Marsh McLennan (MRSH) Q2 2026 earnings call transcript

Thanks, Andrew. Good morning, and thank you for joining us today to discuss our second quarter results. I'm John Doyle, President and CEO of Marsh. On the call with me is Mark McGivney, our COO and CFO, and the CEOs of our businesses. Nick Studer of Marsh Risk, Dean Klusura of Guy Carpenter, Pat Tomlinson of Mercer, and Ted Moynihan of Marsh Management Consulting.

Also with us this morning is Jay Gelb, Head of Investor Relations. To start, I'd like to acknowledge the United States' 250th anniversary commemorated earlier this month. Marsh is proud to be a U. S. -based company and of the ideals embodied in our nation's founding. We are also proud of the contributions Marsh has made to the U. S. economy and society, supporting growth since our founding in Chicago 155 years ago. And we are grateful to our clients for the trust that lets us do the same today all around the world.

I would also like to extend our sympathies and concern for the people of Venezuela. We recently celebrated our 70th anniversary in Venezuela, and we have 100 colleagues in the country. We are grateful that they're all safe, and we will continue to support them and our clients with their recovery.

Turning to results, we had a solid second quarter as demand for our advice and capabilities remained strong. Overall, revenue grew 6% in the quarter. Underlying revenue growth accelerated to 5% from 4% in the prior quarter. Adjusted operating income grew 5%, adjusted EPS grew 9%. We also have $1.5 billion of stock in the quarter, now totaling $1.5 billion for the first half of 2026.

I want to spend a moment on our Thrive program, an important part of our strategy. We aspire to be the most impactful professional services firm in the world, and we have the talent, capabilities, and market position to achieve this. We are leaders in most markets in which we operate and have a truly unique set of capabilities across risk, strategy, people, and investments that differentiates us and drives value for clients.

We're focused on allocating capital and resources to strategic priorities where we see significant growth potential, and we remain disciplined in our approach to delivering in the near term while investing for the future. Thrive is designed to accelerate growth by creating the capacity to invest in the Marsh brand, expanding our capabilities and sales capacity, and leveraging the benefits of our scale in operations and technology through our business and client services team.

We've seen a strong, positive response to the new Marsh brand. As a result, we're accelerating the transition of Guy Carpenter and Mercer to Marsh in September. A unified brand strategy signals the value we can deliver together to clients across a range of industries, segments, and geographies. And its efficiency has allowed us to increase our brand reach, improve marketing ROI, and become the official risk partner of Formula One.

F1 increases our visibility among its over 800 million global fans, and importantly, its high concentration of C-suite leaders and decision makers. The precision, data-driven approach to risk and relentless pursuit of excellence is what aligns Marsh and F1's cultures, and I'm excited for the growth possibilities from the partnership.

We're also accelerating our investment in sales capacity through Thrive. We're building new capabilities and adding client-facing talent in sectors where we see meaningful growth opportunity. One example is our work with energy clients in the digital infrastructure ecosystem, where we are creating multi-billion dollar insurance solutions for counterparty credit exposures. These programs integrate traditional insurance and reinsurance sidecars backed by third-party capital, which we source for the client. It's the combination of our capabilities in insurance, consulting, and investments, as well as deep client relationships and expertise across sectors, which enables Marsh to design and deliver these solutions for clients.

Our AI plans are also benefiting from Thrive. As I've stated before, Marsh is well positioned to be an AI winner. It's clear that our large proprietary data sets in risk, health and benefits, talent, and investments, as well as our longstanding client relationships, are a significant advantage. Our strategy is to drive AI development in three areas, growth, productivity, and efficiency.

Related to growth, we recently introduced Marsh Risk Companion at the RIMS conference in Philadelphia. This new client platform has market-leading analytics, insights, and capabilities in one AI-enabled application. It will enhance our ability to analyze their risks and develop optimal solutions. And we're excited about our coverage intelligence platform, which gives producers serving the middle market the ability to model risk and evaluate coverage options at the point of sale.

The AI-driven platform can quickly find coverage gaps and analyze and compare quotes for clients, a significant advantage for our producers in the marketplace. We also introduced Atlas, an AI-enabled platform that delivers real-time insights to support development of client reinsurance strategies. Atlas curates and expedites information, including hazard scores, litigation risk, market pricing, economic indicators, and other financial data for clients. And finally, our Quotient team is doing extensive work advising clients on AI strategy and transformation. For example, in the last quarter, we launched the build of several new AI-native banks in different regions around the world. We are also introducing AI tools that increase our colleagues' productivity and enhance our colleague value proposition. For example, we rolled out Claims IQ to our 3,000 claim professionals.

