Good morning, and welcome to Arthur J. Gallagher & Co.'s quarterly investor meeting with management. Participants have been placed on a listen-only mode. Your lines will be open for questions following the presentation. Today's call is being recorded. If you have any objections, you may disconnect at this time. Some of the comments made during this investor meeting, including answers given in response to questions, may constitute forward-looking statements within the meaning of the securities laws. These forward-looking statements are subject to certain risks and uncertainties discussed during this meeting or described in the company's most recent earnings release and Form 10-K and 10-Q filings. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements. It is now my pleasure to introduce J. Patrick Gallagher, Jr., Chairman, President, and CEO of Arthur J. Gallagher & Co. Mr. Gallagher, you may begin. Good morning, everyone, and thanks for joining today's investor meeting. These quarterly events are a great opportunity for us to tell the Gallagher story to the investment community and dive deeper into our different businesses outside of the busy earnings season. The format for today's call will be similar to previous meetings. I'll begin with some prepared remarks covering current insurance market conditions and provide some early indications on our third and fourth quarter. Our business leaders will speak for five to seven minutes each, covering important topics such as organic, mergers, thought leadership, and relevant operating initiatives. Our leaders will also provide insights into their respective markets and frame how the third quarter might pan out from an organic perspective. Doug Howell, our CFO, will close the prepared comments with some final financial commentary. Our prepared remarks should last around an hour. After that, we will open up the line to the group dialed in for Q&A. Okay, moving on to my comments on the market backdrop. The overall global PC insurance market remains firm to hardish. The labor market is still extremely tight. Claim counts are rising, and we are not seeing a meaningful economic slowdown within our data. In fact, revenue related to policy endorsements and audits has continued to increase year over year so far during the third quarter. While inflation may be peaking in some geographies during the third quarter, it continues to move higher in others. As we said before, absent a deep recession, we tend to be a net beneficiary from elevated inflation. That shows up through higher sales dollars, property values, payrolls, et cetera, which all lead to premium growth and thus more commission revenue. As we discussed last quarter on our second quarter earnings call, our expense base isn't overly exposed to inflation, so the business is well-positioned moving forward in an uncertain economic environment. Let me shift gears a bit and give you some color on the pricing environment and our expectations for third quarter brokerage organic. Starting with the PC market, renewal premiums continue to increase across all of our major geographies and product lines around the globe. Through the first two months of the third quarter, renewal premiums, that's both rate and exposure combined, are up more than 10% year-over-year. That's in line with what we're seeing in second quarter and the third quarter 2021 levels. As we sit here today, I see similar PC market conditions continuing well into 2023 and perhaps beyond. That's because our risk-bearing partners remain cautious on rising loss costs. You've seen it in recent results. Some carriers recognize modest reserve deficiencies in certain lines, while others increase their estimated loss cost trends baked into their pricing models. It's a tough environment for our risk-bearing partners. They're trying to estimate future profitability while issues like social inflation and increases in claim frequency remain large unknowns and have the potential to reduce underwriting profitability. Property coverages are also creating challenges for underwriters and carriers. From replacement cost inflation, increasing levels of wildfires, floods, and convective storms are causing underwriters to reassess rate adequacy across their portfolios. As you probably saw headlines from the Reinsurance Rendez-Vous, reinsurance pricing is moving higher, and while still early, it's likely that will continue next year. Higher reinsurance costs can't help but find its way into the primary insurance pricing. We aren't seeing and don't expect a meaningful slowdown in primary rate increases. On the benefits side, despite recent efforts from the Federal Reserve, the U.S. labor market is proving resilient and remains very tight. There were more than 11 million job openings in the U.S., with the number of people unemployed and looking for jobs at only six million. With the labor market imbalance likely to remain for the foreseeable future, we expect strong demand for our employee benefit consulting services to persist as employers look to attract, retain, and motivate their workforce. Increasing global renewal premiums, a tight labor market, and increasing claim activity and severity. With macro conditions like these, there should be robust demand for our expertise, products, and solutions. As we sit here today, it is looking like we might deliver third quarter brokerage segment organic pushing 8%. Recall that's off a point from our full year outlook of over 9% because, as we explained during our June IR Day outlook and July earnings call, there's a tough compare in our benefits unit because of timing pulled into the second quarter 2022 and 2021 third quarter had some positive development on covered lives. We're seeing brokerage organic rebound to more than 9% in the fourth quarter, leading to full year above 9%. With great new business and still rising claim counts, it's looking like our risk management business could post third quarter organic of about 10% and something similar in the fourth quarter. That level of organic in both of our core businesses would be fantastic. Moving to mergers and acquisitions. We believe we are a great home for entrepreneurial owners looking to grow their business, add value, or improve service to their current clients, and help further advance their employees' careers. Our growing platform can help owners achieve all these objectives and more. Our branch managers and regional leaders are instrumental in identifying potential merger partners, but we also have a dedicated staff focused on finding M&A opportunities. There's a lot of competition from both strategic buyers and private equity, which is unchanged from recent periods. When I look at our tuck-in M&A pipeline today, we have nearly 50 term sheets signed or being prepared, representing about $400 million of annualized revenue. While we know that not all of these will close, we believe we'll get our fair share. Let me give you some quick sound bites on what you'll hear from the team today. Our US Retail PC leader, Mike Pesch, will tell you his business is performing very well. New business and retention are a bit better than last year. Renewal premium changes are in the double digits, and midterm policy endorsements are higher year-over-year. Tom Gallagher will tell you that our international retail and specialty PC units are also performing very well. Organic growth is excellent across all of our major geographies. He will also tell you that reinsurance integration is progressing at a rapid pace. Client feedback remains favorable, including our recent trip to see some important clients in Asia and encouraging feedback from our clients from the Reinsurance Rendez-Vous last week. As for reinsurance pricing, early indications are for a challenging 1/1 renewal season for property cat and many specialty lines. A lot can still happen between now and 1/1. We're still deep in Atlantic hurricane season. Joel Cavaness will tell you his wholesale brokerage business is forecasting solid third-quarter performance. Open brokerage renewal premium increases are nicely in the double digits, while binding renewal premiums are up in the high single digits. You'll hear about our employee benefits and HR consulting business from Bill Ziebell. He will tell you demand for our consulting practices and other service groups is very strong and refresh you on the reason for his tougher revenue comparison I mentioned before. Scott Hudson will tell you our third-party claims administration business, Gallagher Bassett, is expecting another strong organic quarter due to excellent new business, stable retention, and rising claim counts. Our CFO, Doug Howell, will bring it all together and tell you what we think this means financially for our third quarter results. I believe we are executing extremely well on our strategic priorities and are well positioned to deliver another quarter of excellent financial performance. I'll stop now and turn it over to Mike Pesch, who's going to discuss our U.S. Retail P&C brokerage operations. Mike? Thanks, Pat, and good morning, everyone. I'm Mike Pesch, and I lead our US Retail Property & Casualty brokerage operations. My prepared comments this morning will touch on three topics. First, I'll provide an overview of our US Retail PC operations. Second, I'll discuss current insurance pricing conditions in the US. Then I'll conclude with some comments on how the third quarter of 2022 is shaping up so far. Starting with an overview of our US retail operations. In 2021, we generated around $1.9 billion of revenue, making us the third-largest PC retail broker in the country, according to Business Insurance. We place more than $14 billion of premium annually through more than 160 offices and have around 8,200 employees, including nearly 2,200 in our Centers of Excellence. We serve all sizes of commercial clients: small, medium, and large, but are more concentrated in the middle to upper middle market. These type of clients are typically spending between $100,000 and $2.5 million for their insurance programs, which translates into roughly $10,000-$250,000 of annual revenue to Gallagher. We also have a growing large client list and a meaningful small commercial, personal lines, and affinity customer base as well. While we touch all sizes of clients, we find the middle and upper middle market particularly attractive, and that's because the middle market clients typically don't have a dedicated risk management professional, so they rely on our experts to identify, evaluate, and manage risk across their enterprises. We find the right markets to place insurance coverage on their behalf. That need aligns very well with our client value proposition called CORE 360. It focuses on the six key cost drivers of the total cost of risk for our clients and prospects risk management programs. This holistic approach resonates with clients looking for risk management and insurance solutions and embeds Gallagher inside our client's business. We are organized around 30 niche practice groups, different product and industry verticals where we have experts with specialized knowledge and deep insights. Leveraging these practice groups, we better understand the unique risk characteristics of different businesses and tailor insurance products and services to those industries. Our niche leaders working side by side with our producers in the field, making sure we are identifying and addressing the distinct risks that those industries are facing through focused offerings and coverages. Take cyber coverage, for example. We have over 20 cyber coverage team members, including claim professionals, policy language experts, and placement specialists that work hand in glove with our producers to ensure the cyber coverage purchased captures the specific exposures that a client may