Earnings Call: Q1 2021

Apr 29, 2021

Quarterly report

Good morning. Welcome to the Willis Towers Watson First Quarter 2021 Earnings Conference Call. Please refer to the willis towerswatsons.com for the press release and supplemental information that was issued earlier today. Today's call is being recorded and will be available for the next 3 months on the Willis Towers Watson's website. Some of the comments in today's call may constitute forward looking statements within the meaning of the Private Securities Reform Act of 1995. These forward looking statements are subject to risks and uncertainties. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law. For a more detailed discussion of these and other risk factors, Investors should review the forward looking statements section of the earnings press release issued this morning as well as other disclosures in the most Decent Form 10 ks and in other Willis Towers Watson SEC filings. During the call, certain non GAAP financial measures may be discussed. For reconciliations of these non GAAP measures as well as other information regarding these measures. Please refer to the most recent earnings release and other materials in the Investor Relations section of the company's website. I'll now turn the call over to John Haley, Willis Towers Watson's Chief Executive Officer. Please go ahead. Thank you, and good morning, everyone, and thank you for joining us today on our first Quarter 2021 Earnings Call. Joining me today is Mike Burwell, our Chief Financial Officer. Today, we'll review our results for the Q1 of 2021. I'm pleased with our Q1 financial results and the continued momentum in our business. We generated organic revenue growth of 4% and 110 basis point adjusted operating margin improvement. Each of our operating segments contributed to the margin expansion this quarter, driven by new business generation, strong retention rates and increased operating leverage across our core businesses. Through the Q1 of 2021, our colleagues continued their tremendous efforts to serve our clients through these challenging times and delivered a strong financial performance. I'd like to extend my heartfelt thanks to all our colleagues for their presentation, professionalism and support of one another. Thank you for continuing to bring your very best to the table every day. Your solidarity and resilience are truly inspiring. Our accomplishments in quarter 1 are reflective of our purpose and action. The impact of our work extends to the people in our client organizations, to each other and to our communities. For many of us, This greater impact is our why. It's the purpose behind the work we do, creating clarity and confidence today for a more sustainable tomorrow. Grounded in this sense of purpose, we've continued to partner with our clients to help strengthen their resilience and progress towards long term success. The events of the past year have sharpened our focus. Our clients, our colleagues and our other stakeholders Expect us to conduct our business with integrity and in an environmentally and socially responsible manner with high ethical standards. We take these expectations seriously and have embraced principles that are aligned with our business priorities, Are consistent with our commitment to ethical and sustainable practices and demonstrate our respect for the communities in which we operate around the globe. For this reason, Willis Towers Watson has partnered with companies worldwide to increase racial justice by joining the World Economic Forum's Racial Justice and Business Initiative. The purpose of this initiative is to build more equitable and just workplaces for professionals with underrepresented racial and ethnic identities. Willis Towers Watson is among 44 founding members, Representing 5,200,000 employees and 13 industries. As part of this ongoing global conversation with leading organizations worldwide, We can both learn from them to increase racial diversity and inclusion inside the company and contribute our own ideas to address the issue more broadly. In working towards the goal of improving the communities which we serve, I'm proud to say we recently announced our commitment to delivering net 0 greenhouse gas emissions in alignment with the science based targets initiative by 2015 at the latest, with at least 50% reduction by 2,030. Through improvements to energy efficiency in our operations, leveraging virtual meeting tools, promoting recycling and encouraging colleagues to adapt environmentally responsible habits. The company aims to minimize its carbon emissions and any other related harmful environmental impacts. Turning now to our proposed combination with Aon. We continue to be excited about the potential of the combined firm and are committed to its completion. Upon close, we will serve a common purpose, to serve clients and improve communities, blending the best of both of our firms. We'll innovate on behalf of our clients and co create solutions to address unmet client needs. We will build inclusive and diverse teams, engage colleagues and enable them to deliver their full potential. During the Q1, we continued to build momentum towards closing the transaction with Aon and made significant progress in our integration planning efforts. We anticipate