Welcome to Marsh & McLennan Companies' conference call. Today's conference is being recorded. Fourth quarter 2019 financial results and supplemental information were issued earlier this morning. They are available on the company's website at www.mmc.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 MMC website. During the call today, we may also discuss certain non-GAAP financial measures. For a reconciliation of those measures to the most closely comparable GAAP measures, please refer to the schedule in today's earnings release.
I will now turn the conference over to Dan Glaser, President and CEO of Marsh & McLennan Companies.
Thanks, Holly. Good morning, and thank you for joining us to discuss our fourth quarter results reported earlier today. I'm Dan Glaser, President and CEO of Marsh & McLennan. Joining me on the call today is Mark McGivney, our CFO, and the CEOs of our businesses, John Doyle of Marsh, Peter Hearn of Guy Carpenter, Martine Ferland of Mercer, and Scott McDonald of Oliver Wyman. Also with us this morning is Sarah DeWitt, head of investor relations. 2019 was a remarkable year for Marsh & McLennan. We completed the acquisition of JLT, the largest deal in our history, while delivering strong financial results and managing the global integration. MMC is well-positioned. Our talent, capabilities, expertise, and leadership have never been stronger. The addition of world-class talent at JLT complements our best-in-class teams at Marsh & McLennan.
While we still have work to do, we feel good about how the cultures are coming together. Nearly all our teams are now sitting together, and more and more we are in the market working as one. We finished the year with revenue of $16.7 billion, up 11%. This represents our highest annual top-line growth in 20 years and is a step change for us. On a run rate basis, we now have over $17 billion of annual revenue. We had an excellent year and are pleased that in the midst of the integration, we generated underlying growth of 4%, the 10th year in a row where our underlying growth was in the 3%-5% range. 14% adjusted NOI growth, 110 basis points of adjusted margin expansion, and 7% adjusted EPS growth, consistent with our guidance of modest dilution in the first year of the deal.
We met our capital management objectives to reduce our share count and increase our dividends by double digits. We are running ahead of schedule on acquisition-related cost savings. We now expect run rate savings of at least $350 million, and we will continue to drive for additional operating efficiencies. Overall, I am pleased with our performance in 2019. We consistently challenge ourselves to balance delivering for today while positioning for sustained growth in the future, even in an exceptional year like 2019. We continue to invest in Marsh & McLennan Agency, our fast-growing U.S. middle market brokerage business, completing five acquisitions in 2019, resulting in current run rate revenue of $1.7 billion, and we have a robust pipeline for 2020. We made additional investments in digital technology and analytics. We see further opportunities to leverage technology to expand in small commercial as well as streamline and automate our business.
We also see increasing opportunity to leverage the collective strength, expertise, and relationships across our businesses to deliver enhanced value to clients and drive growth. Lastly, 2019 saw the seamless transition of leadership at Mercer, with Martine taking over as CEO. Martine moved quickly to install new leadership in key areas, energize the workforce, and implement changes that streamline the operating model, create more efficiency, and enable better execution. As we conclude 2019, we emerge a stronger firm than we started out the year, with record revenue, record adjusted operating income, and record adjusted earnings per share. As we look to the future, there is significant uncertainty in the world given current global issues like geopolitical risk, negative interest rates, trade friction, extreme weather and climate change, pandemic risk, and cyber risk.
We come to the fore in these dynamic times by providing trusted support to our clients in the areas of risk, strategy, and people. Marsh & McLennan provided thought leadership on key global issues at the World Economic Forum in Davos. This marks the 15th consecutive year we produced the annual Global Risks Report together with the World Economic Forum. The report ranks the top global risks, and this year climate and weather-related risks created the greatest concern. Climate change was the most prominent issue discussed at Davos, and there is growing recognition of the urgency of both mitigation and adaptation. We are engaged with our clients across all of our businesses on helping them assess the impact of a changing climate. Mercer and Oliver Wyman led sessions on gender equality, longevity, responsible investment, and AI readiness. Despite all the uncertainty in the world, I am optimistic.
Business leaders continue to push for growth and investment despite near-term risks and fears about the longer-term implications of climate change. The perspectives and insights we provide on these topics are a reminder of the uniqueness of MMC and the value we bring to our clients. Let me spend a moment on current P&C insurance pricing trends. Pricing is firming across a wide range of geographies and lines. The Marsh Global Insurance Market Index saw an increase of nearly 11% in the fourth quarter, compared with 8% in the third quarter, 6% in the second quarter, and 3% in the first. Global property insurance and financial and professional lines saw the highest average renewal rate increases at 13% and 18% respectively. Casualty rates are up 3% on average, up slightly versus the third quarter.
Commercial auto and excess casualty continue to see rates rising, while workers' comp continues to see rates decline. Note that the Marsh Index skews to larger risks, which are seeing higher increases. Although middle market and small commercial insurance rates are up in certain geographies. Turning to reinsurance, the Guy Carpenter Global Property Catastrophe Rate On Line Index rose by 5% at the January 1 renewals. Total dedicated reinsurance capital increased by approximately 2% at year-end. Although renewal outcomes vary widely across individual programs, capacity is tightened in some stressed classes like commercial auto, E&O, medical professional, and general liability. The retrocession market continues to see meaningful increases in rate at January 1st, driven in part by trapped capital, a lack of new alternative capital entrants, and continued redemptions from third-party investors.