have. We think this tailored approach to risk management and insurance procurement is a competitive advantage. It benefits our client retention, drives new business, and ultimately translates into organic growth over the long run. While our producers are visiting clients and prospects face-to-face more frequently, we continue to have great success parachuting our industry experts into meetings virtually, and our online thought leadership and industry discussions continue to generate new client leads and revenue opportunities. In fact, through early September, we have hosted 30 virtual webinars. This includes our FutureCast virtual RIMS event and various other webinars on topics such as healthcare, cyber, and product recall, all of which are available on demand. We are constantly adding new content, podcasts, and webinars on our website, ajg.com. Also available are our CORE 360 Flashcasts, condensed webinars on various industry-related items such as talent risk and conversations around coverages. We were able to deliver this thought leadership to clients with a click of a mouse. Our clients and prospects have the ability to tap into our network of experts 24 hours a day, seven days a week. Any time a client or prospect engages with any of the online content, our producers are notified. Through Gallagher Submit, our online client renewal platform, we are harnessing technology to reduce the friction in the renewal process for clients and making it easier for our carrier partners to consume the information. A lot of exciting things going on. It's also important to remember that 90% of the time we are competing against a local or regional broker that just can't do any of this. Our competitors typically don't have a niche expert network, multiple webinars, or even much of an online presence. On the data front, our producers are further differentiating and distancing ourselves from the competition through Gallagher Drive, our analytics platform. Insights we are able to provide clients and prospects include purchasing trends of other Gallagher clients, including what coverage lines, types, and limits ultimately bound, as well as potential catastrophic exposure and claim forecasts. Prospects can visit our website and test the platform using our cyber liability or umbrella limits calculator. Moving to mergers and acquisitions. We have a long, successful track record of tuck-in M&A, and it continues to be an important part of our shareholder value creation strategy. We look for teams that share our values around client service, ethics, want to be with Gallagher for the long haul, know how to grow their business, and are already operating at attractive margins. Many of our merger partners are the result of relationships formed at the branch or local level, developed over time, in many cases, multiple years. We know these entrepreneurs well, have observed how they compete, and understand their culture. We target firms generating less than $10 million of annual revenues, and thus far in 2022, we have completed four mergers and have agreed to terms with another handful of merger partners. We have a really nice pipeline of opportunities across the country which could grow over the course of the year. Moving on to my second topic, the U.S. retail insurance pricing environment. Pricing remains broadly challenging for many of our customers. Thus far in the third quarter, renewal premium changes, that's both rate and exposure combined, are up 10.8%, which is consistent with second quarter. We are not seeing any significant changes in the pricing environment. Delving a bit deeper into the total, so far this quarter, property is up 16%, casualty up 10%, professional liability up 8%, and workers' comp is up about 5%. Just about every line of business continues to experience upward pressure on renewal premiums, and carriers continue to push for rate increases, especially for clients with challenging risk profiles to offset rising loss costs. While there have been some new market entrants during 2022, which has added capacity and helped certain pockets of the market, finding carriers willing to offer large lines remain difficult. Cyber continues to be the most challenging coverage for clients in terms of rate, capacity, and terms. On the other hand, public company D&O, for example, is an area where we are seeing a moderation of rate increases, and in some cases we are seeing clients renew their programs closer to flat. This cyber D&O dynamic is a good illustration of a rational market. Carriers are taking more rate on lines where they need it and not where they don't. Looking ahead and into next year, the impact of inflation, current macro uncertainty, rising loss trends, and increasing reinsurance costs are likely to keep prospective rate increases fairly similar with recent periods. While hurricane season thus far has been very quiet, it only takes one large storm to create havoc in the property market. Even without a large hurricane, there are other perils, like wildfires and flooding, that continue to create turmoil in the property market. On the casualty side, social and medical inflation, reopening of courts, and still depressed investment returns are likely to drive continued renewal premium increases for our clients, but perhaps at a lower level than previous years. Our challenging outlook for clients continues. Remember though, our job as brokers is to help our clients find the best coverage while mitigating price increases to ensure their risk management programs fit their budgets. I think we have the best talent in the industry. Finally, I'll conclude with some thoughts on what we are seeing so far in the third quarter. Through the first two months, we are seeing greater than 10% renewal premium increases, new business production and retention better than 2021. Continued year-over-year tailwinds with midterm policy adjustments, including higher audit premiums and positive policy endorsements. Based on what we are seeing thus far, we think third quarter organic will be somewhere in the 9%-10% range. The business is well-positioned for future growth. With our differentiated client value proposition CORE360, combined with our outstanding client service and data-driven insights, we are consistently in a position to win. I am very bullish about our near and longer-term prospects. Okay. I'll stop now and turn it over to Tom Gallagher, who is going to discuss our international PC brokerage operations. Tom. Thanks, Mike, and good morning to everyone joining us on the call. This is Tom Gallagher, and I lead our global property casualty brokerage business. My comments will focus on the non-US portion of our PC operations as well as reinsurance. First, I'll dimension the business and provide some comments on our reinsurance operations, Gallagher Re. Second, I'll discuss the PC pricing environment outside the US. Third, I'll finish up with some comments on the third quarter. Starting with an overview of the international and reinsurance businesses. We finished 2021 with approximately $2.1 billion in revenues and placed more than $15 billion of premium on behalf of our clients. We operate in about 60 countries. However, our business is predominantly in the UK, Canada, Australia, and New Zealand. Our sweet spot is middle to upper middle market retail clients. However, we serve a wide range of commercial clients, including large account risk management business, smaller businesses, high net worth personal lines, and affinity clients. We also have a leading London specialty broker and reinsurance brokerage business, Gallagher Re. Let me break down our revenues by country. First, our U.K. retail business generates approximately $525 million of annual revenue, and we are a top five U.K. retail broker. We have more than 75 offices across the countryside, and like the U.S., we utilize a niche specialist network. Moving to New Zealand. We are the largest retail broker in the country and one of the five largest brokers in Australia. In these two countries combined, we have around $400 million of revenue annually and nearly 100 different offices in the countries. Within Canada, we operate in eight of the 10 provinces and generate about $250 million of revenue. Outside of retail, our London specialty and global reinsurance platform combined are more than $1.2 billion of annualized revenue. Focusing on reinsurance for a minute. As Pat mentioned, the team continues to make excellent progress. The final secondary closing should be effectively completed next month. Integration is moving at a brisk pace, and we continue to receive great feedback from clients and from our reinsurance partners. In fact, I was with Pat in Japan a few weeks ago, meeting with some of our important reinsurance clients for the first time face-to-face. The meetings were very productive, and there was a level of shared enthusiasm for our continued partnership. Also, the Gallagher Re team was busy last week meeting with insurers and reinsurers at the annual Reinsurance Rendez-Vous, where discussions begin to focus on the upcoming 1/1 reinsurance renewal season. Discussions were focused, constructive, client-centric, and deal-oriented, centering on demand dynamics, capacity, and rate. Within the reinsurance market showing signs of hardening, discussions zeroed in on the availability and pricing of potentially scarce capacity going into 2023, with consensus pointing toward a challenging property and specialty renewal season. That said, a lot can happen between now and 1/1. We are still deep in the Atlantic hurricane season. Gallagher Re, like Gallagher, is broker led by brokers. Expertise and experience will be the key to getting things done for clients and matching reinsurers' risk appetites with clients' expectations. I believe we are very well-positioned. Moving to our global retail operations. Our approach to the business is consistent across the globe, so our strategy outside the U.S. mirrors what Mike just spoke about. Across our major non-U.S. geographies, we too are using niche practice groups, utilizing insights gleaned from data and analytics, adding entrepreneurs and capabilities through M&A, and leveraging our operational excellence to fund investments in growth capabilities. Our talented and knowledgeable producers are constantly innovating, developing new products, and providing insights. In many instances, what our teams are doing in one geography can be standardized and delivered to our retail clients around the world. A few examples of this. First, CORE360. Mike introduced it as our go-to-market strategy and holistic approach to risk management. However, CORE360 is now our global value proposition. It is embedded in how we approach clients to discuss their overall risk management programs. Another great example is our SmartMarket platform. It was originally developed in the US and is now being utilized by carriers in Canada, Australia, and the UK. We have nearly 30 carriers globally using the platform and have plans to add to that roster over the next 12 months. Finally, Gallagher Drive, our data and analytics platform. Every day, more and more of our clients and prospects are asking for data-driven insights, and we are seeing increased utilization by our producers around the globe. We have a consistent, cohesive global strategy that allows us to develop a product, a process, a client service offering, and deliver anywhere across our footprint. This is a key differentiator over the smaller local and regional brokers. They just can't match our offerings, expertise, or service. Moving to mergers and acquisitions. Our unique culture, systems, carrier relationships, specialisms and access to data and analytics continue to resonate with entrepreneurs around the globe. We have the ability and the toolkit to make their