Marsh & Mclennan Companies, Inc. Q4 FY2025 Earnings Call

Hello. And welcome to Marsh's Earnings Conference Call. Today's call is being recorded. Fourth quarter twenty twenty five financial results and supplemental information were issued earlier this morning. They are available on the company's website at corporate.marsh.com. Please note that remarks made today may include forward looking statements. Forward looking statements are subject to risks and uncertainties, and a variety of factors may cause actual results to differ materially from those contemplated by such statements. For more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings including our most recent Form 10 Ks, all of which are available on the Marsh website. During the call today, we may also discuss certain non-GAAP financial measures. For a reconciliation of these measures to the most closely comparable GAAP measures, please refer to the schedule in today's earnings release. If you have a question, please press 11 on your touch tone phone. If you wish to be removed from the queue, please press 11 again. If you're using a speakerphone, you may need to pick up the handset before pressing the numbers. Once again, if you have a question, please press 11 on your touch tone phone. I'll now turn this over to John Doyle, President and CEO of Marsh.

Thank you, Andrew. Good morning, and thank you for joining us to discuss our fourth quarter results which we reported earlier today. I'm John Doyle, President and CEO of Marsh. Joining me on the call are Mark McGivney, our CFO and the CEOs of our businesses: Martin South, Dean Klisora, Pat Tomlinson, and Nick Studer. Also with us this morning is Jay Gelb, Head of Investor Relations. 2025 was another good year for Marsh. We executed well against our strategic objectives, and delivered solid financial results. Total revenue grew 10 percent to $27,000,000,000 with underlying revenue growth of 4%. Adjusted operating income increased 11% to $7,300,000,000. This is on top of 11% growth in 2024. Our adjusted operating margin improved 30 basis points, marking our eighteenth consecutive year of reported margin expansion. And adjusted EPS grew 9%. We generated 25% growth in free cash flow, and achieved our capital deployment objectives. We invested approximately $850,000,000 in acquisitions, and returned significant capital to our shareholders. This included a 10% increase in our quarterly dividend, and $2,000,000,000 in share repurchases—the largest annual amount in our history. We also successfully completed the integration of McGriff, our largest acquisition ever, launched our new brand, and announced the Thrive Program. All of which improve our growth profile in the years ahead. I want to take a moment to talk about our strategy and the opportunities we see. Marsh is a market leader with a proven track record of growth and exceptional performance. Our success is driven by the unique strengths of our businesses, market leading positions, a data and analytics advantage, and most importantly, the talent and dedication of our colleagues. Looking ahead, we see an opportunity to deliver even greater value to our stakeholders. Our vision is to be the most impactful professional services firm in the world. Not just in insurance, but across risk, reinsurance and capital, health and talent strategies, investments, and management consulting. Our clients face increasingly complex challenges and new opportunities. They rely on our expertise across critical areas where we are market leaders and where our scale and specialization are a distinct advantage. Last quarter, we introduced Thrive, a growth program aligned with our vision and core principles. We expect it to provide greater financial flexibility and organizational agility over the next three years. Thrive is already unlocking the capacity to invest in emerging areas with meaningful economic opportunity such as digital infrastructure, health care, private capital, insurance capital strategies, and energy. It's also enabling us to increase investment in frontline talent and integrated solutions across our businesses. With Thrive, we can more powerfully and efficiently invest in one brand. Two weeks ago, we officially launched the new Marsh, ringing the closing bell at the New York Stock Exchange and introducing our new ticker symbol MRSH. Our new expanded Marsh brand better supports our business strategy and simplifies our value proposition for clients. This was highlighted at the World Economic Forum meeting in Davos last week, where Marsh colleagues met with government and business leaders. Together, we discussed geoeconomic confrontation, AI and digital infrastructure, health and longevity, investment strategies, and resilience and transformation in an uncertain environment. The client and even societal impact that we can have when we bring our full capabilities together under the Marsh brand is a sustainable advantage. Another important part of Thrive is the formation of business and client services. Through BCS, we're building a data and technology ecosystem that harnesses AI and advanced analytics to improve client