The tool draws anonymized data on millions of claims to help us manage the claims lifecycle and deliver insights to improve client outcomes. Colleagues also now have access to Lendwork, an agentic assistant that builds on our LendAI suite. Lendwork helps colleagues develop new product ideas, create sales strategies, and respond to RFPs, among other use cases. It leverages frontier models while being purpose-built for our ecosystem. As a result, Lendwork delivers a more secure, relevant, and agile experience, and amid rising token costs, a more cost-efficient approach to enterprise LLM usage. One of the more exciting AI programs of work launched in the quarter is BCS and Oliver Wyman's partnership with Amazon Web Services to reimagine our mid- and back-office processes.

We have already introduced AI into our operations, but this work will push the boundaries to redesign how work is executed to improve efficiency and service. The project is initially focused on pilots to re-engineer claim services and the issuance of reinsurance treaties. We expect our thrive investments in brand, sales capacity and capabilities, and new AI tools will support growth and continuous operational efficiency in the years ahead.

Now, turning to market conditions, according to the Marsh Global Insurance Market Index, primary commercial insurance rates decreased 6% in the second quarter. This follows a 5% decline in the first quarter of 2026. As a reminder, our index skews to large accounts. Rates in the U. S. decreased 2%. Europe and Asia declined mid-single digits. Canada, the U. K. , and Latin America were down high single digits, and the Pacific region had double-digit decreases. Global property rates decreased 12% year-over-year, which was an acceleration from the prior quarter. Global financial and professional liability rates were down 3%, while cyber decreased 4%. Global casualty rates increased 2%, with U. S. excess casualty up 15%, reflecting continued elevated loss experience, and workers' compensation decreased 4%.

In reinsurance, persistent soft market conditions driven by abundant capacity and growing reinsurer appetite have led to a favorable market for insurers. As expected, the outcome of the June 1 Florida CAT renewals saw rate reductions in the 15-20% range from excess supply partially offset by a modest increase in demand. In U. S. casualty reinsurance, renewals reflected adequate capacity and differentiated pricing based on loss experience and portfolio quality. We continue to see record-high catastrophe bond issuance with more than $61 billion of limit outstanding through the first half of 2026. Our clients are exploring alternative options to complement traditional strategies, including through the use of third-party capital solutions. Current market pricing remains favorable for our insurance and reinsurance clients despite the rising cost of risk.

We continue to help clients optimize their risk financing and build greater resilience in a more uncertain world. Now let me turn to our second quarter financial performance and outlook, which Mark will cover in more detail. Consolidated revenue increased 6% to $7.4 billion, increasing to 5% on an underlying basis with 3% growth in RIS and 8% in consulting. Marsh Risk was up 4%. Kai Carpenter declined 2%. Mercer increased 5%, and Marsh Management Consulting grew 13%. Adjusted operating income grew 5%, and adjusted EPS was $2.96, up 9% year over year.

Looking ahead, we continue to expect a good year in 2026, with underlying revenue growth similar to last year. We also anticipate another year of margin expansion and solid adjusted EPS growth. Our outlook is based on current conditions, but the economic and geopolitical environment could change materially from our assumptions.

In summary, I remain pleased with our performance in the first half of 2026. We are focused on executing our strategy, putting our clients at the center of everything we do, and building on our momentum.

With that, I'll turn the discussion to Mark for a more detailed review of our results.

Thank you, John, and good morning. We had a good second quarter reflecting the diversification of our portfolio, our leading position, and strong execution. Consolidated revenue increased 6% to $7.4 billion, with underlying growth of 5%, which we achieved despite continuing headwinds from fiduciary interest income and PNC pricing. Operating income was $1.9 billion, and adjusted operating income was $2.2 billion, up 5%. Our adjusted operating margin was 29.3%. GAP EPS was $2.63, and adjusted EPS was $2.96, up 9% over last year.

