Good day, ladies and gentlemen. Welcome to the Willis Towers Watson CRB and IRR Leadership update. At this time, all participant lines are in a listen-only mode to reduce background noise, later we'll be holding a question and answer session after the prepared remarks, and instructions will follow at that time. If anyone should require operator assistance during the program today, feel free to dial star then zero on your keypad at any time in order to speak with an operator who will be happy to assist you. As a reminder, today's conference call is being recorded. I would now like to introduce your first speaker for today, John Haley, CEO. You have the floor, sir.
Thanks very much. Hello, everyone. I'm John Haley, CEO of Willis Towers Watson. I'm joined by Roger Millay, our CFO, Todd Jones, the Head of Corporate Risk and Broking or CRB, and Carl Hess, the Head of Investment, Risk and Reinsurance or IRR. Joe Gunn, the Head of the North American Region, is here with us as well. Shortly after our first Analyst Day in September 2016, we announced new leadership appointments for the CRB and IRR segments and the Americas Region. These positions are critical in helping us achieve our long-term objectives, we understand the importance for the investment community to hear from this group firsthand. We have a fairly straightforward agenda today. Both Carl and Todd will provide some prepared remarks regarding their segments, then we'll open up the call for some Q&A.
Please note we're doing our call on our fourth quarter earnings on February 9th. We will not be speaking about the fourth quarter results today, no inferences should be drawn regarding the quarterly results from today's call. We would appreciate your questions being focused on business strategy or merger objectives. Finally, I have to remind you that we may be making some forward-looking statements today that have associated risks disclosed in our SEC filings. Our actual results may be different than expected. In this presentation, we may refer to non-GAAP measures, which we believe are relevant for evaluating our operating results. The definitions are disclosed in our SEC filings and in the slides which accompany today's presentation, which are posted on wtwco.com. I'd like to pass the call over to Todd Jones, the Head of CRB.
Thanks, John. Good afternoon and good morning to everyone. I am going to be going through a fairly brief slide deck before turning it over to Carl on the IRR piece. Before I jump into this, I just want to say I've spent the last 60-plus days spending my time going around the business, reconnecting with a lot of old colleagues and meeting a lot of new colleagues around the group who are connected to the Corporate Risk and Broking business, as well as other segments and business units. I can tell you my optimism is at an all-time high in terms of the opportunity that we have. We certainly have some work to do, I'll talk a little bit about that as we go through the material today. I've very much been encouraged through the first 60-plus days and very excited about the future.
Turning to slide seven, this is really just a reminder of what is Corporate Risk and Broking, and giving you an overview of the segment as it resides today within Willis Towers Watson. The way to think about this is this is really the risk and insurance business of what was legacy Willis globally. We're in the risk advice business, we're in the insurance brokerage business, and we serve companies that range from small to medium-sized enterprises all the way up to the largest of the global multinational firms. We serve them in a variety of ways, as noted. We work with them to identify, quantify their risk, develop strategies around how to manage those, sometimes through insurance vehicles and sometimes through alternative mechanisms.
The goal of the business is to reduce the overall risk of our clients, assessing that cost of risk, which includes both premiums, frictional costs, and other costs associated with managing a portfolio of risks and providing innovative and integrated global solutions. All of which, again, as noted, are underpinned by a process that we've been underway for quite some time around data and analytics and enriching the thinking that we're providing to our clients about decision-making and better outcomes around their risks. This is a global business, it is structured as a global business through our balanced matrix of these four geographies and these five lines of business. I want to give everybody the sense that this very much operates across the entire platform that is Willis Towers Watson. In total, we're placing roughly $23 billion of premiums into the market.
Obviously a substantial presence in terms of the overall premium flow. As you'll note to the right, we've broken down the business by line of business, the lion's share of which is property and casualty, followed by the other four lines of business. As you can see below that, the geographic dispersion, North America being the biggest piece, but obviously pretty substantial businesses in other parts of the world as well.
Turning to slide eight, I wanted to talk a little bit about 2016, before I jump into what we have seen as some strategy and structural issues that I wanted to share with folks on the call today, I do want to make the following point that as I've spent time in the business over the last 60-plus days and frankly had a view on this prior to the changes at the end of October, this is a business that is not broken. This is a business that has many high-performing operations across the group in all of the geographies. Conversely, we have a number of operations for which we need to remediate and fix and get their performance back to the expectations we have of all of our operating units. This isn't a broken business.
