Good morning, everyone. Thank you very much for joining us for this is, I guess, the second Analyst Day for Willis Towers Watson. We're delighted to be here and to be hosting you. Before we get started, I've got to remind you that we're going to be making some forward-looking statements today that have associated risks disclosed in our SEC filing, and we do not undertake to update any such information. Our actual measures may be different than expected. In this presentation, we'll refer to non-GAAP measures which we believe are relevant for evaluating our operating results. Good. With that out of the way, again, welcome. I hope you all enjoyed our technology demonstrations that we had out there. We thought this was something different that we would try this year, and from what I've seen, it looked like it was successful.
At Willis Towers Watson, we talk a lot about how we're committed to investing in technology and innovation, and so we thought we would show you at least a small sampling of what we have to offer. Now, our presenters will be around during the break. If you didn't get a chance to see something or if you'd like a second look, please feel free to seek them out then. They'd be delighted to talk with you. Let me just quickly run through our agenda. I'll make a few remarks to start off with, and then we'll run through our four segments. As you remember, we run our business in global segments, and we'll start off with Human Capital and Benefits, and then to do Corporate Risk and Broking.
After a short break, we'll pick up again with Investment, Risk and Reinsurance, and then Benefits Delivery & Administration. Mike Burwell, our CFO, will have some comments on the financials, and we have about a half hour for question and answer at the end. We will have a lunch, and we hope you'll all join us for that. This is the usual forward-looking statement information. Let me just start off by talking about. We're a little over two years now into the Willis Towers Watson merger. As we look back on the last 27 months or so, I would say we feel pleased but not satisfied about what has gone on. When we look at it, 2016 was a bit of a bumpy year in some respects as it often is after a merger.
When we look at our stock price, it underperformed the S&P 500 during that time. 2017 was a much better year for us, and we certainly outperformed the S&P 500. Although they caught up a little bit with the impact of tax reform, I think helping U.S.-based stocks. We've seen a 33% growth in our share price, 36% total shareholder return over the 26 months or so, and then our EPS has grown about 30% from the pro forma 2015 to the $8.51 of last year. I think we said last year at the end of 2016, we sort of felt like we'd hit an inflection point and we had turned the corner. We did feel good about 2017 going into it, and I think what we'd like to communicate today is we feel good about 2018 going into that also.
When we look at our general profile today, it's not much different than it was two years or so ago. We're a little over $8 billion in revenue, a little under $2 billion in adjusted EBITDA. We have about 43,000 colleagues around the world. That's up about 4,000 from what we were when we first did the merger. I'll talk a little bit more about being sort of a destination employer in a few minutes. This is a sign of that we're able to attract people like this and we're growing. In fact, when we look at it, 25% of our colleagues are people who have only worked for Willis Towers Watson. They haven't worked for only Willis or for only Towers Watson. 25% of them have only known WTW.
When I go back and compare this to where we were, for example, during the Towers Watson merger, when we brought Towers Perrin and Watson Wyatt together, that 25% is about the same number that we had at this time, too. I think that when you have something with an attractive proposition like that, you can attract new people in, and we certainly look at this as a good sign of health. I mentioned that our business hasn't changed all that much in terms of the profile, and one of the reasons for that is that about 85% of our revenues are recurring each year. That large proportion of recurring revenues is what gives rise to a steady profile there. Let me just mention about where we've come sort of from integration, and then I'll talk a little bit about where we're headed.
Let me just make sure Yeah, sorry. Strong financial momentum, and as I mentioned, we had some bumps in 2016. 2017, we had 6% adjusted organic growth, and we had an adjusted EBITDA growth of 90 basis points. One of the things you may have noticed, we did that in the last quarter or so, made sure we didn't adjust for any business as usual restructuring charges or for some technology investments. One of the things we're committed to doing is getting under the basis like that. We want to make sure we're not adjusting for things that we really think are business as usual. We think it'll be a more transparent earnings that we have there. The business momentum, we saw it pick up a little bit even in the end of 2017 as compared to the beginning of 2017.
We believe that we go into 2018 with some very strong momentum. Focusing on sustainable profitable growth, and a number of you who have known me for a while know that I believe profitable growth is one word. I don't think you should be separating those two pieces, and that's something that we are going to be focusing very heavily on at Willis Towers Watson. I think the other part of this, though, is sustainable. What we're focused on is making sure that we have a value proposition and we have a way of going to market that we can replicate year in and year out, and so that we have a good sustainable one. The way we do this, we set some pretty clear and reasonable goals for our colleagues.
We're going to make the right investment decisions, we're going to take a disciplined approach to both cost management and working capital. As I mentioned, as we do that, we also want to make sure that we are giving really consistent and straightforward reporting for the investment community. We think we're much better placed when we're as transparent as can be with you know what to expect from us, both good and bad. We're committed to doing that. The leadership team. I've had the good fortune to work with a lot of accomplished management teams over the years. I have to say, I think as good as they all were, the group I'm working with now is probably the best I've ever had. I feel like we're very well-placed. We made a number of changes over the last several years.
A lot of you will know about Todd Jones and Carl Hess in the last year-and-a-half. About a year-and-a-half or so ago, they moved from their North American roles into heading up two of our segments. You'll hear from them a little bit later today. We put Joe Gunn in charge of North America and, of course, Mike Burwell as our new CFO. Those are some of the ones we've made at the operating committee level. We've had key appointments going on all around the organization. Just to mention a couple of others, Alice Underwood is now heading up our Insurance Consulting and Technology. Alice is a very interesting appointment because she came from legacy Willis but is heading up the Insurance Consulting and Technology that came over 100% from legacy Towers Watson.
The reason she's been so successful in stepping into that role is in part because she's extraordinarily capable, but the other part is that both sides recognized the great synergies we have between what we do there and a lot of the work in both reinsurance and in brokerage. Alexis Faber is the new Chief Operating Officer of Corporate Risk and Broking. James Kent has been named the new leader of our reinsurance business. We're continuing to focus on making sure we get all the right people in the right spots there. I think we have a deep bench throughout the organization, and we have a very good succession planning process to make sure that we continue to be well-placed. Portfolio review.
We focus not just on what businesses we want to be investing in going forward, but also what are the ones that, for one reason or another, are just not the best fit. Early in the year, we divested Global Wealth Solutions. We divested a portion of our telematics business, as well as a number of smaller insurance programs. It's more difficult to divest a business than it is to acquire one because you have colleagues you've worked with, and you're parting some ways with them. We made these hard decisions so that we can free up the investment dollars and free up the management time and talent so that we can focus on what we think are more attractive investments in the future. Overall, we divested about 10 businesses with about $65 million in revenue, and this had about a $0.04 impact on adjusted EPS.
I talked earlier about our goal of becoming a destination employer and talked about the 4,000 people net new colleagues that we've added. I think one of the things that does this and sort of gets to this next bullet, the alignment in values and visions, I think our culture is what's important there. As we've added people, one of the things we're really focused on is do we have people that have the same kind of vision and values that we do. If we don't have that, then actually it's not a good fit for either one of us. We just did an engagement survey in early 2017, the first engagement survey for Willis Towers Watson. Actually, we have the technology demonstrated out there. I suggest you take a look at that.
The great thing about that, I think, was that there was very strong alignment with our vision and values throughout the organization, and I think that makes us well-placed going forward. We move from some of these things we've had to deal with the integration to what we like to think of as business as usual. That means revenue growth. Our goal is that we want to be having our revenue grow at least as fast as our peers. At or above our peers' revenue growth. We think we're going to do that partly by continuing to focus on the revenue synergies. I know a number of you have heard me say some of the revenue synergies we identified over the first three years of the merger are not things that all of a sudden end December 31st, 2018.
For example, we set goals as to what we wanted to do in the large company P&C market. We set goals as to what we wanted to do in the active exchanges. Those are going to be continuing opportunities for us to grow in the future and to contribute to above-market growth. We're going to continue to be focused on that. You'll hear from some of our segment leaders about that. Innovation with client solutions and also making acquisitions which align with our long-term revenue and earnings strategy. We have not done much in the way of acquisitions. We've done some very small ones in the last couple of years. We've actually been engaged in really bringing three companies together, Willis, Gras Savoye, and Towers Watson.
We still have some work to do on that, I think it will be easier for us, say, later this year or going into 2019 or so to contemplate other acquisitions, too. We want to focus on the financial fundamentals, that means we've got to keep our expenses in line with our revenue growth. It means we got to work on reducing DSO, driving our free cash flow, doing everything we can to enhance our margins. I think we've made a lot of progress here, I think there's a lot of things we can do. Again, I think the message that we've had as a management team is to say there's a lot we can do in 2018. We think there's a lot we can do in 2019 and 2020. This is going to be a continuing focus for us.
Technology and innovation, we're continued focus on data and analytics, also on transaction efficiencies across all the markets that we're in, really trying to address them. We're trying to address them with technology. A good example of how we do technology is our Horizons program. We identified a few key areas where we thought we'd like to get innovative solutions, and we put these out to our colleagues and said, "Give us some ideas about this." One of them was, for example, we have a couple of operations where we use exchange principles. We do that in the healthcare exchanges. We also do that in AMX, which again, we're demonstrating out there. Go see it. We thought, are there other areas in our business where we could use exchange principles to do?
We had a couple of other themes like that and asked people to submit their ideas. We got, geez, I think several hundred ideas from people. We ultimately selected two or three of the best ideas we had. In fact, we actually had our colleagues participate in helping us select the best ones by voting on the ones that they liked the most, too. The top ideas are then funded by the company to develop. We're trying to press on innovation as much as we can, but I do think engaging the entire workforce in it is part of that. The agile and nimble workforce, we're a matrix operation. We have our segment leaders who meet here today. The other part of our matrix is the geography leaders.
Let me just take a minute to say the reason we have a matrix operation is this. Our businesses that we're in, whether it's Corporate Risk and Broking or Human Capital and Benefits or whatever, our clients now expect that we deliver the same kind of high-quality service with the same kind of standards anywhere around the world. We need to run these businesses as global businesses. At the same time, particular clients that we have are buying our whole portfolio of services. We need something that focuses on the clients and slices across all the different things, and that's where the geography part of the matrix comes in. We find that running a matrix is probably a little bit slower in coming to decisions, but it's much, much faster in implementing them. It's not just much faster, it implements them better.
It may seem funny to say that a matrix is a way for us to get an agile and nimble workforce, but in fact, we believe that enables us to respond to things and to go from having an issue or an idea that you want to address to successfully implementing it much faster than we could otherwise. One example, I guess, I'd just give of sort of advantages of the way we work with our and we work virtually in a lot of things is really I get asked about Brexit a lot and how this is going to impact Willis Towers Watson. The reality is there may be some significant impact on some U.K. businesses, but we have a U.K. workforce that doesn't just serve the U.K., but it really serves global clients. In reality, we think there's relatively little disruption to our day-to-day work.
We have operations around the world, which makes it easy to switch teams and to switch operational centers fairly easy. We think we are less exposed to Brexit than a lot of other businesses might be. Capital allocation. I think what we're going to focus on here is really a strong focus on returning cash to shareholders. We look at what are the things we can do with our cash. We can reinvest in the business, we can make acquisitions, we can do share repurchases, dividends. On the dividends, we've set out our dividend policy saying we want to have about a 20%-25% payout. For this year, we just recently raised our dividend to $0.60, which should give us about a 24% payout for this year, or maybe 20% if we do much better. Right, Mike?
Right.
We sort of announced that policy, and we intend to just sort of stick to that year in and year out. I mentioned some of the reinvestment in the business, and I think that's one of the things I want to emphasize is that there's been a lot of focus from time to time on our 2018 goals that we're trying to meet. One of the things we are not doing is meeting those goals by cutting back on the reinvestment. In fact, over the last couple of years, we've significantly increased some of the reinvestment that we're making in the business. We are very much focused on the long term in terms of what we're doing there. We're doing that. Acquisitions, as I mentioned, we're not in a position to make acquisitions, any significant acquisition in the last two years.
We will be looking at them now. One of the things that happens is when we look at our share price and look at where it is today and compare it to some acquisitions, some of the prospects, repurchasing our own shares is relatively attractive. We actually are probably going to focus a little more on that than we are on anything else at the moment. We want to make sure we maintain the investment-grade debt rating. We are a low investment grade. We're going to continue to focus on being right about there. We've had extensive meetings with Moody's and others, and we feel very good about our rating and the stability of that. We have listed here some of the things we might be investing in in terms of the company.
Again, I think some of the demonstrations we have are the best examples of some of that. What does success look like for Willis Towers Watson in 2018 and beyond? Being the go-to partner for companies that are facing risk and people issue. What we want to do is we want to be known as the most innovative of the providers here, and we want to be known as a company that's not just innovative, but also does a good job of partnering with our clients. Where we're successful across all of our businesses is where we've engaged with the clients so that they look at us as their strategic and their trusted partner. Actually, we're almost operating as an extension of their business. That's our goal in terms of getting that. In a similar fashion, we want to be the destination employer.
We want to be the company that is seen as the most innovative one with the most attractive career prospects for people. In fact, as I said, one of the things that's been gratifying over the last year or so, and really, we saw this starting around the end of 2016, early 2017, we started getting a lot of unsolicited interest from folks who were attracted by the proposition and wanted to join us. We didn't see that in the beginning of 2016, but we started seeing that around the end of 2016, beginning of 2017. It is resonating with, I think, other people in the industry, and we feel very good about that. We've added a lot of really good people.
I talked about market-leading growth. I guess I just emphasize again, we don't see market-leading growth, though, as something that we need to grow revenues, but we also need to make sure we invest for the long term there. Free cash flow. We have a goal of $1.1 billion to $1.3 billion in free cash flow for this year, which is a significant increase for our free cash flow. We don't regard that as the end of it, though. We still think there's some more improvement we can do in free cash flow. Our goal is really to get our free cash flow to be about 75% to 80% of adjusted net income. We expect to see free cash flow increases, sort of extraordinary increases in 2019 and 2020 also. Adjusted EBITDA margin of 25%, we have put that out there for 2018.