For the first six months of 2026, underlying revenue growth was 4%. Adjusted operating income grew 7% to $4.6 billion. Our adjusted operating margin was 30.5%. An adjusted EPS increased 8% to $6.25. Looking at risk and insurance services, second quarter revenue was $4.8 billion, up 4% from a year ago, or 3% on an underlying basis. Operating income in RIS was $1.5 billion. Adjusted operating income was $1.7 billion, up 3% over last year, and the adjusted operating margin was $35.3 billion. The first six months, revenue in RIS was $9.9 billion, reflecting underlying growth of 3%. Adjusted operating income increased 5% to $3.6 billion, and the adjusted operating margin was 36.8%. At Marsh Risk, revenue in the quarter was $4.1 billion, up 6% from a year ago, or 4% on an underlying basis, reflecting solid performances in the U. S. and across international.

In U. S. and Canada, underlying growth increased sequentially to 4%, up from 3% in the first quarter, reflecting strong new business. In international underlying growth remains solid at 5 with EMEA up 5 Asia Pacific up 5 and Latin America up 8 For the first six months of the year Marsh risk revenue was billion with underlying growth of 4 U and Canada grew 4 and international was up 5 Guy Carpenter's revenue in the quarter was $664 million, down 2% on both the reported and underlying basis. Growth in the second quarter was impacted by a tough comparison to 5% underlying growth last year and continued declines in reinsurance rates, especially in property lines. This headwind from rates had a roughly 6 percentage point impact on Guy Carpenter's underlying growth in the quarter.

For the first six months of the year, Guy Carpenter generated $1.9 billion of revenue, which was flat on an underlying basis. As a reminder, the first half of the year accounts for roughly three-quarters of Guy Carpenter's annual revenue.

Despite the challenging market conditions, Guy Carpenter executed well and delivered double-digit new business growth in the first half, as well as high 90s client retention. In the consulting segment, second quarter revenue was $2.6 billion, up 10% or 8% on an underlying basis.

Consulting operating income was $502 million, and adjusted operating income was $533 million, up 11%. Our adjusted operating margin in consulting was 20.5%. For the first six months, consulting revenue was $5.2 billion, reflecting underlying growth of 7%. Adjusted operating income increased 12% to $1.1 billion, and the adjusted operating margin was 21%. Mercer's revenue was $1.6 billion in the quarter, up 7% or 5% on an underlying basis. Health grew 3%, reflecting continued growth across our regions, especially in international. Wealth was up 8%, led by our investments business. This was the best quarter of growth in wealth since we started reporting on this basis in 2016. Our assets under management were $846 billion at the end of the second quarter, up 16% sequentially and up 26% compared to the second quarter of last year.

Year-over-year growth was driven by new business and the impact of capital markets. Career was up 2% and was led by growth in international. For the first six months of the year, revenue at Mercer was $3.3 billion, 5% underlying growth.

Marsh Management Consulting generated revenue of $1 billion in the second quarter, up 15% or 13% on an underlying basis. This was the fastest quarter of growth in over two years, reflecting strong demand and delivery across the business. For the first six months of the year, revenue at Marsh Management Consulting was $1.9 billion, an increase of 10% on an underlying basis.

Looking ahead to the third quarter, we expect underlying growth for Marsh Management Consulting will likely be in the mid to high single digits. Fiduciary interest income was $88 million in the quarter, down $11 million compared with the second quarter of last year, reflecting lower interest rates.

Looking ahead, we expect fiduciary interest income will be approximately $95 million in the third quarter. Foreign exchange was a $0.02 benefit in the second quarter. Based on current exchange rates, we expect FX will have an immaterial impact on earnings in the third quarter and the rest of this year. Corporate expenses in the second quarter were $67 million on an adjusted basis compared to $66 million a year ago.

Looking ahead to the third quarter, we expect adjusted corporate expense of approximately $75 million. We continue to execute well on our Thrive Program and remain on track to deliver $400 million of total savings, a portion of which will be reinvested for growth. We continue to expect to incur approximately $500 million of charges to generate the savings. Total noteworthy items in the second quarter were $130 million, including $52 million of costs associated with ROT. Interest expense in the second quarter was $250 million. Based on our current forecast, we expect a similar level of interest expense in the third quarter. Our adjusted effective tax rate in the second quarter was 24.4% compared to 25.3% in the second quarter last year, with both periods benefiting modestly from discrete items.

When we give forward guidance around our tax rate, we do not project discrete items. Based on the current environment, continue to expect an adjusted effective tax rate of between 24.5% and 25.5% in 2026.