outcomes and drive operational excellence. While we've improved efficiency through technology and moving workflow to cost-effective locations over the years, BCS is a fundamental change in our operating model. And it accelerates expense savings and investment in AI and automation. BCS has introduced dozens of AI-driven productivity tools, and we're ramping up adoption to give our colleagues an edge. We're also focused on launching one-of-a-kind technologies, client-facing technologies such as Centrisq and AIDA, which I've mentioned on prior calls. We see strong growth potential in client-facing technology, virtual agents, and chatbots. I look forward to continue to share our progress on Thrive in the quarters ahead. Turning to market conditions. We continue to see a competitive insurance and reinsurance environment. According to the Marsh Global Insurance Market Index, renewal rates decreased 4% in Q4, driven largely by property. This follows a 4% decline in the third quarter of 2025. As a reminder, our index skews to large account business. Rates in the US were flat. UK, Canada, and Latin America were all down 7%. Europe and Asia declined mid-single digits, and the Pacific region had double-digit decreases. Global property rates decreased 9% year over year, compared with an 8% decline in the prior quarter. Global financial and professional liability rates were down 4% while cyber decreased 7%. Global casualty rates increased 4%, with US excess casualty up 19% reflecting ongoing pressure in the liability environment. And workers' compensation decreased 1%. In reinsurance, the property cat market continued to soften as reinsurers pursue growth by deploying more capital. Price decreases accelerated at January 1. Cedents achieved double-digit rate reductions for non-loss impacted cat placements. Demand increased 5% to 10% depending on region and segment, with buyers seeking better risk sharing such as aggregate and other covers. In casualty, we continue to see price increases driven by rising rates in the primary market, which has made it an attractive growth opportunity for reinsurers. The cat bond market had another record year with 86 new bonds issued totaling more than $24,000,000,000 in limits. Dedicated reinsurance capital is projected to increase 9% to $660,000,000,000 at the end of 2025, driven by growth in traditional and alternative capital. With ample capacity, including new casualty sidecars, reinsurers are seeking profitable ways to deploy capital. Turning to health trends, our surveys indicate medical costs are expected to continue to rise in 2026. In the US, we estimate a 7% increase, while other regions of the world will experience high single to low double-digit increases. We continue to help clients balance cost reduction measures with their need to maintain high-quality benefit plans. As always, our focus remains on helping all of our clients navigate these dynamic market conditions. Now let me turn to our fourth quarter financial performance and outlook, which Mark will cover in more detail. Consolidated revenue increased 9% to $6,600,000,000 growing 4% on an underlying basis with 2% growth in RIS and 5% in consulting. Marsh risk was up 3%. Guy Carpenter grew 5%, Mercer increased 4%. And Marsh Management Consulting, which was formerly reported as Oliver Wyman Group, grew 8%. Adjusted operating income grew 12%. And adjusted EPS for the quarter was $2.12 up 10% year over year. We also repurchased $1,000,000,000 of our stock in the quarter. Looking ahead, despite headwinds from lower interest rates and decreasing insurance and reinsurance pricing, we're well positioned for another solid year. We expect underlying revenue growth in 2026 to be similar to last year. We also anticipate continued margin expansion and solid adjusted EPS growth. Of course, this outlook is based on current conditions, and the economic environment could change materially from our assumptions. In summary, we're pleased with our 2025 performance. We executed on our strategic objectives and continued our track record of strong results. The Thrive program will drive growth through investments in talent and AI, strengthen our brand, and generate greater efficiency. I would add that this is my fortieth year in the business world. I've never seen such a complex environment for our clients. While we are not facing one global crisis, we are in an era of polycrises. Ground wars, trade wars, culture wars, social unrest, AI disruption, and extreme weather are all creating enormous challenges for businesses. But there's also opportunity in the complexity if clients can anticipate the environment, seize the potential of AI while managing the risks, and have the right advisers to guide them. It's why I'm so optimistic about Marsh's future. Our perspective shaped by one hundred and fifty five years of helping clients build the confidence to thrive sets us apart. Our ability to see the risks and opportunities and support clients with advice and solutions will benefit them and make our relationship invaluable. With that, I'll turn the discussion to Mark for a more detailed review of our results.