The overall global P&C insurance market is challenging, and we continue to work hard to deliver the best solutions for our clients. It is in times like these where our expertise and capabilities shine. Turning to the fourth quarter, we are pleased with our results. Our overall revenue growth in the quarter was 15%. Underlying revenue grew 3%, with growth in both segments. Marsh grew 3% in the quarter on an underlying basis, which is solid, but slower than the prior quarter as expected, due to a peak headwind on new business and a tough comparison to the fourth quarter of 2018. Guy Carpenter finished the year strong with 10% underlying revenue growth in the quarter. Mercer delivered 4% underlying revenue growth in the quarter, its strongest growth since the first quarter of 2018. Oliver Wyman declined by 2%, as we expected.
The overall fourth quarter saw strong adjusted operating margin expansion of 100 basis points and adjusted operating income growth of 17%. As we consistently say, it is important not to overemphasize a single quarter and rather look at performance over longer periods of time. Looking at the full year, we are pleased with our results. We generated strong overall revenue growth of 11% for the full year, with 4% underlying growth. We demonstrated top-line strength across our businesses while achieving the initial benefits of the integration. On an underlying basis, Marsh delivered solid growth of 4% for the second consecutive year. Guy Carpenter had a strong year with 5% growth. Mercer had 2% growth, and Oliver Wyman grew 6% for the year, despite the pullback in the fourth quarter.
Our adjusted NOI grew 14%, with overall margin expansion of 110 basis points for the year, marking the 12th consecutive year we have reported margin expansion. Adjusted EPS grew 7%, or 8% on a constant currency basis, consistent with our guidance of modest adjusted EPS dilution in the first year of the JLT acquisition. In sum, 2019 was an example of strong overall execution on multiple levels. As we look to 2020 and beyond, our future is bright. The addition of JLT enhances our competitive position. We are increasingly bringing our collective strength to clients, and we expect to see benefits from our investments in digital and technology. In 2020, we expect underlying revenue growth in the 3%-5% range, margin expansion, and strong adjusted EPS growth. With that, let me turn it over to Mark for a more detailed review of our results.
Thank you, Dan. Good morning. We are pleased with our fourth quarter results, which cap a strong year in 2019. Consolidated revenue increased 15% in the quarter to $4.3 billion, reflecting underlying growth of 3% and the continued contribution from JLT. Operating income was $592 million, while adjusted operating income rose 17% to $856 million. Our adjusted operating margin increased 100 basis points to 21.9%. GAAP EPS rose to $0.76, and adjusted EPS increased 9% to $1.19. Looking at Risk and Insurance Services, fourth quarter revenue grew 24% to $2.4 billion and was up 3% on an underlying basis. A good result considering the tough comparison Marsh faced with strong fourth quarter in 2018 and the fact that Q4 was JLT's seasonally largest quarter. Adjusted operating income increased 31% to $550 million, and the adjusted margin expanded 200 basis points to 25.7%.
For the year, revenue was $9.6 billion, an increase of 17%, with solid underlying growth of 4%. Adjusted operating income for the year was up an impressive 17%, and our adjusted operating margin in RIS increased 60 basis points to 26.3%. At Marsh, revenue in the quarter rose 23% to $2.2 billion, increasing 3% on an underlying basis. In U.S. Canada division, underlying growth was 4% for the quarter and 5% for the full year. This marks the seventh consecutive quarter of 4% or higher underlying growth for U.S. Canada. In the quarter, the international division had underlying growth of 1%, with Asia Pacific up 7%, Latin America up 2%, and EMEA down 1%. For the full year, revenue at Marsh was $8 billion, an increase of 17% or 4% on an underlying basis.
Guy Carpenter's revenue was $152 million, an increase of 10% on an underlying basis for the quarter, representing an outstanding finish to a strong year. The growth in the quarter benefited from strong results in North America, as well as growth in retrocessional and an active quarter for GC Securities. For the year, revenue was $1.5 billion, an increase of 15% or 5% on an underlying basis. In the Consulting segment, fourth quarter revenue increased 4% to $1.9 billion, with underlying growth of 2%. Consulting's adjusted operating income was flat year-over-year at $359 million, and the adjusted operating margin of 19.7% declined 60 basis points versus a year ago. Looking at the full year, margin expansion was solid. For the year, revenue was $7.1 billion, an increase of 5%, with underlying growth of 3%.