Turning to capital management, our balance sheet. We ended the quarter with total debt of $20.6 billion. Our next scheduled debt maturity is $550 million of Euro-denominated senior notes in the third quarter, which we anticipate refinancing with similar Euro-denominated notes. Our cash position at the end of the second quarter was $1.7 billion. Uses of cash in the quarter totaled $1.4 billion, included $438 million for dividends, $230 million for acquisitions, and $750 million for share repurchases. For the first six months, uses of cash totaled $2.7 billion and included $878 million for dividends, $319 million for acquisitions, and $1.5 billion for share repurchases.

We now expect to deploy approximately $5.5 billion of capital in 2026 across dividends, acquisitions, and share repurchases, up from $5 billion previously. The ultimate level of share repurchase will depend on how our M&A pipeline develops.

Earlier this month, we announced a 10% increase in our quarterly dividend, making this our 17th consecutive year of dividend increases, reflecting our solid earnings growth and confidence in our outlook.

Turning to our outlook for 2026, we remain well positioned for another solid year. We continue to expect underlying revenue growth will be similar to the levels we generated in 2025, along with another year of margin expansion and solid adjusted EPS growth. For modeling purposes, we expect more margin expansion in the fourth quarter than in the third quarter.

With that, I'm happy to turn it back to John.

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

Sure, Greg, and good morning. Thanks for the question. And I'll share a couple of comments, and then maybe I'll ask Nick and Dean to add some color. You know, I thought it was a, you know, good, solid first half at Marsh Risk. It was, you know, a good quarter. We've seen some improvement in our growth in the United States, which we're excited about. It's been an area of focus for us where we've been hiring production talent there. So it was a good first half of the year for us in adding lateral talent in the United States and elsewhere. But we're particularly focused there in the U. S. , and it was a very strong new business quarter for us in the U. S. You know, reinsurance, of course, you know, it's not the outcome we want.

But, you know, as Mark noted, you know, our execution was, you know, was really strong. You know, big pricing headwinds. But, again, we're delivering for our clients. Retention is strong, very strong. New business was excellent in the first half. And, you know, I'd add that market consolidation, some M&A, you know, wasn't helpful to us in the quarter. And we have the largest cap portfolio, cap property portfolio in the market. But there's a lot of opportunities for us to grow in reinsurance, and Dean and the team are focused on that. And so we're excited about what's in front of us in the second half.

So with that, maybe, Nick, you can talk a bit about the growth prospects at Marsh Risk.

Greg, yeah, thank you for the question. I'm very pleased with the performance in the face of those rate headwinds that you mentioned. The really solid organic growth represents a continued focus on innovation for clients as well as on efficiency and execution. If I sort of walk you around the business a little bit, in the U. S. and Canada, accelerated growth, high single-digit new business growth, which John talked about. That was actually double digits in Marsh Risk, coming from a range of businesses, specialties, a double-digit growth in marine, in transactional risk, in construction, in aviation, in energy and power, a very robust pipeline in digital infrastructure, which affects a number of those specialties, which is beginning to make a meaningful contribution to growth.

But also, as you noted, continued growth in our sales capacity, strong hiring in the market, strong growth of sales leaders, a trend which we expect to continue into the second half. And then really underpinning the fact that our growth is very broad-based, international GAT revenue growth of 7%, underlying growth 5% on top of 7% a year ago, with strong growth in LAC in Asia and in EMEA, really driven by the UK, which has been growing strongly. The highlights in international, our facultative reinsurance alongside Marsh Re, double-digit growth, specialties similar to the U. S. and Canada, double-digit growth in transactional risk in construction, marine and cyber, and really strong new business growth in Pacific. And really beginning to leverage some of our wholesale capabilities and Marsh risk capabilities like McGriff MMA in London.

So all of that makes us confident in our strategy. While pricing is down, our clients see more risk, more uncertainty, and more volatility. They have more lumpy problems they need our help with. And we're confident in our strategy and investing in our middle market business and building in fast-growing sectors like digital infrastructure. But I could add defense and security and many others. Hiring and cultivating producer talent, building our facilities, building FastTrack where utilization is progressing well, and really seeking to be both a game-changing risk advisor and an all-connected risk intermediary.

Thank you, Nick. Dean?

