Good morning. I'm Greg Peters. I'm the analyst following Willis Towers Watson, who will be our next presenter. I'm pleased to welcome them back to the Raymond James Institutional Investors Conference. Willis Towers Watson is currently in the third year of a transformative acquisition merger. This merger acquisition was designed to deliver revenue growth, revenue synergies at improved margins, at a lower tax rate. The company's delivered on all three metrics so far. From management, we have Aida Sijamic, who serves as Director of Investor Relations, and John Haley, who's the CEO. With that, let me turn over to John.
Thanks, Greg. Thanks very much, Greg. It's a pleasure to be back at the Raymond James conference. We always appreciate a chance to meet with you folks. This is the normal forward-looking and non-GAAP measures statements. Won't read them. Who is Willis Towers Watson? As Greg said, we are a merger between two organizations, Willis, who was primarily in the insurance brokerage space, insurance and reinsurance brokerage. Towers Watson, who was primarily in the human resource consulting space. Generally retirement and healthcare, administering programs for them, and providing value around that. In each case, there were some other things we were involved in also, those were the main thrusts of each of them.
The reason for the merger was this notion that this whole advisory brokering and solutions were really coming together in the future, and that by putting together a company that did that, we would be advancing the strategy of both organizations. The end one is that we have this organization that is focusing, as I said, on really managing risk. We do that through our brokerage and other solutions on optimizing benefits with our retirement and healthcare consulting, cultivating talent. We have a very large talent and rewards consulting area. We're the world's largest exec comp consultant, for example. We do employee opinion survey results. We have the world's largest database of employee opinion survey results, so we can do very rich analysis on that. We work on designing performance management plans, et cetera.
With our reinsurance and also we have an investment advisory operation working primarily with pension plans that can expand capital power. We have an operating team, an executive team, that has been in the business for a long time. I think we have people that at the operating committee, generally, most of the folks have been in the business for 20 plus years. They've seen a lot of the ups and downs, have been through various M&A transactions over the years. I think know what we need to do to make that successful. I'll come to it in a minute. I think the history of this executive team and their preparation is something that I think has been paying off in the first couple of years here.
One of the things, I'll talk a little bit about this in a second also, the idea is that we could, with an integrated focus across all of these different lines, we can create extra value for all of our stakeholders, for our clients, our shareholders, and also for our colleagues around there. The company itself goes back a long time, back to 1828, and we have more than 43,000 employees now in over 140 countries around the world. Let's look at some of the numbers with us. Our revenue in 2017 was a little over $8 billion, and our EBITDA, our adjusted EBITDA, was 23.2%, $1.9 billion. As I mentioned, we've got about 43,000 colleagues around the world in over 140 countries. You can see from this first pie chart up here, the business mix that we have.
Human Capital and Benefits, that's mostly from the old Towers Watson, it's got almost $1 billion in there from Willis, they did a lot of retirement and healthcare brokerage. It's also got the retirement and healthcare consulting and some administration in there from Towers Watson. That's the largest segment we have, about 39% of the company. The second largest is Corporate Risk and Broking. That's about a third of the company. That comes directly from Willis. Then we have two somewhat smaller segments. Investment, Risk and Reinsurance, this is also a segment that is an amalgam of pieces, some from Willis, some from Towers Watson. It's got Willis Re in there. That's the biggest part of that 19% of the company. We have our investment consulting operation.
We have an important operation in Insurance Consulting and Technology that came from Towers Watson. Towers Watson's the largest actuarial consultant to insurance companies, and had a unit that focused on not just the consulting, but delivering very sophisticated software to them. That's continued into the new company, but perhaps more important, that software is very valuable to the Corporate Risk and Broking and reinsurance operations that we have with Willis. It's one of the big synergies that we got out of there. Then the smallest part of the business, coming in at about 9%, but by far the fastest-growing, has been Benefits Delivery and Administration, but this houses our healthcare exchanges. We run private healthcare exchanges in the U.S. I like to emphasize that we're not on the Obamacare exchanges. These are private healthcare exchanges that we run there.
By mix, about half the revenues are in North America. We got 22% is in Great Britain. That's the next biggest part of the company. Then 16% Western Europe and 12% in international. One of the things we wanted to do with the merger is we saw opportunities to grow some of the businesses that came over from the legacy company in different sections of the market. Towers Watson was a company that focused on the very large market, worked for 82% of the Fortune 1000 and 78% of the Fortune Global 500. In each of those cases, 82% of the Fortune 1000, we had really deep relationships with maybe 45% of the Fortune 1000. Still an enormous section of the large market there, and 84% of the FTSE 100, probably over, in terms of really deep relationships, may have been 55%, 60% there.