Adjusted operating income for the year was up 9% to $1.3 billion, and our adjusted operating margin increased 90 basis points to 18.6%. Mercer's revenue increased 8% in the quarter to $1.3 billion, with underlying growth of 4%. Wealth increased 2% on an underlying basis, with investment management up high single digits and defined benefit down low single digits. Our overall assets under management continued to grow and at year-end exceeded $305 billion, up 5% sequentially and 26% year-over-year. Health revenue grew 6% on an underlying basis in the fourth quarter, reflecting strong growth in both international and the U.S. Career grew 4% on an underlying basis, with strong growth in survey products and digital implementation. For the year, revenue at Mercer was $5 billion, an increase of 6% or 2% on an underlying basis.
Oliver Wyman's revenue in the fourth quarter was $559 million, a decline of 2% on an underlying basis. As we said on our last call, we expected a pullback in the fourth quarter. For the full year, Oliver Wyman produced strong underlying revenue growth of 6%. We made great progress in 2019 on the JLT integration and are on plan or ahead of schedule on key milestones. We continue to expect the transaction will be modestly dilutive to adjusted EPS in the first year, neutral in year two, and accretive in year three. We are ahead of schedule on cost savings and restructuring actions. We now estimate run rate savings of at least $350 million. We expect to incur approximately $625 million of cash costs to generate those savings. In addition, there will be approximately $75 million of non-cash charges, mostly property-related costs, as we consolidate our real estate footprint.
We achieved approximately $125 million in savings through year-end 2019 and expect to achieve the balance by the end of 2021. We also incurred $335 million of JLT integration and restructuring costs in 2019 to achieve these savings. It is our expectation that the bulk of the remaining costs will be incurred in 2020, with a more modest amount extending into 2021. This update reflects the plans we have today. As we continue to get deeper into the integration, there is the possibility for more savings opportunities to emerge. As we look to the first quarter of 2020, keep in mind this is the last quarter where our year-over-year comparisons are impacted by JLT. Remember, in RIS, the first quarter is seasonally small for JLT.
In addition, JLT's employee benefits margins are relatively low in the first quarter, and we expect this, along with some quarterly volatility, will result in a decline in first-quarter consulting margin. However, for the full year, as Dan mentioned, we expect strong earnings growth and consolidated adjusted operating margin expansion. Turning back to the fourth quarter, adjusted corporate expense was $53 million in the quarter. In the fourth quarter, we recorded $264 million of noteworthy items, the majority of which are related to the JLT acquisition. Included in this total are $143 million of JLT integration costs, the largest category of which is severance. $17 million of JLT acquisition-related costs, $56 million of other restructuring costs, and $42 million of earn-out true-ups relating to prior acquisitions. As we typically do on our fourth quarter calls, I will give a brief update on our global retirement plan.
Cash contributions to our global defined benefit plan were $122 million in 2019, up slightly from the $112 million in 2018. We expect cash contributions in 2020 will be roughly $116 million. For 2020, we anticipate our other net benefit credit will be slightly lower than in 2019. Based on current expectations, we would assume roughly $264 million for this item in 2020. Investment income was $2 million in the fourth quarter for both GAAP and adjusted results. For the full year 2019, our GAAP investment income was $22 million and adjusted investment income was approximately $12 million. For 2020, we expect only modest investment income on an adjusted basis. Foreign exchange was a slight headwind to adjusted EPS in the quarter and had a $0.05 per share negative impact for the full year 2019.
Assuming exchange rates remain at current levels, we expect FX to be a slight headwind to adjusted EPS for 2020. Our effective adjusted tax rate in the fourth quarter was 23.4%, compared with 23.6% in the fourth quarter last year. For the full year 2019, our adjusted tax rate was 24.1%. Excluding discrete items, our adjusted tax rate for the full year was approximately 26%. When we give forward guidance around our tax rate, we do not project discrete items, which can be positive or negative. Based on the current environment, it is reasonable to assume a tax rate between 25% and 26% for 2020. In the fourth quarter, we repurchased 1.8 million shares of our stock for $185 million. For the full year 2019, we repurchased 4.8 million shares for $485 million.
Total debt at the end of 2019 was $12 billion, compared with $12.6 billion at the end of the third quarter. Next debt maturity is in March 2020, when $500 million of senior notes will mature. During the fourth quarter, we incurred $130 million of interest expense, and we expect approximately the same amount in the first quarter of 2020. As we look to 2020, the framework for capital management we discussed in the early stages of JLT is still on track. This year, we currently expect to deploy approximately $2.6 billion-$2.9 billion of capital across three broad categories: debt reduction, dividends in line with our objective of double-digit increases annually, and a combination of acquisitions and share repurchases. Directionally, we currently expect the amount of capital deployed to be roughly equivalent across these three categories.
This plan allows us to maintain our dividend growth objectives and meet the commitments for de-leveraging we laid out when we announced JLT. It also provides flexibility for M&A. We've consistently stated that we favor attractive acquisitions over share repurchases, as we view high-quality acquisitions as the better value creator for shareholders and the company over the long term. Our track record is good, as evidenced by our return on invested capital of nearly 20% over the last three years. Given our de-leveraging plan and our acquisition pipeline, we currently do not expect any share repurchases in the first half of 2020. Ultimately, share repurchases later in the year would depend on how the M&A pipeline develops. Our de-leveraging should be largely complete by the end of this year, and we expect to have substantial flexibility in terms of capital deployment in 2021 and beyond.
