Good afternoon, and welcome to Arthur J. Gallagher & Co.'s third quarter 2023 earnings conference call. 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 conference call, including answers given in response to questions, may constitute forward-looking statements within the meaning of the securities law. The Company does not assume any obligation to update information or forward-looking statements provided on this call. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the Information concerning forward-looking statements and Risk Factors sections contained in the Company's most recent 10-K, 10-Q, and 8-K filings for more details on such risks and uncertainties. In addition, for reconciliations of the non-GAAP measures discussed on this call, as well as other information regarding these measures, please refer to the earnings release and other materials in the Investor Relations section of the Company's website. 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 afternoon. Thank you for joining us for our third quarter 2023 earnings call. On the call with me today is Doug Howell, our CFO, as well as the heads of our operating divisions. We had an excellent third quarter. For our combined brokerage and risk management segments, we posted 22% growth in revenue, 10.5% organic growth, GAAP earnings per share of $1.72, adjusted earnings per share of $2.35, up 22% year-over-year, reported net earnings margin of 15.5%, Adjusted EBITDA margin of 30.8%, up 78 basis points. We also completed 12 mergers, totaling $57 million of estimated annualized revenue. Another great quarter by the team on all measures. Before I dive into more detail about the quarter and our outlook, I want to make a comment regarding the leadership appointments that were also announced this afternoon. Tom Gallagher will assume the role of President, and Patrick Gallagher will become COO, both effective January 1, 2024. These appointments are being made to better position us for the next phase of our growth. And before you ask, I have no plans to retire. I will continue to be CEO and Chairman, focused on Gallagher's strategy and global expansion. In their future roles, Tom and Patrick will help me lead organic and merger and acquisition growth initiatives, drive operational improvement, and further promote our bedrock culture across the entire organization. This is the best business on the planet. I love my job and believe we are just getting started. Moving to results on a segment basis, let me give you some more detail on our quarter's performance, starting with the brokerage segment. Reported revenue growth was 22%. Organic was 9.3%. Acquisition rollover revenues were $153 million. Adjusted EBITDA growth was 23%, and we posted adjusted EBITDA margin expansion of about 55 basis points. Let me walk you around the world and provide some more detailed commentary on our brokerage organic. Just to level set versus some of our peers, the following figures do not include interest income. Starting with our retail brokerage operations. In our U.S. P&C business, underlying organic growth was about 8%. New business production and retention was better than last year, while less non-recurring construction and capital markets business was a bit of a headwind. Our U.K. P&C business posted 7% organic, with new business production and retention similar to last year. Our Canadian P&C operation was up 10% organically, reflecting solid new business and retention and more modest renewal premium increases. Rounding out the retail P&C business, our combined operations in Australia and New Zealand posted 13% organic. Core new business wins remained excellent, and renewal premium increases were ahead of third quarter 2022 levels. Our global employee benefit brokerage and consulting business posted organic of 6%, with solid health and welfare results and continued strength across many of our retirement and HR consulting practice groups. Shifting to our reinsurance, wholesale, and specialty businesses. Gallagher Re posted 20% organic, thanks to a strong 7/1 renewal season, another outstanding quarter by the team following an excellent first half. Risk Placement Services, our U.S. wholesale operations, posted organic of 7%, including a couple point headwind from lower contingents. Open brokerage organic was 13%, and organic was about 5% in our MGA programs and binding businesses. Finally, U.K. Specialty posted organic of 18%, benefiting from outstanding new business production, strong retention, and continued firm market conditions. Next, let me provide some thoughts on the P&C insurance pricing environment, starting with the primary insurance market. Global third quarter renewal premiums, which include both rate and exposure changes, were up 10%. That's at the top end of the 8%-10% renewal premium change we had been reporting throughout 2022 and early 2023, and very similar to second quarter renewal premiums, adjusting for business mix. Renewal premium increases remain broad-based up across all of our major geographies and most product lines. For example, property is up more than 20%. General liability is up about 6%. Workers' comp is up about 2%. Umbrella and package are each up about 10%. Overall, the primary market continues to behave rationally in our view, with carriers pushing for a rate, rate