Thanks, John. And, Greg, maybe a little bit of context for you on Guy Carpenter's results and the reinsurance marketplace. You know, our negative growth in the quarter and our flat growth for the first half of the year, as John noted, were clearly driven by declining property cap pricing. Our property cap rate online index, which you see every quarter, was down 16% at mid-year, accelerating down from negative 12% at the January 1 renewal. And the steepest year-over-year decline we've observed since the index was created 25 years ago. And as you know, as John noted, property is 50% of our global portfolio, and we have the largest property cap book in the global marketplace. You know, we continue to deliver strong execution in a very challenging market.

You know, and as John noted, despite pricing headwinds, we see strong opportunities to grow moving forward. We had record new business in the first half of the year, strong double-digit new business growth. Our RFP win rate has never been stronger. And outside of property, we have a number of businesses that are performing very well. As Nick mentioned, our international facultative business is growing double-digit. Our casualty business continues to grow strong mid-single digits. Capital and advisory continues to deliver strong double-digit growth, and M&A advisory, structured deals, sidecars, and other capital structures. And we led 20 cap-on issuances in the first half of the year, totaling $5 billion of limit, a record for Guy Carpenter.

We continue to invest in top production talent around the world. We've grown our headcount for five straight years, and demand for our advice and solutions from clients has never been stronger. So what I would sum it up, Greg, by saying, you know, despite our growth challenges in the first half, we feel great about our team, our talent, our platform, and our prospects for growth moving forward.

Thanks, Dean. So, Greg, hopefully that was helpful. Some unsurprising headwinds for us, you know, from a pricing point of view, but execution is strong, and we feel good about our growth prospects as we look ahead. Do you have a follow-up?

Yeah thanks for the question It an important one And again I want to reiterate obviously there been lots of questions in the investor community about AI We very excited about AI the impact it can have on the value that we deliver for our colleagues for our clients and for shareholders And we think we exceptionally well positioned to be a winner And I talked quite a bit about why But we're an early mover, and our CIO, Paul Beswick, has done a terrific job really building the foundation for us to create the value that we talked about. We expected rising costs to become a challenge for us over time. It's why I talked about Lendwork in my prepared remarks, which, you know, essentially is an in-house model that's built on third-party LLMs.

It's a couple of months behind Frontier models in terms of its capabilities, but it's more than adequate. In fact, it's quite capable to do the overwhelming amount of work that our colleagues need from AI at the moment. And so it's a low-cost, very efficient model for us, and we're quite excited about that. Now, of course, when we need to do other work that requires the most contemporary models in the marketplace, and that happens probably most inside of Oliver Wyman and at Mercer, we'll supplement our work by engaging with third-party models. So we're excited about the path we're on. So far, the growth from AI has mostly come into Oliver Wyman. As Nick pointed out, we're starting to see more and more growth and opportunity in digital infrastructure, and that ecosystem is driving some good growth for us.

But we're also excited about the efficiency gains. I talked about the partnership between our team at OW and AWS to really attack some of the mid and back office work that we do. So it's early days on that front, but we're excited about it.

Yeah. Thanks, Mike, for the question. As I mentioned briefly in Greg's question, it was a good first half for us in attracting production talent in key markets. Our brand for talent is excellent in the markets that we operate in and compete. We have the best talent here in our company, but we see the opportunity to get even stronger. I would point out our colleague retention is very strong. Our colleague engagement is excellent, and it's all anchored by a very strong and deliberate and transparent colleague value proposition, a conversation that we have with our colleagues and with talent that's considering. And our investments in AI are another example of how we can make it even more attractive to work at our company.

As I said, I don't want to get into every quarter reporting on kind of how many people and all of that, but it was a good first half, and we expect that to continue. Our pipeline for talent remains quite strong, so we're going to continue to get at that. That's not the only source of improving the growth rate of the company, of course. We do other things that will drive growth, including expanding capabilities and including through M&A, but it is an important source of growth for us, and we did have a good first half. Do you have a follow-up, Mike?

Yeah, I haven't seen anybody in the market report 40% growth rates, so I'm a little bit skeptical there. But we're not trying to keep up with the market. We're leading the market and continuing to extend our leading spot in the market. I talked about, you know, the suite of analytics under the brand of Companion, the Marsh RISC Companion suite that we rolled out at RIMS. An AI-enabled application. So, you know, I think another great example is why as an incumbent and a market leader we're positioned to be an AI winner. The feedback we got from the rollout of that was, you know, was tremendous. And I was actually in our cafe at RIMS to, you know, to witness it firsthand and to sit through some demos with some clients.