Our cash position at the end of the fourth quarter was $1.2 billion. Uses of cash in the fourth quarter totaled $444 million and included $24 million for acquisitions, $235 million for dividends, and $185 million for share repurchases. For the full year 2019, uses of cash totaled $7.5 billion and included $6.1 billion for acquisitions, $890 million for dividends, and $485 million for share repurchases. In summary, we are proud of what we accomplished in 2019. We are very much on track with the objectives we set when we announced the JLT acquisition. As we look forward to 2020, our outlook is for another year of strong performance. With that, I'm happy to turn it back to Dan. Thanks, Mark. Operator, we are ready to begin Q&A.
Thank you. If you would like to pose a question, please press *1 on your telephone keypad. Please ensure that your mute function is switched off to allow your signal to reach our equipment, and you may remove yourself from the queue at any time by pressing *2. In the interest of addressing questions from as many participants as possible, we would ask that participants limit themselves to one question and one follow-up question. We will take our first question today from Elyse Greenspan of Wells Fargo. Please go ahead.
Hi, thanks. Good morning. My first question, you guys updated the savings program for JLT today. It also seems like intangibles are coming in a good amount lower than when you guys had announced this deal. I'm just trying to, I guess, get from that you have these two tailwinds to your numbers and you still are reaffirming, I guess, that the deal will be breakeven in 2020 and accretive in 2021. What's the offset relative to your initial expectations that this deal might not be accretive sooner than you had expected?
Excellent. No, actually, it's going to be the least accretive, consistent with our original expectations. In a deal of this size, there's always a number of gives and takes. As you mentioned, we think the cost savings are higher, we think the amortization is lower, but we also are needing to divest some businesses, principally aerospace, but also some minority interests in other businesses like CRP here in the U.S., which we did not anticipate going into the transaction. We also have some revenue headwinds that we had described before, whether that was from new business pipeline issues or some staff defections. Those are things that we're grappling with. You put it all together, and the deal is tracking in line with our original expectations. Our original expectations, I'll just remind everybody, were really good.
That it was going to be a good, solid financial transaction, which was also very strategic in nature for Marsh & McLennan as a company. When we talk about things like accretion and dilution, it's always a level of how we're growing. We expect 2020 to be a strong year in adjusted EPS growth, and that's what breakeven means to us.
Okay, that's helpful. My second question. On last quarter's call, you guys had alluded to the overall margin for the company expanding more than the year-to-date level. It seems like the fourth quarter came in a little bit below your expectations. Was that just maybe a little bit weaker consulting on margin? Just trying to understand what happened in the fourth quarter as we think about the level of margin improvement going forward.
Yeah. We focus very much on earnings growth and top line growth much more than we do on margin, and we certainly don't really pay much attention to any one single quarter. We were satisfied for the year with 110 basis points, and the fourth quarter was pretty consistent for the year. There's always a lot going on in all of our businesses. It's not that we look at one versus the other as in any way coming up short of what our expectations were. When I look at margins in general for the company, 2019 is going to be our 12th consecutive year of margin expansion, and these are really significant levels of margin expansion. You go back a decade, and we're up like 1,300 basis points. You go back five years, we're up 450 basis points plus in both segments and as a company.
Just to go back, I wouldn't look at any one quarter as being indicative. You need to look at longer periods of time. Margin expansion for us is an outcome of how we run the business, which is revenue growth almost always exceeds expense growth, and that will give us margin expansion over time. The only areas that we were really driving for some margin this year was in RIS and parts of the portfolio, particularly in Guy Carpenter, that we felt we needed to adjust JLT to more similar margin levels than what we had normally been operating within as Marsh & McLennan. Next question, please.
Our next question comes from Mike Zaremski of Credit Suisse. Please go ahead, your line is open.
Good morning. First question regarding the risk and insurance segment. Looking at the EMEA segment, growth there has been, let's call it, the very, very low single digits for the past couple years. Is that a pace that we should have any color? Is that a pace maybe we should expect thinking about into this year? I guess also Latin growth also just a little bit weaker in the second half of the year. Anything going on there and just kind of thinking out till 2020?
I'll take it a little bit, and then I'll hand over to John. Overall, we believe we're set up well in both EMEA and Latin America for future growth, not only in 2020 but beyond. Obviously, EMEA includes the U.K., which has been our biggest area of overlap with JLT, and where we knew was going to be a bit choppy for a while. That's essentially when we look at the business, we unpack the different component parts of EMEA. John, you want to add more to that?
Sure, Dan. Thanks. Big picture, 23% GAAP growth in the quarter. Very, very big growth, 17% for the full year, 4% underlying growth for the full year. I was pleased with the results. As Dan noted, as we expected in the U.K., the underlying growth was impacted by integration-related headwinds. Some first quarter challenges remain, but I will say I'm encouraged by improvements in the underlying performance in the U.K. We made some leadership changes now about 18 months ago in the U.K., and we're really setting the foundation for stronger growth going forward. In Latin America, as I noted in the last call, again, integrator-related challenges still persist through the first quarter, but Latin America remains a high-growth region for us. From the second quarter on, I expect improved results. Again, I want to say I'm pleased overall with the growth.