businesses better. Merging with Gallagher can take their firms to the next level, provide great opportunities to grow their book of business through both existing and new clients, and give their employees career paths. We have completed six mergers outside the U.S. this year, including Canada, Australia, Ireland, and the U.K., and our pipeline of opportunities remains very strong and continues to grow. Moving to my comments on the global insurance PC pricing environment. I've already touched on reinsurance, so let me walk you around the world and discuss the primary market. In U.K. retail, renewal premium change is increasing about 10%. Leading the way in the teens is property and package, while commercial auto and casualty are around 5%. Within London specialty, premiums continue to increase across most lines of cover, averaging around 5%-10%. Premium increases in certain segments are the result of rate increases and supplemented, in many cases, by growing exposures, both exposure units and values. Coverages such as aviation or war cat exposed property are seeing more significant increases. Australia is up 15%. Property is up more than 20%, casualty high teens, and professional liability in the low teens. Most other lines are in the high single-digit range. New Zealand renewal premium change is over 10%. Most lines are seeing renewal premiums in this range, plus or minus a few points. In Canada, renewal premiums are up about 7% overall, with package and casualty up nearly 10%. Commercial auto is up 5% and professional liability up about 3%. Let me finish up with some observations from the first two months of the third quarter. First, new business remains quite strong and is up over 21 levels in the U.K., Canada and New Zealand. Second, I'm seeing favorable retention trends with all major geographies outside of Canada, which is still in the low 90s, better than the same period of 2021. Third, we're getting a small tailwind from positive policy adjustment endorsements, which are trending above last year. Pulling it all together, internationally, I am seeing third quarter organic around 9%-10%. Our international and reinsurance brokerage businesses continue to perform extremely well. I remain incredibly excited about our prospects in 2022 and the longer term. Okay, I'll stop now and turn it over to Joel Cavaness, who's going to discuss our domestic wholesale operations known as Risk Placement Services, Joel? Thanks, Tom, and good morning, everyone. I'm Joel Cavaness, and I lead Risk Placement Services, our U.S. property casualty wholesale intermediary, or RPS for short. Following the same cadence as Tom and Mike, my comments this morning will focus on three topics. First, I'll begin by providing an overview of RPS. Second, I'll give some comments on the pricing environment in the wholesale market. Third, I'll wrap up with some observations related to the first two months of the third quarter. RPS was founded in 1997 and has grown to the fourth largest wholesale broker in the U.S. We have about 2,700 colleagues, nearly $600 million in annual revenue, and we place more than $4 billion in premium on behalf of our clients. As a wholesaler, our customers are independent agents and brokers that need specialized capabilities, products, and carrier relationships. About 75% of our business comes from agents and brokers unrelated to Gallagher. RPS has three main businesses: open brokerage, MGA and programs, and standard lines aggregation. Let me take a second just to describe each one. Within open brokerage, we help retail brokers with access to a specialty product or an insurance carrier. We find coverage and negotiate with insurance carriers on behalf of the retailer and their client. The coverages we deal with tend to be very specialized and can range from hard-to-place property like wind-exposed property and flood, to casualty lines like long-haul trucking or liquor liability. These placements tend to be more complex, involving multiple layers and multiple carriers to fill out a particular program. Next is our MGA and program business. While RPS doesn't take any underwriting risk, RPS does underwrite, price, bind, and collect premium and issue policies on behalf of these various insurance carriers. We have around 40 products that range from commercial coverages for amateur sports organizations to food delivery vehicles and to country clubs. Our personal lines programs include lines of business like non-standard auto, manufactured homes, and other low-value dwellings. Our third main business is Standard Lines Aggregation. Here, we provide retail agents access to admitted products from different insurance carriers. For example, a smaller agency might not have a direct appointment with certain large carriers. However, that agency can still access these carrier products through us, so it allows the smaller agency more insurance options for its customers. We compete, of course, with many different wholesalers, both large and small, but clients choose us because of our quick turnaround times, our ease of doing business, our product breadth, and of course, the strength of our carrier relationships. Ultimately, our goal is to be the recognized leader in the intermediary market by providing a wide range of products and services across a very broad distribution platform. Mike told you that the U.S. retail P&C market is challenging. A challenging admitted market backdrop is a tailwind for growth at RPS since retailers need our help to place coverage. We also see opportunities within our growing e-commerce strategy. We have more than 30 distinct specialty offerings that our retail customers can access with just a click of a mouse. The platform has a lot of momentum, with revenue up double digits this year. Our objective to become increasingly digital is making us even more attractive partner for many retailers, positioning us very well for the future. You heard both Mike and Tom talk about our SmartMarket platform, which is also being utilized by a growing number of E&S surplus lines carriers. Today, we have six insurers using the platform, and we know that that number is likely to grow this coming year. Our newer Edge products provide clients unique, tailored, and enhanced coverage with our key trading partners. These are very similar to the very successful Advantage products on the retail side, so there's a lot of exciting things happening within RPS. Moving into M&A, RPS is also a seasoned acquirer. In fact, since 2000, we have completed more than 60 acquisitions, including three so far this year. We tend to be more interested in the MGA and program space versus open wholesale brokerage opportunities, which can really be more easily replicated with seasoned producer hires. Our focus is finding partners that fit RPS culturally and provide us with expertise for new products. M&A partners tend to be drawn to RPS because of the investments that we make in both people and data and of course, our wide-reaching network of retailers. Given Gallagher's dual presence in both retail and wholesale markets, we tend to be very successful in mergers that have both retail and wholesale pieces to them. Today, our M&A pipeline is very strong. However, we do continue to be very selective with firms we are pursuing on the program side. We're looking for unique, well-established, mature programs. I'll move now to the domestic wholesale rate environment. The E&S market overall had a very strong 2021, with 25% growth in premium and improving underwriting results. However, a recent AM Best report suggests that the loss costs continue to rise and price adequacy remains uncertain for some lines. Further rate increases this year, combined with more business flowing into the E&S market, could lead to an E&S industry premium surpassing $100 billion for the first time in 2022. For July and August alone, our data is showing open brokerage renewal premium increases more than 13%, a few points above what Mike has seen on the retail side. That's pretty typical, as wholesalers generally see rates move up more than retailers. The greater than 13% increase includes double-digit increases in professional liability, property, marine, and casualty. Overall, capacity remains constrained on some lines, and despite carriers getting rate on rate on rate, most of our carrier partners are still not willing to deploy large limits on any one risk. Thus, complex insurance towers are extremely difficult to place. Moving to our binding operations, we're seeing about 8% renewal premium changes so far in the third quarter. That's just a bit above the first half, as property and casualty renewal premiums increases have trended higher each quarter this year, so the market remains difficult overall. That was pretty much the tone at the annual Wholesale & Specialty Insurance Association Conference this past week. We met with many of our key E&S carrier partners. They all expect challenging market conditions to continue for insureds broadly, both across all property and casualty coverages. Let me give you a sense of what we're seeing so far for the first two months of the third quarter. New business remains strong with binding new business production a bit above 2021 levels. Retention is trending a touch better than last year, with binding similar and brokerage stronger than last year. With a few months left of renewals under our belt, the one-month tick up in lost business we saw last quarter within open brokerage is clearly not a trend. Midterm policy adjustments, including policy endorsements and audits, are both trending better than last year levels. On the program side, we did lose a market in a California workers' compensation program for about 90 days, so programs is not growing at the same level as open brokerage and binding. When I really bring it all together, excellent growth in both open brokerage and binding, a little bit of softness within program, it feels like third quarter organic will be around 7%-8%. In summary, the E&S market remains challenging. Demand for our services is strong. Our product offerings continue to grow, and our relationships with our carrier partners are excellent. We should continue to build upon our strong first half here in the third quarter and ultimately deliver another great year at RPS. I'll stop now, and I'll turn it over to Bill Ziebell, who's going to discuss our employee benefits consulting operations. Bill? Thanks, Joel. Good morning, everyone. I'm Bill Ziebell, and I lead Gallagher Benefit Services, our employee benefits brokerage and HR consulting business. My prepared remarks today will cover three topics. I'll first provide an overview of Gallagher Benefit Services or GBS for short. I'll then give you an update on our execution and thought leadership. Finally, I'll offer some early takeaways from the third quarter. Okay, starting with an overview of GBS. Our benefits business began in the mid-seventies, and last year generated around $1.4 billion of annual revenue. Today, GBS is the fourth largest benefits broker and HR consultant in the world with more than 4,600 employees. We operate across nearly 100 different locations within the U.S., the U.K., Canada, and Australia. The United States is our biggest geography and represents about 90% of our annual revenues, while 10% of revenues are international. Our producers sell traditional group health insurance products, including medical, dental, vision, and voluntary products that employers offer to their employees. We also provide advice and deliver recommendations on employer benefit plan design, financial projections of the plans, and potential funding alternatives. Combined, these products and services represent about 75% of our annual revenue. The other quarter of our annual revenues comes from HR and compensation consulting, pharmacy