So we're continuing to invest in that. We have a big advantage in data, as I mentioned, and AI just creates new opportunities for us to help our clients understand their risks, model those risks, benchmark those risks compared to anonymized, of course, but compared to others in the industries that they compete with, set their risk appetites, right? And then think about risk financing. And then when we finance risk, we do it through captives, we do it through traditional insurers, we do it through alternative capital. And so these are all the reasons why we're so well positioned to continue to deliver for our clients. Thanks, Mike. Next question, Andrew?

I hope Bid asks is narrow, but I'm not sure I'm ready to call that yet. In fact, I would say there's still a bit of a, at least between what I think strategics might consider the right price and maybe some financial sponsors, but we'll see. I would point out, we had previously announced Altmark M and Alt's manager that we're excited to add to our investments business at Mercer. That's expected to close in the second half, subject to regulatory approval. On the 1st of July, we closed on Estera, a business in Spain that we had a minority stake in previously. We're excited about both of those businesses. We're very active in the market, but aside from the gaps growing, we've even seen some assets just come off the market entirely.

And, of course, we're going to remain as disciplined as we've always been. Our strategy is the same, right? We have a balanced approach. We do want to invest in our business that's going to drive growth going forward. So, obviously, we increased buybacks in the first half. We also announced an increase in our dividend by 10%. As Mark noted in his prepared remarks, we expect to deploy now $5.5 billion of capital throughout the year. And so the strategy remains the same. Again, we're going to continue to be active in the market, but you're right. It was a bit slower in terms of what we were able to close on in the first half.

Yeah, you know, Brian, we're very excited, obviously, about that growth. You know, Ted and the team have been executing well. It's an incredibly complex environment that businesses are operating through. So the opportunities for us to not only help clients understand the risks and manage those risks more effectively, but to capitalize on the opportunities amidst the complexity and all the change that drives opportunity for us in our consulting businesses. And we're doing quite well at it. But Ted, maybe you can share a bit of color on what's driving demand.

Yeah, sure. Hi, Brian. Look, in answer to your question, actually, it was pretty broad growth. We saw growth in all regions. We saw growth in most business lines. The strongest growth was in Europe and in Asia by region, by industry and energy, insurance, telco, transportation. If you look at the kind of service offering side, for sure, our strongest growth by some distance was in quotient, which is in our AI strategic advisory team. But we also saw a lot of activity in efficiency-related work more broadly, several deals in M&A where we're doing pre-deal work and post-merger integration, and we saw significant growth in private equity and capital deployment as well. So pretty broad-based.

Thank you, Brian. Andrew, we have the next question, please.

Yeah, thanks, Rob. You know, actually, the rate changes is down more, or price change is down more in international, generally speaking. Obviously, it's not one market. It's a, you know, collection of markets by geography, by product, and there's a range of issues, of course, you know, driving price competition. But broadly speaking, pricing in international is down more. Of course, in the U. S. , I talked about excess casualty pricing still up in the mid-teens, which is really a reflection of the very challenging litigation environment and liability environment here in the U. S. Of course, there are bigger protection gaps in the U. S. We're attacking the middle market more in other parts of the world, all driving big opportunities for us to grow.

And so we're excited about our position. And Nick, I don't know if you have any more color you want to add to that.

Yeah, Rob, I'd just say it's similar to my comments earlier on. Our clients face a really complicated world. So while pricing is down, and that's good for our clients after quite a few years previously of tougher market pricing, they have big, messy challenges. You take something like Pacific, where we saw very strong new business growth. As John alluded to, pricing headwinds were pretty high, led by property, but really across the board. But there's no one more capable of solving large risk management and risk transfer type problems.

And so those are the things that are driving growth. I also think that we are just working more smartly across regions and across capabilities to make sure we're connecting our clients' risks to all the available sources of capital, which we can connect them to. So Dean and I both talked about FACT. We talked about, I talked about some of the wholesale market activity, which we've been seeking to channel to MMA McGriffin London and those kind of things.

So just in general, we're working the system harder. But yeah, there's lots of risk out there. And we're seeing growth, I listed that earlier, but across a range of products and specialties.

Thanks, Nick. Rob, do you have a follow-up?

Yeah, thanks, Rob. First and foremost, I want to give a shout out to our over 2,500 colleagues throughout the region. I can't be more proud of their resilience. I talked about the tragedy that unfolded in Venezuela more recently with the earthquakes, but our colleagues all throughout the Middle East have just been incredible, and they continue to deliver for our clients there. The mix of business for us is different in that region. Our consulting business is much larger than, or meaningfully larger anyway, than our risk business. Sales slowed a bit in the second quarter, and that fed a little bit into what we pointed to in terms of second-half growth in consulting, but we're still working our way through what's quite a healthy backlog.