I'm quite proud of the team. We managed through a lot of change throughout all of 2019, we maintained our focus on serving our clients in what's an increasingly challenging market as well. As Dan noted, we're a stronger team entering 2020, and JLT is obviously a big part of that. We also added Wortham in late 2018 and did a lot of work on integration of Wortham last year. We added 2 top 100 firms in the U.S. to M&A as well. I'm quite excited about the team and how we're positioned as we enter 2020. You have another one, Mike?
That's helpful. Yep. Lastly, sticking on the brokerage space. Dan, in your prepared remarks, I think you said it was a challenging marketplace. I assume you're referring to what's maybe become quote unquote, "A hard market," and you can correct me if I'm wrong. Just curious to see, does this challenging market also put a little bit pressure on Marsh's expense base, given your employees are working potentially even harder to represent their clients in this marketplace?
Well, we're built to operate well across cycles. I wouldn't necessarily classify the entire market as a hard market. It's certainly hard in pockets. It's certainly true, as you noted, that Marsh & Guy Carpenter brokers have to run a lot harder to get things done and have to work really hard and creatively in order to serve clients in these challenging market conditions. We recognize that. We don't believe that puts any overt pressure on our expense levels, more than the fact that we recognize that our people are working harder than ever before, and we appreciate that, and we reward them for it. Our teams are driven by serving clients, and so that's what their focus is. They're out there hustling, not in the belief that somehow their compensation or anything else is going to change.
It's actually that they're focused on delivering for their clients. Next question, please.
Our next question today comes from Ryan Tunis of Autonomous Research. Please go ahead.
Yeah, thanks. Good morning. Dan, I guess I was hoping maybe you might be able to quantify perhaps the type of drag you think right now the organic revenue growth rate is feeling because of, I don't want to say disruption, but because of the JLT integration process. Was that worse this quarter, in the third quarter? Is it still getting worse, or is the magnitude of that lessening going forward?
Well, let me talk about that broadly, because I think it's a good question. First of all, I'd start with the basis. When I look at our underlying growth, I'm pleased with 3% in the quarter, and I'm really pleased with 4% for the year. If you look at the quarter, Guy Carpenter had a terrific quarter and a strong year, top and bottom line. Oliver Wyman, as expected, they had a tough quarter, but 6% for the year. Mercer, 4%, solid for the fourth quarter and sequentially improving throughout the year. You look at Marsh, I'm pleased with the 3%, given, as we told you, there were some tough comps, both from Marsh's performance last year in the fourth quarter, but also JLT's performance in the fourth quarter, and the new business hurdle, which was a very big new business quarter for JLT last year.
We had talked to you about the pipeline issues throughout the year. In the context of the largest acquisition in our history, I'm quite happy with the underlying growth levels. Although, I just want to take another minute to talk about growth a little bit more because I understand the way you're looking at it. It's not the way I look at it. From my perspective, we have had a tremendous growth year on multiple levels, and we have significantly outgrown our competitors. We've outgrown our competitors in capabilities, in talent. Our head count's up 10,000 people from this time last year. We've outgrown our competitors in revenue, in the number of clients, and it all starts with GAAP. There are certain times where GAAP is more important than underlying, and I think this year was one of those times.
I mean, our total revenue is up 11% in 2019 and 15% in the fourth quarter. Look at RIS. RIS grew 24% in the fourth quarter. We've been at it for 148 years, and to grow 24% in a quarter at a firm like ours is something. As John was alluding to before, you look specifically at Marsh. Latin America is up 15% in the year. Asia Pacific, 39%. EMEA, 16%, all in 2019. Our base and our trajectory will be better for years and years to come as a result of the remarkable year we had in 2019 on a growth basis. Did you have something else, Ryan?
Yeah. Just on U.S.-Canada organic, a little bit of deceleration there, just curious for your perspective into 2020. Thinking about the market conditions, like does it seem to be a tailwind? How are you thinking about how all that comes together?
Yeah, U.S.-Canada performance has been terrific the last couple of years. John, you want to talk about that a little bit more?
Yeah. I'm quite pleased with our team, Ryan, in U.S. and Canada. I thought we had a terrific year this year. I would also remind you that we had 7% organic growth last year in the underlying growth in the fourth quarter. Both MMA and Marsh had terrific years. We also had a very good finish to the year in Canada and quite a strong year there as well. Our [NGA] operations in the U.S. are performing quite well as well. Our private client business did quite well from a growth perspective. On the specialty front, we had good growth in our credit specialties, our private equity business, aviation did well, transaction risk and cyber are a couple of products that are growing nicely at the moment.
Thank you. Next question, please.
The next question comes from Michael Phillips of Morgan Stanley. Please go ahead.