That's our goal to get to there. Again, there's nothing magic about December 31st, 2018, other than to say that we're going to be focused on continuing improvement. For those of you who followed us when I was at Towers Watson, I think that was the mentality that we tried to have in the organization then. We got up to some market-leading EBITDA margins. Then we just continued to improve them little by little each year, and I think that's going to be the notion. I think, frankly, in today's world, our clients expect to see that we can do more for less year in and year out. The increasing use of technology is something that ought allow us to get incremental growth in margins. Then our guidance for 2018 is $9.88 to $10.12, right around $10, centered around $10.
We'll talk about how we're going to get to that in some of the other presentations. I think longer term, what can we do? We think average double-digit adjusted EPS growth is a reasonable target for us. I think Mike will talk a little bit more about this, but I would just leave with the message that, as I said earlier, we are very excited about moving into 2018. We think we have good momentum. With that, I'd like to introduce Julie Gebauer, who heads up our Human Capital and Benefits segment.
Thank you, John. Good morning, everyone. I'm going to spend the next bit of time providing an overview of our Human Capital and Benefits segment, which we'll refer to as HCB. I think you know we do that. As part of this, I'll provide just a brief reminder of the global businesses that comprise the segment, talk about our competitive positioning, the market drivers that we see, and our focus for the future. As you saw in John's material, HCB represents about 39% of the company. This percentage is lower than what we reported to you back in 2016 at Analyst Day. That reflects one of the divestitures that John mentioned, Global Wealth Solutions, as well as a realignment of our Max Matthiessen business from HCB into Investment, Risk and Reinsurance.
On this page, what you see is a description of our businesses on the left, and on the right, some charts that show the distribution of our segment across businesses and geographies. You'll see a similar chart in this format for all of our other segments as well as we go throughout the day. You will know that our retirement business, at 40% of HCB, is our largest global business. That's where we provide support for organizations to manage their defined benefit or DB pension plans and also provide defined contribution or DC solutions. Also of significant size is our health and benefits business, which is at 34% of the segment overall. This is where we provide advisory and brokerage solutions and services for organizations that provide corporate-sponsored benefit programs, healthcare primarily, but also other benefits like life and disability insurance.
Talent & Rewards, T&R, is 18% of the segment. Here we help organizations address a broad range of HR issues from executive compensation consulting and advisory through to employee surveys where we have some technology outside to look at. Finally, our TAS business at 5% of the segment is the segment that provides benefits administration and outsourcing for key markets outside North America. For this financial year, we're expecting this combination to generate low single-digit growth, which is consistent with what we've done over the past few years. Thinking about that performance over the past few years, I'd highlight that each of our businesses has made a really important contribution, and this is expected to continue. Turning first to retirement, this is not only our largest, but I think as you know, our most mature business.
We face operating in flat to declining DB actuarial markets around the world. We focused over the last couple of years on three things to ensure that we could enhance our competitive position and also nearly maintain our revenue levels. Those were to focus intensely on core market share growth. In 2017, for example, we added 20 new actuarial clients of significant size and 15 new administration clients. We also focused on helping clients understand the value of strategic de-risking opportunities, and we positioned ourselves to be able to take on the execution of most of those, whether that's book lump sum efforts or annuity purchases. Finally, we introduced DC solutions in those markets that weren't fully saturated already, where we could truly distinguish ourselves. Health and benefits is operating in a different environment.
It's a growing market, as you know, around the world, pretty much. For us, though, it wasn't sufficient just to participate in industry growth. Rather, we were absolutely fixed here too on market share gain. We were particularly focused on that in the places where we are not in the top two in the market, thinking about the U.S. mid-market and markets outside of North America, where there's a pretty fractured market. The result of that was that we had pretty significant growth in Health and Benefits over the last couple of years. The global Talent & Rewards market also offered us a good opportunity for growth, but not all of those opportunities were created equal, I would say. We were very disciplined in how we approached that.
We focused in places where we could truly differentiate, leverage our core capabilities, and where clients valued our quality, our sophisticated analytics, our insights we could deliver, maybe in other words, places where we could make money. The result of that is that our growth in Talent & Rewards was modest over the last couple of years. Our TAS business generated very significant growth through market share gains and increased activity with our existing clients. Now, we believe this portfolio in and of itself is a competitive differentiator for us. It gives us the ability to address our clients' strategic issues, whether they are standalone issues that can be addressed in one of our businesses, or broader issues like addressing total labor cost or productivity that requires us to knit together some of our offerings across business segments. That's not the only thing we think that differentiates us.
Over the last couple of years, we've been fine-tuning our value proposition, and we did this because we have a pretty broad range of competitors listed here at the bottom of the page, and we wanted to ensure that we could compete effectively against all of them. The value proposition is focused on what we deliver to clients, in that it's insight and solutions for sustainable impact. We deliver the insight through our colleagues with deep technical expertise, a treasure trove of data about everything compensation and benefits, and sophisticated analytics. Our solutions range from insurance placement through to outsourcing and software applications. The second part of our value proposition is focused on how we deliver our work to our clients.
This is focused on bringing the best of different worlds, sometimes opposing worlds, to our clients, enabling them to be in a position where they don't have to make painful trade-offs. We're able to do this because of how we've organized our business and the investments that we've made in resources and tools. First of all, we, as John said, run global businesses, common technology, common operating approaches, common professional standards. Because of that, we are able to deliver global consistency to multinational clients. At the same time, we have teams in key locations who have deep understanding of compensation and benefits practices in that location, as well as workforce dynamics and cultural attributes, and therefore, we can make sure that that global consistency also has local relevance.
We rely on our ISO and Lean approaches, combined with our professional excellence efforts to ensure that we are deploying proven processes with our clients, processes that we know have worked time and again. We also have research teams in which we've invested who are thinking ahead about the next solution and experimenting with our clients. We've got thinking ahead and proven processes. Our talent development programs are focused on making sure we have the right complement of resources, deep specialists who know the nitty-gritty about the most arcane issue, I don't know, like health plan associations, to broad generalists who can focus on broader human capital issues and address broader strategic issues for our clients.
For example, helping clients with merger integration, we can dive deep and help with benefits, making sure benefits programs are aligned properly, and at the same time, focus on cultural implications. We also combine the latest technology, which we've been demonstrating, really powerful technology, but with intuitive user interfaces, and at the same time, we don't lose that human touch in terms of service. We think this stacks up neatly against our competitors. We're delivering both insights and solutions, as well as this global/local balance. Our traditional competitors tend to focus on one or the other of those areas. We have the integrated portfolio. The full brokerage firms and the niche players don't have that. We have deep expertise that the audit firms and the strategy firms have difficulty replicating.
In addition to this value proposition, each of our businesses has a leading position, we've shared many of these at our 2016 Analyst Day, I wanted to remind you of a few of those and highlight a few new points. In our retirement business, not only are we the leading actuary in all the key markets for defined benefits, we have also moved up the league tables in administration. We are now providing administration services to more than 5 million members in pension plans. Our de-risking capability has been leading the way, not only in bulk lump sums, but in annuity purchases. Last year and the prior 5 years, we participated and led the execution of 40% of annuity purchase activity in the U.S., for example.
You know this retirement business is a sticky business, we're really proud of our 98% client retention rate and the fact that our clients are oftentimes decades-long relationships. In our health and benefits business, we're recognized as a leader by industry groups. We can serve clients in more countries than most of our competitors. We've been first to market on a lot of innovative solutions, including our purchasing collaborative, where we now have very sizable member bases. Our client retention rates in this business are about 95%. As I noted in T&R, we have narrowed our focus to areas where we think we can play effectively and make money.
In these areas, we are one of the top two players across the board, whether that's in our compensation advisory services or our benchmarking services, where we have more than 30,000 participants, as well as in some of our software applications where the number of installations is inching toward the thousand mark. We've been growing our TAS business very deliberately over the years. Back in 2016, I said that we had a sterling reputation among large organizations. That continues. It's evidenced by our near 100% retention rate and by the fact that we've actually had business placed with us without a competitive tender, which is highly unusual with engagements of this nature and magnitude. I want to turn to what's driving our business, each of our businesses now. Many of the things that are affecting the business from an external perspective are similar to what we saw in 2016.
There are a few new things, though. In retirement, for example, the demand for our core work is persistent as pension liabilities and assets continue to grow in spite of us seeing so many frozen pension plans. De-risking is a hot topic still. For 2018, we don't expect to see an economic environment that will allow us to help clients with lots of book lump sum offers, but we do expect a good environment for annuity purchases. A couple of new things for retirement is that there's been a notable uptick in the market activity for DC master trusts. These are multiple employer plans where all of the administration, investment selection, governance compliance is outsourced to a vendor. You may recall that we launched our DC master trust just over three years ago. It's a LifeSight product.
We now have $5 billion in assets and 100,000 members in the U.K. and Netherlands. The acceleration of the movement to these DC master trusts is picking up. It's about six to 12 months behind where we had expected it to be, but the momentum is now building. A couple of other things impacting retirement in 2018, legislation. In the U.K., there's the Pension Freedoms Act. That impacted us significantly in 2017. We expect the activity to continue at that pace in 2018 as individual members decide to transfer their pensions out of their plans. In the U.S., tax reform is causing sponsors to ask us for help to figure out how to maximize their tax deductions. Finally, we see opportunity in pension broking.
Regarding health and benefits, the need for benefits cost management continues to drive the business, though you might have noticed that the healthcare environment, particularly in the U.S., is pretty dynamic. You've got CVS, Aetna, Cigna, Express Scripts, Amazon, Berkshire Hathaway, J.P. Morgan. The latter one of particular note, as we've got non-industry players entering the market to try to drive significant change. They say they're about improving quality and reducing cost, not just reducing healthcare trend. What they say is they're going to focus on technology. We can see a number of areas where they might have an impact, whether it's on simplifying billing or helping with appointments or actually getting through to delivering better quality care. Those solutions are going to take some time to emerge.
The impact of these changes is that it's shining a spotlight for our clients on the solutions that are available today to help them improve their health plan performance. They're turning to us for that. Another change in the healthcare landscape is that organizations are recognizing that there are similarities in the challenges they're facing around the world. They're bundling up those opportunities, generating more opportunities for us. In T&R, similar drivers related to attraction and retaining talent driving the business, boards focus on pay for performance. A couple of new things here. You know that M&A activity is expected to have an uptick in 2018. We'll benefit from that as there are talent strategies needed to be developed from that benefit program integration and the like. There's also been a greater focus on inclusion and diversity.
After decades, organizations are saying, "We're not making the progress that we need to make here." A spotlight shone on this to some extent with the U.K. legislation related to gender pay gap disclosure. They're coming to us to help them figure out why progress hasn't been made and implement solutions. In some parts of the world, there's opportunity related to organizations maturing and transforming. For TAS, similar drivers in the past. What's new this year, U.K. legislative activity will continue to drive transaction volume. Competitor exits will allow us to continue to focus on our market share. To position ourselves effectively to take advantage of these, we are focused on technology, operations, and expanding our business. Technology development and deployment, as John said, to automate our internal processes as well as to enhance our offerings focused on creating great experiences for clients and their employees.
We have hundreds and hundreds of colleagues focused on technology development. We've adopted an agile approach to development. We're ready to make sure technology is incorporated in all of our offerings. We've developed target operating models for all of our businesses. We're in the process of implementing them to improve processes, increase efficiency through technology, and consider opportunities with workplace locations and expansion. We're just looking for plus one, leveraging our existing client base, plus one country, plus one practice offering. We think it'll have a big impact for us. We've already seen how this can impact through our Global Benefits Management solution. You know this was one of our revenue synergy targets. You know that before we came together, we did not have a great offering. Together we got the recipe and all the ingredients to really come into the market forcefully.
What you see here is that the market has responded very favorably. We have contracts or are in contracting phase for $70 million of revenue and a pipeline that gets us to $75 million by the end of the year. We have been hitting a 40% win rate against two very established competitors. We've moved from a standing start, less than 1% market share, to the 15%-20% range. There's other innovation that we've been focused on. It's a key to our future, as John mentioned. We're seeing it across the segment. You heard me mention LifeSight. This is something that will have a big impact in our U.K. retirement business. As I said, it started off a bit slower, but we still see that getting to a $70 million revenue source for us in three to four years.
Another one I'll mention is the Employee Insights pulse survey software. I hope that a number of you have seen that out in the demo area. This is a tool that has changed dramatically how organizations go about the exercise of employee surveys. Significantly reduced time and effort required to complete it without sacrificing deep technical approaches and great solutions. We have built into that software a lot of our intellectual capital. It's not like using SurveyMonkey, not to say anything bad about SurveyMonkey, but it's just a different experience. Our intellectual capital is in that tool, and that's the approach that we take to all of our offerings. I'll also point out data digitization, which we take paper records and other unformatted information, turn it into usable data files, and then apply artificial intelligence to create insight on any number of benefits issues.
Innovation, really key to our future. Looking out beyond 2018, HCB will continue to be a source of that one word, profitable revenue growth altogether. We'll be tapping the growing health and benefits market, which we find very attractive, reinforcing our position in retirement and TAS, and continuing to focus on the profitable and growing parts of T&R. We will be continually refining our value proposition for each of our businesses and across the segment to ensure that our relationships are long-lasting and our retention rates are even better than they are today, as high as possible. That will enable us to focus on growth more. We'll also continue to improve our efficiency through automation, process, and workplace location.
Finally, we'll be refining our offerings to make sure they match the various market segments we're pursuing, from mid-market to the most large and complex, as I mentioned before, continuing to innovate so that we can maintain our leading position. I'm really confident about the future for this segment and for each of the businesses. Thank you for giving me the opportunity to share that with you. Now I'd like to turn it over to Todd Jones to tell you about CRB.
Thank you, Julie. Good morning, everyone. John, when we do this again, if I could not have to follow Julie, that would be terrific. Okay. It's a very impressive story. Good morning, everybody. I'm glad to be here, and I'm happy to talk a little bit about Corporate Risk and Broking or CRB. What we've been up to, give you a sense of some of the things that we've accomplished in 2017, what we're working on for 2018, some of the key differentiators and strategies that we're executing on to grow the business and grow it profitably, as well as to give you a little bit of a window in terms of the overall market environment from a pricing perspective. As Julie said, we've got a similar slide in each of our segment presentations.