It's one that we need to redirect and provide some focus to. I do want to talk a little bit about our plans around that. Definitely wanted to give everyone the sense and confidence that we have some terrific performing businesses, and certainly anticipate that performance going forward. As I think about 2016 and sort of what was overlaid post-merger, there are a couple of things that I wanted to sort of share with this group, just attributes that I think played out in 2016, ultimately, having an impact on the business. The first is this organizational model. I think, as many of you know, we went to a balanced matrix, and CRB as a segment was essentially created and built after the merger. Looking back on it, I think we realized that structure was heavy.
It was somewhat complex in terms of it's not just structure, but implementation and lessons learned as part of that. Out of that, I think the role descriptions and what people wake up every day and think about what they are adding to the organization weren't as clear as they needed to be. Without clarity of role, your speed of execution is not going to be what we want it to be. In setting up a balanced matrix, you had two tension points. You had these global lines of business, and you should have geography, and those two things should be working in collaboration to a common good.
The reality is, in setting this up for the first time, we just weren't as clear as we needed to be about the expectations of lines of business and local geographies, and that they in fact are working together for a common good versus simply doing what they have always done, which sometimes could be at odds with each other. Finally, or not finally, including our priority list, there is a lot to do within the organization, and that really revolves around opportunity. There are many things that we could be doing organizationally in order to add value to our clients and grow the firm. With any priority list that becomes too long, it's difficult to identify the critical few and execute on those most important. Clearly that'll be our mandate going forward.
Change programs in any merger, change programs are going to take some discretionary attention away from our folks, and that in turn can take focus away from our clients, and we needed to acknowledge that. We did have some high-performing geographies, some in international and some of the other parts of the group, that in 2016 did not perform at the level that we've seen historically. When you put that list together, clearly it's going to have an impact on new business, certainly at a minimum. While this isn't making an excuse, it's just sharing some observations about what we've seen for 2016, and frankly, it's a great reminder of where we need to focus our time and effort going into 2017, which is probably a good segue to page nine.
As we think about going into 2017, I'm sharing with you kind of the areas where we are putting our focus and energy behind. I'll start with the first one in the upper left, which is both that this concept of back to the basics, which has been something that we've been talking about internally and externally as well. It's obviously resonating with the folks within the firm as we think about change management. At the end of the day, the business is pretty simple. If we focus on our clients, we focus on our talent, both attracting new talent into the organization and retaining the key talent that we have, and then just disciplined financial management.
If those are the three areas that we get our leaders and business owners to spend their time thinking every day, we believe the issues that I've outlined on the earlier slide are going to be addressed and managed appropriately. I talked earlier about prioritization. We had spent time and now have identified that critical few. Clearly, they are revolving around client-oriented initiatives, where there are things that are not positively impacting client or impacting the financial performance of the business. We are putting those to the side and prioritizing those appropriately, and creating much more focus, as I said earlier, on where people need to be spending their time and effort.
The simplification of the model, I talked earlier about this heavy and complex organizational model. We're working on simplifying that and making that easier to understand for the folks that are operating in that model and obviously for our colleagues that interact with leaders within that model. Work is underway in that regard. The clarification of role description. I mentioned sort of murky role descriptions earlier. We are now being very clear on role expectations and role clarity within the organization so people understand their responsibilities, what they're accountable for, and measuring and delivering on those key attributes. Then finally, communication, that we needed to do a better job communicating what needs to be a simple strategy for the segment within the organization, not only for our colleagues, but all of our external stakeholders, including our clients and the markets we trade with every day.
Those are the key tenets of how we think about going into 2017 and how we're going to shift from the performance of 2016. Finally, on slide 10, just to give you a sense of the performance and objectives outlining into 2017 and heading into 2018. We have recognized that 2016 was certainly a difficult start for the business. I talked about what some of the areas were that had some impact on that. In 2017, we see an opportunity for growth. Even with some of the challenges in 2016, our client retention rates were still very strong and in the low 90s where they have historically been, and in some businesses in the mid to upper 90s. Our focus on client retaining that revenue has never been stronger.
We need to improve the revenue performance, which is about bringing new clients into the organization and expanding relationships for which we have. We believe we will see dividends from some strategy changes that I talked about earlier, as well as some investments that we've made both in growth and infrastructure, data and analytics to be an example of that. I talked about the reorganization of the model and our plans to get people focused on their roles and understand their contributions to the firm. I believe we will have this fully operational in the first half of 2017. Most importantly, or I say most importantly, equally as important is focused hire.
