Marsh & McLennan Companies, Inc.
Q1 2013 Earnings Call Transcript

Published: 2 May 2013

[Operator:]

Welcome to Marsh & McLennan Companies Conference Call. Today's call is being recorded. First quarter 2013 financial results and supplemental information were issued earlier this morning. They are available on the company's website at www.mmc.com. Before we begin, I would like to remind you that remarks made today may include statements relating to future events or results which are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to inherent risks and uncertainties and a variety of factors may cause actual results to differ materially from those contemplated by the forward-looking statements. Please refer to the company's most recent SEC filings, which are available on the Marsh & McLennan Companies' website for additional information on factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. I'll now turn this over to Dan Glaser, President and CEO of Marsh & McLennan Companies.

[Daniel S. Glaser:]

Good morning, and thank you for joining us to discuss our first quarter results as reported earlier today. I'm Dan Glaser, President and CEO of MMC. Joining me on the call today is Mike Bischoff, our CFO. Also, I'd like to welcome our operating companies' CEOs

[J. Michael Bischoff:]

Thank you, Dan, and good morning, everyone. In the first quarter, revenue was $3.1 billion, an increase of 2% on both the reported and underlying basis. Adjusted operating income rose 16% to $615 million, our highest level of quarterly profitability in almost a decade. And the consolidated margin increased 230 basis points to 19.7%, again, our highest level since 2004. GAAP EPS rose 17% to $0.74, and adjusted EPS grew 16% to $0.73. As we discussed last quarter, to assist in building broader client relationships, Mercer has aligned its Benefit Administration services, formerly described as Outsourcing, within its principle business lines, thus positioning Mercer's capabilities around Health, Retirement, Talent and Investments. Also in the first quarter, a significant portion of Marsh's U.S. Consumer business was transferred to Mercer. Last year, this business had $231 million of revenue, operating income of $40 million and close to 1,000 colleagues. Realigning these 2 businesses within Mercer enables us to concentrate our efforts and expertise in a rapidly shifting landscape, including the convergence between traditional benefits and voluntary benefits. Mercer also used the consumer call center operation to support Mercer Marketplace, its healthcare exchange. The supplemental schedules in our press release provide quarterly revenue, operating income and margins for the past 3 years, reflecting the Consumer and Outsourcing reclassifications. MMC is delivering excellent operating and financial results while continuing to invest for the future. As an indication of this, our capital expenditures have grown substantially in recent years, from approximately $270 million in 2010 to $320 million last year. And CapEx is expected to be approximately $350 million this year, including over $120 million in the first quarter. We're constantly investing in each of our businesses. Throughout the company, we have been creating new products and tools to enhance client service, replacing legacy systems with next-generation technology, improving efficiencies and developing new operating platforms that increase our global capabilities. Investment also includes recruiting and retaining the best talent in our industries. We believe the investments we are making will continue to create significant shareholder value. Investment income in the first quarter was $21 million due to the winding up of Trident II, which accounted for the vast majority of our investments in private equity. We expect only minimal income from our Investment portfolio over the remainder of this year. However, while we no longer have an investment in Trident III, we have retained performance fees related to the creation of this fund in 2003. Recognition of these deferred fees will only occur as investments are harvested and the performance fees are no longer subject to callback. Timing of this is unknown and is not controlled by MMC. Interest expense decreased to $44 million in the first quarter due to a reduction in debt. And our next debt maturity of $320 million is in July of next year. Corporate expense declined to $45 million in the first quarter on an adjusted basis. Although there is variability quarter-to-quarter, we believe this is a reasonable quarterly run rate. Cash utilization. As you know, our cash utilization is typically greatest in the first quarter, primarily due to the payment of incentive compensation awards. Additional uses of cash in the quarter included

[Daniel S. Glaser:]

Thank you, Mike. And operator, we are ready to take questions.

[Operator:]

[Operator Instructions] And we'll go first to Greg Locraft with Morgan Stanley.

[Gregory Locraft:]

I wanted to just ask about the operating margins, which were excellent in the quarter, relative to what we were thinking. And I think in your commentary, you mentioned that we won't see the same level of increase for the rest of the year. So can you first maybe just talk a bit about how you did so well? And then number two, can you maybe clarify a bit on how we should think about that for the rest of the year?