Anyway, very significant there. Willis had very significant relationships with middle market clients. I think just in the U.S. alone, over 20,000 mid-market clients. One of the things we wanted to do with this is we saw opportunities. Willis had relatively limited exposure in the P&C market, in the large market in the U.S. We wanted to leverage the Towers Watson relationships to build up that. Towers Watson, with the healthcare exchanges, saw that the big market for healthcare exchanges in the future was, or at least in the short to medium term future, was going to be the middle market. Willis gave us an entree to the middle market that we hadn't had before. Together, I mentioned this notion of advisory brokerage and solutions, and this is a chart that tries to capture that.
Let me just mention a little bit about how did we come into this. I was visiting with Dominic Casserley, who was the CEO of Willis, a year or so before the merger, and we were talking about where our businesses were headed. I was visiting Willis because they were an important client for us, not just of our consulting operation, but also we ran the healthcare exchange for their business in the U.S., and they also were a channel partner sending business to us. We were catching up on what we were each doing. I was mentioning that Towers Watson had its roots as just a consulting operation.
What I had found was that over the years, we had seen clients asking more and more for us to leave behind some tools or something like that, or provide other solutions when we were doing consulting assignments. If I thought back to 15 years ago, and we were going to get a consulting assignment, say on performance management or compensation or something, we just got hired for that assignment. About seven or eight years ago, we started seeing clients say, "Well, okay, if we hire you for this, what software can you give us to implement that performance management solution?" "What software can you give us to implement that compensation solution?" We were seeing this in our retirement business, healthcare, our insurance consulting.
At Towers Watson, we had started an initiative that by 2020, we wanted our tools and processes and solutions to be a much bigger part of what we were doing. Part of what we were doing there was we were going to have to get some brokerage capability because some of the solutions we had in mind could only be offered through a broker. As I was talking with Dominic about this, he was talking with me about how Willis was moving from the brokerage and solutions area to finding that their clients were asking more for their brokers to provide more consultative or advisory capabilities.
They were sort of pioneering this notion of the analytical broker, that the broker is not just somebody who knows what wine to order or which is the best golf course to play, but actually is somebody that can provide you some real analytical advice. As we're talking, we're looking at both of our companies are coming together in this whole advisory, brokerage, and solutions area, and that's what we are attempting to do with this. I thought it was something that, for us at Towers Watson, would move us ahead on our strategy and probably do it with somewhat less execution risk than we might have had otherwise.
When you think about this is built around the four pillars there, the clients, where we now have an expanded scope of services that we can offer to clients across a broader range, the acceleration of our strategic imperative there. We got some synergies. I mentioned the dealing with the different clients in the different sections, and then also our Insurance Consulting and Technology supporting that. Finally, one of the things we thought was important as we looked at the different values of the two companies, they were ones that we thought meshed together well. As Greg referenced in the introduction, when we came through and we talked about the value creation at the time we were doing the merger, we talked about three areas.
One was some identified revenue synergies, about $75 million in a global health and group benefits area that Towers Watson was just beginning to get into this right before the merger. Importantly, this was an area that we needed brokerage capabilities to get into. Towers Watson had identified something called, I can't remember, Brokerslink or something like that we were going to use, and had a good relationship with them. Now with the merger, we could actually use the Willis brokers, and that would advance our strategy. In the exchange market, the healthcare exchanges, Willis gave us entrée into the middle market that as Towers Watson we didn't have. One of the things we had found in our strategy, I had talked about by 2020, we wanted to have more tools and processes. We also wanted to expand our presence in the middle market.
What I had found was it was relatively easy for us to build innovation more into the company, to start developing more tools and other things that we could deliver to clients. One of the things that when you start building tools, though, is you want to be selling to the middle market also, and not just to the large market, because the large market, you only have so many clients, but in the middle market, you've got enormous scope for selling to all those clients. I think I underestimated how hard it is to just all of a sudden get a relationship with people in the middle market. What we were doing by getting together with Willis was we were all of a sudden establishing a lot of those direct links, and you'll see in a minute, but that's paid off in the healthcare exchanges, certainly.