benefits, retirement, and other services that help employers address their human capital needs and organizational well-being. Similar to the property casualty side, our typical clients are middle-market businesses which we define as having somewhere between 100 and 5,000 employees. We also have many larger clients, offering them an alternative to some of the our well-known competitors and a formidable small group benefits business. With this client mix, most of the time, we are competing against smaller, local or regional benefit firms. Mike and Tom talked about their holistic client approach and value proposition, CORE360. GBS's client value proposition is called Gallagher Better Works. Through Gallagher Better Works, our experts examine the most important levers that an employer has to attract, engage, and retain talent while simultaneously managing costs. Whether it's financial well-being, investing in physical and emotional health to competitive compensation plans, our professionals explore a wide range of employee benefits and rewards. The solutions we design from this approach are tailored to align with our clients' unique needs regarding their people strategy. Today, the labor market is extremely tight, and the war for talent is front and center. For example, the U.S. unemployment rate is hovering around pre-pandemic levels below 4%, and U.S. job openings are more than 11 million. That's almost double the number of people looking for work. These challenging labor market dynamics were evident in our most recent benefits benchmarking survey. Participants ranked attracting and retaining talent as their top priority, a shift from prioritizing cost containment during much of the pandemic. Our approach through Gallagher Better Works positions us to help our clients attract new talent and drive costs out of their benefit plans. In addition to producer-generated client meetings, our thematic webinars and thought leadership are driving engagement with our clients and prospects. For example, we have hosted nearly 40 different webinars already this year. This includes three female leadership webinars and broader topics and themes such as financial well-being, strategies to re-retain employees, and compliance updates. These interactive web-based events are on top of the thought leadership that we are publishing on a regular basis. For example, earlier this month, we released our 2022 Workforce Trends Report: Career Wellbeing, which included salary planning and other employee reward trends based on more than 5,000 respondents. Another trend worth mentioning is the quickly evolving landscape of tech-enabled solutions to manage specific chronic conditions or provide access to healthcare services. The primary goals of the more than 800 solutions is to favorably impact costs and improve the member experience. Gallagher has invested in a point solution tracking system to help our clients identify the ones that are effective and viable. The robust tracking system and technical expertise allows us to efficiently package traditional carrier programs and point solutions to help organizations meet their well-being goals. Another great example of how we are further differentiating ourselves versus the competition. Whether it's our thought leadership, engaging directly with our experts, or attending in-depth web-based in-industry discussions, our wide range of product offerings, deep expertise, and innovative solutions continue to separate Gallagher from the brokers and consultants we are competing with day in and day out. Turning to M&A, we are seasoned acquirers and constantly looking for talented entrepreneurs looking to take their operations to the next level. We have completed nearly 50 mergers over the past five years, including 7 so far this year. Merger partners are typically drawn to GBS due to our global resources, innovative tools, specialized practice groups, niche experts, marketing initiatives, thought leadership, technology, and our culture. We have a very nice pipeline of opportunities around the globe and believe 2022 will be a successful year for our merger strategy. Let me shift to some comments on July and August organic, starting with the US, which again represents about 90% of our annual revenues. About 80% of our annual domestic revenues relate to typical coverage you get via your paycheck from your employer, things like medical, dental, vision, and voluntary insurance products. Over the long term, more potential workers returning to labor force and more of these workers finding jobs is a favorable backdrop for future revenue growth. One reminder here. Doug did a vignette during our June IR Day and mentioned again on our July earnings call related to how we recognize revenue as clients add jobs throughout the calendar year. He explained that during the second half of 2021, we were seeing upward development in covered lives as we came out of the pandemic. That positive development added to our revenue throughout the last half of 2021 in particular, and was a tailwind to organic. That upward development and higher revenue last year now creates a more difficult compare for the third quarter this year, and to a lesser extent, fourth quarter, because those jobs were baked into our January 1, 2022 renewal numbers and now are not creating positive development again here in 2022. None of this impacts annual revenues, just some quarterly timing. Moving to the remaining 20% of our U.S. revenues, this includes our fee for service, individual products, and retirement consulting businesses. Many of our practice groups continue to show growth in July and August. This includes more than 20% growth within HR consulting business, so we remain very encouraged by the activity, and our pipeline of future opportunities remains strong. Demand for our services and solutions is robust given the complexity of today's hybrid work environment and the limited number of workers versus open jobs. It's driving employers of all sizes to prioritize strategies to retain, attract, and motivate their workforce, and we see this trend continuing for some time. Shifting gears to outside the U.S., which is again about 10% of our total revenue. Overall, revenue is up double digits through the first two months of the third quarter, with excellent growth in the UK and in Australia. When I combine what we are seeing across our global business, third quarter organic is running closer to mid-single digits. However, due to the tough comparable, we should report organic somewhere in the low single digits. That's in line with our thinking following our second quarter earnings call just a few weeks ago. Looking out further, I believe we have the right people, products, and solutions to help our clients navigate their most pressing organizational well-being and human capital needs. I am extremely optimistic about our future. Okay, I'll stop now and turn it over to Scott Hudson, who's going to discuss our risk management segment, also known as Gallagher Bassett. Scott? Thanks, Bill, and good morning, everyone. My name is Scott Hudson. I lead Gallagher Bassett, our third-party claims administration business. For those of you who are familiar with our financial reporting segments, that's our risk management segment. Today, my comments will cover three topics. I'll start by providing an overview of Gallagher Bassett or GB for short. Then I'll give some insight into what we're seeing here in the third quarter. I'll finish with a few comments on our long-term positioning. Gallagher Bassett was formed in 1962 by the Gallagher brothers and Sterling Bassett and has grown organically and through acquisitions. Last year, GB generated north of $950 million of annual revenue and is one of the world's largest P&C third-party claims administrators. More than 80% of our revenue is U.S.-based, and the remaining is spread across Australia and to a lesser extent, Canada, New Zealand, and the U.K. We have nearly 7,000 employees, most of which work from home. GB does not take underwriting risk, but rather adjust claims for clients. In 2021, we closed over 900,000 claims and paid out $11.5 billion on behalf of our clients. That level of annual claims paid would make us one of the 10 largest P&C insurance companies in the U.S. More than 60% of our revenue is from workers' compensation claims, another 30% is from liability claims, and less than 10% relates to property claims, but we are not storm or catastrophe loss adjusters. We also offer specialty products for lines like medical malpractice, product liability, environmental, professional liability, and cyber. We have a growing portfolio of services that captures the bulk of our clients' exposures. We segment the business by client type. There are four different categories. First, large Fortune 500 businesses. These are the commercial clients who have the balance sheets that allow them to self-insure or have large deductible programs. They will assume all or some portion of their risk and outsource the claims resolution process to GB. This is our largest client segment. The second category includes public sector clients, school districts, municipalities, state entities, and federal governments. For example, the Australian workers' compensation schemes fall in this category. Third, alternative market or group captive clients. These entities utilize our service for their claims infrastructure. Our fourth client segment is insurance carriers. It includes carriers of all sizes that are outsourcing a portion of their claims handling to us. We believe we deliver clients superior outcomes through a combination of deep expertise and solid execution. In certain cases, superior outcomes can mean the avoidance of loss as well as the mitigation of loss resulting from risk management and risk mitigation. Our services can be highly customized to align with client expectations of best outcome, whether it is ensuring customer loyalty, back to work sooner or brand protection. We tailor our offerings to provide more value for clients. We have numerous accolades related to our ability to provide superior claim outcomes. For example, we have been named TPA of the Year at the US Captive Review Awards for the past five years in a row, and more recently, GB and our RMIS platform, Luminos, was ranked highest in the TPA category also for the fifth straight year. Moving to mergers and acquisitions. Like you've heard from other Gallagher leaders, we also see M&A as an attractive way to expand. However, the TPA industry is already highly consolidated, so the subset of potential merger opportunities is much smaller than on the brokerage side. Our strategy is to look for potential partners that can help us deliver enhanced outcomes for our clients. It could be through a new product offering, a new capability, or by providing deeper expertise. We're ultimately looking for highly specialized and complementary claim adjusting and risk consulting entities, not just scale. So far this year, we have completed one merger and have a nice pipeline of potential opportunities. In terms of organic, let me walk you through what we're seeing in July and August. First, client retention remains outstanding. That's a testament to our ability to drive superior outcomes, thanks in large part to our skilled claim resolution managers and award-winning RMIS platform. Second, an equally good story on the new business front. We are seeing and closing new business opportunities across all client types, carriers, captives, public entities, and large accounts. The uptick in shopping behavior is likely in response to rising cost pressures for both carriers and businesses, and we are already beginning to leverage relationships of our newly acquired reinsurance operations, and the early feedback is promising. Third, regarding new COVID claims arising, trending a touch higher than the second quarter, but still down significantly from the first quarter and the height of the pandemic. The team is ready to respond quickly if there's any change in trajectory. Fourth, core new claims arising. Through July and August, we continue to see year-over-year increases in new claims arising across workers' compensation and liability. So far during the third quarter, core new arising claims are up about 8% versus last year. While claim counts aren't always tied directly to revenue, we are encouraged by the upward trend. One call-out to new business. We did incept a large carrier contract effective July 1. It was a fantastic win by the team, and we are excited about this long-term relationship, which continues to highlight our ability to deliver superior outcomes for our insurance carrier clients. We have fully staffed the project and built the infrastructure to support the new client. However, there is a lag as we transition the client onto our full spectrum of services. Accordingly, third quarter margins for this new client are in the low single digits, but we will ramp up to our target levels over the next three quarters. Pulling it all together, third quarter organic is likely to be around 10%, which is excellent. As for margins, we would be close to 19%, but for the ramp-up period for the new client. Factoring that in means our third quarter reporting adjusted EBITAC margin should be around 18.3%. With a stronger fourth quarter, we are on track to deliver full year 2022 margins in the 18.5%-19% range. 