[Daniel S. Glaser:]

Sure. Well as we've shown over the past 5 years, we've pretty much aligned expenses and revenues. So when we saw and spoke with you in sort of the back half of last year or going into the back half of last year, we began to anticipate some revenue deceleration, which we saw not only in RIS but more particularly in the discretionary spending areas of our Consulting businesses. And so we started -- we always actively manage expense, but we were -- we definitely keep a very watchful eye on expenses, particularly in this kind of macro environment. And so we started decelerating our expenses as well. And if you look even back to last year, the third quarter and the fourth quarter, we're decelerating, and obviously, in this quarter, where we're overall flat on the expense side. We're feeling a little bit better looking at the future, little bit more optimistic on revenue. But we just wanted to temper the big margin expansion, so there's not an expectation. Because, obviously, we don't know what the top line is. We're out there building our top line. I won't say emphatically that we won't deliver that kind of margin expansion because I don't know what the top line is going to be. But I can say that if we operate the top line like we do right now in that sort of 3% or 4% range, then we would not sustain the 230 basis points quarter-after-quarter.

[Gregory Locraft:]

Okay, that's great. So you're really flexing the expenses to the revenue outlook and you're feeling a bit better there from this point forward. Obviously outside of Oliver Wyman, I would imagine.

[Daniel S. Glaser:]

No, even within Oliver Wyman as well. I'd be happy to hand it over to John to give you a little bit more color about Oliver Wyman and what they feel their prospects are. John?

[John P. Drzik:]

Sure. So if we look at Q1, before talking about the outlook, I mean, our weak performance in Q1 had stemmed from the challenging business conditions we faced in Q4 and in early Q1 this year, where in Europe we had a recessionary economic climate persisting. And in the U.S., business confidence was weak largely due to political uncertainties around the fiscal cliff, the sequestration and sort of stopped awards from discretionary spending, reducing demand for Consulting. So these weak -- it was a weak sales environment for us in Q4 last year and early part of this year and that translated into weak revenues, particularly in the early part of Q1 this year. Now we've seen our sales pick up during Q1 and our business performance has improved each month of the quarter. March was our best month. So looking ahead, we expect Q2 to be better than Q1 based on our current sales and pipeline activity and expect to return to growth in the second half of the year.

[Gregory Locraft:]

That's great color. And then last is just on the buybacks. It was nice to see the buybacks in the first quarter. As you said, you hadn't done that for almost 10 years. Can you talk about a bit about your appetite for buybacks at the current levels and what we should be expecting?

[Daniel S. Glaser:]

Sure. Well, I mean, we have increasing free cash flow over the last couple of years. And as we grow earnings, we expect that to continue. And so when we look at uses of cash, we fund some internal investments. But that's fairly rare to get those lumps, because frankly, we run most of our investments through our P&Ls anyway so they don't appear in extra uses of cash. Our dividend is really sacrosanct and we maintain a strong dividend. And then we've got an active pipeline. So we look at acquisitions, really, all over the world. We don't do that many deals, but we certainly look at a lot of them. And we can't really time that out for you. But share repurchase, to us, we believe in the company. So when we have available cash, we will buy back our own shares. Next question.

[Operator:]

And we'll go next to Larry Greenberg with Langen McAlenney.

[Larry Greenberg:]

I was wondering if you could just elaborate a little bit of what you're seeing on the reinsurance side. You, Dan, you referenced softening prices a little bit. And then, vis-à-vis capital market solutions, how you're positioning Carpenter to be a player in that.

[Daniel S. Glaser:]

Okay. So Alex, over to you.

[Alexander S. Moczarski:]

Okay. In the first quarter, I wouldn't say that there was much effect from rates. Obviously, accounts that we have were affected by Sandy. We saw some stiffening of rates. And in general, rates had a benign effect on the quarter. But certainly, this downward pressure is, one, more capital; two, less cap losses; and three, stronger balance sheets. And so we're expecting to see some downward pressure. But interestingly enough, if there's cheap alternative capital, you look at your capital. We have a trenching tool, and look at the cost of capital. Actually, we may be buying -- some of our clients are actually buying more reinsurance than they bought before. As regards -- how do we deal with this new alternative capital coming in? Well, we've been sort of fairly good at that in the past. We've had a lot of success with our product -- our quill product. And two, we understand that we need to continue to expand our capabilities there. We have a pipeline of hires who understand that business better, understand the appetites of the capital that's coming in. And so we certainly are focused on it, we want to embrace it. And we think that our value to our clients is the advice we give and we'll continue to be valuable.