We saw an opportunity for increased penetration in the large company P&C market in the U.S. We set out a goal of adding a $200 million run rate of revenue by the end of 2018. To put that in perspective, that's about 2% of that market. We estimate that it's about a $10 billion market. Starting the merger, Willis had 3.5% of that market, about $350 million. We were attempting to go from $350 to $550, which is a pretty big increase. We identified some cost and tax synergies, thought we could save $125 million a year in expenses and $75 million a year in taxes. Willis, which is the acquiring company from the accounting perspective, was an Irish company. We were changing our domicile. That was a big part of getting some of those tax savings.
At the end of the second year, when we look at some of these goals, the revenue synergy on the $75 million on the global health and group benefits, there's 100% chance that we will achieve that. In fact, we'll probably go by that by a healthy margin. That's just been extraordinarily successful. The goal for the active exchanges, the $100 million to $250 million, we came out of the gate very fast, and in 2016, we added about 70,000 new lives on the middle market exchange. 2017 was a down year for the middle market as a whole for exchanges as a whole in the U.S. We believe that a lot of the talk of potential changes to Obamacare, to the ACA, put a dampening effect on people moving into exchanges. We think we had the best year of any of the people selling exchanges.
We don't really know because our competitors stopped releasing their information about their sales. Even though it was a bad year, we think we've actually established ourselves as the clear market leader. Our expectation is 2018 will look more like 2016. If so, we expect to come in right around the lower end of the goal. I think the important thing here is that we believe that exchanges are going to be an extremely important part of the way healthcare is delivered in the U.S. The exchanges will be growing year after year in the future. The fact that we've established our position in the marketplace, we think that's very important. 2018 goal of $200 million of large company P&C work. We've gotten about the right amount of accounts, but the average account size has been lower than we had anticipated.
We're expecting right now we're going to come out at about $150 million of sales. We will not hit this revenue synergy. This won't end at the end of 2018. If we get the $150, that'll get us to having a 5% market share. We see no reason our market share shouldn't be in the double digits. We intend to continue to grow that year after year also. There's a revenue synergy which we hadn't identified in the beginning, which is reinsurance and the Insurance Consulting and Technology. I mentioned that the technology that we have there could be easily adapted and used in both the reinsurance and in CRB. We think that'll generate about $25 million of extra revenue. Overall, we'll probably come out maybe slightly behind, maybe at just the very bottom of the range of the revenue synergies.
With some opportunity to continue to grow, I think, in the future. In terms of the cost and tax synergies, we had given the goal of $100 million-$125 million in cost savings. We're already at $130 million, and we've raised that goal to $175 million for the end of 2018. We've hit an adjusted tax rate of 22% for the full year 2017. We haven't fully figured out the impact of the new tax bill yet. Not because we haven't had people working on it, but because there's regulations to be written, so we just don't know all the details of that. Our estimate is that it'll probably have minimal impact if we did nothing. Minimal impact means maybe a 1% increase in the tax rate if we did nothing. There's some things that we were already planning to do that would bring that down.
We think we should be about where we were beforehand. Not much impact one way or another. Importantly, let me just take a couple minutes on the financial management. Look, we believe in managing with financial discipline, and I think one of the things we've been really focused on the first couple years of this merger is to make sure that we do things in a disciplined way throughout the whole organization, that we pay a lot of attention to forecasting, because if you don't get your forecasting right, you can't run your business correct, that we build the right kind of discipline throughout the organization. I think the history has been maybe that the company hasn't always delivered on the targets that it's had out there, and I think we've started to change that around.
We had a rough 2016. 2017, we came in and delivered on everything we said we would, and I think we're set up for the future for that. In terms of we want to drive free cash flow, I think one of the things that our new CFO, Mike Burwell, and I have been talking to the board about is that one of the maybe two or three most important single metrics for this year is to hit our free cash flow projections. You're going to see a real emphasis on that over the coming years. In terms of capital allocation, we want to maintain our investment grade rating. We're a low investment grade rated company, and we want to continue there. Other than that, we'll expect to return excess cash to shareholders.
I think by the end of 2018, we would be in a position where if we wanted to, we could contemplate some acquisitions. I think we always want to be looking out to see what's out there. Frankly, we think that it's hard to find things that are more attractive than investing in our own stock at the moment. It's pretty high hurdle for any acquisition. We're committed to making sure that we are no surprises and have some transparency of results, and make goings-on at WTW as clear as we can. If we screw up, let people know that and let them know about how we're going to fix it. Again, meeting our commitments is one of the things that we've been preaching to the company everywhere. I've sort of touched on a lot of this already.
