Welcome to Marsh & McLennan Companies conference call. Today's call is being recorded. A press release was issued earlier this morning. It is 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 risk 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 press release issued today and to our most recent SEC filings, including our most recent Form 10-K, all of which are available on the MMC website. I'll now turn this over to Dan Glaser, President and CEO of Marsh & McLennan Companies.
Thanks, Aaron. Good morning. I'm Dan Glaser, President and CEO of Marsh & McLennan Companies. Joining me on the call is Mark McGivney, our CFO, and Dan Farrell, our Head of Investor Relations. Thank you for joining us on such short notice, and welcome to all the MMC and JLT colleagues around the world listening to this call. This is a big day for Marsh & McLennan Companies. We are delighted to announce the strategic acquisition of Jardine Lloyd Thompson PLC. JLT is a premier organization in our industry. This transaction will further enhance our position as the leading professional services firm, serving clients around the world on the key issues of risk, strategy, and people. I've been in the industry for 35 years and have long admired JLT as one of a select group of best-in-class organizations.
JLT has a long track record of industry-leading revenue growth, generating average annual organic growth of 5% from 2012 through 2017. This is a testament to their CEO, Dominic Burke, his leadership team, and all the colleagues at JLT. Following completion of the acquisition, Dominic will join MMC as a Vice Chairman and will serve as a member of MMC's Executive Committee. I am excited to have the colleagues of JLT joining our team. MMC and JLT share a number of common values. We have a shared commitment to excellence, integrity, and a culture of collaboration. What makes both firms unique is our people. Together, we will have the broadest and deepest collection of talent in the industry, with a singular focus on serving clients with excellence and distinction. Our acquisition of JLT represents a meaningful step forward in our efforts to expand in higher growth and higher margin segments.
We estimate the addition of JLT will increase MMC's revenues to approximately GBP 17 billion and add over 10,000 people to our roughly 65,000 colleagues worldwide. The transaction leverages many complementary strengths of both organizations. JLT makes us stronger in specialty risk broking with deep expertise and capabilities in areas such as aerospace, energy, and construction. They make us stronger in markets such as the U.K. and Australia. They add to our positions in key growth markets such as Asia and Latin America. They provide further scale and skills to our global reinsurance business, and they increase our retirement and benefits presence around the world, especially in the U.K. We also see the opportunity to enhance several areas of JLT's business, including accelerating growth in global employee benefits and their developing U.S. footprints. The addition of JLT is the next step in a journey more than a decade in the making.
MMC has come a long way, significantly enhancing our business mix, improving our earnings growth, and reducing our risk profile. These efforts, along with the addition of JLT, position us for a bright future. Let's spend a few minutes on the strategic rationale. We believe the acquisition of JLT provides compelling value for clients and colleagues of both organizations, as well as our respective shareholders. This is a combination out of strength. Both firms are performing well. We see the addition of JLT making MMC even stronger. This acquisition is about one word: growth. JLT accelerates our strategy to drive higher revenue growth by pushing MMC further into faster-growing geographies and market segments while enhancing our capabilities. We are stronger together. Mark will cover more financial information in a minute, but I want to give you some of the highlights. We intend to fund the transaction mostly with debt.
The transaction will be immediately accretive on an adjusted cash EPS basis. On an adjusted GAAP basis, we expect modest dilution in the first year due to the heavy amortization associated with purchase accounting. We expect the transaction to be breakeven to EPS by year two and accretive thereafter. We estimate expense synergies of $250 million over the next three years. We expect a very attractive return from this strategically compelling combination. Importantly, we will continue to deliver on our annual capital return commitments to shareholders, growing our dividend per share double-digits and shrinking our share count each year. Now, let me turn it over to Mark to discuss the terms in more detail.
