 consecutive years of margin expansion when we round out this year. So, you know, we've got a track record, you know, through economic and, you know, E&C cycles to, you know, to continue to deliver. So, again, you know, Thrive will be an important element and an important part of our focus as a leadership team over the course of the next couple of years. So. Thank you, Rob. Andrew, next question?

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

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

Yeah, thanks, Brian. So, by the way, just a quick update on McGriff. You know, everything's moving, you know, according to plan. you know, continue to be incredibly excited. I mean, this is a passionate, talented group of people coming together within our MMA operation. And, you know, as I mentioned before, you know, Reed Davis working with Dave and Matt Stadler on some, you know, really important opportunities for us as a company. So, you know, very, very pleased about that. You know, Do we have the appetite and ability to do a larger scale deal? Absolutely. I think it's more likely that we'll continue our string of pearls approach to the market. But again, we work hard at examining all possibilities and it's not just about getting bigger, of course, it's about getting better and finding the right fits for us on a cultural basis. We remain very active in the market. We've done a bunch of small deals this year. It was a quiet quarter in the third quarter, but again, we're working on a number of different possibilities, and we'll continue to do that. In terms of the bid-ask spread, given the slower growth environment, I don't know, maybe the bid-ask spread might be widening. It's kind of what comes to mind, at least in a couple of conversations that we've had And not just in insurance brokerage, I think, you know, in the MGA market as well, you know, I'm seeing some dynamics there emerge. So anyway, I think PE buyers, you know, seem to be maybe more willing to, you know, to pay a higher multiple than some strategics. At least that's what, you know, I'm taking for the moment, so. Anyway, I hope that's helpful, Brian. Yeah, follow-up?

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

Yeah, you know, we won't report separately on McGriff's organic or, you know, or for that matter, MMA's either. It's an important part of our U.S. business, so... But it's a huge part of our U.S. business with MMA now more than $5 billion in annualized revenue. What we see every time we do a deal pretty much is slowing organic in the first couple of quarters, two, three quarters. It's a lot for people to digest. System changes, even broader technology changes, new laptops, all this kind of stuff. Some cases, real estate changes. So, you know, our folks can be a bit can be our new folks can be a bit distracted during that period of time. You know, that's what we've seen, you know, with McGriff as well. But but we expect it to be a really important contributor to MMA as we as we go forward. And, you know, as Martin and I both mentioned, you know, MMA had a really good quarter in in the third quarter. And, you know, we expect that to continue. So we feel great about our position in the middle market in the United States. So. Thank you, Brian. Andrew, next question, please.

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

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

Good morning, Elise. You know, again, we'll talk about 2026 in 90 days. we thought this year was quite prudent. You know, when you, you go back to 2024, our, you know, our guidance was mid single digits or better, you know, and as we were, you know, doing planning this time, you know, 12 months ago, you know, looking at a likely, you know, softening insurance and reinsurance market, looking at, um, you know, likely a, uh, uh, you know, impacts from fiduciary income in likely, um, softening economy. And again, remember, we're coming out of a, unusual period of, um, you know, growth and all the stimulus and in markets, um, all over the world coming out of, out of a pandemic to us, it was quite prudent. Um, I think we caught a little bit of criticism for it, um, you know, particularly throughout the first quarter, um, but to, to guide to mid single digits, um, underlying revenue growth. And so, um, you know, we'll, we're, we're doing all that work right now for, you know, for next year. Um, you know, as it relates to insurance markets and reinsurance markets, again, you know, as a, um, you know, it's, it'll be a year again with, you know, more than a hundred billion dollars of insured cat, um, again this year, um, you know, pretty quiet, um, you know, third quarter, you know, I, I suspect you'll see some of that in the underwriter underwriting results, you know, that are released over the course of the next few weeks, but, uh, um, you know, and there's still obviously a quarter to play, but, uh, you know, it, it looks to us like if a January one in reinsurance and, um, you know, it was likely to look like, you know, it did, um, entering about 12 months ago. So, so anyway, that's what we see at the moment. But again, we'll give you a broader update, um, and a lot's happening in the world too, right? So, you know, things continue to evolve. It's a very dynamic and complex, um, environment. Do you have a follow up Elise?

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

Yeah, thanks. I don't like the way you said get rid of, Dale. We love our legacy brands. We're quite proud of them and what they've represented in the market. The reason, by the way, there's a transition period of 2026 is to make sure that we transition the equity in those brands, in Guy Carpenter, in Mercer, into the new Marsh Brands. We're going to build a new Marsh Brand. And what that's about, it's not about cross-selling per se. We cross-sold before and we actually cross-sell quite a bit. It's an important part of how we show up today. But it's not about a cross-sell program. But it is about simplifying our story, showing up in a more connected way to our clients. Too many markets aren't aware of the breadth of capability that we have, some of the unique attributes of our firm, the depth of talent, again, the vast data set, market-leading analytics, and building that brand in the market and showcasing our talent and our culture, the team-based approach that we take. We're excited about what that can mean for our colleagues, we're excited about what that means for our clients, and we're excited about what that means for shareholders. It's obviously a decision we didn't take lightly. We've been working towards this for several years. We've aligned around a common purpose inside of the company, a common colleague value proposition. We've brought together the operations and technology teams, and we have a joined-up strategy. I can tell you it was a celebration in the building here over the course of the last couple of days. Our colleagues are excited about it. um you know they see the possibilities in the future and so you know we look forward to delivering for you know for our key stakeholders and your next question please our next question comes from the line of alex scott with barclays hi thanks for taking it i wanted to come back to the thrive program and i guess

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

Alex, I'm not sure I see it as a meaningful impact. We have had technology teams, or excuse me, operations teams in each of the businesses. Our M&A activity from time to time crosses businesses, particularly at Marsh and Mercer, but for the most part, or actually I should say Marsh and Guy Carpenter too from time to time, but for the most part, they're within each one of the four businesses. As I said before, we continue to be very active in the market. We're more likely to continue to do smaller to mid-sized deals that make us better in markets that we're underpenetrated. We're looking for businesses that are well-led, have strong growth fundamentals, and are a good cultural fit for us. And we've been really successful at building value in that way. So we're going to continue to get at it. Do you have a follow-up, Alex?

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

Yeah, look, we're, as I said earlier, very excited about how we're positioned in the middle market. We've got more exposure to that market segment globally. It can be a bit uneven country to country, but globally now, we have more exposure. We've learned a lot from building out the MMA business over the last 15 years and how we can perform effectively in that market segment. And at a high level, we bring real scale benefits to, I don't want to oversimplify it, but in many cases, you've got a lot of relationship selling carrying the day. And while we're good at that, we can also bring, you know, great analytics, great specialty capabilities, a global reach that, you know, is unique in those markets. And so we continue to be excited about that. We bring all those things in the, you know, in the large account, you know, market as well, you know, we're higher penetrated there. So, you know, it's about finding new ways to, you know, to advise clients. And, you know, we've, We didn't talk about AI a lot on the call, but Centrisk, a great example, where really helping clients think through supply chain risk and exposure to global trade negotiations. So an example of innovation that we bring to a market that we penetrated well. Thank you, Alex. I appreciate that. Andrew, I think it's time to wrap up. I want to thank everybody for joining us on the call this morning. In closing, I want to thank our colleagues for their hard work and dedication. I also want to thank our clients for their confidence and trust in our teams. And I want to thank you all very much for taking the time to join us, and we look forward to speaking to you again in about 90 days.

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