Thank you, John, and good morning. Our fourth quarter results represented a solid finish to the year, reflecting our strong position and execution despite a more challenging environment. Consolidated revenue increased 9% to $6,600,000,000 with underlying growth of 4%, which came despite a headwind from fiduciary interest income. Operating income was $1,200,000,000 and adjusted operating income was $1,600,000,000 up 12%. Our adjusted operating margin increased 40 basis points to 23.7%. GAAP EPS was $1.68 and adjusted EPS was $2.12 up 10% over last year. For the full year, underlying revenue growth was 4%. Adjusted operating income grew 11% to $7,300,000,000. Our adjusted operating margin increased 30 basis points and adjusted EPS increased 9% to $9.75. Looking at risk and insurance services, fourth quarter revenue was $4,000,000,000 up 9% from a year ago, 2% on an underlying basis. Operating income in RIS was $830,000,000. Adjusted operating income was $1,100,000,000 up 11% over last year. And the adjusted operating margin was 27.6% up 60 basis points from a year ago. For the full year, revenue in RIS was $17,300,000,000 with underlying growth of 4%. Adjusted operating income increased 12% to $5,500,000,000 and the adjusted operating margin was 32%. At Marsh Risk, revenue in the quarter was $3,700,000,000 up 10% from a year ago, or 3% on an underlying basis. Marsh Risk's underlying growth in the quarter faced tough comparisons to last year's fourth quarter due to elevated claims activity in our Torrent Flood business, and the renewal of eighteen-month policies in Latin America. In the U.S. and Canada, underlying growth was 3%, reflecting good new business growth overall and continued momentum in MMA. In International, underlying growth was 4%, with EMEA up 6% Asia Pacific up 2% and Latin America down 4% reflecting the impact of eighteen-month policy renewals. For the full year, Marsh Risk's revenue was $14,400,000,000 with underlying growth of 4%. U.S. and Canada grew 3%, and international was up 5%. Guy Carpenter's revenue in the quarter was $215,000,000 up 7% or 5% on an underlying basis. Growth remained solid despite softer reinsurance market conditions, and came on top of 7% underlying growth in the fourth quarter of last year. For the full year, Guy Carpenter generated $2,500,000,000 of revenue and 5% underlying growth. In the Consulting segment, fourth quarter revenue was $2,600,000,000 up 8% or 5% on an underlying basis. Consulting operating income was $483,000,000 and adjusted operating income was $550,000,000 up 10%. Our adjusted operating margin in Consulting was 20.8%, up 10 basis points from a year ago. For the full year, Consulting revenue was $9,800,000,000 reflecting underlying growth of 5%. Adjusted operating income increased 10% to $2,100,000,000 and the adjusted operating margin increased 40 basis points to 21.1%. Mercer's revenue was $1,600,000,000 in the quarter, up 9% or 4% on an underlying basis. Health grew 6%, reflecting continued growth across our regions, especially in international. Wealth was up 5%, led by our investments business. Our assets under management were $692,000,000,000 at the end of the fourth quarter, up 1% sequentially and up 12% compared to the fourth quarter of last year. Year over year growth was driven primarily by acquisitions and the impact of capital markets. Career was down 2%, reflecting continued softness in project-related work in the US and Canada, partially offset by sustained demand in international and good growth in our workforce products. For the full year, revenue at Mercer was $6,200,000,000 with 4% underlying growth. Marsh Management Consulting generated revenue of $1,000,000,000 in the fourth quarter, up 8% on both a GAAP and an underlying basis, reflecting solid demand across most regions and sectors. For the full year, revenue in Marsh Management Consulting was $3,600,000,000 an increase of 6% on an underlying basis. Fiduciary interest income was $92,000,000 in the quarter, down $20,000,000 compared with the fourth quarter of last year, reflecting lower interest rates. Looking ahead to the first quarter, based on the current environment, we expect fiduciary interest income will be approximately $83,000,000. We're making good progress on executing our Thrive program. We continue to expect to generate $400,000,000 of total savings, a portion of which will be reinvested for growth, and incur approximately $500,000,000 of charges to generate the savings. Total noteworthy items in the fourth quarter were $210,000,000 and included $112,000,000 of costs associated with Thrive. Interest expense in the fourth quarter was $235,000,000. Based on our current forecast, we expect interest expense will be approximately $240,000,000 in the first quarter. Our adjusted effective tax rate in the fourth quarter was 22.1%. This compares with 21.3% in the fourth quarter last year. For the full year, excluding discrete items, our adjusted effective tax rate in 2025 was 25.3%. Compared with 25.9% in 2024. When we give forward guidance around our tax rate, we do not project discrete items. Based on the current environment, we expect an adjusted effective tax rate of between 24.5% and 25.5% in 2026. Also note that our adjusted effective tax rate in the first quarter last year included a meaningful discrete benefit related to share-based compensation. Based on our current estimates, we do not expect to see a benefit in Q1 this year. Turning to capital management and our balance sheet. We ended the quarter with total debt of $19,600,000,000. Our next scheduled debt maturity is in the first half of 2026 with $600,000,000 of senior notes maturing. We generated strong free cash flow in 2025 of $5,000,000,000 up from $4,000,000,000 a year ago. This reflects the underlying strength of our business and discipline in managing working capital. Our cash position at the end of the fourth quarter was $2,700,000,000. Uses of cash in the quarter totaled $1,900,000,000 and included $444,000,000 for dividends, $481,000,000 for acquisitions, and $1,000,000,000 for share repurchases. For the full year, uses of cash totaled $4,600,000,000 and included $1,700,000,000 for dividends, $847,000,000 for acquisitions, and $2,000,000,000 for share repurchases. I want to take a minute to reiterate our approach to capital management. We've consistently followed a balanced capital management strategy that helps us deliver solid performance in the near term while investing for sustained growth over the long term. We prioritize investment in our business, both through organic investments and acquisitions. We favor attractive acquisitions over share repurchases and believe they are the better value creator for shareholders and the company over the long term. However, we also recognize that returning capital to shareholders generates meaningful returns for investors over time. And each year, we target raising our dividend and reducing our share count. Looking ahead to 2026, based on our outlook today, we expect to deploy approximately $5,000,000,000 of capital across dividends, acquisitions, and share repurchases. The ultimate level of share repurchase will depend on how the M&A pipeline develops. Turning to our outlook for 2026, we are well positioned for another solid year. We currently expect underlying revenue growth will be similar to the level we generated in 2025. We also anticipate another year of margin expansion and solid adjusted EPS growth. With that, I'm happy to turn it back to John.