Thank you, Dan. Good morning. Before I go through some of the specifics of the transaction, I want to echo Dan's comments on how excited we are to announce the acquisition of Jardine Lloyd Thompson. JLT is a terrific company. This transaction leverages strength of both firms and provides a meaningful further tilt to higher growth, higher margin aspects of our business. As I will discuss, we believe this transaction offers compelling benefits for all of our stakeholders, and there will be meaningful synergies as a result of the combination. As our press release detail, we will be paying GBP 19.15 per share for each common share of JLT, which equates to $5.6 billion in fully diluted equity value and an estimated enterprise value of $6.4 billion. The acquisition will be funded primarily through new debt, and we have secured committed bridge financing to complete the transaction.
Although the driver of the acquisition is positioning for higher growth, we do see meaningful opportunities for efficiencies. Our preliminary estimate of synergies from the integration is $250 million of annualized pre-tax expense savings that will be realized over the next three years. The transaction will be immediately accretive on an adjusted cash EPS basis, and as modeled, will produce a double-digit IRR. Despite substantial amortization associated with purchase accounting, which we currently estimate at approximately $180 million, the deal will be neutral to adjusted EPS in 2020 after modest dilution in 2019. U.K. regulations have strict rules governing takeovers of listed firms. One of these rules mandates that an acquirer has committed and dedicated financing in place at the time of the announcement. Accordingly, we have secured a committed bridge loan facility for the full amount of the anticipated consideration.
As we have discussed for several years, we have maintained substantial balance sheet flexibility in order to position us for just this type of opportunity. Our intention is to fund the acquisition with existing cash and new debt, and intend to work over the next several months to replace the bridge facility with more permanent financing as we get closer to closing. We value our high-quality ratings, and the financing and capital management plan contemplated in the transaction is consistent with maintaining solid ratings. Though initially our leverage ratios will increase, the substantial cash flow we expect to generate, as well as increases in debt capacity through earnings growth, will enable us to bring our leverage ratios back in line with what we see as levels consistent with maintaining a strong ratings profile. From a capital management perspective, this transaction essentially represents a pull forward of acquisition activity.
As we digest this acquisition, the focus for capital management, particularly in the first year, will be working down our leverage, and this will obviously have an impact on capital deployment in the near term. That said, we have carefully planned the financing in order to be able to maintain our longstanding shareholder capital return commitments to reduce our share count annually and increase our dividends per share by double digits. We do expect, though, that after the first couple of years, we will be back to deploying substantial amounts of capital to M&A and increase share repurchase. In terms of timing, at this point, our best estimate of closing is the spring of 2019. MMC has received irrevocable undertakings from JLT's largest shareholder, Jardine Matheson Holdings, and JLT directors, who collectively represent 40.5% of the issued and outstanding JLT shares in support of the transaction.
Before I turn it back to Dan, I just want to reiterate a few key points. This is a compelling strategic transaction that further positions us for growth and margin expansion. We expect solid returns and only modest impact to our earnings in the near term. We are committed to maintaining a strong ratings profile while delivering on our capital return commitments, and we are confident in our ability to execute. Since 2009, we have completed more than 150 acquisitions, and the acquisition of JLT plays to our strength. With that, I'm happy to turn it back to Dan.
Thanks, Mark. I want to reiterate how excited I am about the addition of JLT to Marsh & McLennan. While we have talked about the numbers and our strategy for growth, the true value in any transaction in our industry is the people. Put simply, a combined Marsh & McLennan and JLT will have the greatest concentration of talent in our industry. Thank you, and now we would be happy to answer your questions.
At this time, if you would like to ask a question, please press the star, then one on your touch-tone phone. You may withdraw your question at any time by pressing the pound key. Again, it is star, then one to ask a question today. We will pause for a moment to allow questions to queue. Once again, ladies and gentlemen, it is star, then one to ask a question. We will go to our first questioner. That questioner is Kai Pan with Morgan Stanley. Your line is open.
Thank you. Good morning. It looks like the deal came together rather quickly, like 11 days. I'm sure you have thought about this for a long time. These two organizations are quite different in terms of culture. How do you plan to keep the revenue as well as the talents?