2022 is stacking up to be a fantastic year. Longer term, GB is extremely well positioned. We are making investments to add to and enhance our products and services. We are expanding into more specialty lines of business, aligning our services with new potential customers. At the same time, client satisfaction remains at very high levels, and our revenue retention remains excellent. The team is well on their way to delivering another year of excellent results and is executing extremely well against our long-term plan. I am very excited about both our near-term and long-term prospects. Okay, I'll stop now and turn it over to our CFO, Doug Howell. Doug? Thanks, Scott, and thanks everyone for joining. Here's what I'll cover today. First, I'll recap what we're seeing in terms of organic revenue growth as earlier discussed by each of our business leaders. Next, I'll address margins for the next two quarters and how we're thinking about 2023. Third, I'll give you some sound bites from our updated CFO commentary document that we post on our website and do a short vignette on a way to model revenues in a changing FX environment. I'll then wrap up with some comments on cash, M&A, and capital management. Okay, to the business unit organic revenue recap. Mike and Tom had favorable commentary on our global P&C retail reinsurance and London specialty brokerage operations. They're seeing strong new business production and stable retention. Renewal premium increases are trending similar to second quarter 2022, plus favorable midterm policy endorsements are trending even higher than last year. It feels like our global retail and specialty P&C third quarter organic could come in somewhere between 9%-10%. You also heard a positive update from Tom on our reinsurance acquisition. Integration is moving along nicely, and we should effectively complete the last deferred country closing next month. Early indications from the Reinsurance Rendez-Vous are for a challenging 1/1 renewal season for most lines, particularly peak zone property cat and specialty lines impacted by the Russia-Ukraine crisis. I'll also add that full year 2022 financial results remain on track with our expectations. Joel is anticipating another quarter of solid organic results in our domestic wholesale brokerage business. Open brokerage is showing fantastic organic while binding is up high single digits and programs closer to flat. Combined, Joel's wholesale unit should post between 7%-8% organic growth. Bill walked you through our employee benefit and HR consulting business. International and consulting growth is expected to be excellent. Health and welfare revenue is more mixed this quarter as we forecasted it due to the tough compare we hit on a couple times today. Even with this really tough compare, Bill's business should post third quarter organic growth in the 2%-4% range. Pulling all of these comments together, it feels like the brokerage segment third quarter organic could come in between 7.5%-8%, but that would be closer to 8.5%-9% after levelizing for the tough benefits compare. As for fourth quarter, you heard Pat say we're expecting organic above 9%, leading to full year organic greater than 9%, which is right in line with our previous expectations. As for our risk management segment, you just heard Scott tell you that third quarter organic is shaping up to be around 10% due to excellent new business and still growing claim volumes. Fourth quarter organic should be pretty similar, leading to double-digit organic growth for the full year. Okay, let me shift to the brokerage segment adjusted EBITAC margins. This will take me a minute or so. The punchline is our 2022 forecast is unchanged. We forecasted earlier this year and in subsequent quarterly earnings calls and IR days that we expect to deliver 10-20 basis points of margin expansion for full year 2022. We are still on track to deliver that. During those calls, we also gave a heads up that on a quarterly basis, you would see some quarterly margin change volatility because of the return of some pre-pandemic expenses, the roll-in impact of the reinsurance acquisition, and additional discretionary investment when you compare the quarters, this year's quarters to the margin in the same quarter of 2021. Recall what we said, margins up in the first quarter, down in the second quarter, and down in the third quarter, then back up in the fourth quarter, again, all compared to the same quarters in 2021. Over the last few months, FX has added some complexity to that comparability. We always levelize the prior year period for FX in our earnings release, so here's what we are now expecting to see in terms of quarterly margin changes compared to 2021. Applying the latest FX rates. First quarter up about 50 basis points. We reported down about 100 basis points in the second quarter. We expect to be down about 125 basis points in the third quarter, and then up about 125 basis points in the fourth quarter. That would mean posting around 32% adjusted EBITAC margin here in the third quarter, and a similar 32% margin in the fourth quarter at current FX rates. That's a lot of words to end up to be back at our beginning of the year forecast of up 10-20 basis points of margin expansion for the year. I think it's worth the time given the quarterly volatility. Also, don't forget, since 2019, in three really difficult years, that would mean we improved margins around 570 basis points. It shows the power of our investments in systems, common processes, utilization of our Centers of Excellence, and working closely across divisions to capitalize on being better together. Now, looking out to 2023, it's still early in our budget and planning process, but as we sit here today, we think we can expect margin expansion next year with 4% or better organic growth. As for risk management segment margins, you heard Scott say that even with the large new client ramp-up, we expect to still deliver margins between 18% and 18.5% for the third quarter with a strong fourth quarter, full year adjusted margins will be in that upper 18.5% range. Now let's move to the CFO commentary document that we post on our website. Starting on page three. Here we have the usual modeling helpers related to foreign exchange, non-controlling interest, and non-cash expense items, including the non-recurring earn-out payable expense, all of which have been updated. Please consider as you work on your models. Now is a good time for me to do a quick vignette on modeling total commission and fee revenues. It's been a while since I've done this, so let me walk you through the three steps using our brokerage segment third quarter. First, recast prior year revenues at current FX rates. On page three of the CFO commentary document, you'll see that we're expecting about $45 million of FX headwind to revenues during the third quarter for the brokerage segment. Accordingly, you should reduce last year's commission and fee revenues by $45 million. Second, apply your organic growth pick to that recast third quarter 2021 revenue. As we said earlier in our comments, we're expecting organic to be in that 7.5%-8% range for third quarter. Third and last, add rollover revenues. You can pick that number up from the top table on page 6 of the CFO commentary document, again, in the top table. We are two months into the quarter, and we don't expect that $163 million amount of rollover revenues to change much at all from our estimate we provide in the CFO commentary document. If you follow these three steps in that order, you should get pretty close. When it comes to the fourth quarter, go through the same steps, but admittedly a little more difficult to predict the impact of changes to today's FX rates, and you also need to make a pick for additional M&A activity. As for the risk management segment, again, you can follow those same steps, but note there isn't much impact from rollover revenues. When you flip to page four of the CFO commentary document, not many changes from our July estimate. We did provide an estimate for third quarter legal costs associated with the remaining deferred closing on the Willis Re deal, but we'll lay that out when we get to our non-GAAP results. Turning to page five for the clean energy page. I hope this page is familiar to everyone by now. It's really to highlight that we expect incremental cash flows from our clean energy investments over the coming years. While this incremental cash doesn't go through the P&L, it will show up in our cash flow statement. The pinkish column shows that we still expect to harvest $125 million-$150 million a year of cash flows, and the peach column shows that you could even expect greater than that in 2023 and beyond. With most of our plants sitting idle, we remain well positioned to restart if Congress decides to extend the law. Either way, it's a great story. Let's move to the top of page six in the rollover acquired revenue table. I hit on that earlier when I was talking about the revenue modeling vignette, but just a reminder, the third quarter estimate won't change much before the end of the month. Sticking on page six and shifting to the bottom table, you'll see the full year and quarterly outlook for Willis Re. Punchline is no change to our outlook, which is really terrific work by the reinsurance team. For clarity, those Willis Re revenues are already included in the top table on page six, so don't double count those in your models. Finishing up with my typical comments on cash, debt, and M&A. At the end of August, available cash on hand was nearly $500 million. Our current cash position, combined with strong expected cash flow for the remainder of the year and incremental borrowing potential, positions us well for our robust and growing M&A pipeline. When I look at 2022 and 2023 together, we believe we can fund more than $4 billion of M&A without using any stock. Like we've signaled previously, if we cannot find attractive M&A opportunities, we will return cash to shareholders through share repurchases or dividends, yet making sure to preserve our solid investment grade rating. Those are my prepared comments. It's shaping up to be an excellent quarter, excellent second half, and full year. We have great organic, a