Yeah, thank you. Good morning, everybody. I was just curious, Dan, on your thoughts on how much, I guess on a very high level, how much you think there's more room to go on the legs of the P&C overall pricing environment? I mean, is that going to peak, do you think? I guess maybe a peak time for maybe by the end of this year, or how much more room do you think there is to grow on the overall environment for pricing?
Well, that's the $64 question. I mean, you've got different things at work. I think you've got many insurance companies who are dissatisfied with the results they have achieved financially over the last several years, so there was a factor impacting many companies at the same time. They've got a little blood in the eye, and they're looking to get back to a better position. You also have the thoughts around social inflation and how real that is and how it's impacting their firebooks as it rolls forward. You have pressures on the reinsurance side. I'll go to John and Peter in a minute to give a little bit more, but there's pressure on the reinsurance side which may build throughout the year, which will put some pressure on primary carriers.
Ultimately, it's a matter of what's the loss activity and the premium levels will, over time, reflect whether it's a benign environment or whether it's a harsh one. I mean, certainly when I think about this year, I look at the level of catastrophe potential. If it's a tough cat year, we're in for quite a ride. If it's a benign year in the Southeast particularly, well, maybe some of the wind goes out of the sails. I also think a lot has to do with how casualty develops. Why don't we start with primary and John, and then we'll go to reinsurance, just to talk more broadly about market conditions and maybe if we have any prognosis. John?
For me, it's an earnings-driven market change for sure. Dan talked about some of the trends continuing into the first quarter. There continues to be a very wide range of outcomes in markets around the world. I don't consider it a hard market, although it's certainly become more challenging for our clients. On a geography basis, Australia, the U.S., and U.K. wholesale are seeing the largest increases. In the U.S., it's about 10%, and you go up to the high teens on average rate increase in Australia. In Asia, Continental Europe, Middle East, Latin America, U.K. retail, more mid-single digit price increases. You look at it from a product perspective, Dan noted property's up 13% globally, financial line's up 17%. Significant increases there. Casualty up 3%, where you see a real mix, where comp continues to be down.
Excess liability, though, particularly in certain classes of business, are quite stressed at the moment. Public D&O, particularly in the United States and Australia, are a couple of classes that are the most challenging. I would note, Dan talked about this again, our index skews the large accounts. The middle market is flat to low single digits in many markets, in most markets around the world. We continue to hear from underwriters the concern about rising loss costs, whether, as Dan noted, social inflation or the impact of litigation funding on the claim environment. We're also observing and working with our clients through some challenging verdicts and large settlements in pharma, in chemicals, in commercial auto, and in D&O. There's no question there's some stress in the loss environment, and it's difficult to predict where markets will head. There are some storms on the horizon.
[Sam], Peter?
Thank you. I think from a reinsurance standpoint, the market is responding very responsibly. It's really been a function at one-one. The pricing and the renewals were largely shaped by a couple of factors, deteriorating loss experience, a lack of new alternative capital, and increasing challenges in the environment with regard to primary insurance and retrocessional markets. There's a wide span of pricing. Some was flat to down in certain geographies and others it was up significantly. The retrocessional market, we saw increases of between 15%-20%, I don't believe the market in the reinsurance business is hard. I think it's more expensive, it certainly isn't a hard market, which we define as at any price you can't generate capacity.
Thanks. Mike, do you have a follow-up?
Yeah. Thank you all for your thoughts. I appreciate the time.
Okay, thank you. Next question, please.
Our next question comes from Meyer Shields of KBW. Please go ahead.
Great, thanks. Dan, you've been very upfront about the fact that when you worked on the merger, you anticipated some level of producer and client outflow. I'm wondering, as we look forward to 2020, is there any margin pressure? Because in 2019, overweighing simplistically, you had revenues associated with people that had left the firm.
It's a good question, but our anticipation, and as I was mentioning before, there's always a lot of puts and takes in a transaction of this size and geographic breadth. As we look to 2020, we expect to expand margins as Marsh McLennan. So we think that it will be our 13th consecutive year of margin expansion, and we think we'll have a strong year in adjusted EPS. I would say when we went into the transaction, big people business combination, we expected some level of defections. So when we sit here today, and we look at where we are, even though there are some people who left the firm who we would have preferred not leave the firm, we're in good shape. Where we've had the most significant levels of leavers would be, let's say, in London, in the U.K. market in London.
Well, we are strong in London. We were strong, and we are stronger today, and more people by a very wide majority stayed rather than left. So we're in great shape from that perspective. So when I mentioned 10,000 additional headcounts, and that these are smart, hardworking, talented people, which will deliver a lot of value for us into the future. Our ability in a place like London to regenerate ourselves using our existing capability, the JLT addition, and then going into the market to replace some people who have left, our ability to regenerate talent in London is amongst the highest places in the world. So it's not something that's anything more than short-term.
I would also note that the voluntary turnover rate at legacy Marsh was the best it's been since we collected the data. Right. From that perspective, it's quite a stable year from a talent perspective.
Okay. Next question.
Meyer, do you have a follow-up?