closing in the first half of twenty twenty one, subject of course to regulatory approvals. Now let's move on to our Q1 results. Reported revenue for the Q1 was $2,600,000,000 That's up 5% as compared to the prior year Q1, Up 1% on a constant currency basis and up 4% on an organic basis. In quarter 1, We continue to face some headwinds due to macroeconomic factors such as COVID-nineteen. In the prior year, we only started to see the impacts near the end of the first quarter. We started to experience some improvement in areas where revenue is tied to discretionary project spending. Similar to last quarter, We experienced solid financial performance in areas where we have a well established market position, mature relationships and annuity or compliance driven business. Net income was $736,000,000 up 135% for the Q1 as compared to $313,000,000 of net income in prior year Q1. It should be noted, we disposed of our Miller wholesale business on March 1, 2020 for $696,000,000 in proceeds and a gain of $356,000,000 on a tax free basis or $2.73 per share. Adjusted EBITDA was $730,000,000 or 28.2 percent of revenue for the Q1 as compared to 680,000,000 or 27.6 percent of revenue for the same period last year, representing a 7% increase on an adjusted EBITDA dollar basis and 60 basis of margin improvement. For the quarter, diluted earnings per share were $5.63 An increase of 140% as compared to the prior year. This included a net $350,000,000 gain on disposal of operations, Mostly resulting from the sale of our Miller Wholesale business. Adjusted diluted earnings per share were $3.64 for the 1st quarter, Reflecting an increase of 9% compared to the prior year. Overall, it was a solid quarter. We grew revenue, we enhanced margin performance and we increased earnings per share. Now let's take a look at each of the segments in more detail. To provide clear comparability with prior periods, All commentary regarding the results of our segments will be on an organic basis unless specifically stated otherwise. Segment margins are calculated using segment revenue and they exclude unallocated corporate costs such as amortization of intangibles, Certain transaction and integration expenses resulting from mergers and acquisitions, as well as other items which we consider non core to our operating results. The segment results do include discretionary compensation. The Human Capital and Benefits HCB segment revenue was Flat on an organic basis and constant currency basis compared to the Q1 of the prior year and generated the similar level of revenue with 1 less billing day this year. This result represents sequential revenue improvement compared to our prior quarter, which was driven by increased demand for advisory services across various lines of business. Talent and rewards revenue decreased nominally With the uptick in executive compensation and rewards strategy work offset by declines in our traditional survey sales and communications and change management offerings. Our health and benefits revenue was flat for the quarter. We continue to grow revenue from advisory work in North America and global benefit management and local brokerage appointments outside of North America. However, this growth was offset by lower commission based revenue, Chief Minimum Pension Equalization Work in Great Britain, Offset by Declines in North America, Resulting From 1 Less Billing Day and Less Derisking Activity. Technology and Administration Solutions revenue grew moderately, primarily due to increased project work and new business activity in Great Britain. HCB's operating margin increased by 20 basis points compared to the prior year Q1 as a result of continued expense reduction efforts. We're pleased with HCB sequential improvement and margin growth. Our long term outlook on HCB remains positive. The pandemic has changed the needs and demands of workers and workplaces. HCV stands ready to help clients navigate the transition. Now let's look at Corporate Risk and Broking or CRB, which had a revenue increase of 5% on an organic percent respectively for the Q1. The revenue increases were primarily driven by new business wins, most notably Source and Finnex insurance lines. North America's revenue was up by 6% in the Q1, driven by strong renewals across all regions, But also particularly in the Finnex lines. Revenue for Western Europe decreased 2% due to both the timing of some revenue moving to later quarters and the departure of some senior staff, which pressured business in certain geographies. CRB revenue was $810,000,000 for the quarter with an operating margin of 20.0 percent compared to $739,000,000 of revenue with an operating margin of 17.2 in the prior year Q1. The 2 80 basis point margin improvement reflects the continuation of effective cost containment. To see the strong top line growth and improved profitability in the Q1 is encouraging and we remain optimistic about both CRB's short term and long term growth prospects. In a world marked by uncertainty, CRB goes beyond the traditional boundaries of insurance products and risk management to deliver services that help organizations prepare for what may lie ahead. Turning to Investment Risk and Reinsurance or IRR. Revenue for the Q1 was $605,000,000 An increase of 4% on an organic basis and a