Thank you, Mark. Andrew, we're ready to begin the Q&A session.

Certainly. We will now begin the question and answer session. If you have a question, please press 11 on your touch tone phone. If you wish to be removed from the queue, please press 11 again. If you're using a speakerphone, you may need to pick up the handset before pressing the numbers. Once again, if you have a question, please press 11 on your touch tone phone. And in the interest of addressing questions from as many participants as possible, we ask that participants limit themselves to one question and one follow-up question. One moment, please. Your first question comes from the line of Gregory Peters with Raymond James.

Good morning, everyone. So for the first question, I'd like to go back to your comments on AI and digital infrastructure. And I guess I'm curious how you think the trends of investment in these areas by your clients could affect the long-term revenue outlook for RIS, for the consulting business, and the health business where I guess there could be some potential rising employment volatility.

Yeah. Thanks, Greg. We're excited about the investment in the digital infrastructure world. We expect roughly $3,000,000,000,000 of investment over the course of the next five years or so. It's been an area of focus for us for some time. We have a digital infrastructure practice and a global leader and head of it. The investment comes from lots of different parts of the economy. It's not just hyperscalers, of course, and so we've been focused on it. We're quite excited about the investment there. I think you're right, the job market is soft in many labor markets. And so, this is a good area for us to be focused on. And, our focus, of course, is risk advisory, risk financing, but also capital management, workforce strategies, energy solutions, community engagement. There's real complexity to the build out of all this infrastructure. So it is a big opportunity. And maybe, Greg, what I'll do is have our business leaders talk to you a little bit about each area and kind of what we're focused on. Martin, maybe you could talk a little bit about what we're doing at Marsh risk.