Thanks, Kai. I would say, while quickly, it was in process for a long time. We have long watched and admired JLT. They're a public company, obviously the information is available. We essentially have been reviewing them for a long time. Yet, when I met with Dominic on September 7th in London, I saw an opening that I had not seen before, and we decided to press ahead. Our basic philosophy in a lot of strategy is to be meticulous and to be careful in our approach and our evaluation of alternatives. When we need to strike, we can strike boldly. Your comment about culture is completely wrong, Kai. The cultures of JLT and Marsh & McLennan are very similar. In fact, I had competed with JLT as a broker early in my career and late in my career.
JLT was a major producer of mine when I ran AIG in the U.K. I got to see JLT in action, and I saw great similarities to Marsh & McLennan. A focus on client service, excellence in everything that they do, integrity, and really, an identification that clients' interests always come first. I believe that the combination of JLT and Marsh & McLennan will be absolutely the beacon in our industry, the employer of choice, the organization that people want to work for as opposed to leave. Now, it's up to management, and it's up to leadership to create the environment of the best of both worlds. It's not going to be as to where somebody came from, whether it was Marsh, Guy Carpenter, JLT, et cetera. It will be what's the right structure, and who is the right person in the right job.
We will pack the biggest punch that we can in the marketplace.
That's very helpful. My second question on your target of adjusted GAAP EPS accretion by 2021. Can you tell us probably more details, sort of like your key assumption in terms of debt, cost savings, buybacks, as well as amortization? Also, is that target including any consideration for revenue synergy or dis-synergy?
Yeah. I'll take that broadly, and then I'll hand it off to Mark to give you more depth. That's a good question. It's a multi-part question. Let me handle some of it, and then I'll hand it over to Mark. One, you know enough about Marsh & McLennan to know that we're a conservative company. When I look at our acquisition strategy in general, and I'll just repeat it a little bit here as to what we've said in the past, we have no budget or timetable. Quality, for us, is the number one factor. We seek acquisitions that will improve Marsh & McLennan, whether it's talent injection, geographic depth, capability, segments, specialties. You need to have trust. To us, we'll never do a hostile acquisition. We want companies that want to be part of Marsh & McLennan. We choose them; they choose us. Chemistry is vital.
We prefer companies with recurring revenue and advisory businesses with transactions or implementations. We also prefer companies growing faster than us and where the post-synergy multiple is lower than ours. That's our basic philosophy. It is very rare, if ever, that an acquisition target of ours hits every one of those points. JLT hits every one of those points. That, from our perspective, is why we were so bold in this case. You also know that we're a conservative company. When we look at something, yes, we'll look at expense synergies, and we'll be generally conservative about what we believe we can achieve. We actually will look at things like revenue dis-synergy as well, even though I can tell you that Dominic and I and our respective teams, we will fight every fight. We're not giving up any account to any other company.
Yeah, we model in some revenue dis-synergy because we're a conservative company. Additionally, where you see a lot of deals where people pile on a lot of revenue synergy and revenue benefits, we expect revenue benefits over time from this transaction, absolutely. We didn't model any because in our view, we wanted to look at it, the acquisition, on as conservative a basis as possible. I can tell you, we do expect revenue benefits.
When I think about areas of the business like Mercer Investment Management, Mercer's career business, Oliver Wyman's digital technology and analytics practice, our ability to do health and benefits on a cross-sell, and all of the data and analytics that we have been building within Marsh, and the power that that will give our clients in terms of looking at things in a different way, I absolutely believe that there will be revenue benefits over time there. Mark, do you want to deal into finances a bit more?
Yeah, Kai, we tried in my script to give you a pathway to get there, and I'll just repeat some of the things. First of all, in terms of financing, as I said, mostly debt. We will be accumulating some cash, and whatever we have we'll use. Largely debt finance. We talked about the synergy assumptions and expanded on that. That's primarily cost synergies, so we don't have revenue synergies modeled in. I did give you the amortization number, so obviously it's a preliminary number. The amortization that'll be running through for GAAP purposes around $180 million. You touched on capital management, and as I said, if you think about this as a pull forward of acquisition activity, we structured this to maintain our two capital commitments.