And, you know, the impact so far has been limited, and that continued through the second quarter. But, you know, if current conditions persist for, you know, for many months, you know, that obviously could, you know, could change over time. And, you know, about what I would also say, apart from our colleagues' resilience, it's our clients' resilience is remarkable, too. I mean they all you know doing the best they can to you know proceed as you know as if business is as usual Of course it not but it you know it really remarkable what we seeing across the region And so so so far so good And you know again we incredibly well positioned in that region and we excited about the growth from that region for our business you know over time And you know we see how it goes but it been quite manageable so far Thank you Rob Andrew next question please Next question comes from the line of Mayor Shields with KBW.

So, Myron, when we come into the year, you know, there's a lot of uncertainty in the outlook. So we, you know, we start with a number we feel good about. And as we've talked about, through six months, our results are tracking really well with our expectations. We also came into the year with a little extra cash in our balance sheets. It's really as simple as that. We've just got more conviction about our outlook for the year. And so at this point, we see more like $5.5 billion than the $5 billion we got into earlier.

Well, it's effectively kind of ex-MMA, right? Now, I mean, we do have data into MMA where, you know, in the U. S. , pricing is relatively stable, and at least historically, that market has operated within kind of a tighter band up and down, you know, from year to year. And so effectively, that's what's, you know, what's excluded from it.

Yes, you're doing two for one here. I'll go on the talent front. I'll start with that. I mentioned this earlier. We have the best team in the market, and we're excited about that. We had a good first half in terms of adding production talent in key markets, and I love the fact that you all are asking about people because people do matter.

That's what makes our company go. But our brand for talent and attracting talent in the market is excellent, and we have a colleague value proposition that, again, leads to a very transparent dialogue. It's about our culture. It's about the work that we do. It's about the learning and development opportunity, mobility, course rewards, important part of why we all come here.

And fundamentally, what we talk about is we want our colleagues to be their best at Marsh. And so that's what it's all about. So, you know, lots of headlines in trade press, you know, about, you know, talent wars. You know, our colleague retention data wouldn't support that there's something new from like, you know, that would, you know, would say that it's a war compared to, you know, kind of other markets for talent. It's a competitive market for talent. That's good. I'm good with that. I like how we're positioned to compete in that respect. Of course, there's been team raids and unethical conduct in the market, which I think is probably what's really behind some of those headlines.

But we feel very good about how we're positioned and how we attract talent in the market. In terms of margin, Mark talked about it in his prepared remarks. We expect margin improvement for the year. We've always cautioned in the past about over-indexing on any quarter results. We had expected to make some investments in the first half of this year, and we did that, as I just talked about, talent investments primarily.

And, you know, we also expected the property market to be a bit challenging and property reinsurance market, I mean. And, of course, that was the case. But we've talked in the past about BCS, you know, our shared ops and tech team that's really coming together under the leadership of Paul Bestwick. The team there is doing a terrific job. So we've been doing more right-shoring, automation, and in my prepared remarks, I talked about some of the productivity and efficiency gains from AI. So we're excited about all that, and we're going to obviously look to deliver here in the second half.

Next question, Andrew?

Yeah, you know, retention's been solid. It's not been something, you know, to crow about. I think, you know, the bigger achievement has been for us in, you know, in new business strength. And so, you know, of course, it's a very active M&A market, not just in the insurance market, but in fact, it's much more active outside of insurance markets. You know, that's created some retention challenges, but overall, retention remains quite solid in the U. S. and outside of the U. S. , I would note.

Sure, sure. It's probably a good example of where new business has been quite strong and retention has just been kind of more ordinary. In a market where obviously medical inflation is creating lots of strain for employers, but you're right, David, our growth in international is good. I'll ask Pat to talk a bit more about it.

Sure, and thanks, David, for the question. Listen, we've been pleased with the growth momentum that we've had in health over the last several years, as you highlighted, right? We've actually had 5-plus percent growth over the last few years each quarter. And while this quarter did go to three, right, and it is below that, let me start by cautioning against extrapolating too much from any single quarter. We think that the 5% that we delivered in the first half is probably a better reflection of the underlying growth profile of the overall business.