decrease of 5% on a constant currency basis as compared to the prior year Q1. Reinsurance with growth of 4% continued to lead the segment's growth through a combination of net new business and favorable renewal factors. The Insurance Consulting and Technology and Investment businesses also contributed to the segment's revenue growth. Both lines of business were up 8% compared to the Q1 of the prior year, having benefited from increased demand for advisory work. Insurance, Consulting and Technology revenue growth was aided further by increased software sales. The wholesale business was down 14% on an organic basis. Although that's reported as organic, about half of the decline Was because we transferred wholesale special contingency risks business to the CRB segment in the Q4 of 2020. The remainder of the revenue decline was largely caused by ongoing pressure on various insurance lines from COVID-nineteen. As a reminder, we sold the wholesale business on March 1, 2021. IRR had an operating margin of 47.9%, up 2 80 basis points as compared to 45.1 percent for the 1st prior year Q1. The strong margin expansion was a result of careful cost containment efforts coupled with solid top line growth. IRR helps businesses and communities to Sustainably Navigate the Risks and Opportunities Ahead. IRR's powerful combination of advisory services, Technology Solutions and Analytical Capabilities continues to create value for companies as they reevaluate risk and reinforce resilience post pandemic. Revenue for the Benefits Delivery and Administration or BDA segment increased by 23 marketplace, primarily by TRANZACT, which contributed $148,000,000 to BBA's top line this quarter with growth in Medicare Advantage products. The benefits outsourcing business also contributed to the increase in revenue, Which was largely driven by its expanded client base. The BDA segment had revenue of $287,000,000 with a 2.5% operating margin as compared to revenue of $231,000,000 and a negative operating margin of minus 4.7 percent in the prior year Q4 Q1, excuse me. We continue to feel positive about the momentum of our VDA business for 2021. For many people, the pandemic has highlighted the importance of securing health and wellness plans that meet their individual needs. BDA provides education, communication and decision support tools that empower employers, employees and retirees to navigate the changing world of benefits. Overall, I'm very pleased with our results this quarter. We delivered strong overall financial performance with top line growth, margin expansion and EPS growth, all while continuing to make progress against strategic initiatives and our proposed combination with Dayon. Now I'll turn the call over to Mike. Thanks, John, and good morning to everyone. Thanks to all of you for joining us. First, I'd like to extend my appreciation to all our colleagues. We've asked a lot of our teams and our colleagues continue to pull together and deliver. I'm proud of all the work they have done to continue supporting our clients, each other and the communities in which we work and live. We're off to a solid start this year. While we continue to face some headwinds from COVID-nineteen pandemic, we are reassured by the improved demand for our discretionary services and Solutions and our ability to generate profitable growth. We're pleased to see another quarter of solid revenue growth with underlying adjusted EPS growth. While free cash flow decreased and improved when normalized for certain significant litigation and compensation payments made this quarter. Now I'll turn to the overall detailed financial results. Income from operations for the Q1 was 452,000,000 or 17.5 percent of revenue, up 2.90 basis points from the prior year Q1 income from operations of $360,000,000 or 14 point 6% of revenue. Adjusted operating income for the Q1 was $579,000,000 or 22.4 percent of revenue, up 110 basis points from $525,000,000 or 21.3 percent of revenue in the prior year Q1. For the 1st quarters of 20 2021 2020, our diluted EPS were $5.63 $2.34 respectively, Which included the $359,000,000 gain on disposals. For the Q1 of 2021, our adjusted EPS was up 9% to 3 point $0.64 per share as compared to $3.34 per share in the prior year Q1. Foreign currency rate changes caused an increase in our consolidated revenue $86,000,000 or 4 percent of revenue for the quarter compared to the prior year Q1 with $0.12 tailwind to adjusted diluted EPS per share this quarter. Our U. S. GAAP tax rate for the Q1 was 11.5% versus 20% in the prior year. The Current quarter tax rate was lower primarily due to the tax exempt disposal of our Miller business. Our adjusted tax rate for the Q1 was 20.5%, up nominally from 20.4 percent in the prior year. Turning to the balance sheet. We ended the Q1 with a strong capital and liquidity position with cash and cash equivalents of 2,000,000,000 And full capacity in our undrawn $1,250,000,000 revolving credit facility. We also successfully reduced our leverage profile by repaying $500,000,000 of bonds outstanding during the quarter. Willis Towers Watson Remains well positioned from a liquidity perspective. We aim to continue to maintain a strong and durable balance sheet and continue pushing forward on our cost savings and efficiency initiatives. As the