Yes, sir. Marsh Risk has long been a leader in the technology sector, and we continue to build on that legacy with a very strong presence in the digital infrastructure landscape. This includes the fabrication plants, data centers, ancillary services, builders, designers, communities, beyond that, power and energy and supporting operations. Over the next five years, it's estimated that between 2,000 to 3,000 data centers will be constructed worldwide. We're already well on the way to establishing our preeminence in this ecosystem as a trusted partner. From our calculations, in '25 alone, Marsh US had the leading market share of the $205,000,000,000 in data center construction value. In Asia, we're the clear leader serving six of the largest foundry businesses, the four largest memory IDMs, and the largest semiconductor tool manufacturers' plants. As a trusted risk adviser, our capabilities support clients with builders risk, property insurance, and ongoing capital facilitation. We're supporting clients with asset revenue contracts, what we're calling our life cycle work, supply chain issues, assessing revenue streams, and reviewing contractual obligations. We recognize that insurance capacity is a critical factor in supporting growth. And to address this, we're collaborating with Guy Carpenter and insurers to develop innovative capacity solutions. For example, the Nimbus facility, which just this week doubled its capacity to $2,700,000,000. All of this underscores our preeminence in the digital infrastructure space and our commitment to helping clients manage the risk in one of the most dynamic and fast-growing sectors globally. We see tremendous possibilities ahead and are very well positioned to capitalize on them.

Thanks, Martin. Dean, how are you supporting the effort at GC?

Thanks, John. Greg, as Martin said, I think this is a significant new business opportunity in 2026 for both cedents and reinsurers. There's been estimates of up to $10,000,000,000 of new premium entering the market in 2026 because of these opportunities. And the market needs more capacity. No cedent's gonna put up billions of dollars of capacity for a single location risk. So that's a real issue. All of our clients want to write data centers across 10 plus products globally, but they require additional reinsurance protections. Everybody's concerned with accumulations in portfolios and we're solving that right now for our clients. And I think we need to bring new capital to the market. It's not gonna just be traditional reinsurance capital. The introduction of third-party capital and securitizing some of these risks via sidecars and other vehicles is gonna be critical. And these are gonna have to be deep-pocketed investors given the size of these risks. But we think this is the single biggest new business opportunity in 2026.

Yep. Thanks, Dean. Pat, how about at Mercer? What are we doing there?

Yeah. Thanks, John, and thanks, Greg. I appreciate the way you asked the question and how it had to do with employment and talent. On the data center infrastructure side in that ecosystem, what we're seeing is employers needing to think really strategically about their talent to be able to drive these large programs. Unique skills involved are evolving fast. Critical talent is in limited supply. So things that we're doing are workforce planning projects, skills assessment and development, global mobility, rewards, and health care plan designs—all on top of clients' minds out in the field right now. Martin had mentioned Asia specifically, and I will say that's an area where there's heavy focus on this. A couple of examples: we're working in the semiconductor industry around large global mobility policy redesigns to enable overseas expansion. As the ecosystem goes global, Asian companies are thinking about how to get people with the right skills to projects all over the world. We've also done some really large technical skills design projects for clients to assess and develop the skills they'll need in the workforce. And that goes across the ecosystem, not just the data centers themselves—manufacturers of supplies, gases, raw materials—we're seeing projects across the spectrum there.

Thank you. And, Nick, how about at Marsh Management Consulting? How are we helping our clients?

Yeah. I think it's well covered by my colleagues, but maybe just put a wrapper around it. Our portfolio is totally unique, both in terms of the advisory businesses that exist across all four of our businesses but also the strength and depth of Marsh Management Consulting, within which sits Oliver Wyman and Marsh Business. We have the ability to be very integrative, not just in the construction of new data centers, but in the 90% of existing data centers that are needing to become AI-enabled. So we're working with colleagues across our businesses to help manage that transformation, integrate strategy, risk, and execution planning. We're also seeing strong demand in our energy practice around power, grid strategy, supply chain resilience, and the navigation of regulation. And one of our biggest capability practices is around cost; most of the cost work we're doing at the moment is being done to fund investments in growth, resilience, and in AI. So we really bring a uniquely integrated set of capabilities.

Thanks, Nick. So sorry, Greg. That was probably a little longer than you expected, but we're excited about the space. We have a unique breadth of capability and we see it as a real meaningful opportunity going forward. Do you have a follow-up?