growing M&A pipeline, strong margins, and robust cash flows. As I look out to 2023, it'll be nice to have all this quarterly volatility behind us. Willis Re should be fully on our books, and the return of pandemic expense should be mostly behind us. As we sit here today, we are extremely bullish on 2023. Okay, operator, we're ready to move to Q&A. Thank you. The call is now open for questions. If you have a question, please pick up your handset and press star one on your telephone at this time. If you are on a speakerphone, please disable that function prior to pressing star one to ensure optimum sound quality. You may remove yourself from the queue at any point by pressing star two. Again, that's star one for questions. Our first question has come from the line of Mike Zaremski with BMO. Please proceed with your questions. Hey, good morning. Good morning, Mike. Thanks for all the great commentary. Good morning. Thanks. Starting out on the wholesale side, appreciating kind of Joel's comments about the huge growth that the E&S marketplace is seeing and I know that Joel talked about it, maybe a program falling offline. Just curious, you know, and I don't mean to downplay the wholesale segment's excellent results at Gallagher, but it looks like if you look at the numbers, the spread between the overall and E&S marketplace's growth in Gallagher's has kind of widened out a bit, if you agree with me. Just kind of curious, any insights into. No, I don't. You know, but it looks like E&S. It's going for us nicely. We've had great organic growth for the last four or five years. Our acquisition activity has increased our E&S position. Our open market broking is doing fantastic, and our E&S growth is, I think, going right along with the E&S growth of premium in the market. Okay. Maybe you can just kind of talk about what's driving such robust E&S market growth. Are there certain lines, maybe cyber or home- Yeah, sure. That are kind of- All of the above. You've got appetite change, basically. You've got an appetite in the primary market that is not meeting the needs of clients. That's why the E&S market develops in the first place, free to form, free to rate, able to go into the market and say, "Hey, we'll sell you this if you'll pay us that." That's a more difficult thing for a primary carrier to do. That's why the E&S market is flexible. It's a great market if you think about it, because it does step in to client needs. It's not anti-primary regular carriers either. I mean, many of them have their own E&S arm for that very purpose, to have talent that can see opportunities right opportunistically and not necessarily have to be stuck with form and rate. Now, you know, that does create swings in results, and you all have to watch that from an underwriting standpoint, and we have to watch it from a rating and capability to pay claims standpoint. But the E&S market is incredibly important, has been for many, many years, and is growing in importance. Hey, Mike, one thing that might be overshadowing the view on that is that, remember when Joel talks about his wholesale business, and Joel's having some connectivity issues right now, so apologies, as he's on the road. But that is, there's three pieces in there. There's open brokerage, and that's growing nearly 20% a year, so that's tracking pretty close to the end. That's what I'm addressing, Doug. Right. It's the open brokerage. To that. When you look at the binding businesses, those are more in the upper single digits someplace. We did have one workers comp program that we lost a market in for about 90 days. That might be pulling the whole wholesale business back to that 7%-9% range. That might be clouding a little bit your observation on. If you really just look at our open brokerage business, they're killing it. They're doing a great job, and they're providing really, really terrific alternatives for our retailers right now. Okay, great. That's helpful. Maybe sticking to the competitive environment globally on the P&C side. You know, appreciating that Gallagher is more of a upper middle market client base, but I believe there is a good amount and a growing amount of kind of larger national account business. Any kind of nuances that you're seeing in terms of competitive environment between kind of middle market and large national accounts? Some of the pricing indices that some of the brokers put out there that are more kind of larger national accounts have kind of showed more of a decelerating pricing trend. I don't know if anything you think is worth calling out. No, I think that, well, you're right. The preponderance of our business is upper middle market. However, I never like to be on these calls and not suggest that we aren't incredibly capable and do have a strong position in risk management accounts. Remember, those risk management accounts, and this is where we advise our clients, are much more capable of taking additional retentions, eliminating coverages, and what have you. They can mitigate those price increases, and they can play the game better on a global basis. Yes, our upper middle market clients are going to buy insurance at a lower level and will pay a higher rate. Primarily where we're seeing the issues in terms of our customer's perspective is property and cyber. Yeah, this is Mike Pesch. Okay. Mike, the only thing I might add, I think if your question was addressing the competitive environment among brokers, I think what we're seeing, at least in the US P&C retail business, is more opportunities. You know, the buyers want choices, and there's fewer and fewer choices with brokerage firms that have capabilities that we can provide around data analytics and things of that nature. So we're finding that we're getting more opportunities in the large account space, and we feel we can be competitive on any account anywhere in the world, given our size and structure and capabilities. So I think if your question was around the competitive landscape, I think we're still extremely strong in the mid-market and upper middle market, but we're seeing more and more opportunities in the large account space. Got it. Maybe I'll stick one last one in. You know, Pat, you had talked about a kind of this still being a tougher environment for risk bearers due to unknowns on social inflation and claims frequencies. Just curious, anything that you guys are seeing maybe Scott Hudson in Scott Hudson's business on the health on our medical inflation side. Some of the CPI numbers on health seem to be creeping north lately. I don't know if you're seeing anything on maybe workers comp, medical kind of inflation creeping north. Thanks. I'll let Scott take that. Hey, Mike. I mean, we continue to see inflation as not significant, but as it relates to, you know, we're looking at bill reviews. You know, we're going through, you know, each and every day, you know, thousands upon thousands of medical services, you know, surgeries and so forth. There is upward pressure there. I wouldn't say it's significantly different than it has been. It's not pushing up more so than it has in the past six to nine months, but there is upward pressure there. Thank you. Thank you. Our next question has come from the line of Elyse Greenspan with Wells Fargo. Please proceed with your questions. Hi. Thanks. Good morning. My first question. Good morning, Elyse. Good morning. My first question, you know, throughout this discussion, you know, I think, Doug, you used the word bullish, right? When talking about 2023. It doesn't sound like you guys are seeing any impact of, you know, a recession today within your data. Pat, you said that to start. You know, as we sit here today, you know, recognizing that there's some unknowns, but how do you guys think organic growth should trend in your brokerage business next year? Elyse, last time we spoke about this, we said somewhere between what we were seeing in 2019, which was pushing 6%, and this year if we end up nicely over 9%, it feels a lot like in between there somewhere, to be honest. You know, like I said, we're just starting a budget and planning process right now, but. Then I'd probably be more surprised at the upside on that than I would be on the downside of that. Okay. Then on the reinsurance side, you guys gave, you know, throughout the discussion also some pretty, you know, pretty good commentary on the potential for, you know, the January 1 property cat pricing. You know, it sounds like we could see good rate increases there and also increased demand. How should we think about those two dynamics benefiting organic growth at Gallagher Re? Would the benefit be muted? Think about just the benefit to the organic growth within the reinsurance business. Well, on the one hand, it's gonna play very well for us because of our capabilities. Everything's always focused on rate, rate, and where are we gonna get in terms of our clients that are paying bills now, how much more are they gonna pay later? Reinsurance, you've got your most sophisticated buyers in the market. They know when rate is too high, and they'll take that risk. That's the game they play. What doesn't happen is when you've got someone who says, "What should I do?" That's where our Gallagher Re guys shine. You're gonna see, in my opinion, big opportunities. Yes, of course, rate will have an impact, but we'll do everything we can to mitigate that for our very wise clients. You're gonna have people that are smaller players out of the market with no capabilities. By the way, I've lived that life. It sucks. The reinsurance growth, Doug, you reaffirmed the figures, right, that you guys have provided with that deal. What does that translate into for growth in the third quarter for that business? Just say you broke up a little bit there, Elyse. Just ask your question again. I was curious, you guys have been providing like the revenue growth for the reinsurance business each quarter. The third quarter figure, what would that translate into, organic growth for that business if you were reporting it that way? Well, yeah, we typically do that on our earnings calls. We'll give you the organic on it. I see nothing in here that would tell me that it's not running in that, you know, 7% range that we set in the second quarter. Again, always takes a little longer to get that information. It's a small quarter also. If you go back to page six, you know, that's only $100 million worth of revenue, $120 million worth of revenue in the quarter. I would expect that organic growth to be consistent with what we were seeing in the second quarter. One last one. Do you guys still think that there's a chance for an extension bill on the clean energy side, or where are your current thoughts there? Well, listen, I think the real question is there gonna be an extenders in D.C. in the lame duck session? You know, you usually look for that in December. The question is, would something like this be viewed favorably? I think the answer is yes. I think an energy policy, I mean, what's happening with energy right now across the world would say that anything we can do, any place to provide energy, lower cost to the customers is important. Cleaner. Cleaner, yes. This does all of that. It makes energy cheaper. It makes it cleaner. I would think there should be some open ears to that in D.C. if there's extenders passed in the lame duck session. Thank you. Thanks, Elyse. Thanks, Elyse. Thank you. Our next question comes from the line of Paul Newsome with Piper Sandler. Please proceed with your questions. Good morning, everyone. Thanks a lot. Hey, Paul. I wanted to ask about terms and conditions in the wholesale brokerage and P&C brokerage and the reinsurance business. It doesn't seem like we really had much change in people's attitude towards terms and conditions, but I'm wondering if some of this