I won't take a lot of time. Human Capital and Benefits, again, the biggest segment, and retirement is in here. Retirement is a very slow growth area, zero, one, 2%, something like that. It's 16% of our business. It's 24% of our profits. It's an enormously important part of our capabilities to either invest in new things, to finance innovation, and in terms of building the company of the future. We love the retirement business, and we're glad it's a reasonably significant part of that. We have a lot of work in healthcare, and healthcare consulting is in Human Capital and Benefits. Healthcare broking work around the world is in Human Capital and Benefits. We think that's a market that's just going to be more and more important in the future. We're delighted to be participating in that.
As I said, we have a broad array of what we do in terms of human resources and talent and rewards that we do. The Corporate Risk and Broking, we are the third-largest broker in the world. The big thing we want to improve there, we think we can improve our margins somewhat over the coming years. That provides us, we think, with some good upside. In addition to that, as I mentioned, the big focus is going to be we want to continue to grow the middle market in North America. We love the fact that we have the positioning we have as one of the big providers to the middle market. We see that as a lot of growth.
We also look in the U.K., in the large corporate market, we probably have a 15%-18% market share, and we're down at around 5% in the U.S. We expect to grow that. That's one of the reasons why I say we think getting to 10% in the long run is certainly something that should be achievable. Investment, Risk and Reinsurance, we have Willis Re, which is the third-largest reinsurance market in here. It's hard to do comparisons directly to some of our competitors because in Willis Re, we have only our treaty reinsurance. Our facultative we have in the Corporate Risk and Broking. The facultative, where you've seen a lot of growth over the last few years. Our growth rates look a little bit lower. We think if you combine them, it would tell a different story.
We have a large investment consulting operation. It's been centered in the U.K. That's where a lot of our intellectual capital is. It's been an area of innovation. We recently rolled out The Asset Management Exchange, which will connect investors and the clients in using the same exchange principles in some ways that we use from healthcare. That's worked out very well. We're going to be rolling that out in North America in the coming year. Finally, the healthcare exchanges, I've referred to them, that's an area that we see being the biggest growth going forward. I've talked about the benefit revenue splits. Let me get to the fourth quarter performance. We had a 5% constant currency growth, 6% organic. The diluted earnings per share were $2.21. We had a 23.3% margin.
The margin's up about 100 basis points from where it was the prior year. We are targeting trying to get to a 25% margin by 2018. We have a ways to go here. We knew that it was a difficult one to achieve in some ways, but still realistic, we think, and our budget gets us to the 25% for this year. If we do, we're targeting getting to earnings per share for this year of $10 or so, $10 plus. When we look at the particular segments, all of our segments were up in the fourth quarter. Human Capital and Benefits was up 4%, Corporate Risk and Broking 7%, IRR 4%, and the Benefits Delivery and Administration 11%.
One thing I should say about Corporate Risk and Broking is when we first did the merger, that was an area where we actually lost revenue in 2016. We had negative revenue growth in 2016. Near the end of 2016, we made some changes, and we thought they were going to improve things. We saw the revenue growth get to zero in the first half of 2017 and then accelerate near the end. We feel pretty good about that. These are the similar numbers for the full year, and as you can see, we have 4% constant currency and organic growth, $8.51 per adjusted earnings per share, and we're looking to take that up to north of $10 this year. All of the segments had good growth during this last year.
During calendar 2018, our goal is to have revenue growth somewhere in the 3 to 4% range, adjusted EBITDA around 25%. We expect our income tax rate to be 24% or a little bit better. Our guidance is for $9.88 to $10.12 per share. The guidance, we have the exchange rates that are there. The other key number is the free cash flow of $1.1 billion-$1.3 billion. As I mentioned, that's one of the key things we'll be focused on. Let me just conclude by saying I think we have a great brand. We have great relationships with many of the world's largest corporations, and we have a strong financial history, and I think good leadership that'll drive shareholder value. Thanks very much. We have time for one question. Oh, okay. I thought you were giving me the hook. Go ahead.
One on regulation. There's increasing regulation in several areas, the investment business, the markets, studies, brokerage generally again in the U.K. and aviation studies as well. How would you rank those in terms of potential?
Can you repeat the question? Oh, yes. There was a question about there's a number of regulatory initiatives. There's the aviation investigation. There's some reviews on the investment business and some reviews on just the brokerage business. These are all U.K.-centric. I would say that I really can't comment really much on any of these, but I would say the only one that has really advanced at all is the aviation investigation, which started about a year or so ago, maybe a little over a year. The others, for example, the review of the brokerage market in the U.K., people were asked to submit some information, and the information was due by the end of February. With both that and the investment ones, we're in the first inning really of those kind of things, I think. All right. Thank you.