[Larry Greenberg:]

Great. And then just quickly, Dan, you just talked about buyback. But I'm just curious, what drove the decision to repurchase shares in the first quarter?

[Daniel S. Glaser:]

Mike, you wanted to take that?

[J. Michael Bischoff:]

Yes, thank you, Dan. Larry, as you know, we ended last year with $2.3 billion on our balance sheet in cash and cash equivalents. And so not only was it robust overall, but we were very effective over the course of the third, fourth quarter and early part of the first quarter, of bringing back a lot of that cash into the U.S. on a very tax-efficient basis. So as an outcome of those activities, we had more flexibility in the first quarter. And even though we had a lot of uses for the cash, we felt very comfortable in repurchasing 100 million shares in the quarter.

[Daniel S. Glaser:]

Next question?

[Operator:]

And we'll go next to Brian Meredith with UBS.

[Brian Meredith:]

I'm wondering if you could give little bit more color on what's going on with Mercer, particularly in the Retirement area and the Talent area?

[Daniel S. Glaser:]

Julio?

[Julio A. Portalatin:]

Sure. Thanks for the question, Brian. As you saw, and we talked about in the past, in the Talent area, we have there the highest mix of project work consultancy in the globe, which is, of course, more sensitive to economic cycles and discretionary spending decisions of our clients. And there's no question that you can see that those types of decisions by our clients are being very defensive in the days that -- of the quarter and probably for us, in days ahead as well. But look, the strength of Mercer, though, is its diversification. We have significant other businesses that, of course, have ancillary and absolutely repeatable revenue streams. And those that performed very well, as we mentioned already, in the Health area and the Investment area, we saw some really good growth there. And now it's even, off of some very powerful growth that we had in the first quarter 2012 in those areas. So we're feeling pretty comfortable about our prospects to be able to maximize our diversification of our portfolio, so we can continue to grow and also improve profitability.

[Brian Meredith:]

Great. And can you give an update on how the healthcare exchange has gone?

[Julio A. Portalatin:]

Yes, sure, absolutely. Lots of activity to report there. We recently announced a pretty impressive lineup of participating carriers for Health, sponsored, ancillary and voluntary product choices and are in active with numerous firms who are considering Mercer Marketplace for their employees in 2014 and some in 2015. So firms like Aetna, Cigna and United Healthcare, Humana and Anthem [ph] have decided to participate in our core medical offering, while organizations like Allstate and Met and many others who offer voluntary benefits such as P&C products, ID, theft protection, legal coverage and, of course, the always offered dental and vision and much more. So our goal was to have the most flexible and complete solution in the market for companies of virtually all sizes. And Mercer Marketplace has proven to be just that. We can offer companies a wide range of benefits and carrier choices to offer to their employees. Now we offer employees an excellent buying experience. We're pretty excited about the prospects.

[Brian Meredith:]

Are you generating revenues out of it yet? And when do you expect to start seeing revenues?

[Julio A. Portalatin:]

No, this is -- the enrollment period for 2014 will start in the fall. So any revenue will fall into '14, not '13.

[Daniel S. Glaser:]

Next question, please.

[Operator:]

And we'll go next to Dan Farrell with Sterne Agee.

[Dan Farrell:]

I just want to -- I wonder if you could talk a bit more about the margin improvement efforts within the Consulting business. You've had some very nice success there over the past year, and I've been particularly impressed with this quarter, given the weaker organic growth. But I'm wondering, is this -- how far along are you in all the stuff that you've wanted to do there? How much more stuff do you have to do that's in your control? So maybe just give us an overall update on that.

[Daniel S. Glaser:]

Okay. Well, I'll start with that and ultimately hand over to Julio to give you a little bit more color. But we started, really, maybe 18 months ago, talking about how we thought that the Consulting business could be improved on a profitability basis. And that we could take some of the disciplines and approaches that we were using in the RIS side of the business and apply them within Consulting. And we actually moved some people and we used some technology, changed the structure to where it was more aligned with both a geographic and a line of business matrix within Mercer. Oliver Wyman stayed on a line of business basis because it's a different kind of structure and market, and we started the march. And we talked about that, really, from a couple of years ago, and our belief is that we can, similar to the RIS side, manage expenses aligned with what kind of revenue we're seeing and achieve some significant gains in margin over a long period of time. Now, consulting is a little lumpier than RIS. It's got less recurring revenues than RIS, so it might not be quarter by quarter, every single quarter. But over a long period of time, we expect those margins to continue to improve. Now, I'll hand it over to Julio to give you a little bit more color.