We will still be increasing our dividend at a double-digit rate, and we provided enough flexibility, even though we'll be focused on de-levering, enough flexibility over even in 2019 to be able to repurchase enough shares to see our share count go down and provide for some M&A flexibility. I think as you digest what I said, I think you have all the pieces that will be able to get you there.
That's great. Well, thank you so much and best of luck.
Thank you, Kai. Next question, please.
Our next question comes from Christopher Campbell with KBW. Your line is now open.
Yes. Hi, good morning, gentlemen.
Hi.
I guess kind of my first question, does this acquisition mean that Marsh is back into wholesale brokerage?
When I think about the market, the term wholesale, whether you're talking about London, Bermuda or in the U.S., I think is kind of an archaic one. I know it's used widely and it's talked about widely, but generally I view traditional wholesalers have become really specialty placement operations with all kinds of capability, segmentation, specialization of facilities, MGAs, et cetera. It's not traditionally like that. When we look at JLT, they actually don't have a dramatic amount of third-party wholesale, as you say, business flowing into the London market. Ultimately, we believe that the highest quality placement organizations attract some third-party placements, and we believe that will continue. I wouldn't look at this as us re-entering a market that we exited when we sold Crump many years ago.
Okay, great. Well, that's very helpful. Just a second question on buybacks. How should we be thinking? I get that most of the deal is going to be funded with debt. How would that impact the buybacks, I guess, near term?
Mark, do you want to take that?
Yes. As I said, obviously the focus will be over the next couple of years de-levering. To be clear, we've had two minimum capital return commitments for shareholders for several years. One of them is that we'll increase our dividends double digit, and that every year we'll buy back enough stock to see our share count go down. We've structured this financing and capital management plan so that we'll be able to continue to do that. In 2019, there's enough share repurchase built into our plans to be able to reduce our shares and to go beyond that or do a little bit of M&A, depending on how opportunities come up. By 2020, we'll have even more flexibility. As I said, by 2021 and beyond, we're back to deploying substantial amounts of capital.
Yeah, I think what Mark just said is very important in terms of M&A. We'll be more selective, but I want to be clear that Marsh & McLennan Agency, we've allowed for some flexibility for the continuation of their strategy.
Okay. Just one final one. What would be the termination fee or the breakup fee on the deal?
There is no termination fee on the deal by either side. We're committed to closing. We've each chosen each other, that's our intention.
Okay. Well, thanks for all the answers. Best of luck.
Okay. Thank you. Next question, please.
Our next question comes from Ryan Tunis with Autonomous Research. Your line is now open.
Hey, thanks. Good morning. First question just on, I guess thinking about what this does to the organic growth profile of Marsh. I think legacy Marsh, it's always been 3%-5% organic revenue growth expectation. It sounds like you think that you can grow faster now with JLT. Is it 4%-6% now? I'm just kind of trying to get an understanding of how much this accelerates your organic growth aspirations.
Yeah, it absolutely accelerates our aspiration. This is announcement day. We want to win in the marketplace rather than the day of announcement. I often say that to the teams when we're doing our annual planning. Win with the actuals, not with the budget, right? I look at this and say, okay, 3%-5%. Marsh obviously is larger than JLT. JLT skews into higher growth areas. It should provide a lift over time to that level, whether that gets us above five or whether et cetera. It's a good acquisition from a growth basis, for JLT consistently has outgrown its competitors organically, and we would expect that to continue as a combined business. We feel comfortable that this is more about growth than any other factor and about positioning both by geography, by specialization, segmentation. It hits a lot of different things for us.
As Mark was saying, think of this as us accelerating our basic strategy keeping within our knitting, right in our strong suit, the same strategy we've been executing since 2008. It's just bigger, and we bring it forward more. We're ready for it.