I absolutely do. And that was good detail. I guess I'd like to zero in on the headline in reinsurance in particular, in property more broadly speaking, where we're seeing some pretty strong rate reductions. And, of course, that's excellent news for your clients. But on the other hand, when we're sitting back here on the outside looking in, that looks kind of scary from the potential of organic revenue growth. I'm mindful that you talked about increased demand, but I'm hoping you can just reconcile the moving parts as we process these pretty dramatic rate decreases in reinsurance.

Yeah. No. I'll ask Dean to talk a little bit about it. Obviously, we don't guide by business, but we had a decent finish to the year and a good year overall at Guy Carpenter in what was a soft market last year. And so, we expected a challenging market into 2026. And certainly, the first of the year would indicate that we're getting kind of what we expected. As you mentioned, it's good for our cedent clients, which is terrific. We have seen demand pick up in some spots which we didn't see much of last year. So, we're excited about that, but we're also focused on some different areas to advise clients on in the reinsurance and capital space. Dean, maybe you talk a little bit about what you're seeing.

Yeah. Thanks, John. And, Greg, you touched on the headlines. Property cat pricing rate environment will certainly be a headwind as we move through 2026. In addition, the interest rate environment. That said, I remain really upbeat on the fundamentals of our business with our talent and capabilities. Our data and analytics platform is a key differentiator. We continue to attract top talent at GC; we've grown our headcount for five years in a row and made some really big time hires that are making an impact. Despite all this, Greg, we had record new business in 2025 and a really strong fourth quarter of new business, and we feel good about that momentum. I would highlight a couple things. We're seeing a lot of diverse areas of new business. I've spoken in the past about capital and advisory; our investment banking group has never been more impactful for our clients giving the flow of third-party capital into the marketplace right now. I highlighted that in data centers. We're winning impactful engagements from our clients around M&A advisory, raising third-party capital, and fairness opinions. You've read a lot about sidecars; billions of dollars of new capital flowing into the market for the creation of casualty sidecars—we're right in the middle of that. Lot of client interest around Lloyd's platforms and structured solutions, obviously a red-hot cat bond market. More broadly, we think the casualty market now is a clear growth opportunity for brokers and reinsurers. Even though renewal outcomes were in line with expectations, we think this is a true area of growth. Martin talked about 19% rate increases in casualty in the fourth quarter; that's flowing straight through to quota share contracts in our portfolio, which is the majority of our portfolio. We think we have plenty of sources of new business growth and opportunities that maybe didn't even exist a year ago.

Thanks, Dean. So lots for us to work on there, Greg, and we will have headwinds, obviously, from the pricing market in property cat, but lots of areas of growth for us to get focused on. Andrew, next question, please.

Our next question comes from the line of Mike Zaremski with BMO.

Hey, great. Good morning. Maybe back to thinking about all your good commentary, both today and in the past about AI and expense initiatives, including Thrive. When we think about Thrive, what would you say that encompasses? A lot of the new AI technologies that you all are deploying? Or should we expect more to come? You've had a number of companies specifically guide to how AI could change their headcount numbers. So just curious if there's overlap there or maybe you'd expect something separate in the coming quarters or years.

Well, Thrive is, as I mentioned, Mike, a growth program. It'll certainly fuel efficiency and help us with margin expansion, but it's also going to enable us to accelerate investment in market-facing talent that will help us continue to grow our company. But bringing BCS together, our operations and technology teams under the leadership of Paul Beswick, and exploring the best technologies that have existed in each of our businesses, bringing them together to get scale benefits, will accelerate the path that we're on. We're excited about that path on AI. We've introduced dozens of productivity tools to our colleagues; we're an early mover on this. Paul and team have done a terrific job. We'll continue to introduce new tools, but also, we're quite focused on ramping up on production. We need more of our colleagues to become power users, and that will drive further efficiency for us. And then on the growth side, we're excited about that too. I mentioned Centrisq and AIDA during 2025, two market-facing tools. We have others in development that are SaaS-like models that will drive revenue growth for us over time. In terms of jobs, clearly, there are job families that will be more impacted than others, but for the most part, these tools are gonna make our people better and more efficient and able to serve clients in a better way.