[Julio A. Portalatin:]

Thank you, Dan. We're pretty pleased with the continued margin expansion that we're seeing at Mercer. Our top line growth combined with our focus on cost discipline is really what's driving the results. We're going to state this, it's within -- a bit defensive in some places and also continue to invest in others. We have a significant amount of expansion that we expect in the years to come that will hopefully allow us to continue to calibrate our expenses to our growth on revenue. And some of those, you've heard me talk about before, whether it's expansion in the growth market, whether it's expansion in our breadth of products that we have to offer, in our distribution points like Mercer Marketplace and other investments we're making in technology, client-facing technology, especially, I think will pay dividends for us in the future and allow us to continue to calibrate appropriately with our expenses. So we will continue to be disciplined and defensive in some areas, invest in others. And of course, we don't anticipate any additional restructuring. As you know, we announced some in the fourth quarter of last year, but we do expect that as our year goes on, that we'll continue to invest in those things that will give us the top line and expense efficiency that we need.

[Daniel S. Glaser:]

Next question, please.

[Operator:]

And we'll go next to Ray Iardella with Macquarie.

[Raymond Iardella:]

Dan, maybe just touching on your comment about Oliver Wyman making some moves to protect profitability, just curious if you can give me a little bit more color on those actions.

[Daniel S. Glaser:]

Okay. I'll address it a little bit, but I think it would be better for me to hand it off to John, who could give you more details. We run our businesses differently. We have 2 segments. And we look at Consulting in a different way than we look at RIS. And so, the models are a bit different. And as we talked about, about a year ago when Oliver Wyman's growth started to come off, we were saying that, that was going to be more of a revenue event than an earnings event. And then Oliver Wyman had a more fungible business model, which is sort of best-in-front in that they could fairly easily move people from one part of the world to another part of the world, so it's not that they carry a lot of stranded cost on expense. And so, let me just hand it over to John to give you some more flavor.

[John P. Drzik:]

Yes, I think there are few other factors behind us protecting our margin in the first quarter. I think, first, given the weak conditions we saw in Q4 2012, we expected Q1 would be challenging from a revenue standpoint. So we took that actions to constrain our operating expenses in that environment. The second point is that our compensation model is very performance sensitive and since it's a major part of our expense base, that part of the expense basis flexes naturally down with our weaker performance. And then finally, I think coming into 2013, we expected our operating profitability of our business portfolio to be stronger. So there were a number of expense investments, for example, that matured through the course of time. And so, the combination of those factors enabled us to protect our margin despite the revenue decline.

[Raymond Iardella:]

Okay, that's helpful. And then maybe, I don't know, if Peter or Dan, do you want to address this, but the new business in Marsh, is that -- I mean, how much of that is being generated out of the U.S. versus internationally? Is there any sort of flavor you could give in terms of that number?

[Daniel S. Glaser:]

Sure, thanks. Let me hand it over to Peter.

[Peter Zaffino:]

Sure, Ray. It's actually quite balanced, the new business, it has been for the last year. The 2 regions where we had the strongest new business in the first quarter were actually the U.S. and Latin America. So while we're seeing from strategic investments, very strong growth in the emerging part of the world, we're also seeing very strong new business for the U.S. And when you look at last year, as Dan opened up with, we're the top comparable. So to get stronger new business year-over-year, really is a tribute to the pipeline and how we're executing.

[Raymond Iardella:]

Okay. And last one, a numbers one, if I can squeeze it in, for Mike. The CapEx you talked about for 2013, that was $350 million. Is that correct?

[J. Michael Bischoff:]

That's absolutely correct, even including, I think, the $126 million in the first quarter. We typically track around $75 million to $80 million a quarter CapEx rate. You can see in the first quarter of last year, it was about $25 million below it. And in the first quarter, it's above that. But we think then, over the course of the next 3 quarters, it will track more like we normally would see in the neighborhood of $75 million to $80 million, realizing it could be variable quarter-to-quarter.

[Daniel S. Glaser:]

Next question, operator?

[Operator:]

And we'll go next to Michael Nannizzi with Goldman Sachs.