John had mentioned earlier about the reorganization of the company and the creation of these global segments. CRB as a business was not organized this way in advance of the merger. It was organized very much geographically. When we set this up, it was certainly a change for the business. I'll talk about how that played through in terms of performance. John really hit on it, that what we're seeing more and more is operating this business in a global manner, operating seamlessly in terms of serving our clients globally and bringing in the resources regardless of where they may reside is a huge benefit for us, certainly for our clients, and a real differentiator in the market.
This is, in its essence, the risk advice and insurance broking business that was embedded with Willis, and we serve clients from small and medium-sized enterprises up to the very largest global multinational firms that operate around the world. Really focused on thinking and working with them about how we solve their risk issues, both in terms of risk transfer and other mitigation solutions, and tapping into, which I'll talk later, all of the analytics and risk and diagnostic tools that we've developed over the last several years to really bring that to life. It is a global business. You'll see in terms of the spread of revenue, Gras Savoye, which I think unfortunately sometimes gets missed in the mix. That was an acquisition, I think it was four days prior to the combination.
Gras Savoye came into the organization, it is a terrific business, giving us really market-leading share in many countries around the world, most notably France. Roughly $22 billion of premiums annually placed in the marketplace globally. We provided some guidance in terms of revenue and wanted to focus on one area, which will be a continued theme, I think, through this part of the discussion, which is really around margin and profit improvement. When Gras Savoye came into the organization, it was a private firm, operated at a margin that was below where Corporate Risk and Broking operated. Gilles Bénéplanc, who leads that business for us in France, and his team have been well on their way in a multi-year strategy on bringing that margin up to where the levels are, what we expect within Corporate Risk and Broking.
Gilles and his team are doing a terrific job in making progress on that. We're very confident that that's going to be additive in terms of our aspirations about margin. John had mentioned, for me, rolled into the job at the end of 2016. For some of you that joined us on a call that John hosted, it was myself, Carl, and Joe Gunn, who John mentioned in January. Some of this material we borrowed from that and then obviously supplemented with more up-to-date material. I won't go through 2016. I think we talked about it was a challenging year. On that call in January, we talked about the why and what were the lessons learned in terms of some of those challenges.
The complex organization structure John had talked about, I referenced this was new, it was a new operating environment for a number of people to work in, merger distraction, et cetera. What we said in January was that the fundamentals of the business were not broken, that it was a good business. It just needed to sort of get its momentum back. We had a lot of ideas and strategies on how we were going to do that. As we went into 2017, a lot of this was around simplicity. It was taking some of the complexity in the organizational model, and where folks had multiple jobs or were pointing in multiple directions, cleaning that up and creating some simplicity in terms of the leadership model, not only at that top table, but deeper within the organization.
We use this phrase back to the basics or what we say here, return to market focus. I think inevitably, in a merger, in a complex operating environment, it's easy to see how attention can be paid internally. You're trying to spend time understanding role clarity. You're trying to spend time understanding the new organization you're a part of. What you're not doing is talking to clients. That was a big part of 2016. We spent early parts of the year really drilling on to the back to the basics and the fundamentals of how to run a growing business. Not complex, the fundamentals of running a growing business. We saw that play out through 2017 and start to pay dividends, certainly in the last half of the year within North America. Within North America, we had a leadership change.
Mike Liss took over responsibility for CRB in North America in early 2017, Mike and his team have done a terrific job getting the business organized appropriately, making a number of leadership moves that we have been announcing through the course of 2017 and into 2018, both in terms of bringing talent outside the organization in and redeploying proven talent within the organization to expanded leadership roles across the segment. As I said, we started to see that pay dividends in the latter half of 2017 and expect that momentum to continue. One of the segment vision and strategy, I think one of the areas, I was chatting earlier with somebody that I think was a fundamental issue about the performance of the business early on was this sense of identity. Meaning we weren't really quite sure who we were anymore as an insurance brokerage business.
We were part of this amazing resource-rich firm, were we consultants? Are we no longer insurance brokers? Is it a business that's really relevant anymore? It took some time to make sure we understand, no, insurance brokerage is a big part of this organization, one that has got a massive future in terms of the future growth of the organization, but fits very nicely in terms of the other businesses that we operate in, it's highly complementary. I think getting that identity back helped get some of the momentum back and helped make sort of focusing on the basics much more apparent. I'll talk a little bit later on revenue synergies as I focus on client segmentation and where we see the opportunity there. OIP was completed, we finished that program at the end of 2017.
I'll talk about how we migrate from that environment and what I think it means for CRB. Reviewed the entire technology portfolio and put in a governance program that we think is going to ensure that we are getting the right outcomes from our technology investments, and where we're not, we're course-correcting appropriately. Then, as John noted, we're investing. We continue to invest in technology, continue to invest in people and other interesting business opportunities that we see for the business. What does that mean in 2018? One is growth, and profitable growth, and continuing that trajectory and momentum. This global line of business strategy, which again, is relatively new for our Corporate Risk and Broking colleagues, we're going to continue to bring that to life and breed real examples, and it's working.
As we are working with clients, and they are seeing us operate seamlessly across the globe and bringing resources regardless of geography, it's really paying benefits. I'll expand more on our revenue synergy work there, as well as our segmentation strategy, and give you a sense of our client engagement model, which we really think is different in terms of how we operate in the space, and a great way to understand the power of Willis Towers Watson. Then finally, operational excellence. This is really the next phase of how we think about running the company, both from a growth and an expense management perspective, and how we expect that to pay dividends going forward. Maybe I'll talk about the market, and I won't spend a ton of time highlighting the events of 2017. I think most of you probably have heard about this.
2017 was a fairly active year and the most active year financially in terms of cats. There was activity not just here in North America, but obviously all across the world. This happened at a time where we were in a prolonged, what we would call, sort of soft market, depending on the product set, sort of decreasing pricing year-over-year for many, many years. Lots of speculation about, hey, is this going to be the event that leads to a quote, unquote, "hard market." Depending on who you talk to, I think everybody had a different point of view, or maybe a wish or desire, but a different point of view.
The reality is, as we issued our Insurance Marketplace Realities report, which we did at the end of 2017, our view then was we had a view on where pricing was going, and it didn't correspond to a hard market. It certainly corresponded to a market that was going to be flattening in certain critical risk areas, which I'll talk about in a second. We were going to experience some pricing increases. I'd say I'm very proud of the team because I feel like we were out early on that, and really at a time where we hadn't gone through the 1/1 reinsurance renewals, the cat renewals, which typically happen in the spring, were certainly in front of us. We talked to enough people, engaged with enough markets and clients, and felt like we had a perspective that we went out with. That report was updated.
I think as you know, early in 2018, we issued a supplemental report based on the 1/1 renewals and essentially validated what we felt like we saw at the end of 2017 when we initiated the early report. We're using this phrase, an orderly market reaction, which we think is the right one. That's more about how we classify risk characteristics, and where we're going to see pricing increases based on the risk profile of individual clients. As you'll see for non-cat exposed, it's still quite a competitive market as it relates to the property market. As we think about kind of the impact on Willis Towers Watson, you could immediately go to sort of labor. There's a labor increase when you're in a market of transition.
Either clients want more options, you're going to more carriers to provide those more options or different program structures and designs, and kind of time and effort and energy to go into that. Our view on that is we actually think the new revenue opportunity that exists in a market where there's potential transition is the greatest. This is our chance to engage with clients, bring to them cutting-edge analytics and tools. Bring to them greater insight for the purposes of sort of giving them these options and solving problems. We're quite bullish in terms of where the market is going and our ability to respond favorably and kind of take advantage of even in this orderly transition as the market exists. Again, all around delivering better insight and leveraging the tools and capabilities that we've been building.
I would encourage you, if you haven't, the Marketplace Realities report, which is something we do annually. It's posted on our website. It definitely gives our point of view in terms of where we see the market heading over the next 12 months. I want to spend a little bit of time on sort of segmentation, and this draws into some of the things that really John and Julie both talked about in terms of where we want to compete and how we're going to compete and when. We do operate in three distinctive markets, right? I think it is important to understand this large account space, which you'll see we sort of loosely define by turnover metrics and head count. It was a space that we've been in and been in quite actively.
It's just been a space that we think we have outsized opportunities based on the new organization we've become. We've talked publicly about where we are in terms of the P&C revenue synergies. I think as John has noted, we're actually pleased in terms of the activity and the client win rate. The value of those client win rates has been a little bit smaller than we anticipated as we thought about what we could generate. We're still very pleased with the opportunity, the level of activity, and what we see sort of longer term.
John referenced 12/31/2018 and sort of saying, "No, we plan on continuing to tackle this market and feel very optimistic about our opportunities." This is another area where we devoted some new leadership. In the fall of last year, Louise Pennington took over the role of leading this effort in terms of large account P&C revenue synergies. Louise is very well-respected within the CRB organization. She's been a practitioner and a manager, and a leader of practitioners, and brings really unique insight on how we can focus and win and compete in this space. We're very happy and see lots of opportunities there.
Mid-market, I think for those of you that have paid attention to us over a longer period of time, mid-market and in the U.S., that represents two-thirds of our revenue portfolio, is a big business for us, not only in the U.S. but around the world. Sometimes I go back to this identity crisis that I talked about earlier, kind of where do I fit in in this new organization? Some of our colleagues that spent a lot of their time focused on growing and serving clients in the mid-market weren't really sure where they fit. We spent time making sure they know they fit squarely in terms of the future of the company and how we're going to grow this place. This is an area where, really compared to in the large account space, where data and analytics are not table stakes, but expected.
You are expected to show up with cutting-edge analytics in that large account space. If you can scale and deliver data and analytics and real insight into the mid-market, that is a massive differentiator, which is exactly what we're doing. We feel like in that space, with the right discipline and the right focus, getting back to what I talked about earlier, that we have a real chance to continue to grow share in this space, and play a big part in what is a very fragmented market. We also, although it's not a large part of the revenue base that is CRB, we definitely play in the small account space, both in terms of affinity, personal lines, and our small commercial book. That is a business that we continue to see being leveraged more and more by technology.
Our anticipation is that we're going to continue to use technology to do that business cost-effectively and be able to drive better margins and yields on that going forward. The complexity that I mentioned earlier was definitely felt in kind of the client-facing part of the organization. We list a number of what I would refer to as job families, whose role it is to interact with clients, to interact with the various capabilities within the firm, for the purpose of acquiring new clients, keeping those client relationships, and growing those client relationships. A big part of the work through the end of 2016 and in 2017 was to create real role clarity around these various job families to include producers, client relationship directors, client advocates, so that everybody understands their role in terms of growing Corporate Risk and Broking and Willis Towers Watson, the company.
That has paid massive dividends. It has given us a focus, which has played out in terms of pipeline growth and certainly conversion rate, ultimately, as we've talked about, building momentum through 2017 and into 2018. The client engagement model is really the framework that supports all this. What we've demonstrated here, or what we're showing here is a component of a larger client engagement model. In our business, certainly in the broking business, it can be very episodic. It can be around a claim, it can be around a renewal, it can be around a merger acquisition, an event. That's where you sort of see a lot of activity. We think of it very differently. We think of this as a continuum of how we engage with our clients.
It may be about a specific event, but we have a very detailed schedule of how we think about interacting with our clients, specific tools, insights, services, meetings, and how we structure that engagement. It gives us the ability when clients say to us, "Help me understand what it's like to be a client of Willis Towers Watson." Instead of saying, "Hey, trust me, it's going to be great," we actually have an answer for that. We can actually show them, this is how we're going to engage with you. It's a very simple, straightforward framework, but we can customize it however you want to customize it. We can bring new insights and tools at any point along the way. This is not just a moment in time. This is a living document that involves the team as well as the insurance carrier. Carriers love this.
They love to be a part of knowing there's a system to engage the client that is repetitive, it's simple, but yet we can customize it for a client's needs. When we think about how we're engaging with clients, both on the large account space as well as the mid-market, this is the framework we're going to use to compete and grow in that space. We need to talk about technology. If you're like me, you get invited to an Insurte ch conference, I think, daily. There seems to be a lot of activity going on in that space. I want to give you a sense of kind of how we see technology, right? The first is change is definitely coming.
We do not see this as an event that'll happen in a day, that it'll be in a moment in time where there'll be a shift. It will be more incremental, which requires us to really pay attention to this space and make sure we're connected, I'll explain that in a second. We also believe that it's the client and the user experience that will separate winners and losers. We're very focused on making sure whatever technology is out there, both that we're focused on developing or that we're looking at externally, how does that help us think about our client and our user experience? Where can we connect those two? Because we think that's going to separate the winners and losers. Partnerships are important.
Our partnership with Plug and Play is a great example of how we want to stay connected to an incubator that's looking at all of these things and make sure we understand where's capital being deployed, where are people paying attention to creating real solutions. At the end of the day, you should be comforted by the fact that we are very connected to what's happening in the world of technology, both our own investments in technology and what's happening in the outside world. We're always looking at those disruptive ideas that we don't think will change the business overnight, but could have a profound impact over time, and very focused on collaboration, very focused on being connected to those that are in the space that have a point of view that we think is interesting and contributing to the thought leadership associated with that.
Now I want to go big picture, and I'm not going to go through each of these, but what I do want to point out, I guess there's a couple of themes that I would draw to. One is coordination and focus. That our ability to continue the growth momentum, to continue the margin expansion of the business, is really all around coordination across all the services we do, but also around focus. We cannot be all things to all people. We need to be very disciplined about where we're investing our time and energy in order to make sure we're getting the right returns. We feel really confident about all the opportunities we have.
One of them I will mention, which is we talk about how we're going to grow CRB, but the fact of the matter is we as a company have got amazing opportunities in Julie's business, in Carl's business, in Gene's business by working more collaboratively across the company. Feel very good about that, but coordination and focus are important. The other, which you'll see, is investment. We still need to invest in this business. You saw some of the tools earlier this morning. More and more tools that we need to create and develop in order to stay competitive in this space. I'm very proud of the work that John Merkovsky and his team have led in terms of building our core models. It's a real differentiator for us, but we can't stop. This is a continual process.