We see some really unique talent opportunities to bring into the organization and feel very confident that we're going to be bringing some folks into the organization and making some investments in terms of talent to bolster the talent that we currently have with the company, but certainly take advantage of the opportunities we see going forward. There is a lot of excitement as we talk to others within the industry about what we're doing and what we're up to and the opportunities, the professional and career opportunities that exist for them. So feel really good about where we sit in the talent acquisition game. Finally, in 2018, really reiterating what we shared at our investor day in late September is where we see the business going forward, which really isn't any change.
We see that 3%-4% organic growth profile with obviously lower cost growth profile and translating into a margin that's in that 22%-23% range in 2018 and beyond. With that, I will turn it over to my colleague, Carl Hess, to talk about IRR.
Thanks very much, Todd. Unlike Corporate Risk and Broking, IRR is more of a portfolio of businesses that do share common themes, however. They revolve around financial intermediaries and financial institutions. Within that portfolio, the single largest business is Willis Re, one of the world's largest insurance brokers. Reinsurance broking to both the property casualty side as well as on the life side. It does share a common client base with our risk consulting and software business while Re concentrates on the modeling of risks and the placement of reinsurance in the markets. Our RCS business focuses on capital management, software, and consulting needs around reserving and other insurance matters. The third largest business is principally comprised of Miller. Miller is a wholesale broker on the London market, so it serves other retail brokers bringing business into that market.
Portfolio and Underwriting Services is our unit for packaging MGA business, structured risks. Capital Markets & Advisory works to help advise on merger and acquisition, as well as issuance of insurance-linked securities working with our Re business. Investment is one of the world's largest investment consulting and now delegated asset management firms. The newest addition to the portfolio, Max Matthiessen. Max was part of our human capital business until the end of the year. We've moved that into IRR. Max is one of the largest advisors and brokers within insurance benefits, human resources, and savings in the Nordics. We think there's a strong overlap with the investment business as they both function from that sort of human capital and both do run fund-to-funds business. It's been a busy 60 days or so moving to slide 13.
Like Todd, I have been working to formalize our leadership team finding the synergies within the business both within the segment and the larger company as a whole. Leadership team has met both as a segment and individual lines of business. We have begun the process of regularizing our financial arrangements, monthly reviews of financial results. We've had budgeting meetings to make sure 2017 is ready, set, and go, and begun to deliver the business priorities that we feel are critical to making our financial objectives for 2017 and beyond. The realignment of certain business units has begun. I talked about Max Matthiessen already. We'll continue to examine where in the portfolio things are a best fit to maximize the revenue and expense synergies we think we can generate between these businesses.
The 2018 goals we've communicated before we believe we remain on track for them, though, again, as John said, we're not going to get into how we performed during the last quarter on that. Looking forward to the balance of 2017, we'll continue to make sure that the businesses are aligned correctly. We're paying special attention to our sales pipeline and making sure that where to the extent we find desirable overlaps within the segment, I highlighted the Re and RCS businesses already, but there have been overlaps we found between our insurance clients and our investment business and others that we make sure we're supporting these fully, exploiting these opportunities to the maximum. We do think that there are opportunities to continue to develop further revenue synergies, as well as looking at how common processes can be developed to develop synergies for expenses as well.
We think that's an important part of our business review over the next several months. We have asked each of the lines of business to develop a strategic vision for the next three to five years with a common template. We'll be discussing those during the first and second quarters to see how we can better develop a vision that makes sense for Willis Towers Watson in each of these businesses, and make sure that it's getting the full benefit of being part of the portfolio of companies under the umbrella. Lastly, common to many of these businesses, of course, is it's dependent on the insurance industry as clients, not just as vehicles we place coverage into.
We have worked with the firm's Operating Committee to assign executive sponsors for our largest insurance relationships so that we can have an effective voice to span the totality of the business that all of our segments represent for these insurance relationships. They're particularly critical to our business success, and we are beginning the roll-up of that, and we'll be meeting with those insurers going forward to make sure that the mutual benefits of our relationship are fully worked through.
Great. Thanks very much, Todd and Carl. Now we'll take your questions.
Ladies and gentlemen, if you have a question for the speakers at this time, you may dial star, then the 1 key on your keypad. That's star, then 1. If your question has been answered or if you wish to remove yourself from the queue, you may press the pound key. Once again, ladies and gentlemen, star, then 1 will place you into the queue. Our next first question will come from the line of Dave Styblo from Jefferies. Your line is open.
Hi there, thanks for taking the questions and hosting the call. It's very helpful at this time. Maybe I'll start off with CRB, Todd, and talk a little bit about the things that you're doing there. I guess my impression is that the challenges have been more company specific rather than external macro factors. I wanted to just, one, see if you agree with that. Then second of all, the timing of fully implementing sort of the model, it sounded like it was quite complex and maybe perhaps that was the biggest challenge. I'm wondering if you can just spell into more of the specifics about what you've done to simplify it, to perhaps free up the business development guys to improve the gross win, since it sounds like retention hasn't been an issue.