Okay. That's helpful. My follow-up is on your organic growth comments for the coming year. If we look at the current quarterly organic trend line, should we expect consulting to lead the pack on organic while maybe risk runs a bit lower given the backdrop in P&C? Or would your enthusiasm about data centers offer upside as 2026 progresses?

Look, obviously, we had a slower growth in the fourth quarter in RIS than we did earlier in the year, but it's a quarter. We had a good year of growth overall. Marsh Risk is a 155 year old business, maybe more relevant than it's ever been; we had 15% GAAP growth last year and 4% underlying growth. We know how to grow our businesses. Every year creates its different challenges and opportunities. I wasn't trying to guide to strength in one area; we see good opportunity across all of our businesses. For 2026, as I said, I see a similar environment to 2025. It's an uneven economy. We talked about digital infrastructure, health care, energy, and private capital. We will see headwinds from pricing and interest rates—we expected that. Less than a couple of weeks in, we knew 2026 wasn't gonna be calmer geoeconomically. But we've all built muscles around navigating those environments. I'm optimistic. MMA is strong. We've got the team from McGriff that makes us better and stronger. Thrive again is that capacity engine to drive earnings growth and sustain our growth over time. We have a strong balance sheet and M&A is a core competency with a strong pipeline. So there's a lot for us to get after in 2026. Thank you, Mike. Andrew?

Our next question comes from the line of David Motemaden with Evercore ISI.

Hey. Thanks. Good morning. John, you spoke last quarter just about the talent situation. Some teams that have left, and I'm wondering if we're seeing any of that impact in the results this quarter specifically within U.S. and Canada? And then how we should think about that in 2026, but also thinking about some of the teams that it sounds like you guys are gonna be hiring. What are some focus areas to offset those headwinds?

Thanks, David. Overall from a talent perspective, we have an excellent brand in the market. We're 95,000 people strong and growing. Our colleague retention remains strong—it's above historic norms. Our engagement scores are exceptional. Our talent strategy is all about making our colleagues be their best inside our company. I'm very confident that we have the best and deepest teams on the field. We have a culture that sets us apart—collaborative and team-based. We're not a place for mercenaries. We added market-facing talent in the aggregate last year. The team dynamics that happened over the course of last summer aren't helpful, of course, but they're not material to our results. It becomes a bit of a distraction, but given our brand, we're able to get back at it. We added talent last year, and we're going to add market-facing talent again. So I feel good about how we're positioned. And, I would also note that, if there are folks out there that are either gonna violate their covenants or steal information from us, I'm gonna call you out and do everything I possibly can to hold you accountable. Do you have a follow-up, David?

Yeah. I do. Thanks for that, John. Then, just on the data center construction values—I heard $205,000,000,000 that Marsh US handled the leading market share in 2025. It didn't look like that had a meaningful impact on the results with the call it 3% underlying growth for the year. Is that something you think is going to have a material impact on the growth in 2026, or is it just going to get offset somewhere else? I'm trying to square those comments with the stable underlying revenue growth outlook.

Look, David, it's hard to look that far ahead given all the things that have happened just in the last thirty days. But we're excited about the investment in digital infrastructure broadly. We believe we're the market leader in it. Some of the investment happened last year and we're at 4% underlying growth in all our businesses. It was a factor in our results, but there's much more in front of us than is behind us in that build out. We think we're well positioned to help clients invest in a wise way. Andrew, next question.

Thank you. And our next question comes from the line of Brian Meredith with UBS.

Yes, thanks. I was hoping you could talk a little bit about the insurance budgets for clients looking into 2026. Are they looking to increase coverage given price breaks in property, or is there more uncertainty?

Brian, it's an uneven economy. Growth excluding digital infrastructure is not inspiring. Our clients are all over the map in terms of what they're ready to spend. Broadly, pricing relief in the market is welcome after several years of increases, but it's quite clear that the cost of risk is continuing to rise. Excess casualty liability costs are going up, and more of the economy is exposed to extreme weather and rising health care costs. Eventually, those costs will have to catch up with inflation. We're advising our clients to buy more coverage, particularly in casualty given nuclear verdicts and litigation funding. But many don't—many are looking to harvest the savings if they're in an industry in a lower growth mode.

That's very helpful. And then going back to AI—I'm hearing that for the management consulting business, formerly Oliver Wyman, there could be some project-related work that goes the way of AI and becomes a headwind. Is that true? What are potential revenue losses you could see there?