Understood. My follow-up is just, I guess, what do we think is the baseline for free cash flow here? I guess excluding integration costs, before we start layering on the cost saves, what are we working off of at the beginning? Of that $250 million, are you assuming as you do your projections, that all that falls to the bottom line or is there some reinvestment of that?
Yeah. Well, let me hit the 250 first. I'll hand it off. We're looking at that as real expense savings. We have, as you know, significant cash flows to fund organic investments and strategies on an as-we-go basis, so there's no pent-up demand for further investment. Our intention would be for the $250 million to drop to the bottom line. Mark, you want to give more information?
Yeah. I'd say a couple of things. First of all, as we said, on an adjusted cash basis, it's immediately accretive. If you just looked at JLT's 2017 numbers, their annual report, they disclosed $260 million or so of free cash flow. We have our existing cash flow, plus that, plus synergies over time. After a period of where we'll have some upfront integration costs and things, this actually should add meaningfully to our free cash flow.
Thanks.
Thank you.
Next question, please.
Our next question comes from Elyse Greenspan with Wells Fargo. Your line is now open.
Hi. Good morning. My first question, when you guys talk about the accretion on a cash basis to your standalone estimates, are you assuming 2019 includes buyback at M&A prior to this deal? Or is it just on an adjusted basis, you're kind of assuming newer buyback at M&A estimates pro forma for JLT when you give us this accretion information?
Mark, why don't you handle that?
Yeah, Elyse, just to be clear, when we're talking about accretion and dilution, that's just relative to our own internal models. Of course, you folks have your own models, it's relative to us. It would be, to your point, we have our outlook and our own capital management plans that are baked into our estimates of 2019 and 2020, we're talking about impacts to those numbers, it is off of that baseline.
Okay. In terms of thinking through revenue potential dis-synergies, JLT is also a pretty big reinsurance broker. Obviously, complementary and expands the share of Guy Carpenter. How do you go into this transaction thinking through a way to minimize the dis-synergies as possible and make one plus one equal something more than two?
Yeah, no, it's a good question. When we look at JLT Re, it's about $280 million. Guy Carpenter is nearing $1.2 billion. It's a nice addition to Guy Carpenter in terms of skills. When we look at clients, whether it's reinsurance or whether it's primary clients, the fundamental driver to their decision-making is capabilities. The notion of recalibration is oversold. The reality is people make choices in their C-suite based upon what's in their interest and best for their company. The biggest factor to prevent dis-synergy is quality and capabilities. Our view is that there will be no finer insurance broker or reinsurance broker in the world, and that is our insulation to lost business. We are a conservative company, and obviously there'll be a little water cooler talk for a little time, and that's what happens in businesses.
Ultimately, we expect this to contribute to our growth over time, but we have modeled in some level of dis-synergy and the value of the transaction was still compelling for us.
Okay, thank you. Just one last question, if I may. You talked about looking to manage down your leverage. Can you just give us the timeframe for that? After you get done through managing down your leverage, do you want it to sit at the level that you were at prior to this deal, or is there some kind of in-between point, since obviously you've been pretty under-levered for a while?
Yeah. Obviously, I'll give you a bottom line up front. There is an in-between point. Mark, you want to give the details?
Yeah. As I said, Elyse, and as you pointed out, we've been relatively conservative, and this is the kind of opportunity we've been saving that flexibility for. Initially, we would be flexing up our balance sheet and think about it as a pull forward of activity. The basic balance and consistency that we've operated under hasn't changed. Now, as you point, it doesn't necessarily mean we're going to settle back to the levels we were at before. Just to help you out a little bit, if we were around, just on a straight balance sheet debt to EBITDA basis, off of our balance sheet, if we were hovering around the 1.7 level for the last couple of years, I could see a couple of years out us settling back to 2 to 2.25 or something like that.
Still a very conservative level for a company like ours.
Thank you very much. I appreciate the color.
Thanks. Next question, please.
Our next question comes from Larry Greenberg with Janney Montgomery Scott. Your line is now open.