[Michael Nannizzi:]

Most of my questions have been answered. I guess one question. Can you talk a bit on the U.S. organic and just kind of the renewal book there and kind of what sort of trends you're seeing? Just get some color and just one quick follow-up.

[Daniel S. Glaser:]

Sure, Mike. I'll hand it over to Peter.

[Michael Nannizzi:]

And that's on the risk side, I should say.

[Daniel S. Glaser:]

Sure.

[Peter Zaffino:]

Sure. For the U.S. core business, as I said, the new business has been strong, but the biggest contributor is really the renewal retention, revenue retention. And so a strong rollover from last year of new business, very strong client retention. I would say the third factor is modest pricing improvement. So when we look across the different segments within the U.S. business, more of our clients are receiving rate increases than are receiving rate decreases. The lines of business that probably are seeing the biggest increases are D&O more on the financial lines, access and umbrella, workers' compensation. So we have seen some benefit, not much, but some benefit, in the U.S. but it's been offset by the International where there's more headwinds.

[Michael Nannizzi:]

So in that environment, I mean, does the size or scale or, how do you view the reasons behind the renewal book sort of improving in quality?

[Peter Zaffino:]

I think the biggest component or lift is really the strong retention that we have for client and the strong rollover we have from the production pipeline. So again, strong new business last year, rollover, more clients, strong retention is really what the biggest contributor is.

[Michael Nannizzi:]

Great. And then, I just -- one question, maybe, Dan. Obviously, Berkshire has made a couple big announcements recently. Can you just talk about how either of those either impact your business or how you perceive their impact on the market overall?

[Daniel S. Glaser:]

Sure. I'm not going to get into the weeds of what other companies are doing in the market. I think it's fair to say that there is plenty of capital in the insurance industry, and that our clients are well-served, and we are good intermediaries to find that capital for them when they need it. And so at the end, the insurance business is pretty healthy. Insurance companies have done pretty well, notwithstanding the big cats of 2011. And as you look at shareholder surplus and that sort of thing, it's an appealing business for many. And so capital is continuing to rise. And on that basis, we'll continue to work with our clients to access whatever capital they need.

[Operator:]

And we'll go next to Adam Klauber with William Blair.

[Adam Klauber:]

Within the Risk P&C business, to supplemental payments, commissions, do they come in more in one quarter than another, or are they pretty evenly spread?

[Daniel S. Glaser:]

Peter?

[Peter Zaffino:]

They're pretty evenly spread. There's no one quarter where we would benefit more than another for any fee or commissions from insurance carriers.

[Adam Klauber:]

Okay, okay. As far as Europe and the RIS services, do you expect that business to flatten? Or as the environment isn't getting better, the potential of that just continues to drift off?

[Daniel S. Glaser:]

So you're talking about our EMEA segment?

[Adam Klauber:]

Yes.

[Daniel S. Glaser:]

Okay. Peter?

[Peter Zaffino:]

That's held up very well. I mean, certainly, we're very cautious, as Dan said, from last year looking into the economic conditions within Europe and other parts of the world. But for us, most of our European countries within EMEA grew, albeit modest. And it's been a real steady performer. And so, there's no signs to suggest that it's going to fall off from its track over the last -- for 6 quarters.

[Daniel S. Glaser:]

One thing to bear in mind, some countries in Continental Europe are sort of weighted toward renewals in the first quarter. So a good start to the year usually signals a decent year for them.

[Adam Klauber:]

Right, right, okay. And one final question on the health exchanges. I know it's early, but how's your pipeline looking for the 2014 enrollment?

[Daniel S. Glaser:]

Julio?

[Julio A. Portalatin:]

The pipeline is very strong. As you can imagine, we have client and prospects who are very interested in having deep discussions about the Mercer Marketplace alternatives. Many of these conversations are leading to work that may not be directly related to Mercer Marketplace, but thus, we help our consultancy with these prospects and clients as well. So the pipeline is strong. Many are making decisions and we're consulting them on whether or not 2014 is the right timing or 2015 is the right timing for them. So we'll see over the coming months as to who comes on in 2014 and who comes on in 2015.

[Daniel S. Glaser:]

Okay. Operator, I think it's time for 2 or 3 more questions. So are there any other questions?

[Operator:]

Yes, sir. We'll go next to Elyse Greenspan with Wells Fargo.