Yeah. Dave, I'll start with the first question, which, I think you're right. I think these were really mostly company specific issues that we're focused on the overall performance. I don't want to dismiss, obviously, certainly in the P&C space, in parts of the geographies we operate, rate is a significant headwind in some of those businesses, and then just kind of the overall economic climate. I think all of our competitors are sort of dealing in a similar environment as that. I think it's safe to put this on, as you described in your question, more internal issues.
I think on the complexity question and maybe the best way of giving an example on that is sort of in creating the operating model, we were very focused on creating capabilities and having a group of people or an individual and groups of people below them, sort of own certain client services or certain capabilities. Which on paper made a lot of sense, when you create a lot of these individual sort of client enablers and you don't link them together under one kind of client enabling function, what I would describe, you don't get the benefit of the collaboration and the synergies that can happen in kind of working together. You just actually create a big model of a lot of direct reports and a lot of structure.
It's not necessarily that you have too many people, although in some cases, we certainly want to keep our eye on that, it's that you have too many people that aren't actually organized appropriately in order to sort of serve clients and serve the business. If you think about that, these aren't huge changes. It's really just about getting people organized, connected a little bit differently. Instead of four people maybe sitting all by themselves, identify a single leader, have those four that really are in, an example as I use, these client enabling functions, serving clients. You are going to do that more effectively. It's going to be an easier model to operate in. It's going to be an easier one for folks to understand how it works within the organization. That's an example.
We have some work around doing that, as I noted, work has been underway, and I suspect we'll be up and fully operational in the first part of 2017.
Okay. That's helpful. Maybe just the matrix of how you think about the global lines of business running against the geographic areas. What does that model look like in terms of who's in charge of P&L responsibility? I mean, ultimately, that comes down to you being the head of the unit, but how are those juxtaposed against each other when you've got two different business heads running a specific geography versus a specific product line? How do you make sure those interests are properly aligned?
Yeah. That is, when I talked earlier about some of the challenges of sort of local priorities and global lines of business not necessarily being aligned, that is exactly the point you're getting at. Simplistically, it starts with the expectation that our lines of business are going to grow. They're going to wake up every day and think about how am I growing financial lines? I am responsible for growing financial lines globally. They need to work with the geographic leaders
On how they are going to grow financial lines in their geography. Simultaneously, the geographic leaders are focused on growing all of our lines of business in the geography in which they sit and are measured and rewarded associated for doing that. It's really about how that I go back to the clarity of role and getting people to understand the accountabilities for which they have. It was frankly, the purpose of putting the matrix in place, is that we were going to apply the appropriate pressure from both the line of business and the geographic point, in order to get the right focus and the right outcome. I think the reality is in setting up the segment, we just didn't get that right early on, and have identified that as an opportunity for improvement.
The good news is, I think where we have the right leadership in place, they're embracing because they see this as a huge opportunity to leverage the capability to advance whatever their cause is, be line of business or geography, that working together, they have the best chance of actually being successful.
Okay. Very helpful. Then my last one is just for Carl on the IRR business. It seems unlike CRB, that some of the factors there are more external. We've had, I think you guys have cited the slowdown in the capital markets from soft M&A, declining risk consulting projects. Can you talk a little bit more about the external factors that are affecting the business versus maybe some of the other internal challenges? Which one weighs heavier on the challenges that are in that business?
Again, when you think about getting through some of those headwinds that are external, are we at a point where we're starting to lapse some of those where they just become less of an issue as we're entering 2017 or sort of, I know you don't want to get ahead on guidance, but if you can kind of give us an idea of where we are in that cycle from the headwinds that you're facing.
Yeah. I think one of the principal headwinds has been a very soft reinsurance market over the last few years. We've done, I think, very well in terms of new business wins to offset some of that, but that's clearly been a big headwind to this business. One of our competitors did announce a softening of the softening a day or two ago. I think I can point to that as at least one observation regarding those conditions. The volatility in the capital markets also affects both the Max Matthiessen and the investment businesses. It's difficult to predict what volatility will continue in those markets, but I certainly pointed that the relatively low VIX has been, despite the realized volatility, that's been one of those factors we can observe looking forward that might make a real difference.
I would point out the Capital Markets & Advisory, although it's been a very dry market for M&A, that's a relatively small part of the overall segment. I wouldn't call that a major driver on the segment's overall results.