Yeah, just a quick one. In the breakdown by segment, there was an 8%, I guess, hit to Guy Carpenter's revenues from a divestiture. Is that going to persist for the next few quarters?
Mark, why don't you take that?
Meyer, on that schedule, you'll see that column heading, it's acquisitions, dispositions, and other. From time to time, we'll have just changes in mapping of businesses or other things that we use that column to adjust for, just to make sure the year-over-year comparisons are apples to apples. There was no divestiture in Guy Carpenter. It really was just comparability adjustments. The fact that Guy Carpenter's revenue base was so small in the quarter just magnified that. There should be no ongoing impact from that.
Next question, please.
Our next question comes from Jimmy Bhullar of J.P. Morgan. Please go ahead.
Hi. Good morning. Just a question first on Oliver Wyman. The weakness there, I think, organic growth slowed the last couple of quarters. How much of that is just normal volatility in the business versus maybe shifts in spending on the part of your clients?
A couple of things. I've mentioned in the past that Oliver Wyman has more volatility on the top line than our other businesses because they have less recurring revenue. They actually had a strong year through nine months, and we had anticipated some slowdown in the fourth quarter. Scott, you want to give more detail?
Sure. We definitely had a weak Q4, but there was really nothing significant that happened, and the result was driven by three things. The first was some project movement from quarter to quarter, which regularly happens with us and drives some volatility. We could see that coming, and in Q4, and we signaled a little bit of a pullback on our last call. The second thing was we did have a solid Q4 last year where we grew 7%. The third thing was we did see a modest, but what feels very much like a temporary slowdown in a couple of markets in Q4. Broadly, the business was strong across sectors. Both Europe and Asia showed some weakness, primarily in the financial services business. It feels like it was temporary. The Q4 results, it hasn't changed our medium-term expectations.
We continue to plan for mid to high single-digit revenue growth over time. For the time being, at least, demand for consulting services feels solid across sectors and across regions.
Thanks. Secondly, on Guy Carpenter, in the second, each of the past couple of quarters, you've had double-digit growth. Those are obviously the lowest quarters of the year in terms of the base. How much of this is driven just by the small base versus maybe better momentum in the business that could potentially carry into this year?
Thanks, Peter. Jimmy, it's really a combination of both. They are smaller quarters for us, but they're also being driven by good new growth. We've had our third year of record new business wins, in the U.S., in our retrocessional business, in our Asia-Pacific business. Our facultative business, which we very rarely talk about, has grown significantly. All of those can impact a small quarter, as you've seen in Q3 and four, but it's more a function of phasing than it is anything else, and a very disciplined approach to sales and growth.
We were very pleased with the 5% growth for the year. The next question, please.
Our next question comes from Yaron Kinar of Goldman Sachs. Please go ahead.
Hi. Good morning. My first question is around the cost saves from the integration programs. Do you have any sense how much of that $350 million or greater will actually fall to the bottom line versus get reinvested back in the platform?
The general sense is that the majority of it will fall right to the bottom line. That's how we projected when we originally put things together. Obviously earnings will go up, so some of it will go into bonus pools and that sort of thing. A lot of the efficiency gains that we have developed is because of the investments that Marsh & McLennan made over a number of years. When you think about things like financial systems, we're Oracle 12 everywhere in the world. HR systems, we're Workday everywhere in the world. We use Salesforce extensively throughout the world. We're able to take an organization like JLT and integrate our systems and controls and functions reasonably seamlessly, without adding to a lot of our existing cost base in order to do that.
That gives us a lot of benefit and really should not impact the frontline client-facing people all that much. That's one of the reasons why most of it will drop.
Okay. Understood. Going back to some of the questions around growth, the 3%-5% organic growth target there that you've talked about in the past. One of your peers has been kind of talking about just mid-single digits or better over the long term. I'm just trying to square the 3-5 to that other guidance. Are there structural differences between the two organizations, or is it just more conservative guidance on your part? Are there just near-term headwinds just with the integration now that maybe once you get through those, you do get to a step up in that organic growth number?
I'm one of those people where I'm like, you are what your results say you are. For the last 10 years, we've been in a 3%-5% organic growth range. I do not believe that we have many competitors. We're a pretty unique company across the breadth of the things we do. Clearly, we have certain formidable competitors in parts of our business, but across all of the things that we do, including Oliver Wyman and some of the strong businesses we have within Mercer, we don't have many direct competitors. When I look at the competitive landscape, I absolutely believe I wouldn't change our strategic positioning with anybody. I wouldn't exchange our capabilities with anybody or our culture. There's no reason under the sun to where our revenue growth performance would not be as good or better than any of our competitors over time.
Next question, please.
Our next question comes from Larry Greenberg of Janney. Please go ahead.
Thank you. Not much left to ask, but I guess this is for Mark. Just wondering if maybe the trajectory of expense saves has accelerated a bit from earlier from when you initially gave your guidance on that. It looked like what you saved in 2019 as a percentage of what you now think is the total is a little bit higher than how you initially walked into this period. I'm just wondering if that's correct.