Overall, from a strategy perspective, you know, we're out there providing innovative and tailored solutions to our clients. There's a lot of demand for them. We're expanding the functionality of our digitally enabled tools. We're now live in over 100 countries. You highlight international as part of your question, and we have been very active in expanding our tools and our capabilities around the world to enable the consultants to be able to drive this technical advice in real time with them, be able to sharpen their focus on the client segmentation in different areas around the world, both multinational, large, and mid-market. You highlighted international and U. S. I want to talk a second about multinationals because we have an awful lot of U. S. multinationals that we're spending a lot of time with driving growth and winning global benefits management deals with.

We built facilities around the world that are leveraging that large global broad network that we built where we've got best-in-class brokerage locally in the countries. I would say the solutions are really resonating with our larger global benefits management opportunities, both in continental Europe, but as well as really in the U. S. with the large employers, driving more value for those clients, bringing together the local and multinational advisory capabilities that we built, combination of brokerage and consulting to really help them navigate costs and then access to care around the world. So I would say overall we have a very positive outlook on the growth trajectory of the business. We expect the growth momentum to continue. We've got good, strong macros and client demand supporting the value that we bring to clients.

Thanks, David, for that question. Our outlook remains positive in health.

Thanks, Elise. As I mentioned, it wasn't just price, of course. First, we were impacted a bit by market consolidation, which wasn't helpful to us. But Dean mentioned some of the opportunities for growth, not just in the second half, but looking ahead. In fact, in casualty and M&A advisory, all the alternative capital work, and so we're excited about that. And so I wouldn't look too far forward in terms of what happened in the second quarter in a flat first half. And even in the second half, our mix of business is different than what it was. It's obviously a much smaller second half, but it's a different mix of business than the first half.

Yeah, both digital infrastructure and TR transaction risk were important drivers of growth for us in the first half and in the second quarter, so we feel good about it. Digital infrastructure has been – we've been in the TR business, obviously, for many, many years. The growth and investment, obviously, in the digital infrastructure ecosystem is also an area that has been a focus of ours for some time, and it's not just insurance, I would point out. Our consulting business, our investment operations, and Mercer Investments had an outstanding quarter. We're very excited about how that business is positioned, but we have a unique capability set, and so advising on contracts and SLAs between the various parties is an important part of it.

Business interruption mapping and modeling is important work. I talked in my prepared remarks about some of the energy-related issues and the counterparty credit exposures that utilities have to some of these data center owners. And so it was a good contribution, you know, in the second quarter, and we have a very, as Nick pointed out, a very robust pipeline going forward.

Thank you, Elise. Andrew, one more?

Yeah, I mean, you know, of course, it's not, you know, it's not a robust moment for the E&S market as, you know, property pricing is under pressure and, you know, more business has migrated back to, you know, to the admitted marketplace. But, you know, I think Nick mentioned when he was talking about some of the growth opportunities for us.

So when we acquire agencies in the middle market here in the United States, we typically pick up a trail of, you know, third-party wholesale business. And some of those companies have chosen to compete with us in places. And so we created a desk for MMA and McGriff in the London market, which has been driving a bit of growth for us and enabled us to bring back some business from third parties in the London market. So we're not looking to build a third-party wholesale business, and we have exceptionally specialty talent. And so the third-party wholesalers do a nice job for us, but we want to use them when we need to use them.

Do you have a follow-up, Pablo, before we wrap up?

Yeah, thanks for that question. It was an excellent quarter, and obviously markets were strong, but we had an excellent new business quarter. Pat, very briefly.

Yeah. Listen, I'm really pleased with where we were on the wealth business. We've been able to build on a lot of the recent acquisitions we've made to enhance our capabilities over the last couple of years. You know, we've also done a great job increasing the partnership across the firm, working with Guy Carpenter, Marsh Risk, Marsh Management Consulting, you know, to raise capital and develop different solutions. Mark mentioned the AUM growth. We're pleased with the AUM growth of 26%, up to $846 billion. But I will highlight we also continue to see really strong growth in investment consulting where assets under advisement, not paid for basis points, more fees, is up to $16 trillion. So we are having big impact in the market.

Thank you, Pat. Thank you, Pablo. Thank you all for joining us this morning. I want to thank our colleagues for the dedication of Marsh and our clients for their continued support. We thank you all very much, and we look forward to speaking with you again next quarter. Andrew, back to you.