Good morning. Almost all of my questions have been answered, so I'm stretching to come up with some more questions. Mark, just on the amortization stream, you said initially $180 million. How will that change going into forward years?
Well, Larry, this is a preliminary estimate of that.
Yeah.
Generally, the amortization periods of these things will range from seven to 10 years. As we get to actually apply the actual purchase accounting and value these intangibles.
clearly. You're talking about, it generally tends to be fairly straight line. You're talking about a long period of time that this will be in our results.
Great. Then, I know you're not building in revenue synergies, when you think about the product and geographic breadth that you're getting from the transaction, are there one or two items that you would really point to as being perhaps the biggest area of opportunity?
Yeah, when I look at it, let's just start with just people and talent to begin with, just broadly. JLT is a company that punches above its weight. On any given day, they could've beaten any broker on an account, right? They're highly skilled, highly motivated, highly specialized. When I look at it's a tremendous injection of talent, and that's where I would start with that. The world goes in different ways. Our fastest-growing practice last year was cyber. It didn't exist 10 years ago. From that standpoint, I always start by saying, "Let's have a mountain of talent, and then we'll see how we develop." Obviously, when we look at Marsh & Mercer together, we've got very high quality, very high level of resources and capabilities, deep industry expertise, global reach, real significant capabilities.
Health, whether we're doing it in Marsh & McLennan Agency, Marsh, or in Mercer, it's our largest line of business. When I think about JLT, the first thing I think about is that talent base and then a relentless focus on client service. They really work that angle well, and that's why I think we match up very well. The best colleagues, whether it's at JLT or at Marsh & McLennan, actually care more about their clients than they do about the company that they work for. You can't build that into a culture if it doesn't exist. The reality is, we both have it, and we're going to preserve it and cultivate it. There are obviously many specialties that they've excelled in, whether it's aerospace, energy, construction, real estate, public entities in some parts of the world. They've done very well in those specialty areas.
I love the idea as we go and close this transaction, as Mark was saying in the spring, of getting groups of people in rooms together, figuring out the best way of approaching the market. When I look at regional capabilities, looking at big countries for us. Australia's a top six country for Marsh & McLennan. JLT is quite large and significant there too. I love the idea of how that combines. As I was saying earlier, there's very few transactions that we've done that hit on every point of our philosophy. That's why we've been watching JLT for a long time. We've been admiring them from afar, when we saw an opening, we decided to move swiftly.
Thanks very much.
Sure. Next question, please.
Our next question comes from Dave Styblo with Jefferies. Your line is open.
Hi there. Thanks for the questions. Just to follow up, Dan, on that. As you mentioned, you kind of looked at this acquisition, making sure it was checking all the boxes and the stars lined up for it. I guess the question I had was timing of why now versus why wasn't it the right time two years ago, as you looked across the timeline of your acquisition pipeline?
Obviously, I would've preferred to acquire them a couple of years ago, since their stock had such a nice run up as they realized some of the benefits of their strategy. At the end, the stars and the moon have to align for both companies. We would never pursue any kind of transaction where that alignment didn't exist. I've known Dominic for more than 15 years. I respect him. I trust him. He runs a good business. He built a terrific company. It really needed to be that both sides thought that the timing was right. It has as much to do with them as it does with us. The reality, we've been at it for 150 years. We're going to be at it for a lot longer. We're a very patient company.
Whether this thing came about now or whether it was two or three years subsequent, we're building a great business, and we'll continue to look at companies that make us better, whether that's by geography, by specialization, by segmentation, or building our capability in some way. It just happened to the stars were right at this particular moment.
Okay. Thanks for that. On the financials for the cost synergies, can you peel back the $250 million a little bit more? What does that include? Is it mostly back office type savings? What is the cadence of that look like? Is it going to be pretty evenly split throughout the three years as you build up to that, or is it more back-end loaded? Any color on the cadence of that savings would be helpful.