In order to invest, not surprisingly, we have to be very disciplined about our expenses. We have to create the right leverage between our revenue and our expense base in order to give us the headroom to invest. Which leads to what I referred to earlier, operational excellence. And I would encourage you to think about operational excellence, not as a cost program, but it's how we think about running the organization better to benefit both the top line as well as the bottom line. John mentioned Alexis Faber, an announcement that we made earlier. I personally worked with Alexis for my almost 15 years at Willis Towers Watson. She's had leadership roles in functions, in leading business, and was leading our global line of business, our financial lines business, prior to this role. And she is uniquely qualified to focus and deliver on this aspect.
As I said, I don't view this as a cost program. What I view this as, if we focus on improving our client and colleague experience, we will improve productivity, we will be able to improve revenue growth and top line, and there will be economic benefit that flows to the bottom line out of that. John used the word continuous improvement. I have borrowed that. That is something that I think has been a really important learning for me within the organization, and it really is an ethos that has to exist in the business that we understand in order to compete in the market we are in, we just can't be as good as we are today. We need to continue to get better and better and better.
I'm very excited about the impact that Alexis is going to have in this area and how that's going to flow through in terms of financial performance. In closing, it's about growth and it's about profitable growth and getting CRB back, which as we talked about earlier, to the growth momentum that we believe the business should have and will continue to have going forward. Delivering on this global line of business proposition that we feel strongly about in our risk and analytics offering. Our operational excellence program will only assist in that. We think that that's going to leverage not only our revenue aspirations, but as well as our focus on cost and making sure that we're driving appropriate return to the bottom line and managing our expenses appropriately.
How we go to market, we feel very good about our client segmentation, the leadership we have against each of those client segmentations and the individual strategies on how we're going to compete and win, and as I said, continue to focus to deliver results in those markets. Thank you for your time. I am very excited to hopefully share with you the progress as we go through 2018 and beyond about this segment. We are now at a point in time where we're going to take a 15-minute break. If we could go to the 15-minute break, then we'll resume with Carl Hess. Thank you, everybody.
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One. We're live? There we go.
There we go.
Thanks everyone, and welcome back. I think I'll be doing this to the noise of stragglers in the halls coming back and greeting us in a bit. I've got the rather challenging task of talking about what I consider the most diverse segment we have, Investment, Risk and Reinsurance, in 25 minutes. We're going to cover this rather at pace. Describing the segment actually in a couple of words is quite difficult, but I think it's easiest to think of it as we're serving two basic markets, two basic value chains, right? The insurance industry, with a number of businesses that operate in sort of everything that's not Todd's domain of retail broking. The investment industry. I think the good news is we have no intent in getting into equity analysis, so there's no competition here in the room, right?
As Julie said, we've got the sort of same slide that looks at the stats for this business that we do for the others. You can see the breakdown by business at the top left. The two biggest businesses are about 60% of the portfolio. That's Willis Re and Insurance Consulting and Technology. These are businesses that are on a trajectory of working more together by the day, and it's really encouraging to see. That's been largely organic in nature. We've actually seen quite a number of joint wins coming out, whether it's being appointed broker of record through going to market together and showing our full scope of services, or in terms of broadening the scope of assignments and remits we've had through joint pitches. That's a wonderful development. The geographic line-up there is a bit misleading.
Not that that's where we get our revenues, but these are all businesses that are managed on a global basis. We do work with the geography leaders because we want all our colleagues to be working together, but recognize there's a bit of regulatory separation we need occasionally for these businesses, whether it's retail versus reinsurance, or the fact that investment management is a highly regulated activity and we want to make sure by a bit of separation of the business that we're confining our risks. The first thing I asked for when I took this job, or was thrust into this job maybe, a year ago November, was to ask each of the businesses to do a five-year strategic plan.
Coming out of that, we did make a number of changes to the portfolio we'll talk about as we go through the individual business slides here that I think have worked out pretty well. The last point I'm going to make as we get through this is there's a good amount of innovation going on. Just as Julie and Todd showed, we're innovating with the IRR segment. I'm going to highlight 2 of them. One is the Asset Management Exchange. Hopefully, you had a chance to stop by and see the demo of that. The other is our reworking of what was our portfolio underwriting services business into something called Underwriting and Capital Management we're very excited about. The 7 businesses under the hood, sort of broken them by size, but you could also think of them by who they serve.
Willis Re is 1 of the world's leading reinsurance brokers. Insurance Consulting and Technology, which used to be called Risk Consulting and Software or RCS, is the world's largest provider of actuarial consulting services to the insurance industry. Miller is a very large wholesale broker on the London market. Our investment business, we've now called it Investments because I think we're doing more than 1, is a very large investment consulting and asset manager firm. It's a manager of managers business. We're seeing significant growth in that. Max Matthiessen, Julie talked about earlier, right? That business was moved into IRR at the beginning of 2017. It's the leading provider of retirement solutions in Sweden. Stockholm is lovely this time of year. UCM, formerly Willis Programs, our MGA platform. Specialist Insurance.
Finally, Willis Towers Watson Securities, which works very closely with our Willis Re business to do ILS underwriting as well as M&A advisory for the insurance industry. At the broad note, 2017, I think has been a year of rather positive conditions for many of these businesses. Todd talked about our analysis of rates at the retail level. Here's my chance to do a little bit of advertisement for Willis Re's 1st View. We issue this 3 times a year, so I won't go into what's happening with rates in the reinsurance market other than to say that kind of the conditions we saw at the 3rd and 4th quarter of 2017, talked about, I think, ad nauseam for those who read the Insurance Insider and other publications, but generally have not hurt Willis Re's outlook for 2018.
The activity, we've seen quite a bit of consolidation and continue to see consolidation upheaval in the insurance industry. This is quite good for our ICT business. We do a lot of valuation work. Whether it's looking at blocks of business or actually as appointed actuary to companies. That sort of M&A is a tailwind for ICT, and we see that potential continuing into 2018 as well. Very much two legs that stool, consulting and technology. Our software growth has been good. We see that continuing as well. While Miller has faced the same headwinds as Todd Business has in rates, it is a significant player on the London markets. As we see the London markets consolidate due to very high expense ratios that are pretty well-publicized, we think we can take advantage of that.
Our investment business continues its evolution from a provider advice to a provider of solutions. The switch to DB to DC is a challenge for the business, but one that, as Julie illustrated, we're meeting through the provision of things like LifeSight and the ability to leverage that in different markets going forward. Max Matthiessen enjoyed a strong year due to good performance of the equity markets and the revision of how they take commissions. It's a well-run business, and we're really happy with it in the portfolio. Underwriting and capital management, I'll talk a little bit about. This is a business in change, right? We did divest some parts of the portfolio during 2017, during 2018, I'll talk a bit about why and why we think that positions us well going forward.
2017, what we've got here on the chart are sort of two-year growth rates for the major businesses in IRR. Each of these has its own story, but there's a common story to all of them. 2016 was a difficult year for all these businesses. 2017 was a year of rebound. Willis Re had a growth of 0.2% in 2016, 2% in 2017. For ICT, 2.4% shrinkage in 2016, 9.2% growth in 2017. That's actually sort of double-digit increases in both pieces, consulting and technology. Consulting went from a 6.2% shrinkage to a 4.5% gain. Technology from a 14% growth to a 26.4% growth. Really strong results we see in a business that's had some challenges over the last decade. Investment went from 1.3% growth to 6% growth. Miller, recognizing that we only had Miller in the results for half a year in 2015.
Looking at Miller's full results for 2015, even as a standalone business, we went from 2.2% decline to 7.2% growth. Strong momentum in terms of revenue for all these businesses in 2017. That wasn't just top line. That actually dropped to the bottom line. Our operating income grew 6%. Remember that in 2016, we had the settlement on the FABS business. That was about $35 million. That's worth on a $1.5 billion IRR business. That was a couple of points of margin that we had to kind of consider in our profitable growth targets that John sets us. I think we were able to overcome that and a bit. I think a very nice story in terms of the conditions we see ourselves in going forward. Our biggest business in the portfolio is Willis Re. It's about $600 million of revenue.
One of the world's 3 largest reinsurance brokers with a global reach, right? Willis Re is organized in 3 pieces: North America, International, which is everything that's not North America. I know it sounds a bit parochial. Specialty, which works with specialty insurers, especially in the London markets. The 3 businesses work together in terms of thinking about the common things like placement activity. We have continued to invest in this business, especially in its people who help drive our results forward. You can see on the right-hand side of this page, sort of our 6-point model in terms of how we have continued to reinvigorate this business to compete on a global basis. It starts with things like world-leading analytics, working with our people to develop a client-centric model for how we manage relationships, continue to diversify the business.
Right now, Willis Re is a treaty reinsurance business that largely works with the P&C industry. We're looking to diversify our client base by moving into life insurance and MGAs and other sources of alternatives, ways to source business. Continuing to keep people skilled up is a very important part of this in a very fast-moving world where alternative capital plays an increasing role. We do think there's room to grow this business, especially in North America. We have opportunities, especially working with the other portfolio businesses within IRR and the rest of Willis Towers Watson to have a unique value proposition for the marketplace in terms of an advisor that can offer broking, that can offer technology solutions, that can offer advice or transaction to the capital markets. We don't see anyone else lining up with that same set of capabilities to the same extent we have.
We're really excited about it. The one number I'd like to call attention to is that bottom right-hand number looking at our retention rate. 2016 was a bit of a tough year for us on retention for a couple of reasons. We had merger distraction. We had the operational improvement program where I think we didn't do ourselves any favor by moving a little too quickly on a number of fronts. We were able to raise that number up to a number we're much happier with during 2017. The way this business works, you can almost boil it down to 3 factors: Renewals, rates, and new business. Throughout 2016, we actually did very well in new business, and that continued into 2017.
We'll let you take your own view on rates, but the pressure on-- A year ago, when Todd and I had the call with you all, I talked about a softening of the softening. We did see some of that, and we'll hope we'll see maybe that turn even further away to look from what's been a significant headwind to us to a bit of a tailwind. Then the other component is indeed retention. I think we're happy with 94%. We'll see where we can take this forward going forward. On ICT, John talked a bit earlier about Alice Underwood taking over the helm here. Alice has made a number of changes in her team, which we think have actually worked out very well. Serhat Guven has taken over the leadership in the Americas. We've got Duncan Anderson taking over for Mark Beardall.
Mark has taken a role at the segment level, looking at our technology platforms across IRR to see what sort of efficiencies we can get as a business to continue to modify our technology platform. ICT had a good year in a year of change. We did do a couple of things during the year. We sold our telematics business to Octo. We do have the ability to work with Octo as they implement for clients. We think that's a very good arrangement that suits us both. At the beginning of this year, we've moved a chunk of the ICT business into Todd's world. It's not a trade. I got nothing for it. What we did was we had a unit called ICT Corporate. They actually had corporates as their clients, whereas the rest of ICT serves insurance companies as their clients.
This is a very natural fit with Todd's Risk and Analytics Group, who also serves corporate clients. We're taking a very client-centric view about this. We think it's a very well-rounded proposition we can offer our corporate clients, but continue to cooperate behind the scenes on technology that serves us both. ICT continues to evolve from an advice business to a solutions business. It's not IC versus T, it's very much IC and T. We look to continue to find consulting opportunities around installed software at clients. We've actually worked to revamp the incentive structure for our consultants so that software is first, last, and always in their minds in terms of thinking about the relationship.
Our goal here is to drive this business, which historically has had a lot of project-based revenues, into a more regular revenue stream focused around software, the opportunities that brings for us. It's very sticky. We're pretty happy with it. Regarding Miller. Miller is a business we bought in 2015. It's one of the leading wholesale brokers on the London market. We own 85% of Miller. The partners at Miller own the remaining 15%, and we have influence over Miller two ways. I and a couple of other colleagues serve on Miller's investment board, and we also were represented up on Miller's partnership board. During 2017, we had a transition of leadership at Miller from Graham Clarke to Greg Collins. That went seamlessly. Graham is still with us as chair and continues to have great influence on the organization.
The London market is under a bit of stress these days. High expense levels are impacting the London market's ability to be competitive. We think that can actually play to our advantage. There's a good deal of consolidation opportunities there, and we think that the scale Miller brings to the table and the capabilities they have between their Programs and Specialty Business actually positions very well. I've also been pleased to see the cooperation between Miller and other parts of the organization. Miller's distinct brand identity is actually very important for them as a business because their clients are Willis Towers Watson competitors for the most part. That separate brand identity is actually something you'll see maintained. We're able to cooperate.
For instance, Willis Re and Miller have cooperated on a joint venture in the Japanese market that brings together Miller's facultative reinsurance skills with Willis Re's treaty skills to actually have created something that brings more value for clients as well as grow our revenue. Stay tuned on this. On the investment side, this is a business that had been a bit challenged in the 2014 to 2016 period due to changes in the environment in which it operates, the transition from DB to DC in most major markets we do business in, as well as the shift from advisory to asset management or Outsourced Chief Investment Officer, OCIO solutions. I talked a little bit earlier about the overall growth pattern for investment over the last couple of years. Here we've broken it between advisory and delegated.
You can see while there's a decline on the advisory side of the ledger, that's been more than offset by growth in our delegated business. We think we have a more than competitive offering in delegated. Our assets under management now exceed $100 billion. We are winning more than our share of mandates, and we are focusing the bulk of our efforts in this space on our capabilities here, working with not just within the investment line of business, but very closely with Julie's retirement business, where we serve a common client base. We think the joined-up offering, understanding both assets and liabilities together is a huge winner for us in the marketplace. Max Matthiessen. We haven't necessarily talked about Max Matthiessen very much in prior years, but it's a bit of a small jewel in the portfolio.