economic recovery unfolds, we will continue to monitor the ever evolving impact of the pandemic and are prepared to take appropriate measures as needed to preserve our financial position. Free cash flow was negative $165,000,000 compared to negative $43,000,000 in the prior year. The decrease in the year over year Free cash flow was due to the net legal settlement payments of approximately $185,000,000 in respect to the previously announced Stanford and Willis Towers Watson merger settlement and higher incentive compensation and benefit related items of approximately $180,000,000 Absent these one off items, free cash flow would have more accurately reflecting our run rate improvements in working capital and cost containment efforts. We have made tremendous progress to improve our free cash flow in 2020. We remain dedicated and focused on maintaining our progress in this area in 2021. In terms of capital allocation, Quarter of 2021, we paid approximately $92,000,000 in dividends. We do not expect to repurchase any shares for the remainder of 2021 given Certain prohibitions in the transaction agreement with Aon in connection with our pending business combination. Pension contribution to our qualified plans totaled $86,000,000 in the Q1 We are currently projecting contributions of $126,000,000 for 2021. As a general matter, COVID 2019 pandemic did not have a material adverse impact on our overall financial results in 2020 or in the Q1 of 2021. However, the pandemic did continue to impact revenue growth, particularly in some discretionary lines, and we expect the effects of COVID-nineteen on general economic activity May continue to negatively impact our revenue and results for the remainder of 2021. The duration of the pandemic, the full magnitude of its economic impact and the subsequent speed of recovery remain unknown. In the meantime, we remain focused on maintaining a strong balance sheet, liquidity and financial flexibility. We're very pleased with these Q1 results. They're a direct reflection of our resilience and our continued focus on strategic priorities. Our first quarter results were very encouraging. We have momentum, solid financial results and a strong balance sheet and an excellent team, Which gives me confidence in our ability to continue driving value for all our stakeholders. And I'll turn the call back to John. Thanks very much, Mike. And now we'll take your questions. To withdraw your question. And James. Please proceed with your question. Good morning, John, Mike and team. So I'll just ask 3 questions. And First, I realize you're bound by Irish takeover law, but I guess it might be professional malpractice if I don't ask you a merger question. Two parts of the merger question. You said in your comments, you're still expecting expect to close in the first half of 'twenty one, pending regulatory approval. I'm wondering, if I'm not mistaken, the Phase 2 extension from the EC goes into July, so that would imply a second half potential regulatory approval. And the second piece on the merger is, I know you haven't commented on it, but The disclosures in the press suggest that you're going to exceed the revenue divestiture cap in the purchase documents. So I was just wondering if you could give us some First of all, on the EC, I think their extension goes into July. That doesn't mean it has to run that long. It's still possible to close June 30 and be consistent with that extension. So no particular conflict there. And I'm sorry, what was the second question? The second piece is on the divestitures. The leaks to the press, Given what we're hearing suggests that you might exceed the $1,800,000,000 revenue divestiture cap that's in the purchase documents And just trying to reconcile that and your perspectives on that to the extent you can comment on it. Yes, actually, as and you won't be surprised to hear that we're really not in a position to speculate on any potential divestitures. Yes, I figured. Okay. Well, let's pivot to the producer retention comment that you made regarding CRB and let's expand it. Can you just give us an update? I know from time to time you have comment on employee retention in the past. Can you give us a sense of how the retention has stacked up through the Q1? We have seen reports in the press of certain teams leaving. Just curious how the Willis franchise exists today versus where it was a year ago? Yes. So a couple of things, let me say. First of all, I think our When we look at our turnover, say, rolling 12 months today compared to where it was a year ago, And I look at it segment by segment, it's pretty much about the same, Maybe slightly improved in general. The one segment that is up is BDA. And That's just a function of some of the expansion I think of TRANZACT and we have a lot of turnover there. But overall, our if I look at it segment by segment, our turnover is slightly improved. Now At the same time, every time a transaction like a big merger or acquisition gets announced. There are some people that decide they don't want to be part of the new station and certainly we've seen that in some instances. But when we look at it in terms of the overall impact, it's not Certainly showing up as a big overall impact, but we can certainly point to isolated instances where that's