Oliver Wyman had a terrific year and demand is strong. But, Nick, maybe you could talk a little bit about Outlook and also the impact of AI in our business.

Yeah, for sure. Over the last five years, it's been a volatile environment, but I'm tickled that we just registered our first billion dollar quarter. Five years ago, we were just over $2,000,000,000 for the year, so 75% growth over that period. We think the outlook is robust. We've had three of our best ever sales months over the last five months. Regarding AI, what we see in our business is that the use of AI tools has had a significantly positive effect on productivity. We have leveraged our consulting teams better, but frankly, we're not really being paid for things that AI can do at this stage—we're paid for helping clients deliver outcomes rather than for assembling third party information. Within the business, maybe 30% of our work draws on advanced analytics and AI. We launched our DNA business (data analytics) and our Quotient platform which delivers AI transformation for clients in partnership with hyperscalers—that is the fastest growing part of Oliver Wyman. Regarding our own delivery model, AI is replacing some tasks, but at the moment I expect to hire the same or more junior staff because they are AI literate and use these tools well. Finally, we're doing a lot of work on performance transformation and cost work driven by the need for firms to fund investments in growth and AI. So, we aren't experiencing revenue headwinds because of this at the moment.

Thanks, Nick. Andrew, next question, please.

And our next question comes from the line of Jimmy Bhullar with JPMorgan.

Hey, good morning. John, you mentioned you expect organic growth in '26 to be similar to last year. My question is specifically on the Marsh Risk business. You've seen a slowdown in growth over the last three, four quarters. It seems from your comments that you're not expecting an incremental slowdown from here. Is that correct?

Good morning, Jimmy. Again, we were at 4% for the year at Marsh risk. I cautioned in the past not to over index on any single quarter. 15% GAAP growth for the year at Marsh risk. We feel good about that despite a tougher environment. We're adding to the talent on the team and using AI to boost productivity and make our producers better. We're optimistic about our prospects next year. MMA is a huge part of our business now and is executing very well.

Do you have a follow-up, Jimmy? Yeah, just on buybacks. You did a lot more than you've done in a quarterly basis. Maybe just give us some insight into why the buyback amount was as high as it was.

Returning capital to shareholders is an important part of our approach. Mark, maybe you can talk about the buybacks in particular.

Hi, Jimmy. We did ramp up buybacks in the fourth quarter purely as a function of the M&A pipeline. We had an active year on the M&A front completing 20 transactions, but they were all relatively small, so we only deployed about $850,000,000. My script reiterated our approach because there has been no change in strategy. As we think about the $5,000,000,000 we're gonna deploy this year, our bias is toward high-quality accretive acquisitions and our pipeline is very active. We did three acquisitions in Hawaii that closed December 1. Pipeline is strong and we're excited for 2026.

Our next question comes from the line of Meyer Shields with KBW.

John, big picture question. Obviously, there's been news about team lifts. Are you seeing any increase in the cost of brokerage talent?

Mayor, thanks for the question. I don't see broadly any more pressure in terms of inflation for compensation related to this. What we've seen over the last year is some PE backed businesses using, in my view, unethical and often illegal practices to build their businesses out. It's an unfortunate thing. I love to compete broadly, and mobility for talent in the industry is a good thing. But let's compete in a fair way. The best thing for us is to focus on our clients and a colleague value proposition that makes us the most attractive place to work.

Okay. And another pricing question. We've seen a significant deterioration in the valuation of publicly traded brokers—how long does it take before that filters into M&A multiples?

That's a good question. The market has changed a bit as public company comps have come down over the last six to nine months. I would say the bid-ask gap has probably grown. High quality assets are still insisting on higher multiples, which probably contributed to a little less deal flow overall in our sector last year. It will be interesting. Strategic buyers versus financial sponsors is generally where the gaps fall out. We're excited about our reputation and the relationships we've developed. Andrew, we need to bring this call to a close. I want to thank all of our colleagues for joining us this morning and for their dedication to Marsh, to one another, and to our clients. Thank you all, and we look forward to speaking to you again next quarter.

This concludes today's conference. Thank you for participating. You may now disconnect.