Max is a full-service retirement administrator, investment manager, and financial advisor operating in the Swedish market. It's about a $120 million business. It's driven largely by working to recruit new corporate clients, and then we handle the retirement for their non-union employees. Our distribution is via the corporate client base with overlap with CRB and HCB. The proposition here is actually one where we do financial advice, including loans, including asset allocation, including manager selection, and helping people with their retirement. We've got about, I think, these days, 150,000 people we are helping in a country of 9 million people. We're actually quite a significant player within the Swedish market. We think there are lessons we can learn from the Max Matthiessen experience that potentially can be leveraged to other parts of the organization and help inform our strategies going forward.
We've had a change with Christoffer Folkebo stepping down after 14 years at the helm of Max Matthiessen. We are actively recruiting a new CEO from within the Swedish market. Underwriting and Capital Management. UCM, and this used to be what's called WPAS, our Willis Programs base, is an area where we've divested about $70 million with programs in two transactions. In late last year, we sold about 15 programs to Aon, and then early this year, we sold Loan Protector to its management. We continue to invest in this business. It's one of our two major activities within the segment. What we're trying to do is build a platform that takes advantage of the technology we have. We use ICT's own software as part of the offering here.
Look to grab data from within the portfolio, those are the sort of WTW cells we talk about here. As well as bringing in underwriting talent in Specialty Insurance areas that can form MGAs to attract revenue and premium onto the world markets. Use Willis Re's ability to assemble capital to back these MGA opportunities. We think this gives us the ability to play the value chain to maximal advantage, taking advantage of our global span, our global client reach, and our world-leading technology in this area. We're actually quite exciting here. We continue to build out cells as we find them. We're opportunistic about finding third-party talent, and we're working with Todd to see how we can best use the CRB reach, client base, and book of business to maximize the opportunity for our clients to get the best coverage possible. Stay tuned.
I hope you had a chance to visit. There's Oli Jaegemann in the back, who is the head of our new Asset Management Exchange. AMX, or you can visit theamx.com, is our ability to actually leverage what's a highly inefficient global investment management market. By that I mean, if you are an institutional investor and you want to contract with an asset manager, and we have a number of buy-side people in the room, you know the labor that entails, right? A bespoke contract, negotiations back and forth, a lot of labor in actually getting that. Then hire another manager, repeat the process all over again. What we've established in the exchange is a series of pooled funds that you can sub-advise that actually helps you just contract once. The client contracts once.
We save a lot of time, effort, energy, and it's actually easier and you get better insight through our technology into your portfolio. This is a basis points revenue model. We're up to $3 billion under management already. We're looking to expand. We've hired a new head for the U.S. to expand into the world's largest investment market as well. We hope we'll be up here in a year telling you about putting some more numbers behind this to show you how we're doing. Stay tuned. As you can tell, I'm rather ebullient about the future for the segment. I think we have a tremendous amount of opportunities in terms of what we can do. The combination of our insurance-facing businesses is unrivaled in the industry, and we are actively working together to advance that proposition. It started organically, right?
This was already going on from the date of the merger without any management activity at all. We're putting management activity behind this to say, not just how can we work together, how can we go to market together? How can we take advantages? Let's understand what each other is doing and coming up with propositions. For instance, our securities business and ICT actually figured out together a banc assurance product in a East Asian country. A multimillion-dollar opportunity for us that we definitely could not have had without the merger, right? Those capabilities didn't exist in either organizations by itself. We think that the potential here for this segment in terms of keeping our clients happy, growing new clients in all the markets we serve, and then broadening our services across this actually gives us a very strong leverage possibility for the future. Stay tuned.
With that, I'll turn it over to Gene.
Thank you, Carl. Greg at the break asked if John saved the best till last. You know from my three colleagues that he didn't. I think he saved me because it was close to lunch, and you'll forget what it is that I say. It is a pleasure to be here. It is a pleasure. Our Benefits Delivery & Administration business, as you can see on the graph, is a U.S. business. It doesn't mean that we're not in this business around the globe, but this segment is focused completely on the U.S. because of the unique opportunities that we have in the U.S. Julie talked a lot about TAS and the retirement administration, and I'll get into some of that. We have a lot of us sitting in HCB, and we're very best friends, and we coordinate as we go.
Because of the unique opportunities, as we set it up, we said that we're going to be focused in this segment just on the U.S. business. The other thing you'll notice at the bottom, and you've seen it from our guidance, is you're used to us saying we're going to grow 15%, 20%, 25% per year. This year, our guidance is we'll be in mid-single digits, and I'll talk about what's changed, and what we might see as we go along in here on that basis. What is it that we do? We're here to help our clients unlock their benefit strategy.
As we go to market and we get a lot of RFPs on the benefits administration, I'm asked the question by the advisors who are helping the clients, "Are you really in this business?" Because as you know, as you see our competitors, the landscape has changed. Most of them have said, "We're going to sell it," or, "We're not in the business," or, "We're teaming with somebody else." I'm here to tell you, as I tell every client, we are in this business, we're in this business 100%. We're convinced that having this business together with the consulting business and the rest of it is the right way to go. Most of you probably don't know our history, but a young John Haley had a special assignment just before he became CEO to exit the administration business. We at Watson Wyatt were in the administration business.
Towers Perrin, who we merged with, was also in the administration business. We were small consulting firms, and the capital requirements for us to be in the administration business ended up being much greater than our consulting firms could bear. In fact, John will tell you, we almost didn't exist as Watson Wyatt because of the administration business, because of the commitment that we were in. We've gone the route, we've looked to say, "Should we be in the business? Shouldn't we be in the business? Where are we?" We've slowly, slowly come back into it till it's grown to where it is. Let me tell you a little story, my relationship with John. John had this special assignment to exit us from the administration business. We exited. He became CEO.
I'd spent the early part of my career at Towers Perrin and had a very big client that I spent most of my time on. When I left Towers Perrin and joined Watson Wyatt, I had a non-compete, so I didn't see this client anymore. After about two and a half years, a small high-tech company that I had as a client made a hostile takeover of this big client that was a Towers Perrin client. I was very good friends with the VP of HR and with the CFO, and I helped them with the due diligence. Then they came and said, "Congratulations, Gene. You're now the actuary for this new big combined company." This company had 100,000 participants in a big DB plan that had been in existence for probably 150 years.
You are now in charge of the administration for this client that Towers Perrin was doing at that point. I was like, "I'll be the actuary, but I can't do the administration." Because my boss had said, "We will never, ever" I don't know how many evers, " be in the outsourcing business. We're done. We're out of it. We're never going to go back into it." They said, "Well, you can't be the actuary if you don't do the administration." I was like, "Okay." I'm new to Watson Wyatt. I got to build my portfolio. I got to get this done. I got on a plane and went to Washington and visited John. We didn't get out of producing software. What we got out of was the administration of it.
I said, "John, we can write a software platform for this client, and I'll have the actuaries do the administration. It's not outsourcing. We'll just do the administration, the benefit calculations." John said, "Go home." I went home, came back, visited with again, said, "Yeah, but look at the revenue we're going to get. This little Denver office isn't very big. We can do all these things." Slowly, slowly worked on him, convinced him. He said, "Okay, but you may not take phone calls, okay? I'll call it administration, but you can't take phone calls." I said, "Okay, I promise we won't take phone calls." We built the software. We get it going. It's 1/1/2000. Towers Perrin's unplugged their system. We're ready to go. Our system isn't quite ready, but we think we'll be okay.
The client announced that they were going to lay off 10,000 union employees. We all of a sudden get 10,000 union employees send us emails saying we need benefit calculations. I had to go back to Washington to visit with John and say, "Okay, well, maybe we could take phone calls for like two months because we have to talk to these people." That got us slowly back into the administration business. The thing that we learned from it and where we built this business is it was a client who partnered with us, a client who didn't say, "Take my administration. You can do it cheaper than I can. I don't want anything to do with it." We partnered completely.
From then, we would go back to John and say, "Can we do one more?" Every time he would look, and it required CEO permission for us to slowly continue to build this business. The reason we needed to be back into it is because this client literally said, "You will not be the actuary. You won't do the consulting. You won't do these things if you don't help me with the administration." We built a new model. One of the things and one of the reasons that I'll talk about in the slide, and Julie talked about it, that we have the retirement administration sitting in retirement, not in this segment. We build the systems, but the running of the systems sit in retirement is because our actuaries have special knowledge.
What we had done wrong before is we said, "This is just a separate business. You don't need knowledge. You don't need to be where it is." We need our actuaries sitting right there because they have special knowledge of what's going on, and that's how we built this business, very closely keeping it tied. The administration retirement sits in HCB and in retirement, not in this segment. The healthcare, I'll talk in a moment about some of the changes we're making to healthcare to continue to grow and build the healthcare. What we do is we build administration systems, and we help clients do administration. We're organized in four different businesses. Our accounts business that I'll get into more detail on each of these, our benefits outsourcing business, our group marketplace, and our individual marketplace.
We've got four distinct things that we do that we're building as we go along. One of the other things on this prior slide that I wanted to point out is the other thing that we are very committed to is we have wholly owned solutions. We've worked with partners, we've worked as we've gone along, and we continue to believe that we need from beginning to end the solutions so that we can tie them together so that it's a Willis Towers Watson experience that our clients have, not we're just managing the experiences. That really is the key point as we go along. We changed our name. You will have seen in 2017, we were Exchange Solutions and we're now Benefits Delivery & Administration, and it really is to show the breadth of what we're doing.
We do more than exchanges, it is more than exchanges. What we thought would happen with exchanges, I know John in an analyst day three or four years ago got up and talked about the fact that we don't know how this is all going to turn out, but we know that there is growth here, we're going to be focused on it. What we thought would happen with exchanges, some of it happened, some of it didn't. We still think it's a very viable growth business, but we're doing a lot more than that's the key reason that we changed the name, because we do a lot more than just exchanges. We had a lot of clients who just actually didn't like the name Exchange.
Our one exchange, our individual marketplace, we had a number of clients say, "We want to hire you, but will you change the name for us?" We said, "Well, we can't change the name because we're using it for everybody else." It really was also a reaction to the marketplace, the clients saying, "Please don't use the word exchange. Our participants actually don't like it because it had a negative connotation to the government exchanges and the rest of it." What we're focused on this year, our number one focus is bringing our colleagues together. We built this business with a number of acquisitions. Very good acquisitions, but we built it with a number of acquisitions, we spent the last year and a half integrating these acquisitions, integrating the colleagues, making them feel like they belong with Willis Towers Watson.
When I took over this business, became responsible for it about a year and a half ago, we had just taken on, by far, our very largest client in the individual space, 250,000 retirees. It almost brought us to our knees because it was bigger than anything we'd done. I went on a tour visiting all of our clients, our clients would look at me and say, "Gene, you've taken over this retiree experience. It's sticky. Once the retirees move, they're ours. They're not the clients. I can fire you from every other thing Willis Towers Watson does. I never have to use you for" This is the senior VP of you name it, the biggest corporations in America.
I never have to use you for anything else if you don't get this service fixed." We have done that, our key focus is making sure that our colleagues know that they're serving Willis Towers Watson clients. We service about 7 million participants. On the retiree side, we service about 2 million participants. We get very high scores from those participants. We survey them, we do net promoter scores, we're doing all sorts of things for it. Our people are really proud because we're in probably the 95% of people who give us very positive scores, it works very well. You can do the math. If you take 5% of 2 million, I got 50,000 retirees who are mad at me. Our focus in the business, as we'll get to in a moment, is on those 50,000.
When you think of what those 50,000 do, we had a retiree who got their reimbursement a week late and sent a note to the CEO of the company saying, "This is the worst company that you could ever be associated with. I didn't get my money." We had another one who didn't turn in the documentation that they needed to get the claim because these are IRS accounts, you got to turn in documentation. They didn't do it, and they wrote their VP of HR saying, "This company stole my money. I know what they're doing. They're getting the float on my $150." "There's a lot of money in there.
If you keep the money for two weeks, and you get the interest on it." I went back and pointed out to the VP of HR, there actually isn't any float because we draw on their bank account, they have the money, not us. The last time I checked float for two weeks on $150, it's just rounding. It doesn't get very far. That's the kind of business we're in. We're focused on becoming completely part of Willis Towers Watson. When we give service, our colleagues know that they're dealing with Willis Towers Watson clients, and it reflects well on the rest of the business. Building stronger relationships as we go, also identifying efficiencies.
There are a lot of efficiencies if we can build them in that we can improve the bottom line, which is what John tells you his focus is, how do we improve the bottom line? How do we make this more efficient? In providing seamless experience for our clients that our clients know who we are and we're giving the service that is expected. Let me go into the businesses. The one that we're really excited about, and it's the smallest of the businesses, our benefits accounts business. We made this acquisition about two and a half, three years ago. A company that had been in existence since 2001. They provided white label service to aggregators. We acquired them not for that business. We acquired them for the know-how and the technology. We have a demo out there that you'll see.
I think it shows very well. Greg also asked when's it coming to the market, and the answer is soon. We're building technology as we go. What this helps us with is all the administration clients we have, we have a natural entree. We don't have to give this work to our competitors. We have a natural entree into building this business. For our individual marketplace, we're moving 400,000 accounts this year. We're in the process now of moving accounts. All the work we sold last year has gone onto this platform, and we're now starting to transition our clients. It's a really big deal to us. Why it's such a big deal is because the reimbursements to the retirees is probably where the stickiest point is.
Today when they call us, we then transfer them to the vendor who's helping us with it. They get transfers, they get phone calls going, and when we have everybody on this, it'll be one call. Our benefit advisor can see one thing, they can give all the answers, and it will actually take a tremendous amount of noise out for us, and it'll be a good source of revenue growth as we go along. The other thing for this business is we're one of the few who has IRS non-bank custodian status. We got the non-bank custodian status a year ago, which means we can then hold the funds and be the investment advisors and go along. We have to grow the business, but this is something that we think will give us great growth going forward. Our benefits outsourcing business has very strong growth.
This is also where when we talk about group marketplace and we talk about active exchanges, this is where most of the revenue that stays in BDA sits. When we have an active exchange partner, we have to do the administration of it, and we have it sitting here. When you saw that first slide, I didn't break out group marketplace and outsourcing because they're essentially the same thing. That's where the revenue sits. Also in this business, and I talked about, is that the revenue for a lot of the outsourcing is split with HCB. Julie has almost as big a business in outsourcing on the retirement side as we do on the health and welfare on the systems side.