inflation issues is changing how the primary companies and the reinsurers think about retentions as well as specific risks. It just doesn't seem like there's being much that's excluded, and maybe I'm wrong. I was wondering if you had any thoughts on potential for that to change. Yeah. Paul, this is Mike Pesch. I mean, I guess your question is really, you know, around specific lines of cover, and we continue to see an evolution in the cyber market from a terms and conditions. You know, that was in my remarks, around difficulty in some of those placements, especially on a more complex risk. Those are definitely evolving. The excess casualty market, still in the question earlier or the comment earlier about RPS and open brokerage, that's where we're seeing a lot of opportunity and growth still in the excess marketplace for casualty because, you know, there is still a lot of concern about social inflation. There's still a lot of concern about limits put out for any one risk. I'm working on an account right now with our team, where the specific limits are being taken down, so we're having to go to the excess marketplace to replace some of that capacity. Those sort of things are happening on a regular basis. I would say across the board, we're not seeing drastic terms and conditions changes, given some of the changes in the economic environment. I would say on a specific line of coverage, we're definitely seeing it, and it's continuing to evolve. Paul, this is Tom Gallagher. Coming out of Rendez-Vous, our guys have said that consensus is the prices and deductibles are definitely gonna move upwards in cat-exposed areas. Any changes in the approach towards insurance to value in property? Well, it's a big push. I bet it's a big push by every carrier. I mean, they're getting stung left and right with blanket limits and having to pay for sites that are underinsured. Homeowners is a huge issue. Yeah, they're very concentrated on that. Yeah. Paul, this is Mike Pesch. I would say it's very important for us. We've been putting out a lot of content to our customers and to our producers to make sure they're evaluating those things on an annual basis, given still some of the supply chain challenges and w e work hand in glove with Gallagher Bassett, who has an appraisal division to make sure that our clients are properly insured at the point of sale. It's still a big topic, and the carriers are pushing it from their end. They want certainly to get the kind of value that is expected for any specific property. Great. That's thank you very much. That was my questions. Always appreciate the help, folks. Thanks, Paul. Thank you. Our next question has come from the line of Weston Bloomer with UBS. Please proceed with your questions. Hi. Good morning. My first question is on the margin guide within brokerage. Curious, does that margin guide that you could expand with organic over 4%, does that include any potential pickup in discretionary spending? I know you'd called that out with the 1Q call, and there's a little bit in the 3Q as well. Curious, just a clarifying question there. Yeah, I think that at 4% organic growth, there's room for increase in discretionary spend in there. At 4%, that's when we'd start showing margin expansion. You know, as you go up a little higher, it'd get bigger. You know, I think in 2019, we had 50 basis points of margin expansion on six percent organic growth, something like that, if I recall. When you look at it, but above that 4% level, we think there's opportunity for plenty of opportunity in there for discretionary spend. Great. Thank you. On the margin for 2023 in consulting, and apologize if I missed this, but do you have any outlook on how that could trend in 2023? You know, a 19% margin is pretty strong. Curious if you're considering that kind of full at current levels, adjusting for the ramp-up in the new client or any initial outlook on how we should think about that moving forward. Yeah, I would see it between 18.5% and 19% for Gallagher Bassett. You mentioned consulting, but we'd refer to it as our risk management segment. Great. Thank you. Lastly, any thoughts on how free cash flows should trend in the back half of the year or in the 3Q? Any kind of one-time items that we should be aware of or any initiatives that you're taking to kind of improve your cash flow conversion here? No, actually, the second half of our year is usually our strongest because, you know, we pay our bonuses in the first and the second quarters. That's our strongest two quarters, third and fourth quarters. Got it. Thank you. Last one, I think it's been a while since we've had an update on the internal hiring process. Curious if you could expand on how that's developing, as we kind of get out of the summer months. No, I'm running, I'll let Mike speak in a minute, but I'm running out of here as fast I can to go speak to a whole bunch of new producers. I'm excited to see them. Go ahead, Mike. Yeah, no, Weston, it was a great summer for our internship program. We had, I believe, just over 450 across the US. It was just a great year. We're right in the midst right now of recruiting season, so our people are being deployed on campus to go do the exact same thing. We anticipate that number being at or slightly above in the 2023 summer. So it's as good as it's ever been. A lot of energy, a lot of excitement. You know, this is where branding and marketing help, right? And you know, seeing our name and being more familiar with the Gallagher brand, especially on campuses and things of that nature, helps draw some really great talent to the business. All right. Great to see insurance is still cool. Thank you. I tell you, Weston, it is cool, and I'm hopeful that the campus folks will start to get that. It's a slog, but we've been at it for 50 years. Thank you. Our next question has come from the line of David Motemaden with Evercore. Please proceed with your questions. Hi. Thanks. Good morning. Hi, David. Hey, good morning. I guess just to follow up on the margin point. I guess you pointed out 50 basis points of expansion at 6% organic in 2019. You know, I guess, is that the same sort of level of margin expansion we should think about in 2023 if it is at 6% organic in the brokerage segment? Yeah, I think that's about right. I think if we hit 6%, you might see 50 basis points. It might have been a little higher than that. Might have been 60 or 70 basis points. I can pull it out here in a second, but you probably got it already in front of you. I think in this environment right now, I think that sounds about right. Again, we're just starting a budget and planning process. We'll have more free at the end of October, and then when we do our December IR Day, we should be able to lay that out for you pretty carefully. Got it. Thanks. Just on the thinking about the comment on just M&A, and if it doesn't materialize, you know, you could explore returning cash to shareholders, potentially through, you know, share repurchase or dividend. I guess, how should we think about that? Is that really, you know, as a 2022 comment, as in, if we don't really see anything materialize through the end of the third quarter, that you'd look to do more share repurchase in the fourth quarter? I guess maybe just wanted to just get your thoughts on just how you're thinking about potential timing of that. Well, listen, I think it's just a general statement that there's three pieces in there that we understand that if we end up with excess cash, this is what we'd do with it, but we also have to maintain a solid investment grade rating, and that becomes more and more important as interest rates go up, obviously. But right now, we've got more opportunities than we know what to do with. We have a lot of great opportunities in the pipeline, still at reasonable valuations. We're not chasing the highest valuation, we're not chasing the top numbers, but if people really want to bring their employees and their clients to an organization that values insurance broking, wants to work together as a team, puts the clients first, understands important relationships with the carriers, wants to get better together. There are tons of opportunities out there, so I'd rather spend every single penny of that on nice tuck-in acquisitions than necessarily buying our own stock back. You buy your own stock back, it's a cheap thrill for a moment. It does use the cash, but you don't get to trade together anymore. You don't get more brains in the organization. There's no opportunities to go out and tackle a bigger client together. We've always been a company that says, let's be better together and use that cash to bring more players onto the team. We don't have a 53-person limit roster. We can bring as many smart people as are out there onto the team and continue to build the franchise like we've been doing for the last 50 years. Chuck would rather favor finding good, solid partners than just going out and buying stock back. Understood. That makes sense. You know, just looking, you guys seem to be generating a lot more cash, especially following, you know, the Willis Re deal. You know- Yeah. That definitely sounds. Yeah, just thinking about that. Then maybe if I could just ask one for Scott on the risk management side. Are you guys seeing any impact on some of the non-comp liability claims in Gallagher Bassett? You know, we're hearing some rumblings of courts reopening and a few headlines in the trade press. I guess, are you seeing any tangible impact of that on just claims levels on non-comp liability claims? I wouldn't say claim levels, but claim dollar amounts, yes, there is. More so in the specialty areas that we're working with Rob Blasio and his team. I mean, we're just seeing natural growth in our liability business through you know, going out and you know, bringing on more clients. In terms of like an uptick in frequency or anything, I don't believe we're seeing anything like that. It's more the amounts themselves. Got it. Okay. Thank you. Thank you. Our next questions come from the line of Mark Hughes with Truist. Please proceed with your questions. Morning, Mark. Good morning, Pat. Just to follow up on that, Scott, when you say dollar amounts are up, are you talking about dollar amounts per claim or dollar amounts overall because you're growing the business? Severity on claims is, you know, pushing up on the liability side. That was the specific point. You know, and I think you hear about social inflation and things along those lines. There is, you know, ongoing pressure there. We're also, you know, I mentioned in my comments that, you know, we're still seeing significant growth through a lot of good business production, new business production, in our liability lines. It's both of those, I think, Mark. Okay. Then the program, the 90-day loss of capacity, does that extend into the fourth quarter? Was that fully replaced until the program's back up to prior levels? Yeah, I would say it's 80% replaced. The reason the program shifted is because there was some adverse experience on a small sliver of one line that you know. I'm not saying it's an uninsurable line, but it's got some pretty big loss ratios in it, so we've got to make sure that the pricing gets right first, and then it'll be back. Remember, there's never a bad risk, just a bad price. Right now, what they're doing is they're repricing even that sliver. That business will be back probably in 2023, but it's a very small proportion. To put this in perspective, just remember, we're talking about, you know, a $10 million a quarter type business here. If you lose a line in it, while it impacts Joel's overall percentage of growth, it's not a huge number to us on EBITDA or revenues in total. It just impacts the percentage of growth more than anything. It just gives you some flavor. There's