Thank you. Our next question comes from the line of Gregory Peters from Raymond James. Your line is open.
Good morning or afternoon. Thanks for the call. I appreciate your commentary around some of the differences in your approach relative to what was discussed before. Is there any incremental investment expense associated with these changes? Or in the context of the comments around heavy structure, is there any incremental room for a further reduction in costs?
Greg, the first answer to the question is no, there isn't any incremental investment that's required for sort of simplification or kind of de-layering. I think I mentioned earlier, frankly, a lot of what we're doing is just redeploying leaders and assets in a different structure, still providing some of the same function but doing it in a way that's much more clear and much more aligned with the objectives of the segment. We're always looking for efficiencies within the organization, in sort of every regard, whether that be around technology workflows, et cetera. I certainly don't want to tell you through this process that we won't be able to identify and to have some benefit on some of the cost reduction efforts. I wouldn't say that through the restructuring process itself and how we're kind of realigning the organization, that that's one of the key outcomes.
I hope that answers your question.
Yeah. Thanks. I appreciate that color. Carl, you mentioned this in one of your answers, but maybe you could circle back on the Max Matthiessen business. Is there any way to reduce the structure of that business or change the structure of that business so you reduce the volatility associated with the stock market returns?
The fund-to-funds revenue
Yeah
largely equity-linked, and it is basis point linked as well. While it's possible to move alternative structure, industry standard is basically what I just described, I think the opportunity is limited. It's not the sole part of Max Matthiessen's revenue, right? There are fees for consultation with the employee clients. There are fees associated with the placement of insurance. It's not as if 100% of the Max Matthiessen revenue is subject to that same volatility, but it is going to be a component, absolutely.
Okay, perfect. Thank you for your answers.
Thank you. Our next question comes from the line of Elyse Greenspan from Wells Fargo. Your line is open
Hi. Thanks. Good morning. First, in terms of CRB, I appreciate the color in terms of some of the reorganization efforts you mentioned, and I know that you did say that this will run through to the first half of 2017. I know you're not looking to provide guidance today, but as you think about the glide path to looking to stronger growth within that business, do you see it maybe as being something that's more back-half heavy in 2017, given some of these initiatives that you're pointing out to the street today?
Well, Elyse, it's Roger Millay. I guess I'll jump in on this one first. As you reiterated for us, we're not giving guidance. I think generally what we've been saying about the changes is there's not immediate impact but the timeframe of two to three quarters.
Okay. In terms of the reinsurance and the investment risk business, Carl, I appreciate some of the commentary that you gave, but given that we're still looking at a soft reinsurance market, as you think about the business for 2017 and 2018, can we just get a bit more color how you expect to go to this higher return to growth in that business, even given the fact that if it's still a soft market, we're still going to see the same headwinds. Just how do you see that business, just a little bit more color on how you see that business returning to growth in your kind of 2018 goals?
I do like the position that we've got, I think, a very effective sales team and two larger competitors who don't have 100% all happy clients. If we can do two things well, which is stay very active in the marketplace and very close to both our clients and prospects, we should have good sales success and good retention. I think it's that combination we need to pull off to be able to have the results I'd like to see for this business.
Okay. As one thing, I guess, we have seen some level of departure from within Willis. As we think about some non-competes potentially expiring and some other employees potentially leaving the firm, I know you guys did point out that you're looking to do some more hiring. How do you think about, I guess, the level of attrition that you have in your minds, I guess, built into these organic growth levels, I think, for both Corporate Risk and Broking as well as Investment, Risk and Reinsurance? Thank you.
This is Todd. I'll start. Definitely, as we've noted, we've certainly had some attrition, which certainly was to be expected when you think about the merger of the two organizations. We definitely had some attrition that I would put in the regrettable category. I can also tell you, as I think about sheer numbers, really the sheer numbers of regrettable [hires I can probably count on one hand. I don't anticipate that we're going to have a huge impact going forward as it relates to that. Clearly, what we want to do is we want to keep, as I said earlier, our most talented people and build a segment and an environment where they feel as though they can succeed and it's a great place to work.
As a result of that, as I mentioned earlier, attract new talent into the organization as well, which we are very optimistic as we continue to work in the market to recruit and talk to key talent about what we're doing in the business and the opportunities that exist, and are encouraged about our ability to grow our talent base. Always focused on making sure that we have as minimal regrettable attrition as possible, and feel pretty comfortable about what we've had thus far, but very excited about what I think we have in terms of some really unique opportunities to build talent within the organization.