Again, our strong belief is that the way to be efficient in this and actually make it work and avoid the pitfalls we had 20 years ago, is to keep the actuaries involved. The actuaries know the pension business. They know the pension plans, they know how to run it, and we think that that's the best place to have that business sit. We also provide the call center support now for benefits accounts. Group marketplace, our active exchange, is now more of a concept within WTW than a line of business. You won't see us break out revenue for this because we actually have very few people in BDA sitting on what we call group marketplace. Taking the belief we had with the actuaries having to be involved, we believe that the H&B consultants need to be involved in this business.
BDA, we're going to get revenue from the administration piece, HCB, Julie's business, will get revenue from the consulting, the design, all the other pieces we're doing. That really is, I think, the big mistake we made when we entered into this about three years ago. Three years ago, I was running the benefits business, Jim Foreman was doing the Exchange Solutions, and we kind of declared war on each other. He hired a whole bunch of people, put them in Exchange Solutions and said, "I'm going to run this business." Our healthcare consultant said, "Well, you're taking all my business." We actually didn't do so well as we were going along. I do think that was part of the reason we didn't grow it as fast as we could. We've moved back from that.
The revenue will sit where the consultant sits, and we're actually partners going forward. We quit having wars and quit having battles. Besides that, Julie's a lot smarter than I am, so I would never win if we ever had wars or battles or trying to outthink each other. This is a Willis Towers Watson offering, and communications will do communications, and the healthcare consultants do the designs, and the administrators will do the administration, and we're offering a seamless offering as we go along in there. We've seen the market react very well to that. On the individual marketplace, let me give you some statistics on the individual marketplace. We took 2 million phone calls from retirees this year. We had outbound calls of 685,000 phone calls.
When you think for a moment, the average length of a phone call is over 30 minutes. When you think of the scale of the business and what we have going and where we're going, this isn't a business that can necessarily be done all by technology because the government requires a number of things to be read, and there's interpersonal connections that have to happen. You can't do it all online. We have the technology, and we're building the technology, replacing what we've had so that we can do this more and more seamless.
When a retiree calls in, we have to know where they live, we have to know what carriers are available, and the technology can identify the retiree calling in saying they live in this town and this county, here are the plans that are offered, and we then know which of our benefit advisors are licensed and authorized by the carriers that are there, and the phone call goes immediately to that person. That's the kind of technology we have built so that we immediately can get someone on the phone talking to the retiree. The retiree may call and say, "My heat's not working. Something happened, this happened." We're actually very focused helping them with all kinds of issues. You hear the story about Nordstrom and what they're doing.
We want to be the Nordstrom in this business because if we don't, they'll be one of those 50,000 and they're going to send a note to our CEO or VP of HR at our client and say, "They didn't take care of me." That really is the focus that we have in this individual business. This is now also a very mature business. As you know, this is the business that the growth has been exploding in. The reason it's not exploding today and it's more episodic is we get commissions for about a six to seven year period. That's the contract we have. We've been in this business, or Extend has, for 10-plus years. We got clients that are definitely in that six to seven-year zone, and the commissions are supposed to drop.
One of the good things we found is we're still getting about 60% of the commissions that we should've dropped off. The carriers continue to pay us because we're doing the administration. The carriers still want incentive for us to continue to focus, which we would. We continue to get more revenue than we thought. The other thing is, by the nature of this group, there are a lot of deaths every year. There's a number of the retirees that just aren't there the next year when they're going to come sign up. It's the nature of it as it goes. The positive thing with this is the number of clients we have, is they have a lot of new people turning 65 who enter right back in, and we have a very good, steady business. What we haven't had is the 250,000 life sale.
The question is, are we ever going to get any more of those? That's the question John's always asking me. There's still a very ripe market in the public sector. The public sector, for the most part, hasn't moved into this. A lot of the private sector has, but the public sector hasn't, and that's the area that we're now very focused on. We have 4 or 5 of the states that are signed up for this, and there's a lot of them that we're working on. What you're going to do is you're going to see it episodic. We're going to come and tell you one year, we just signed up 250,000, and you should expect 30% growth, or we didn't sign up any of those, and we have a steady growth.
There's a lot of private sector that hasn't moved yet either, but they're the smaller clients, and they're more work as we come along. We still think it's a tremendous business, but that's why this year I'm telling you it's mid-single digits. The other thing, which I point out to my boss, who's an actuary, he understands it, when you grow 30% a year for two or three years, the same growth isn't 30%. When you double in size, that 20% growth is only 10. Don't hold me accountable. I can't continue to just have this thing ratchet. He argues that he's not an actuary, and he doesn't remember that, 20 is 20 is 20. That's the other thing that's going on is we continue to have good growth, but we got the maturity of this that's coming through.
The other last thing I want to talk about, Julie talked about Benefits Access, she talked about the $75 million we're getting on the global brokerage. One of the key platforms behind it is the same technology that we bought with Liazon that we've converted. When Julie goes and sells global administration, and you saw it as one of the demos that we have, the global administration is the platform we're using here. BDA is building the platform. We're responsible for the platform. We're not growing it nearly as rapidly as Julie wants it grown because it takes a lot to do country by country. We have 11 countries up on the platform now. We'll add a number again this year. As she sells the global brokerage, we're then building the platform to do the global administration.
We think that this administration business can be as big outside the U.S. as inside the U.S. It's not a concept foreign to me that we could have 1 million participants on this platform as we go along. At some point, I won't show zero revenue outside the U.S. Julie actually pays me a little bit to do the platform. We'll show some revenue growth. It really does build, and that's why we've done so well on building the global network is because we need to do the administration, and we're building it homegrown. The Liazon platform is actually perfect for it. You can see how we've grown. Again, tremendous growth in those years where we added a lot of participants. I think it's going to, again, be a little lumpy. You'll see a bump and go, a bump and go.
There are some big states that we're having discussions with that we think as we go along, it's just a longer pitch as we go. The one thing, though, John did tell me, and then he hired Mike and got Mike to even reinforce this. I had a better relationship with Roger, so I could kind of ignore Roger. I can't Mike. John said, "If you can't grow the revenue, you better get that margin going." You can see the improvement on the margin, and you should expect that we continue to build and boost that margin. That's where our real focus is this year is continued improvement in the margin. In closing, again, I'll let you know, and I say it, we are all in in this business.
You won't see an announcement in three months or six months that says we found somebody, and we sold this business to. What we're doing is integrating it completely in what we're doing as Willis Towers Watson. We believe that having the seamless offering gives us tremendous advantages with the clients. That's where we're focused on doing it. I do remind Mike it does take investment. It's a complete technology-based business. We do need to continue to get CapEx. We need to continue to build. We have a lot of developers. We're focused on that, and he's been a very good partner on that. As we continue to realign the segment, we are building a complete segment instead of independent companies. Thank you. Now, my good friend Mike is going to tell you what all this translates to financially.
Thanks, Gene. I got one errant email while you were sitting there. I forwarded it on to you in terms of that came back in. I'm Mike Burwell, for those of you who don't know me. I've been the CFO, as John said, new to the team, but very much happy to be a part of the team at Willis Towers Watson. I've been here five months, 165 days, or six years in dog years, if you looked at it just in that context in terms of getting myself up to speed. It's been great. What I want to do is share with you a little bit as our overview of our financial management philosophy.
When I think about that, it starts off with this set of ideas or perspectives that John started with today and commented on, it permeated through all the segment leaders and really, I'm summarizing it back one more time. When we think about managing with financial discipline, what do I mean by that? It means that we're conforming our investment and savings plans up and down the organization with our financial objectives. We're looking to drive free cash flow, and first is making sure our adjustments, adjusted EBITDA and adjusted EPS, we continue to reduce those. John referenced it in his opening comments that we have taken a couple of charges in the fourth quarter this past year that we highlighted on our earnings call in HCB and in Carl's investment in IRR. We didn't adjust for those. We ran them through the P&L.
We'll look to continue to reduce the amount of adjustments that we have overall between our reported earnings and adjusted earnings. To focus on free cash flow, we know those earnings ultimately need to translate to cash flow. As we look at that cash flow, we look at that needs to be $1.1 billion-$1.3 billion this year in fiscal year 2018. Why do we think about that $1.3 billion and why is it a difference between $1.3 billion and the $1.1 billion? As we reiterated before, we had the Stanford litigation, and we don't know whether that will actually get paid out in this year or in 2019, and that's the only variable between the $1.3 billion and the $1.1 billion. We're focused on capital allocation.
We think about what does that mean in terms of maintaining an investment grade or, as John said, the lower end of that investment grade, but equally, make sure we return excess cash to shareholders overall. We're looking to create transparency goals. Where we think those goals that we're sharing with you are translated inside the organization as each of the segment leaders had highlighted and translated throughout their businesses through each of those particular component business units and driving it all the way down. Very transparent. Equally, we've implemented, think about it as an operating model around CapEx and OpEx overall. We really kind of put it into three buckets as a framework. What is it that we're going to use to stay in business? What are we going to use that's ROI, that's higher than our cost of capital? Where are we placing bets?
You heard some of those bets that we're placing today, but some will work, some will work less than optimal, but we're placing those bets longer term that we'll see over time that will move from option creating into ROI. We're meeting our commitments. John talked about it in his first slide that he had in terms of setting out the objectives and do we build trust by meeting or exceeding those expectations over time. It's embedded in all of us on the leadership team of setting the right expectations that aren't easy layups, but they aren't stretch goals that are ridiculous, that they're the right ones to be able to put out there and that we meet or exceed those ones over time, we kind of think that's the right perspective, that we build trust by meeting and exceeding those over a time frame.
If we look back at 2017, you've seen most of these numbers. I just highlight, I know each of the segment leaders went through the right-hand side here in terms of all the growth numbers that we had seen overall. I'd point you down to this adjusted EBITDA margin of 23.2% for the current year. As I said, we had a couple adjustments, the investment we made in IRR and the restructuring that we took in HCB in the fourth quarter. Again, we didn't adjust for it, but if you were to adjust for it'd be more like 23.5%, in terms of looking at fiscal year 2017, just to give you that insight. Let's go back to the merger goals that we had to be in place.
We had said from a revenue standpoint, we'd be roughly $375 million-$675 million as we exit 2018. Each of the segment leaders went through what did they see actually happening in their segments around these synergy goals. See, it's very close to what those revenue targets are, and in particular, one that was added there, a fourth one that we've seen come on is the interface that's been happening between reinsurance and ICT. Carl really highlighted a bit of that synergy that's really happening within that business, and we're continuing to see that come to life for us overall. Equally on the cost side, we had talked about a target of $125 million of cost savings.
We had achieved that really through the end of 2017, and we increased that by $50 million for our overall goal, and therefore we'll get that incremental $15 million, 50, 5-0, going forward. $175 million. Equally, from a tax perspective, we've put a goal in place to get ourselves below 25% effective rate before the tax reform. We had effective rate of 23% in the current year. We feel pretty good overall, as you see in the takeaway here, about setting expectations, very challenging, but nonetheless, how did we do against those merger goals? We feel pretty good about it. Let's turn ourselves to 2018. We've really completed the OIP program as it relates to 2017, really moving ourselves into 2018. What we see is really sustaining that overall core growth.
I touched on the revenue and cost synergies and really maximizing margin, as you see in the right-hand box here, and that is 25% EBITDA margin in terms of what we're looking to deliver as an overall enterprise in fiscal year 2018, and then the $9.88-$10.12, just to reiterate from an adjusted earnings per share standpoint. We know cash flow is very important and is very much a focus of ours. As we look to drive that, we see operational efficiencies that we're continuing to highlight and drive. Although we were kidding, John, it's very much true in terms of driving profitable growth is an important element at Willis Towers Watson. We're going to focus on DSO. We look at our DSO and days sales outstanding as an opportunity.
It just hasn't been the same level of focus as we brought the two organizations together, but it's absolutely a focus of ours going forward. Every day we save generates $20 million of cash flow. We're targeting five days in the current year, but that's only the beginning in terms of where we see. We've benchmarked ourselves. We absolutely see an opportunity here across our entire business. We've also stopped the OIP programs I referenced on the left-hand column here. That obviously drives further cash flow for us in terms of what it means for the enterprise and how we could deploy that. Equally, capital expenditures, we spent a little over $300 million last year, and we're targeting more like $250 million in the current year in terms of what that is.
Again, looking at that right-hand goal, $1.1-$1.3 in terms of our overall cash flow numbers. Longer term, let's think beyond fiscal year 2018. What might this look like from a target perspective, from a target operating model perspective? First, I'd point to you in the first line here, it says 85% of our revenue base is recurring. Think about what Julie and Todd and Carl and Gene talked about in their segment presentations. They talked about retaining clients. They talked about how sticky they are and what's that mean from a revenue stream standpoint. Every year, we're starting with 85% revenue base in our business at day one. That feels pretty good. We'll continue to focus on five areas of focus in fiscal year 2018 that we'll see in 2019 and beyond. I touched on DSO.
We're looking at our sales and marketing organization as the most efficient and effective in terms of how it is that we generate revenue and equally from a cost perspective. We're looking at optimizing our international footprint. We're also looking at procurement. We buy $2.5 billion of goods and services. How do we do that in the most efficient and effective way? Improving our colleague experience. Equally, can we do that in a more efficient and effective way? Equally, our shared services operations. We see that there's more activities that we can do collectively together as an organization, but equally, we look at it as a service delivery network, things that we do offshore, things we do with third parties, things we do in centers of excellence. We see those as further opportunities. We'll further hone those ideas and perspectives as we think about 2018 and beyond.
I'd really bring you to the chevrons below here. What is this target operating model we think about? We look at revenue growth, both organic and inorganic, consistent with where the market is overall as it relates to our peers. We look at translating that into more with less, more with less in terms of how it is that we drive efficiency or continuous improvement or productivity, whatever word you want to put on top of it. Equally, that's going to drive us to double-digit earnings growth and then drive 75%-80% cash flow. That is how we think about our target operating model as we get beyond fiscal year 2018, and as we think about the future. We also think about being disciplined around our capital allocation.