I guess, Larry, just a little bit further on phasing. As I said, we expect to take most of the actions to generate the full $350 by the end of this year. Just by what I've said with the charges, there may be a little bit spilling into 2021. The remainder of the savings will come in over the two years, probably more in 2020 than 2021. As I said earlier, we expect to realize the full impact of the savings by the end of 2021.
Thanks. That's it.
Okay. Thank you.
Thank you. Our next questions come from Dave Styblo of Jefferies. Please go ahead.
Hi there. Thanks for the questions. Just want to ask a little bit about capital deployment after 2020. I think you guys are pretty much going to be done with your debt paydown plans. Curious how that affects your thinking for M&A after this year. Does that open up the net to possibly doing something a little larger, or are you guys inclined just to keep things on a more modest basis as you continue to integrate JLT?
We have acquisitions that are a core part of our long-term strategy. We have done something like 175-plus acquisitions since January 1st of 2009. We tend to be a balanced company when we look about. We put our dividend first. It is sacrosanct. We want to grow it double-digit every year, and that is going to be, for the sake of argument, look at a number of circa $1 billion for that, which should leave, in most years, 2021 and beyond, roughly a couple of billion dollars to deploy between acquisitions and share repurchase. As we have said in the past, we favor acquisition over share repurchase for the very reason we are building a great company. Our focus, and as we have shown over time, we have been able to do that.
You look at Marsh & McLennan Agency in 2009, zero revenue and no position, and now we have got a terrific platform, $1.7 billion, growing well, good EBITDA margins, et cetera. We are in a business that we otherwise would not have been in. That is what is called building a company, and we are committed to continuing to do that. We have all kinds of opportunities across the enterprise, not just in Marsh, but across the firm, in order to acquire our way to be a better, stronger, more formidable company in the future. When we look at that $2 billion and our debt to EBITDA at that level, we will probably be in the low twos, and so we would have the ability to flex if we needed to. There is certainly nothing that we are pining for in terms of a larger or mega acquisition.
Certainly having circa $3 billion to deploy year after year is going to make us one of the great companies of the world.
Right. Got it. Okay. Just a quick housekeeping. I think I heard for the first quarter, given the business mix and so forth, that consulting margins were expected to be down year-over-year. I do not know if I heard a comment about RIS.
Yeah, no, we didn't make a comment specifically about RIS. We wanted to point out consulting because of our visibility to it. We recognize that consulting has its own attributes. RIS is a different kind of business. As you know, the consulting margins declined in the fourth quarter, even though we had a 90 basis points improvement for consulting for the year. We just wanted to give a heads up that our expectation was for a decline in the first quarter for a variety of different reasons, which our view is temporary. When we look at the full year of 2020, we expect it to be our 13th year of consolidated margin expansion for the entire firm.
Our next question comes from Brian Meredith of UBS. Please go ahead.
Hey, thanks. Hey, just two quick ones here. First, just curious on the EMEA organic revenue growth, the slowdown we had in the fourth quarter, I know you explained it. Should we expect it to kind of continue into the first half of 2020 as some of these leadership changes go on?
John, you want to take that?
Yeah. I think there, Brian, there's still some headwinds in the first quarter for sure, but as I noted earlier, I think the underlying performance, as we work our way through, cut through some of the integration-related headwinds. I think we'll see improved performance throughout the rest of the year. We had, by the way, in the Middle East, a terrific growth year last year. Good solid results in continental Europe as well. Obviously, it's somewhat hopeful too that the U.K. economy will begin to pick up now that there's more certainty around Brexit. A number of different factors that will ultimately determine where we are, but I'm quite encouraged by how our team is leading through all this change.
Also just to bear in mind, the new leader in the U.K. is a Marsh veteran. He's worked for the firm for more than 30 years and ran Canada for us, had other big jobs. It's not like somebody coming in and having to learn the ropes. He knows the business very well. As we mentioned in previous calls, when we think about the short and midterm, we are optimistic about Britain. Britain's sort of been through the wringer over the last couple of years, but there's now clarity around Brexit. We've got new leadership in the U.K. We're in many different businesses, from large account through to small commercial, and we believe it's going to be a great business for us over a stretch of time.
Great. Then, my second question, just hopefully just a quick one here. Could the coronavirus have any impact on your growth in the fourth quarter in your Asia Pacific business, do you think, at all?
Yeah, we're monitoring the situation closely, like I'm sure everybody is. Our primary concern is definitely the health of our colleagues and their families, and we're doing everything we can to assist clients as they think through possible scenarios that can impact their business. It's just too early to see that as to whether there's going to be any impact on our business, Asia or otherwise. We'll just have to see how this plays out in the coming weeks.
Thank you. I would now like to turn the call back to Dan Glaser, President and CEO of Marsh & McLennan Companies, for any closing remarks.
I'd like to thank everybody for joining us on the call this morning, certainly thank our colleagues for their hard work and dedication, as well as our clients for their support. Hope everybody has a good day. Thank you very much.
Thank you. That will now conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.