Yeah. I think I'd echo Todd's comments and just point out two things that are very common to both our businesses. One is we're quite focused on building a set of tools, whether it's analytics and other capabilities that make it harder for our competitors to replicate what we do as well. It's about turning our revenue from me revenue to we revenue, really, to some regard. The other is by just making it a great place to work so that if people want to work here, they're a lot less likely to leave.
Yeah.
It's about creating that environment where people want to stay.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Kai Pan from Morgan Stanley. Your line is open.
Thank you, and good morning. First question for Todd is that you have been long-term leader of the North American business. Now you have a chance to look at international operation of brokerage as well. Where do you see the challenges? Because it have been a drag, especially in China, in Russia, and Latin America. What is the challenges as well as opportunities in international business?
Yeah. Thanks, Kai, and I'm actually glad you asked the question because I think it gets to what I said earlier about when you look at the performance of 2016, and we've had some geographies that underperformed relative to their historical performance. You have to ask the question, do we have any sort of systemic issues going on, whether it be leadership, structure, the markets we operate in? That's really been one of the nice things for me getting familiar with the international businesses is getting to understand the leadership, the capabilities that we have in country and in geographies, the opportunity that we have. We talked about headwinds from rates and other economic issues. While I see some challenges, I see many more opportunities in terms of the businesses that I'm now getting to learn, which are really those outside of North America.
I don't think if you talk about challenges, I think our challenges are going to be ones that are more broadly shared by the industry, and those are going to be the economic challenges in the existing country. We certainly have got, as I mentioned, some P&C rate challenges in different parts of the world as well. I think we see a real clear path. I feel very good about the leadership team that we've got that are in charge of those businesses, and think the opportunity continues to be really strong.
Okay. Maybe next question, maybe for Roger or for Todd and Carl as well, is how much these sort of restructuring program and the refocus you're doing and will impact the $325 million cost saving target in the operational improvement program? I just wonder if that, because you guys seem to talk less and less about that, is that still relevant and how much that will flow through the bottom line?
This is Roger. There may have been two parts to your question, I am not sure. I will answer them, but maybe I will answer some things you did not ask. I think one, you may have asked whether some of what Todd was talking about in changes for CRB, whether there is any overlay between that and what we call the Operational Improvement Program, and there isn't. OIP continues on the track that we have talked about with the same target of the total of the program, $325 million, with the contribution to growing the EBITDA margin of the company that we talked about in September at the Analyst Day. We continue on track with that.
Great. Thank you so much for the answers.
Thank you. Our next question comes from the line of Quentin McMillan from KBW. Your line is open.
Thanks very much, guys. I just wanted to follow up, not trying to get too harsh with the guidance, but it seems that the first half of 2016, particularly in the Corporate Risk and Broking side, you obviously had some struggles out of the gate. In the first half of 2017, you should be coming up against some easier comparables on a year-over-year basis. Are we now pushing out the maybe organic growth expectations until we implement these changes and not really expecting too much in the first half of 2016 without giving specific numbers for guidance? It does kind of feel like you are pushing out organic growth expectations another couple of quarters, and I just want to make sure we clarify that.
Yeah. This is Roger again. Again, I'll maybe go back to what John said in the beginning, then maybe I'll say a little bit more. Again, the focus here wasn't at all to further develop or alter or set any expectations about 2017. We're acknowledging the challenges of 2016. We're reaffirming the exiting out of integration 2018 targets. We hadn't set any expectations about what 2017 looked like in that context, and we'll do that in the earnings call. Again, there was no intent to change any expectations. Just to what I said earlier about the two to three quarters for the impact of the simplification of Carl and CRB, we've been saying that for the last few months. That's not a new story at all since the announcement of the organization changes.
I guess then I'll conclude with John's line, don't draw any inferences from what we've said. In a couple of weeks, we'll be talking about 2017.
Okay, great. Then if I could follow up on Kai's question, is there any numbers you could sort of help us out with, maybe Todd or Roger, in terms of what geographies have slowed down and maybe how much of a drag they had on 2016 so we can kind of frame what we think the bounce back might look like in 2017? The international business is 17% of Corporate Risk and Broking. Maybe help us with what are Russia, China, and Brazil, what was the sort of negative impact they may have had on a year-over-year basis, or anything that could give us a little bit of help in thinking about that?
Yeah. I would just refer you again to the conversations during the year last year. We did highlight, and Todd reiterated, we highlighted through the year the challenges in the international business. There was a reference earlier to particularly Latin America, in reference to China, and we've talked about those before. There was that phenomenon, then we particularly talked about North America and the challenges there. I think for CRB, that's where we're focused. I think, again, you have the context that we provided in the earnings calls for the first three quarters, and you'll get more context in the fourth quarter earnings call.