I think this was inferred in many of the comments that we had here today, and that is around these five buckets. Obviously, dividends. John referenced it. We're looking to pay dividends out in the 20%-25% range. We've paid $476 million in dividends since the merger date, and we just raised the dividend percentage to 13% to $0.60 this year. Share repurchases. Given where our P/E multiple is, we're still a very attractive place to reacquire shares. We see that. We're obviously continuing looking for your help to continue to drive that up, of course. We're continuing to look at share buybacks as an attractive alternative for ourselves. We've targeted $600 million-$800 million in terms of share buybacks in the current year. We've purchased $1.1 billion shares back since the merger date.
We're looking to keep ourselves as investment grade, as Moody's calculates it, we look to really look at our debt to EBITDA roughly in the 3.5% range or 3.5x range, I should say. We'll look to grow that as EBITDA grows. M&A. We touched on looking at the portfolio, a lot of it had actually been in Carl's business, we're looking at it overall in terms of cutting back that portfolio where we didn't see that type of investment made sense, or we didn't see the future opportunities in the marketplace for those businesses under our umbrella, we've divested those businesses. We have been presented with a fair amount of M&A activity, we've really been working on the integration. Right now, we just looked at tuck-ins and where it made sense in the overall business model.
As you think to the future, that's obviously an area that we will continue to look to expand and grow and think about, against this backdrop of these five alternatives that we have in front of us. CapEx and OpEx. We spend about $500 million in this area. Again, under that operating model that I touched on before, which is stay in business, ROI, and option creating, we can obviously continue to invest in our business. We see great opportunities. You saw them in the hallways out here today, each of our segment leaders highlighted those opportunities going forward. To date, as the takeaway says, we feel pretty good about where we are, clearly, there's more to do. There's always a but, which is we can do more. I think about the key takeaways here.
Before I get to this, I want to just mention to you, in your booklets, we did restate 2017 under the accounting revenue recognition standard 606. It's hopefully helpful to you that you hadn't seen previously in terms of modeling. Just to reference that and make sure you're aware of that. When I think about our overall takeaways, I think about my kids' 529 program. If I was investing in a 529 program, would I invest that in Willis Towers Watson? My answer today would be yes. Why? I think we got a strong and diverse portfolio overall, you heard it from our segment leaders today in terms of the client base. We have more than our revenue is 85% recurring. That's starting out the year every single year.
I think we have a strong management team, I'm absolutely very excited to be a part of it. Even the colleagues that you heard here today, but even the ones that aren't here with us today, I'm glad and I'm proud to be a part of it. I think it's a great culture. What we're seeing today is people that want to join us and people that want to stay here, and that includes me. I got to tell you, our back office. We're establishing a back office as we think about fiscal year 2019 into the future that we can put acquisitions on top of and drive operating leverage. Equally, how is it that we connect with customers in the right way with that back office?
That's a very important element, I think really all the segment leaders touched on it, but in particular, Julie and Gene emphasized it. We're continuing to invest in technologies. The reason we showed and wanted to share some of that with you today is we know how important that is to our future, but it's really important from a customer perspective and our client perspective in terms of differentiating them and help them be more successful. Equally, what can we do in terms of looking at those solutions? We're looking at double-digit earnings growth. We're obviously very focused on operating and delivering our free cash flow. I see a very positive momentum. I think about consistency of expectations that are set and that we deliver them into the future.
As I think about my 529 for my kid, that's why I would look at investing in Willis Towers Watson. With that, John, I think those are the main points.
Thanks very much, Mike. Thanks, I'll take that. I hope that presentation gives you a sense as to why I was talking about just how great I think this management team is. As Mike says, it's not just the people here, but some of the ones that we don't have here today. I feel real good about our prospects, mainly because of the people that we have surrounding us here. As an example of our efficiency, we finished early. We'll now take some questions, and we may have some extra time. Go ahead, Greg.
Greg Peters, Raymond James. Good afternoon. Thank you for the presentations. Just as we step back and think about the brokerage space and all the brokers are striving for margin improvement. You're targeting a 25 for this year and then EBITDA. Look for 2019 beyond to grow that further. I'm just curious, when you talk to your clients, is there some sort of structural ceiling that they'll look at before they'll start looking for you to start giving them cuts on their contracts, et cetera? Do you anticipate that this continual improvement of margin will continue well into the future?
Yeah. I'll maybe ask a couple of the others to comment on it, but let me just make a couple of observations about that. I think, first of all, in brokerage in particular, we see our margins as being behind some of the others. We're looking to still do some catch-up there, and Todd can comment on that. Overall, as we look at our operations and as we have improved our margins, we've done that by becoming much more efficient in what we're providing. We've done that. You look particularly at some of the human capital areas. Retirement is a great example. We've improved our margins, and we've also lowered the prices that we charge clients at the same time.
We've shared efficiency gains with our clients, and I think that's the kind of win-win proposition that actually builds some of the loyalty you see, too. Todd, did you want to add anything to that?
I think, John, just building on what you said. We tried to highlight this in the discussion that I think if you analyze where we sit relative to the peer group, we've got some room for improvement. We don't think, Greg, that we're sort of butting up against having conversations about where we are from a margin perspective and trading off from a revenue line.
Just as a follow-up, if you could just get some of the other segment leaders to comment.
Sure
As it relates to their
Julie?
John, you highlighted it in retirement. We have reduced prices. Competitive pressure has been there. We feel like we don't have to reduce them further. We're at a pretty good point there. In Talent and Rewards, we've been able to improve our margins significantly and have not chased the business that has required price concessions.
I think that's a really important point. There's a large section of Talent and Rewards comprises a very large area, and what we've focused on is the area where there's opportunity to do it in a profitable way, and we haven't gone after some of the others. Carl and Gene, do you want to add on anything?
Just maybe one point. Some of it is about business mix shift. For instance, ICT, where we sort of deliberately are shifting from consulting to technology, a much better leverage model for us, and still providing a service that's in demand in the marketplace helps ease a lot of that tension.
The administration business, I don't think we've ever had a second term of the contract at the same price we had for the first term. It is a very competitive business with a lot of technology companies. What keeps it so sticky is the build to get the technology ready to do the administration gets built into the price, and you have a much more competitive position in your second and third term of the contract because you don't have the build and the competitor does. It gives you the ability to reduce some price while still making the margin.
Elyse, I think you had-
Elyse Greenspan with Wells Fargo. I just have a couple questions. My first is, as you think about that double-digit annual EPS target for 2019 and beyond, what level of margin, I guess, improvement is embedded in there? Obviously, assuming we get to the 25% this year, do you guys have an internal target that you think of when you're at a steady state that you can improve your margins on an overall basis on an annual level?
Just to give you a simple model about that, let's say that we have 4% earnings growth and we have 3% expense growth, so we have a 1% gap there. If we're running at a 25% profit level, that implies a 7% increase in profits, if you run through the arithmetic on that. If you buy back some shares and that adds maybe a couple of extra points, and then you get some additional efficiencies in there. You start at seven, you get two points for the share buyback, say, and then you get another percent or two from some extra efficiencies, you're right in the 10-11% range.
Thanks. My second question, John, we've obviously had a lot of change at the top of Willis over the last couple of years, Willis Towers Watson. You've obviously been one of the mainstays there. Had a lot of success building Towers Watson and also building Willis Towers Watson. As you think about your own plans and remaining in the CEO spot, if you can give us your view on continuing to stay leading this company after we get beyond 2018, and also just any thoughts you can give us on succession planning within the company. Thank you.
Maybe I'll start at the end and say, I think we have a state-of-the-art succession planning process that we do throughout the company, but especially like for the very senior leaders here. It's comprised of internal 360-degree feedback that we get for people. It's comprised of for the senior people in the operating committee, I share with the board my assessment of those folks. We also do some external benchmarking, where we have them work with some outside firms to assess their capabilities and readiness and improvement opportunities. We go through all of that with the board all the time. I've always said that as long as there's some interesting, exciting things to do, I'm interested in tackling some of them. I also recognize that I don't want to be carried out of the building, too.
I serve at the pleasure of the board, so I talk with them every year about what we're doing, and I guess we'll have some conversations this year.
Thank you. Kai Pan with Morgan Stanley. My first question is, if you're looking back, your presentation back in September 2016, you said by 2018, adjusted EPS will be $10.10-$11.50. Looking back, what has been sort of actually now your target is at low end of the range. Looking back, what have been weighing on that? Looking forward, is that $11.50 or even your 20% payout target suggesting $12 per share achievable in 2019?
I think we were setting out a path to try to get to $10.10 when we did the Analyst Day in 2016. We set out some factors that said we could get there. I think tax reform has probably knocked about $0.04 off of what we would have had otherwise. That was an exogenous variable that we didn't factor in. If you look at that otherwise, $10.10 is still within the parallel of possibility in terms of what our guidance is. Or $10.06, if you adjust for what that would be. Or $0.04 or $0.06? $0.06, sorry, $10.04. I think we're still on about the path we were from 2016. We know a little bit more about that. I think our focus has been to try to get to where we were on the $10.10.
I think as we move beyond that, what we've really said, if you think about what we're talking about for the year after that, we said we expect to get to double-digit earnings growth. Does that get us up into the $11 range? Yeah.
Okay. My second question is on the, if you can maybe, Mike, walk us through the margin expansion from 2017, 23.5% adjusted to 25%. How much of that coming from OIP, how much coming from additional synergy, how much coming from just underlying revenue growth above your expense growth?
I'm going to let Mike take this because I've decided never to look again at what portion comes from OIP or anything like that.
Kai, I would just say, again, we're looking at 25%. To John's point, what we got savings in OIP, what came back into it, looking at the run rates overall. We feel very comfortable that we're going to be able to get that 25% EBITDA, it is a combination of all those things without stepping you through each of those points. It's very difficult and a bit squishy in terms of saying it's each one of those pieces. Look, have I done the analysis? Yes. It's degrees of magnitude that's there. I know you'd like me to tell you each one of those slugs, I would just tell you, we feel comfortable in terms of going down that particular path and getting to that 25%.
Yeah. We got one over here.
Hi. Ben Landy. Question for Julie. I noticed on slide 18, on the side it says, "Beyond 2018, mid-single-digit revenue growth." This year you're guiding to low single digit and last year was low single digit. Is that just the flow-through of the $75 million that gives you visibility to accelerate into 2019 and 2020, or are there other things also that give you confidence to step up beyond this year?
It's.
Yep, go ahead
it's really a combination of things. First of all, I mentioned that bulk lump sum activity in 2018 will be not very significant. We don't expect a lot of it. That has, over the past several years, had a big impact on growth levels. That is restraining this year a bit. That's one factor. The other is the $75 million and other growth in health and benefits as health and benefits rebalances to a greater percentage of the market, of the segment, and we expect high single-digit growth from that business. We're continuing to focus on those three factors in retirement to moderate any reduction in revenue that we would expect from that business.
Mark?
Mark Marcon, RW Baird. I've got a few questions. First of all, thanks for the comprehensive presentation, as always. There were lots of positives. What are the areas that you feel are the most challenged, number one? Number two, some might be challenged and might remain challenged. What are the areas when you think about as we go out over the next three to five years, here are the areas where we can really improve? One area you've cited previously is, if we take a look at brokerage in terms of U.S. market share, particularly on large and medium size, we can improve there.
Can you cite a few areas where it's like, if I'm really thinking about here are my big swings for the next three to five years that are really going to drive the business 4%, maybe 5% top-line growth, what would be the three or four that would really stand out?
Okay, great. Thanks. Maybe what I'll do is I'll ask each of the segment leaders to maybe to identify what they would see as the biggest potential challenge. Todd, you wanted to go ahead of Julie.
Yeah, thanks, John. I think, for us, it's what I was describing earlier is I think we graduated out of the complexity of the operating model and getting people with some role clarity and back focused on how they should be devoting their time. It's continuing that journey. I talked about the global lines of business. We still have this amazing opportunity to operate much as a global business. As I look at, if you listen to Julie and certainly Carl talk about how they operate these businesses and they work globally, that is still an opportunity that we have. We have not sort of completely solved that problem. I think with that will come kind of the revenue opportunities along with the profitable growth that we desire.
That is an area that's been a challenge because that's a new organizational model and not one that we really manage the firm historically that way.
Yeah. Julie?
Sure. I already mentioned the retirement challenge. We've been talking about it for years. That is an ongoing challenge, and we must find ways to manage our way through that. I think we're doing a reasonable job with that. I also will highlight Talent and Rewards because we do need to continue to maintain agility in that business, that we've talked in the past about how there's a lot of volatility in that business, potentially. We've been working toward a rebalance of our services in that business to be as much product and recurring revenue oriented as it is advisory. That is probably the part of the business that is one of the lowest in terms of recurring revenue, maybe down around 50%, we're estimating.
We'd like to build that up, but it's going to take some time for us to get that to a higher percentage of recurring revenue.
Carl?
Probably two major challenges. One is regulation. We've got reviews with the Competition and Markets Authority of our investment business, the investment business in general in the U.K., where we are a major part of that. The London Market Review, as well as challenges from MiFID and AIF that just we have to work our way through as an industry, whether that's going to affect client buying patterns or not, open question. Of course, Brexit, where we have quite a presence on the London markets, and a smartly managed Brexit would certainly be to our clients' advantage and ours. Those are things that are just sort of big uncertainties out there we will manage through, but I can't tell you exactly how we'll respond until we get better clarity on what the authorities are going to do. On opportunities, those same challenges are opportunities, right?
Regulation, I think, burdens smaller players more than it does bigger players, and we are a very big player. When I highlighted the opportunity to consolidate on the London markets, we'll take advantage of the difficulties that I think the industries we operate in find themselves in.
Gene?
The biggest challenge and opportunity for us is the sales in the individual exchange. There's some great opportunities out there, but especially in the public sector, requires a lot of times legislation in the states. It's just a longer-term play, but the opportunities are huge. It'll just be lumpier.