[Elyse Greenspan:]

Most of my questions have been answered. But just in terms of more getting a flavor for the organic growth. I know within Oliver Wyman, you had mentioned seeing trends pick up as we move throughout the quarter. And would you say maybe the same if you're looking in terms of RIS? And also within Mercer, did you see trends kind of improve as we got later on in the quarter? Was it more consistent throughout the 3 months?

[Daniel S. Glaser:]

I think one thing, when you think about RIS and about 70% of Mercer tends to be recurring revenue. So the trends are rarely, do you see acceleration. You basically look at year-over-year in terms of what the renewal date was in the previous year. So I think that Oliver Wyman has often been a good canary for us in terms of determining where the macro environment is going. And Oliver Wyman is anticipating some better trends, particularly towards the back half of the year.

[Elyse Greenspan:]

Okay. And then also in terms of the Healthcare investment, from one of the questions earlier, you had said we would more see some of the revenue from those exchanges come up in 2014. Do you anticipate, when we gear up towards 2014 enrollment period later this year, seeing a little bit of a pickup in expenses there that might hit later in the year and then see the revenue early next year? Should we see that maybe impacting margins a little bit later on this year?

[Daniel S. Glaser:]

Okay. So let me answer that a little bit, and then I'll hand it over to Julio. I think one thing you have to bear in mind when there's such a change like we're seeing in healthcare reform is that the initial waves are largely around existing clients making decisions. And certainly, we're talking to a number of prospects. But most of our time is serving customers, serving existing clients. And so when you think about, okay, if a client may elect to go onto the exchange or they may elect to stay out of an exchange and buy their insurance in a traditional way. So I think at least in the early waves, you have to consider that these are different choices that a client would have. And over a long period of time, what you'll see on successful exchanges will be that they'll be able to build some share because of the quality or breadth of their exchange. Julio?

[Julio A. Portalatin:]

In the first couple of years, we don't expect a significant impact on margins or expenses, quite frankly, as it relates to the exchange in Mercer Marketplace, in particular. I would expect to, obviously, have margins that are more in line with what we're seeing today in the business as years out develop. So I wouldn't expect a little lumpiness in this period of time.

[Daniel S. Glaser:]

Okay. Operator, I think we can take 1 more question.

[Operator:]

And the final question will come from Charles Sebaski with BMO Capital Markets.

[Charles J. Sebaski:]

Had a question about Guy Carpenter and some of the organic growth. I was wondering if -- how much of the growth in the quarter came from one-time transactions, capital markets alternative as opposed to sort of the traditional renewal book?

[Daniel S. Glaser:]

Okay. Let me address this slightly and then I'll hand over to Alex. I just want to make the point that Guy Carpenter grew 7% organically in last year's first quarter. So they're comparable, with a pretty high comparable, and they've done pretty well against that comparable. Alex?

[Alexander S. Moczarski:]

Clearly, at the beginning of the year on the cap side, we'll be oftentimes selling products which won't necessarily be renewed. But we've been able to do that well. And the bulk of our business continues to be renewable business. And what we've done is we've increased discipline around client service, improved advice, as well as a very focused new business approach. I think we've been able to keep the momentum.

[Charles J. Sebaski:]

Okay. I was just wondering if there was any like large one-time capital market events that happened?

[Alexander S. Moczarski:]

No. No.

[Charles J. Sebaski:]

No? Okay. And just one follow-up. I was wondering if there was any additional color on the MMA front on the agency business and how that's looking.

[Daniel S. Glaser:]

Sure, absolutely. Peter?

[Peter Zaffino:]

Yes. The MMA platform is very exciting. We're now approaching almost $500 million in annualized revenues. The acquisition pipeline is quite strong. And again, we don't report in the segments, but they had a very good quarter in terms of growth and profitability in margin expansion. So we're excited. They're actually very focused on how we invest in driving organic growth so it's not just the acquisitions that are going to drive value for MMA. We tend to do less acquisitions for a variety of reasons in the first half of the year. But again, excited about the pipeline and the prospects for future growth.

[Daniel S. Glaser:]

I would just like to thank all of you for joining us on the call this morning. I'd also like to thank our clients for their support of Marsh & McLennan Companies and certainly, our colleagues for their hard work and dedication in delivering such fine results. Have a good day.

[Operator:]

And again, that does conclude today's conference. We do thank you for your participation.