happened. Those are the kind of things we've seen happen before in this business and we think We're prepared to deal with them, but it is something we continue to look at. Got it. I guess the final question Would be on free cash flow. I know you called out the Stanford cash payment settlement in the Q1. If we exclude that and think about the full year, how are you feeling about free cash flow for 2021 After what was a phenomenal result in 2020. Well, I'll maybe just give you a quick reaction from me, which is that I couldn't be happier with our cash performance in the Q1. I thought we had a tremendous Q1 last year And I think we did significantly better this year. So I was really pleased to see what happened. As Mike mentioned, we did have a couple of trends things that affected us this year compared to last year, but I see continued progress being made. But Mike, maybe you want to comment on that. Yes. Thanks, John, and thanks for the question, Greg. Yes, I mean, we have put a lot of effort and a lot of focus to Have repeatable processes and our colleagues have been working very hard and continuing to deliver, as John said in terms of delivering that free cash flow. So although as you know, Greg, we are not giving any guidance. But nonetheless, we're very pleased with what's happened here for the quarter. And as I say, I'm very proud and pleased with what the team continues to deliver. Got it. Thank you for the answers. Great. Thanks. Your next question will come from Elyse Greenspan with Wells Fargo. Please proceed with your question. Hi, thanks. Good morning. My first question, was going back to, you had mentioned senior staff departures, right, within CRB, within Western Europe. Team. And I guess tying that together with your response to Greg's question in the fact that you said With mergers, right, there's always some type of kind of individuals that will choose to leave. Is that the only area, I guess, of your business where you noticed A more significant impact from some employees that might have left the organization? I would have to say, Elyse, I think we've seen, you might see Half a dozen people leave here or half a dozen people leave there, and so you see some isolated ones. I think the Western Europe one was probably the most significant one we saw. Okay. And then as we think about, you guys mentioned the impact of the economy Due to COVID still having an impact on your business, right, but if we look on an overall basis for Willis Towers Watson, right, Guys will create 4% organic revenue growth, which was an improvement from what we saw in the past 3 quarters of 2020. So would you expect, just based off of the fact that no vaccines are being rolled out, looks like the economy will improve. Should we view the Q1 as kind of the low bar for the year? And it sounds like there should be some tailwind to organic revenue that the other 3 quarters of 2021 should be better than what we saw in the Q1? Yes, I would say, so first of all, We haven't given guidance. And the reason we haven't given guidance is because this is such A volatile environment and it's hard to predict exactly what's going to happen. But I would say this, we feel better about The rest of the year today than we did when we entered 2021. And we also feel very good about our ability to grow with the market Kit and to compete. So, we're somewhat optimistic. Okay. That's helpful. And then from, you We're talking through expenses and margins and it sounds like there was just kind of growth driving margin improvement as well as expense management throughout the different segments. It doesn't sound like there was anything one off within your margins that We perhaps should think about not continuing, but was there anything COVID related or is it just kind of a good expense management quarter and we could think about that continuing on from here. Yes. I think The theme that Mike had touched upon was our colleagues throughout the organization embracing what we needed to do during COVID and responding. And we've seen them do that. And we do in general, we think these are things that are going to be ongoing. Okay. Thanks for the color. Your next question will come from Phil Stefano with Deutsche Bank. Please proceed with your question. Yes, thanks and good morning. So the growth in transactions continues to be fantastic. It's It's outpacing our expectations. And if I'm not mistaken, this is the 1st segment operating margin that was positive for BDA Outside of a Q4, maybe ever. Can you talk about the extent to which TRANZACT is helping to drive that and the extent to which growth continue to lap the strong growth we saw last year. Mike, do you want to? Yes. We have really been very pleased Transact. If you go back when we announced Transact, we were very excited about What they brought to the table, in terms of their ability to serve the market. We saw it as a market that was Very, very strong and we had put out there in terms of organic revenue growth and as a pretty formidable view over the next several years in terms of what the CAGR growth rate was going to be and TRANZACT has exceeded it. As you said and rightly pointed out in terms of where the margin is in terms of improvement and positive for the first time other than the 4th quarter Happening. Transact