Yeah. I guess the one thing maybe, Mark, I would add to that, what the folks said is, we've outlined a lot of different opportunities here. The opportunity to go to clients with an integrated and holistic view of what's happening in risk. If you think about it, we help clients through their Corporate Risk and Broking with their programs there, but we also deal with risks that they have in their medical plans or in their retirement or something. Actually, part of one of the initiatives I mentioned, the Horizon program, where we sought some innovative ways to think about things and to do them. The top winner this year was something that is focused in this general area of how we go out with an integrated holistic approach.
To the extent we can develop something along those lines and do it, I think it'd be something exciting that we just haven't even talked about yet. Back there? Okay.
Thanks. James Naklicki with Citi. My question is for Todd. You talked about Gras Savoye being multi-year strategy to bring up margins. Where do we stand on revenue and margins on that business? I appreciate you said it was below the CRB average, but sort of where are the margins now, and then how many years is reasonable to expect those to improve to the CRB average? Thanks.
Yeah. Sure. It's growing. It's contributing to organic growth. Margins are in mid-teens, and have got a plan through 2020.
Yeah. Gilles Bénéplanc, the head of-
Gilles Bénéplanc. He's got it, yeah.
Gras Savoye. 2020 is his plan, right?
Yeah. Vision 2020.
Yeah. The interesting thing is, of course, I understand that in France, perfect vision is 2010, but that's not what we're aiming at.
They can be blind as long as we have margin.
Yeah. We'll go here, and then to Sarah.
Yeah. A question from Mike. Cash flow as a % of operating or adjusted earnings. Adjusted earnings, you've already kind of taken out the amortization drag from, it kind of looks like a cash number. I'm always assuming that CapEx kind of offsets depreciation. What's the big difference between your free cash flow and your adjusted earnings? Why isn't it closer to 100%?
Yeah. Well, it's the amortization from, to begin with, the acquisition, when the two acquisition came together is the biggest chunk that's in there that we have from the two companies coming together, Jay. What he talked about is making sure we had had the OIP programs to be in place where we were spending a lot of that cash flow in prior years. We're not spending that in fiscal year 2018 and beyond. That's $250 million-$300 million that's coming through. The operational improvements that each of the segment leaders touched on in terms of coming through, in terms of driving that further improvement that's there. We had some one-time issues that we touched on. If you go back to the fourth quarter earnings call, we paid some cash taxes, about $45 million in the fourth quarter.
We had some bonus numbers that we paid out that were included in there. There were some one-time issues. If you go back to our earnings call, it'll highlight those particular components that are in it. If I kind of do the walk from where we were at the end of 2017 to where we're looking to be by the end of 2018 or the 1.1 to 1.3, those are the biggest chunks.
Yeah. Sarah.
Hi, Sarah DeWitt, J.P. Morgan. On your long-term goal of double-digit EPS growth, do you need at least 4% organic growth to expand margins and hit that? If so, how confident are you that you can get there if global GDP growth is about 2% and pricing in P&C insurance is flattish?
Yeah. There are different combinations you could have to get there. It's not impossible to have 3% growth and get up to double-digit growth. You start getting below 3%, it becomes really hard to do that, obviously. I think, if you look at the projections we have out here that we put, we're really talking somewhere in the mid-single digit growth rates for us, whether it's in that general 4%-6% range. That's what our projections are consistent with. We have a little bit of wiggle room there, but probably not too much. At 2% revenue growth, it's pretty hard to get 10% earnings growth.
Just on GDP and pricing, you're not up to your confidence you can still get towards that?
We think we're in markets that offer us the opportunity to do that. We're in some markets like retirement where we think we're going to be getting zero, and that's what we're planning for. We have some markets like the CRB or the reinsurance where there's pricing pressure in terms of what the prices are. One of the things that people don't always think about is that there's new products or new opportunities for insuring things. Cyber, for example, is going to be much bigger five years from now than it is today. That's going to be a growth in the market that's going to occur irrespective of the other prices. When we look at the overall market and where we are, we think somewhere in that mid-single digit growth rate is pretty reasonable. Shlomo?
Hi. Thank you. Shlomo Rosenbaum from Stifel. Hey, John, I talked to you a little bit about this, maybe you could expand just, and maybe Mike wants to weigh in. In terms of increasing the free cash flow as a percentage of adjusted net income beyond 2018 to get up to those levels, can you point out the most prominent aspects of what are going to go on in 2019 and 2020 to kind of raise that up to an increasing free cash flow as a percentage of adjusted net income?
Sure. You're really talking here, I think your question is about why do we expect that we'll get incremental growth that free cash flow will grow even faster than earnings.
Exactly right.
Yeah. Mike?
Yeah, first is the restructuring program that we had had in place ends at the end of 2018. If you look at that's another big chunk of cash flow that's coming in that we're still executing on in terms of systems integration, real estate, et cetera, that we have a big third year of the merger that's actually happened in this current year. That cash flow will flow into 2019 in terms of thinking about that. We're continuing to drive operating improvements. We feel confident of being able to do more with less across this enterprise from each of the segment leaders in terms of what they're talking about. Equally, balance sheet management. I talked about the first down payment, Shlomo, of the five days in terms of working capital at DSO.
If you benchmark us versus our competition at DSO, there is an opportunity there that's continued. Again, you put your number in, we look at least why can't we get to the benchmark of the average of the industry at minimum. I hope to believe that we would do better than that. Nonetheless, each day is $20 million.
Yeah. We think that we're not going to get it in one or two years, but we think 15 days is not an unreasonable target for us over the next several years to improve DSOs.
Yeah.
We got [inaudible]. Elyse?
Elyse Greenspan. I just had another question. Throughout the presentation, it seemed throughout everyone's presentation, the idea came up of acquisitions. You made the point that it had been very small deals since the Towers Watson merger. When you're thinking from here, what businesses are you guys not in, or are you sub-scale in that you would look for an acquisition? Can you help us size now that you think you're at the point where you consider larger deals, what would be the size of a deal that you think the company would look to entertain? Thank you.
Sure. Thanks. I'll ask my colleagues to weigh in on some of maybe the adjacencies and everything, but let me just make a couple comments just first about acquisitions. As I said, really in 2016 and 2017, and really even for most of 2018, we have a lot of work to do with the three we're bringing together, and making sure that that's successful has really been job number one. Acquisitions have just not been high on the priority list. Doesn't mean we've stopped looking at them because we think it's always important to understand what's going on in the market, and actually there was one about a year ago that was $several hundred million that we thought we couldn't at least pass making a try at that one. In exceptional circumstances even, we looked at maybe doing something in the last year or so.
Right now, we think certainly by the time we get to 2019, enough of the integration work will have been done that we'll be in a position now where we can take it on. What we're really signaling is not so much that we see a change in what's out there, just we're talking about a change in our capabilities to bring things on and to successfully integrate them. I'll maybe just ask you guys quickly to reference any adjacencies or things you think we might look at. Julie, anything?
I think the portfolio, as I said, is a pretty strong competitive advantage. We aren't feeling like we're missing anything major at this point in HCB.
Todd?
Yeah, I'd say the same thing, John. There may be some geographies where we may be sub-scale, either in the U.S. or around the world, that if something interesting came up. It's a fairly competitive landscape. It would have to be certainly the right situation.
Carl, Gene?
We're sub-scale in investment in the U.S. That's something we continue to assess for opportunities. On the ICT side, we continue to look at technology opportunities. Someone was talking about Plug and Play earlier. We get to see a lot of things that might be interesting fits to the portfolio. I talked about the London market and consolidation opportunities already in wholesale.
Okay.
I think the only place in ours we're very sub-scale is the accounts business. If we found some opportunities to grow faster, we would look for those.
Yeah. Do that. I think, just one thing, I'll get to the questions, but let me just. When we first got into the exchange business, we did that back in 2013, I guess. We acquired Extend Health, that was our entry into that. I think if you had asked us the year before about that wouldn't necessarily have been on our radar screen. We knew the exchange business was out there, but it was really as it developed, there were a couple things that made that attractive to us. One was we saw it was a big area of growth. We also saw it was a way to diversify our portfolio in healthcare as to some things that were happening. Because to some extent, if you have people going to much more of an exchange operation, they need somewhat less in consulting.
Now, as it turns out, the consulting is actually becoming a big part of exchanges, too, so it didn't happen quite as much as we feared it might, but it was a way to diversify against that. The other thing that was attractive about that was it was a business that we understood the value proposition because we were advising our clients about whether or not they should adopt exchanges for their particular program. We understood what you needed to do. We understood what the value proposition was to clients, and we also understood what you needed to do be successful because we helped them integrate into that.
When I look at what are potential areas that we might be thinking about for adjacencies, it'll probably be ones like that, where they're not quite anything we're doing now, they're not very far removed from it, but they're ones that we feel. We don't like things that are big steps, where we don't really understand the value proposition all that well. It'll probably be things that we're already touching parts of that today, we just recognize that maybe it's time to make a move and get further into that ourselves. Greg, maybe we can
Just as a follow-up. I know Mike and John, you both talked about altering your hedging program, I think you're going to cancel it. I was wondering maybe if you could walk us through the implications. Does that mean the results going forward are going to be more volatile? There's also, I think, a margin aspect to this as well, or a cost aspect to this as well.
Yeah. You'll be glad to know that Mike convinced me that canceling it wasn't the best idea. I'll let him explain why.
Yep. When we looked at the program itself, the level of volatility that we had was higher than we would like. We looked at how long we were having periods of time. We were really out almost three years, and we were really reducing it more in a two-year timeframe, as well as the amount of currencies in terms of what we're looking to hedge. We've reduced that amount down by about 20%. We feel that's the right risk level for us to manage. We've increased our information in which to make those decisions on going forward. We've had a lot of pushback. John came to me and said, "Should we get out of this thing? There's other competitors who don't do this at all.
Why should we be doing this?" I took that under advisement as a recommendation, I came back to him with some other thoughts, that's how we got to that view. When we look at it, we just don't like the level and the volatility that's been going on with it. We believe we can manage that risk better. We think this is going to be a lot better, Greg, going forward to us if we put those behind us.
Maybe what I would just say is, from my point of view, what I think what came out is we don't think we had the right design, and we don't think we were executing it as well as we should have. By shortening the period from three years to two years, and by changing the way we're executing some of this, the modeling we've done shows there will be no increase in volatility, and we'll just get better. We think we can get better results.
Is there a cost?
We think it'll be cheaper.
Cheaper.
What were the arguments against eliminating it altogether and actually just doing this? The arguments were, Wait. You need to say it again to be on the webcast.
Sorry. Bob Glasspiegel from Janney. What were the arguments against-
I mean,
eliminating it altogether?
We knew what our natural hedges were across the portfolio. What's the level of risk we're willing to take in allowing that to happen? It was the debate we had in terms of risk profiles to it. It was a very healthy discussion. It wasn't we disagreed. We debated the various options.
Yes. It wasn't about cosmetics.
No.
It was the risk if we didn't hedge would be
Yeah, what's the risk tolerance that we have as an organization, and then how are we putting in these instruments to help us manage that risk? We said, "Look, this is step one, and we'll continue to think about this going forward." Yeah.
Yeah. Kai?
Thank you. I have two follow-ups. I will spell them together. Number one, we had two weeks ago, can you give us update on the first quarter, including thinking about the organic growth last year were very strong in the first quarter, and also you have change in seasonality because of revenue recognition. My second question is that your current tax rate, 24%, can it be lower?
Yeah. Okay. No on the first one. Mike, do you want to talk about the tax rate?
Yeah. Obviously, 24% is what we had given guidance on. If you look at the back of the book, you'll see the one page that you'd heard from our earnings call when we gave guidance. You see all the numbers that are in there, Kai. The 24% is really kind of where we are. If you look back, what's our history? Our history has been we've been able to think about managing that risk appropriately. We've got some of the laws and rules aren't written yet, so we're trying to still understand that interpretation of it. Our track record has been pretty good. We know the statutory rate's 21. I would tell you we're going to continue to work on it, continue to try to drive that down.
Yeah. We have no interest in paying any more tax than we are legally obligated to, I can assure you that.
Thank you. [Hiren Pinor] with Goldman Sachs. I have one question probably for Mike and John, then a follow-up for Todd. The first question is around expense management. Over the long run, you gave the example of maybe 4% growth in revenues and 3% expenses. Once we move past the cost saves flowing in from OIP and the integration saves, how do you manage those expenses to be lower than revenue growth when you still have, I think you also pointed to investments that you need to make to remain relevant as you compete in this environment?
Do you want to start with it?
Yeah, I'll start with it. One, I think you heard from all of us about profitable growth. We think about that as a collective team in terms of driving it that way. I used in our financial management philosophy, first thing was let's look at what those goals are that we have, and we drive them all the way throughout the organization. Each of the segment leaders do it across the geographies and across their teams and really know what our overall objectives are in terms of driving it. John uses $4 of revenue and $3 of expense in terms of modeling, in terms of thinking about it. That's what we need to deliver. We may target even more than that at times, but nonetheless, that's what we're looking to deliver.
Yeah. I think one of the things that happens, though, is in part, as Julie said, it's about areas that we target. We look for areas where we can have some profitable growth streams there. The other thing is, though, you mentioned investing in technology, and we have to do that. One of the things that we have been doing that in the past, we should have some payoffs from past technology investments that help bring down costs today, and that's why we're investing for the future there, too.
Thanks. Then Todd, I think the other segments had talked about retention rates. I didn't see that for CRB. Can you talk about those?
Yeah. The business has historically operated around 92, 93%. Actually, even in 2016 when we had struggled to sort of grow top line, it still operated in that 92, 93% range.
Is that any different for the large accounts versus mid-market?
That's a good question, we really don't track it differently. We track it on the portfolio. I would say no, it's no different between the two.
Thank you.
Okay. Well, good. We got an extra 12 minutes of questions in here, let's go with that. We have lunch in, where is that, Ida? Right down the hall here to the right. Right down the hall here to the right? Great. I hope you'll all join us for that. Thanks very much for coming out today. Thanks, everyone.