Okay, great. Thanks, guys. Just very quickly, if you guys are going to rebucket Max Matthiessen, since we now have four-quarter run rate after you report the fourth quarter, if you could just please give us comparable data. You put that on a quarterly basis so we know which is which, so we can have a year-over-year comparison for 2017. I think everybody would find that really helpful. Thanks so much.
Absolutely.
Thank you. Our next question comes from the line of Jay Cohen from Bank of America Merrill Lynch. Your line is open. Mr. Cohen, please check your mute button. We are not getting any audio from the questioner. One more call or your mute button. We will move on to the next questioner. This one's from the line of Mark Marcon from Baird. Your line is open.
Good morning. Thanks for taking my question. Todd, questions are for you. Can you talk a little bit more about what you ended up seeing with regards to talent attrition rates as the year unfolded? I'm talking about 2016. I'm just trying to get a sense for have things been getting better, same, worse. Secondly, for those who we've gone through your background, talk a little bit more about your background and also culturally, how you would think things would change with regards to how CRB is going to perform and maybe a little bit of comparing and contrasting your style relative to Tim's.
Sure. I think the last one's going to be a hard one, but let me start with your question around attrition. I don't actually think the trends were really any different as we went through the year. I think in general, as we talked about our attrition rates had frankly probably in aggregate been a little lower than what we've seen historically or what we might have expected out of a merger of this size. As I think about going through 2016, it's not as though there were peaks and valleys in terms of attrition. I think it just sort of marched along. When you think about that, sometimes it's not just the attrition rate specifically, but are there specific job families or specific individuals that make up the attrition piece.
I think, as I said, as we reflected on the regrettable nature of those, then both the near term and what we think are going to be the longer term impacts, we feel like it's pretty manageable. Net at the end of the day, our ability to go the other way, which is to attract is probably never been better. Just on the background piece, I'm not hugely comfortable just talking about myself, I'll do this somewhat quickly. Obviously, I had spent a fair bit of time at Willis prior to the merger, and grew up in the industry as a broker, principally in the financial lines area. I find myself very comfortable relating to and connecting to what I would call brokers or traders that work within the organization. I think that's been quite helpful.
Actually shortly before the HRH merger, moved into a management leadership role, having responsibility for the broader portfolio of products, ultimately within a region and then ultimately a couple of different responsibilities in North America. The upshot of that is, one, I understand the organization really well. Two, I feel as though I understand the business really well. My style, if I had to describe it, which is somewhat of a very common style for some leaders, which is this servant leadership style that I believe I wake up every day to help people succeed and grow this business and help them achieve their goals and objectives. I think when we're in the position that we're in right now, bringing the companies together and doing some change management, that type of style is very helpful.
I think it lessens the anxiety that people feel around change, and they feel more comfortable with, really in this case, I think somebody that understands the business, and has certainly in many respects done most, if not all the jobs that are required to do across the organization. I hope that answers the question. I'm not sure. As I said, I'm not great talking about myself.
It does. My sense was that Tim came more from the consultant, in terms of just the trajectory of his career relative to you having a little bit more of a sense with what it's like to be a broker in the field. Just wondering how that ends up ultimately translating to what you're going to try to get the brokers to really focus on, and why it's going to make Willis a place to come to when you're trying to attract new talent.
Yeah. One of the things that I get excited about in terms of what we're looking to accomplish bringing these companies together is the opportunity within that brokerage space to really do some different things, to bring some different ideas to the organization. There's no doubt having grown up as a broker in the business and then leading and working with teams of brokers, that you have this natural excitement in terms of the opportunity that we have in front of us. I'm hopeful that my skill set is going to be additive to this. I know John's looking at me. He is hopeful as well and expecting. The plan is we're going to leverage this thing to the best of our abilities and make the most of it.
Great. Just on the reorganization timeline, do you already have that reorganization kind of set and it's just a matter of implementing it, or is it still kind of being developed in terms of the structure?
Yeah, Mark, I'd say we're pretty far along. There's still some development that's required. I've really been leaning heavily on my colleagues in the geography, Joe, who's in the room with us today, and the other geographic leaders from around the group to help us think through and shape what's going to make sense for the segment within their geography as well as the segment overall. I think we're pretty well baked, but I definitely want to make sure we have all of the rounded input so we end up at the very best spot. Some of the pieces are pretty straightforward. I wouldn't say anything's incredibly complicated, but want to make sure we're thoughtful and we do it right.
Great. Thank you.
Thank you. Our next question comes from the line of Shlomo Rosenbaum from Stifel. Your line is open.