has been a big, big contributor of it. So I got to tell you, we see it as doing very well. We really like the Transact team and what they continue to deliver and we couldn't be happier with their performance. Okay. Thanks. And so switching gears a bit and just going back to the potential merger with AAON. Understood that you don't want to comment on any potential divestitures, but maybe I'll comment this from a different angle. If I wanted to take a negative Lens to view this at. I could argue that divestitures in a regulatory approval scenario might be at a forced sale price that will be less than you would get And the market otherwise. And if I layer on top of that incentive comp retention awards, How do you think about these dynamics to get the deal done versus the fiduciary duty to maximize value for shareholders? I mean, I think we always have in mind our fiduciary duty to maximize value for shareholders and when we're considering anything, whether it's acquiring a company, divesting a company or just running our business, So we that's one of our paramount considerations. So maybe to press on this just a bit and then I'll let it go. But is there a level revenues and price that you could get for potential divestitures at which this starts to feel like the deal doesn't make sense anymore For the Willis Towers shareholders. Well, I mean, again, I don't want to speculate on things, but let me just address something as a theoretical matter. If you were told you had to give away businesses and couldn't get anything for them, of course, that would seem like that would not be a good thing for shareholders. So clearly, there's some price at which it occurs. Okay, thanks. Your next question will come from Suneet Kamath with Citi. Please proceed with your question. Thanks. I wanted to ask another one on the pending merger. Can you talk about the client reaction to the deal? And obviously, it's been announced, It's been out there for a year. Are you seeing any concerns around sort of concentration risk with the combined company from your clients. Quite the contrary. Our clients are Very excited about the possibilities that the new firm can bring to addressing unmet needs. And you may remember when Great, Cason, I first announced this merger. What we talked about was the possibility for innovation, The possibility of the new firm being in a better position to address unmet client needs. Clients have responded quite enthusiastically about this. And I would say the fact of the matter is the businesses we're in Across the whole spectrum are all highly competitive businesses and we don't see any concentration risk. Got it. And then on the $400,000,000 retention payment that was part of the deal, Is any of that being paid now, which could be impacting your level of attrition? No. So that's all once the deal closes? Any retention payments are at the time the deal closes or after. Got it. And just one last on that. Is there an element here where the retention payments are effectively being communicated to employees, but not being paid? Oh, yes, of course. Yes. Yes. I mean, it wouldn't have any retention effect if they didn't really know what they were getting. Yes. Okay, got it. Thanks. Your next question will come from Mark Marcon with Baird. Please proceed with your question. Good morning, John and Michael. John, I just want to start off by saying, We don't know if we're going to have a second quarter call, just given that this is going to end up closing, prior. So first of all, congratulations going all the way back to the Watson Wyatt days, for all the shareholder value that you've created Over multiple decades, it's just been an incredible run. So I just wanted to start with that. Can you just talk a little bit about, if there's if the client reaction has all been positive, What would be the driver behind some of the objections that are out there, just broadly, theoretically. Yes. So, first of all, Mark, Thank you very much for those kind words. It's been a pleasure to work with you over the years. And I am actually hopeful that this ends up being my last earnings call and that we close June 30 as anticipated. So I think when regulators look at markets, they go and They talk to clients, they talk to other market participants, they talk to competitors and they get a wide variety of comments from them. Sometimes, you could hear from a small minority of market participants and the regulators still put some emphasis on that. So there's lots of different ways that you could Look at it and at least have the potential to ask some questions about it. But our experience And of course, we're probably going to hear from the clients that are the most enthusiastic about it, I get that. But our experience has been the clients are quite excited about prospects of the combination. Great. And then can you just talk about, so How big is that now just from a revenue perspective, roughly speaking? Mike, you have the figure on that, don't you? Mike, are you on mute? Sorry, John. Yes, so it's about Think about it, I don't know, it's in the $400,000,000 range, something in that range. Okay. And then Willis 3 in the U. S. You wouldn't happen to have that, would you, Mike? I don't think we really disclosed that, Mark, in that kind of breakout. Sorry, would