I'll hand it to Mark to talk about the cadence. Obviously, whatever we've modeled in the cadence is probably conservative. On these sort of things, you want to be deliberate and make the right decisions. Once you make those decisions, you want to move swiftly. At the end, whatever cadence is built into the model, we will operate on a way that the sooner, the better to get to whatever organizational structure that we finally have. When I look at the businesses, obviously, we're in the same businesses in certain areas. There's going to be some duplication and overlap in those businesses. If I just give you some examples, clearly JLT is a public company. So are we. We've got public company expenses, so do they. We don't need both of them. If I look at real estate, technology, particularly infrastructure. Clearly we're both big companies.
We use vendors and outside services. I think we can do a lot more combinations of that. As you mentioned, functional areas or back office areas. Those are key critical strategic parts of the business, but there is some overlap in areas like finance, legal, HR, risk and compliance, service centers, and call centers that we both have. The other point I'd want to bring out, and I was thinking about this just over the last couple of days. There's a natural attrition in the business. Marsh & McLennan has employee turnover let's say around 10% a year. That means 6,500 people exit our firm every year. For the sake of argument, say it's about 500 people per month. I would say that we and JLT just take a pause right now.
The person who could fill that spot that just became empty may work for the other organization. We have to be cautious about how we manage our existing headcount and let that natural attrition that occurs in business work in our favor over time. I do think that that will be a part of that overall cost savings. Mark, do you have a comment on the cadence?
No, I do. Just on phasing. It won't be back-end loaded. We said it will be fully realized within 3 years. Of course, at this point, it's hard to judge exactly how much. You can get a little bit of a clue in when we say we're getting to the amortization comes in day one is sort of straight line, but we're getting to GAAP break even or adjusted GAAP break even by year two. It gives you a little bit of a sense for, we expect heavier realization early on.
Great. Okay. Thanks, guys.
Thanks. Next question, please.
Our next question comes from Scott Frost with State Street Global Advisors. Your line is open.
Hi, thank you. Rating agencies are going to do what they're going to do. Given your conversations with them regarding this transaction, assuming that you had them, or your conversations with them generally, would you be surprised if S&P or Fitch lowered your ratings given your de-leveraging plans?
Mark, do you want to-
Other than a heads-up last night, we're at the very beginning stages of speaking with them. We maintain, as you can appreciate, a very active dialogue with them, and we'll be working through this. As I said before, we were very thoughtful about how we developed this financing plan and the capital management plan around this, and we believe it is consistent with maintaining a strong ratings profile.
Consistent. Should I read that as consistent with your current ratings or not? Is really what I'm driving at.
I wouldn't read anything into it. We're committed to maintaining strong ratings, and we're at the beginning of those conversations.
Okay. Thank you.
At this time, ladies and gentlemen, I'd like to turn the program back over to Mr. Dan Glaser, President and CEO of Marsh & McLennan.
Thank you, Aaron. This is a great day for Marsh & McLennan. I think one of the days that when we look at our history is an important one. Starting from about 10 years ago when we were rebuilding some of the capabilities of the firm, we talked about that we needed to earn the right to do a large transaction. A large transaction would not have made sense for us 5 years ago or 7 years ago. We needed to build a proper foundation. We did so. We maintained lower leverage just because of this kind of opportunity to where if it ever came about. We were prepared. One of the things I was thinking about as well, obviously the U.K. is our second largest country in Marsh & McLennan. Not including JLT, we have over $2 billion of revenue and approaching 10,000 people.
Despite our short-term growth hiccups over the past couple of years, we believe the U.K. is a great place to do business. Sure, Brexit creates some short-term uncertainty. So what? We are building a company that should perform well in the short term, medium term, and long term. Anybody who thinks the U.K. is not a good place to invest doesn't know Great Britain. I lived in London for 10 years. Britain is a remarkable country filled with resourceful and resilient people. We are happy to bet on Britain. I would like to thank all of you for joining us on the call this morning. I'd like to thank our clients for their support, and our colleagues for their hard work and dedication in serving them. Have a good day.
Thank you for your participation. This does conclude today's program. You may disconnect at any time.