Hi. Thank you very much for taking my questions. I just want to ask a little bit about the reorganization of CRB. The way that the organization was set up post the merger, I want to know if that was a streamlining of the organization, or was that to take advantage of some of the strategic focus of the merger? What I'm getting at here is, was there an organizational implementation that was supposed to generate some strategic cross-sales that you now have to get back to basics that we need to think about, hey, does it not necessarily work the way that you were thinking originally? Was there some other reason that the organization was organized that way that really does not impact the strategic focus of the business?
I'll take a stab at that, and then obviously, if others have some comments. When we set the organization up, we set it up as a balanced matrix. Both organizations came into it with a particular orientation. The TW business was around line of business and segment, and as you know, Willis had the geographic lens. The view coming into it was, this is our opportunity to actually leverage both parts of that, both in terms of focus and geography, and then across the lines of business. The reality we still very much see that the purpose of setting up the enterprise that way was about just doing that, growing the enterprise. Hence these, in this case, this global line of business or this global segment, CRB, and working with the geography.
I don't think other than some what I referred to earlier in terms of complexities around the actual setup and rollout and execution of the model, I don't think anything's changed our minds in terms of the benefits that we foresee by operating in a balanced matrix and the expectations of, as I described earlier, sort of those two points, geography and line of business working together in order to drive to the best outcome. I don't know what you want to add.
There's no change in the strategic focus of the organization. It's just a matter of when you're trying to align both lines of business and geographies, it's easier said than done?
Yeah. That's probably a very succinct way of saying it exactly. Yeah, no change in focus. When you're setting up a model that, in this case, a segment really didn't operate in before, complexities and some challenges that we've identified and feel as though are imminently solvable. Just need to work through it and take advantage of the opportunity that we saw when we initially rolled out the operating model.
Okay. Can you just give an example of where something was murky in the old model that is now not going to be murky? Just on the ground as opposed to a high level, hey, we have to define your role. Just give us an example of a role that had a problem and now won't have a problem.
Yeah. I think, I'll kind of refer back to what I was talking about earlier in terms of an example of kind of the simplification. We have a number of what I would call sort of client-enabling functions that exist within the organization. Risk and analytics is a really good one. That is a terrific team that helps us on the risk and analytics side. That is one sort of singular group. We have a number of groups that are organized to provide sort of similar services, meaning similar sort of client-enabling services directly to clients or working through teams to deliver to clients. Those things weren't necessarily linked in the old model. They were set up as somewhat silos of delivery of service. It's an easy one to look at that and say, we don't necessarily need to change what they do.
We just need to put them together and organize them under a singular organization of client-enabling functions for them to be linked up so they're just more joined up, so they understand how they're pairing off and working with both the organization and our clients. It doesn't require a tremendous amount of change management. It's just about identifying a leader amongst that group, then putting those assets together, and agreeing upon what are the objectives for the group. That's why when I talk about sort of simplification, and I think some questions earlier about, is there going to be a lot of work or is there going to be sort of investment that's got to come out in delivering some of this? It really isn't.
It's just about putting the pieces together in a little easier and more well-understood way, not only for the folks that deliver those services, the folks that use them within the firm, and then, most importantly, our clients.
Ladies and gentlemen, we're running a little short on time. If future questioners would limit their questions to one. We'll be taking our next question from the line of Brian Meredith from UBS. Your line is open.
Yes, thank you. I guess a question, the elections that we had in the U.S., did it change at all, Todd, any of your kind of thoughts as far as resource allocation, kind of way you're thinking about the business?
Yeah. Brian, I do think, in general, where we see economic growth, whether that's GDP growth, inflation, and translating back to what we might think is exposure growth within the Corporate Risk and Broking space. Where we see that, we absolutely want to, as you've said, sort of redeploy efforts or deploy efforts to take advantage of market opportunities. I think it's without saying, I think it's probably a little too early to make some judgments on how that's going to translate back other than we're definitely paying attention to that. In some of our businesses, especially around our industry specialties, there could be some real opportunity. It still has to play itself out. Definitely something we're keeping an eye on.
I would say that not only for the business that we have here in the U.S., but that dynamic is something we certainly pay attention to around the world in our international markets as well.
Ladies and gentlemen, that is all the time that we have for questions today. I'd like to turn the call back over to management for closing comments.
Thanks very much to all of you for your questions, and we look forward to talking with you on February ninth when we will be going over our fourth quarter results.
Ladies and gentlemen, thank you again for your participation in today's conference call. This now concludes the program. You may all disconnect at this time. Everyone, have a great day.