you have an estimation or? No, no. We just really have I'm sorry, Mark, we really haven't disclosed that. Yes. I think, Mark, it's not that Mike doesn't know. It's that we just haven't disclosed that. Yes. I was just saying, this is a public forum and obviously, Yes. I mean, it's fairly obvious what I'm trying to get at, just because it does seem like we There are some press reports that we're going to be above the merger cap, and there are some that are that would Suggest that maybe we're going to be below. And so I was just trying to triangulate on some of the pieces. Is there any comment that you can make just with regards to what seems realistic or what the next step? You've obviously got a long term track record of success. You think about all of the possibilities. You didn't just you're obviously super sophisticated and all of your advisors are as Well, so just it's hard to imagine that you haven't conceived of some of the possibilities that Could come up or and some of the next steps to address those. So just trying to think through like, I mean, even if we're slightly above the merger cap, I mean, there would be a relatively easy reconciliation on that, wouldn't there? Yes. I mean, I think, Mark, so first of all, I think you're right as we think about any of these things with Our partners at Aon about whether we might whether there might be some remedies that we offer to regulatory authorities. As I said to an earlier question, we always have the best interest of the shareholders at mind and doing something That makes sense. But we've we really we're not in a position right now where we can just comment about any potential and certainly not about press reports, which are out there and Sometimes, have some elements of truth, but a lot of times, they're wildly inaccurate. Got it. And just, I mean, from a purely regulatory strategy perspective, Does it make sense to think, okay, the EC was the first priority, next up is the DOJ. And then after that, we go to some of the smaller countries. And if the DOJ and the EC are both on board, It's going to be hard to imagine that some of the smaller countries would end up proving to be decisive. Is that reasonable way to think about it. Yes. Well, I would say that certainly the vast bulk of our business In the BC, including the UK in that and the U. S. On the other hand, We have been meeting with and addressing regulators in jurisdictions throughout the world. And we're committed to working with all of them. We're committed to Making sure they understand the transaction and why this is good for the competitive competition in the industry. And we're not emphasizing necessarily one over the other, but it is true that the bulk of our business is in those two jurisdictions. Okay. And then I mean, I imagine that TRANZACT is going better Anybody anticipated, say, 9, 12 months ago. When we Take a look at the growth that we're seeing here and the possibilities going forward. I mean, what inning do you think we're in With regards to TRANZACT and how powerful that could end up being? Yes. I think we had, and Gene Wicks and Mike Burwell and I, when we were first looking at this, and Gene and Mike are the ones who really led the charge on TRANZACT had lofty expectations and TRANZACT has performed way above Our lofty expectations. So we couldn't be more pleased with how that has worked out. This is a very dynamic market. There's lots of, I think, growth opportunities. There's lots of potential changes, which could We're down to the benefit of organizations like TRANZACT. So we think we're in the early innings, 2nd, 3rd, I mean this is there's a lot left Great. Congratulations to you, John, and also to Gene if he's listening and Mike and everybody else on team. So congrats. Thanks. Thanks very much, Mark. Your final question in queue will come from Meyer Shields with KBW. Please proceed with your question. Thanks. Two really brief questions, I think. 1, John, can you quantify the impact on CRB And its organic growth from the transfer of wholesale business? Mike, you have that number, don't you? It's really immaterial, Meyer. Yes. Very small. I think we talked about that on the last quarter. We said it was material for the wholesale business, but immaterial for CRB. Yes. No, I just want to see whether that held In the Q1. Yes, it does. Okay, perfect. Can you sort of lay out the timeline for when the Western European stuff Left and when the associated revenues kind of disappeared, was that at the same time, is there a lag? It was the middle of last year sometime, I think middle to late middle that folks left, But the revenue impact tends to be noticed a little more in the Q1 when you have a lot of the renewals. Okay. No, that's perfect. Thanks so much. And we have reached the end of our question and answer session. I would now like to turn and the call back over to John Haley for closing remarks. Great. Well, thanks very much, everybody. This is the time when I traditionally say we look forward to updating you on our 2nd quarter earnings in Later this year. I'm actually hoping the transaction is closed and we don't have that call, but if not, we do look forward to updating you then. Have a good day. This concludes today's conference call. Thank you for participating. You may now disconnect.