some risk out there that's having a hard time getting priced. You go back to all of your comments about what Mike's saying about more creative programs, what Scott's saying about severity going up. There hasn't been anything we've talked about in this call where risk is getting cheaper. If risk isn't getting cheaper, that means that pricing naturally follows. You know, Pat said it best. It's tough right now for the carriers as they're looking at what their losses are. As they come into 2023, it'll be interesting to see what pops up in the yellow books in February next year, because we're just not seeing anything getting cheaper, guys. You talked about organic mix for next year, that 6%-9% range with, I think you said risk to the upside. Is that to say the more likely to see it trending to the upside if you looked at it now? Yeah. If I were going to bet, if you pick the middle, which side would you bet? I'd pick the over versus the under probably a little bit. Again, it's early. Yeah. Finally, Pat, I think you've kind of touched on this, but we see a lot of economic signals that maybe are flashing red, let's say, but sounds like you all are doing quite well. What do you attribute that to? Do you think the middle market or the economy is really doing well and the headlines are perhaps mistaken? I look at it directly related to jobs, Mark. We've got way more people out there looking to employ people than we have trying to lay people off. There's a gap in the job hunting group, and I think that's bad news in the sense that it'll probably create more job and wage inflation, but it's good news for the business. Now, remember, we're also a lagging indicator. You're not gonna see recession first in the brokerage business, you'll see it last. Right now, on a prospective basis, our clients are pretty robust. Yeah, Mark, the way I look at it is I'm not seeing a lot of top-line pressure from most industries. It's more bottom-line pressure. Remember also any action that takes to reduce demand, we insure supply. You know, people have to insure what they have, not what they want necessarily. I'm not seeing a contraction in the supply side of this yet. If you dry up some excess demand, that probably softens pricing a little bit. By and large, sales are still up, people are still buying. I'm not seeing bottom line pressure. I'm seeing bottom line pressure in some of the news stories, but I'm not really tracking it. Maybe I should look a little more carefully. It'll be interesting to see when third quarter results come out, how much top line pressure there really is. Well, also remember, we're looking at, and I think this is a great indicator, and we give it to you at all these calls. That's the what's going on with our endorsements and cancellations. That's really during the month, during the quarter, during the week, we can look at it and see if people are adding things to their accounts or detracting. We can look at it from last night and see what's happening. Right now, knock on wood, from our perspective, things are pretty good in that regard. Okay, great. Thank you. Thanks, Mark. Thank you. Our next question has come from the line of Greg Peters with Raymond James. Please proceed with your questions. Morning, Greg. Hey, good morning. This is actually Sid on for Greg Peters. So I know in the prepared remarks and just now you're mentioning that you're not really seeing any indications to slow down the economy. Maybe just looking ahead, could you touch on what you would expect from the M&A market should we start to see a slowdown and versus what you've seen in the past and how that might change your strategy if it does? Well, our strategy is not gonna change one way or another. That's kind of the beauty of where we sit. I think that if you see interest rates tick up, you see the economy slow down, and the returns on these brokerage businesses that have been excellent. You know, I've said it for 10 years, I think they've got the pricing wrong. I've been wrong. They've been right. The returns have been outstanding. You've had a robust economy, and we're a great business. We're the greatest business on the planet. That's what PE firms have found that over the last decade, and they've never seen, A, a recession or B, interest rates tick up. If that were to happen, I think you'd see a slowdown in their appetite. We'd continue to grow ours, and that would give us a more robust list on top of a list that we have right now that we can barely deal with. Yeah, think about it. All signals are good. Yeah, think about it this way. If you're thinking at all about opportunities to grow your business, if you're seeing it, let's say it slows down just a little bit. Why wouldn't you join up with us? It brings more capabilities, more resources, a terrific team, brokers run by brokers. I think we get more than our fair share with just a little bit of thinking by some of these opportunities out there. I don't know why. If you're gonna sell, and many of these folks sell, not because they're trying to clip the peak of the pricing, it's just they get to a certain life point where they're gonna retire, they wanna, they've hit the wall on what they wanna do to run their agency. They sell to us for more than price, and now is the opportunity to team up with somebody who has capabilities. It would accelerate their growth even in a little bit of a pullback in the economy. Remember, even with all the acquisition activity over the last decade, according to one of our consultants in the industry who I have a lot of respect for, he believes there's 39,000 agents and brokers still out there trading as independents. Less than half of them have $1 million in revenue. There's lots and lots of opportunities. It's a great business for that. Okay, understood. Thank you. Thanks, sir. Thank you. Our next question has come from the line of Meyer Shields with KBW. Please proceed with your questions. Morning, Meyer. Great, thanks. Good morning. How are you? Two quick questions on reinsurance, if I can. First, one of the takeaways we heard from Monte Carlo is a move towards facultative protection for property because of capacity shortages. I was wondering if that matches your experience and if you could update us on Gallagher Re's facultative capabilities. Tom, why don't you take that? Yeah. Meyer, Gallagher Re consciously does not have a facultative unit per se. We actually do that inside of the retail brokerage business on a global basis. When we look at the facultative reinsurance side of the business coming out of Monte Carlo, as James says, this market is completely logical, where clients are experiencing good results, they're going to get favorable terms. Where they're experiencing bad results, we've got to look at all different avenues to try and solve the puzzle of the problem. Sometimes that's gonna wind up in placing facultative out of it. I think it's too early to say what's ultimately gonna happen at 1/1, and it's going to depend on. Think about it, we're in the middle of the hurricane season, and we've got to think about what will be happening as we approach the end of the year. Okay, perfect. This is only tied because it's reinsurance. Are there any M&A opportunities emerging in reinsurance brokerage that you're seeing? At this point in time, we're really focused on hiring great talent, both from inside of the industry and outside of the industry. You've seen a couple of announcements from us on some of the talent that we have acquired. There is a very small world of reinsurance brokers, and at this moment in time, if there's an opportunity that's the right one, we would consider it. We're really focused right now on trying to find great talent to help build out the franchise. Hey, Meyer, where you see that is on the international side, where a retailer will have a reinsurance component of their brokerage business. So those will be opportunities to pick up nice international brokers that have that are 30% reinsurance, you know, 50% P&C and 20% benefits or direct consumer businesses. So you see it in there as opportunities. Then there are some nice boutique shops, especially like in Bermuda and everything, where there's some, you know, some boutiques there that would be a good fit with us. With us. Oh, I got a little feedback there. That's where the opportunity is, but just straight up, you know, large reinsurance operation, brokerage operation in Phoenix, those just aren't as prevalent anywhere. Okay, perfect. Thank you so much. Thanks, Meyer. Thank you. Our final questions come from the line of Robert Cox with Goldman Sachs. Please proceed with your questions. Morning, Robert. Good morning. Thanks for taking my question. The 50 bits of margin improvement in brokerage at 6% organic, I'm just wondering how fiduciary investment income fits into that equation. It seems like, you know, that would be a pretty meaningful tailwind to the margin next year. Yeah. Yeah. I think you're probably right on that one. What we need to do is digest what the inflation offsets are on that against the investment income. You would expect a rising interest rate environment where if we're a little bit lagging on our cost structure, and we spoke about that before, you know, we're not overly exposed to headline inflation numbers on our expense base. I would say that investment income would be a helper for that next year on margins. Got it. Thanks. It probably improves my confidence level on being able to say that we should be able to harvest, you know, some margin expansion at 4%. Got it. Maybe a little bit of a related question. You guys have talked a lot about, you know, breaking out fiduciary investment income and the impact that that might have. Can you talk a little bit about the impact and magnitude of rising rates on the premium financing business? Yeah. Here's the thing about premium financing. You won't see as much gearing quite in that right now because as short rates dropped so much, we were holding rates a little higher on what was the market rate on the actual what was being paid. As short rates come up, you get a little compression in that early in the cycle like this. I wouldn't expect that to be something that would be overly meaningful at all to our bottom line results. It's not right now. I wouldn't expect that to happen next year, either. Got it. Then maybe just the last one, on the core claim volumes and risk management increasing 8% quarter to date, is that more of just a return to normalcy in workers' comp or can you talk about what's really driving that and, maybe where workers' comp frequency is year-over-year? This is Scott. The primary driver is new business, and just kind of the overall growth that we've seen kind of across all of our client segments. I think as it relates to where things were with the, you know, the pandemic and the fallout, I think for the most part, we're seeing that kind of back for most clients to, you know, where it's going to be. Maybe a little bit of a fallout relative to what it was, but I don't know that we see much more expansion related, just kind of getting back to normal. All the growth is coming from new business. Got it. Thank you. Thanks, Robert. That was our last question, and I'd like to just say thank you to everybody for joining us this morning. We appreciate it. From my vantage point as a CEO, I believe the business is firing on all cylinders across the world. I believe we have the best team in this industry, and I think we're operating in the best business on the planet. Obviously, I'm very bullish on the third quarter and beyond 2022. We look forward to speaking with you again in our third quarter earnings call at the end of October. Thank you very much for being with us this morning. Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Enjoy the rest of your day.