where it's needed to generate an acceptable underwriting profit. Remember, though, our job as brokers is to help our clients find the best coverage while mitigating price increases. So not all of these premium increases ultimately show up in our organic. Shifting to the reinsurance market. Following the orderly July 1 renewal season, all eyes are turning to January renewals. Assuming no major cat events before year-end, we believe the property reinsurance market will see adequate capacity, continued firm pricing, rising insured values, and increased demand overall. When it comes to casualty, reinsurers appear to be taking a cautious view of risk. With that said, we believe adequate capacity will be available to support increased demand at firmer pricing. Here in the U.S., our retail and reinsurance teams met with more than 25 of our key U.S. insurance carrier partners at the annual CIAB conference earlier this month. It remains a tough environment for carriers, dealing with frequency and severity of weather events, including secondary perils, pockets of unfavorable prior year development in casualty lines, higher replacement costs, social inflation, and rising reinsurance costs. So we believe carriers are likely to seek out further renewal premium increases and to maintain their cautious underwriting posture. Moving to our customers' business activity. Overall, it continues to be more resilient than headlines would suggest, and we continue to characterize it as strong. During the third quarter, our daily indications showed year-over-year increases in positive mid-year policy endorsements and audits. Additionally, the U.S. labor market remains strong, with continued growth in U.S. non-farm payrolls and a wide gap between the amount of job openings and the number of people unemployed and looking for work. We also just passed the six-month mark of the Buck acquisition, and the team is off to a fantastic start, with integration on track and financial performance in line with our expectations. I am most pleased with how the teams have come together to better serve our clients. I believe our HR consulting, retirement, and benefits business is well-positioned, headed into the 2024 enrollment period. Bringing it all together, as we sit here today, we see full-year brokerage organic in the upper 8s and pushing towards 9%. Posting that would be another fantastic year. Let me move on to mergers and acquisitions. We had an active third quarter, completing 12 new tuck-in brokerage mergers, representing about $57 million of estimated annualized revenue. I'd like to thank all of our new partners for joining us and extend a very warm welcome to our growing Gallagher family of professionals. We also recently signed definitive agreements to acquire the insurance brokerage operations of Eastern Bank and Cadence Bank, with total pro forma annualized revenue towards $275 million. Building on our success from the 2022 M&T Bank transaction, we are extremely excited about these mergers and believe these two regional banks have built brokerage businesses that operate and feel a lot like us. If that isn't exciting enough, we also have a very strong merger pipeline. Excluding these two pending mergers, we have around 45 term sheets signed or being prepared, representing more than $450 million of annualized revenue. We know all of these won't ultimately close, but we believe we'll get our fair share. Moving on to our risk management segment, Gallagher Bassett. Third quarter organic growth was 17.9%, ahead of September expectations, due to continued growth in claim counts and new business from 22 new business wins. We still expect to grow over these wins by double digits during the fourth quarter due to our superior client offerings, some smaller new business wins in 2023, and continued growth in claim activity. Third quarter Adjusted EBITDA margin of 20.4% was strong and in line with our September expectation. Looking forward, we see full year 2022 organic above 15% and Adjusted EBITDA margins pushing 20%, and that would be another fantastic year. I'll conclude with some comments regarding our bedrock culture. A few weeks ago, I had the pleasure to visit our associates in our India Gallagher Center of Excellence. It was awesome to see our team in action again. The energy, the excitement, and relentless pursuit of improvement is thriving among our 10,000 colleagues. It's a huge competitive advantage for us because we can take a process, streamline and standardize it, and then move it to our centers of excellence. Once there, the process is refined even further, and then we make this service available to all our geographies. At the same time, we are refining, automating, deploying robotics, and using AI. We are a machine that is driving out rework, improving turnaround times, and raising our quality. Remember, we don't outsource these important roles. Rather, these full-time Gallagher employees who represent the very best service and support professionals who are passionate about our customers and have a culture of constant improvement, which is the Gallagher way. Okay, I'll stop now and turn it over to Doug. It was a great quarter. Doug, over to you. All right, thanks, Pat, and hello, everyone. Today, I'll walk through third quarter organic and margins by segment, make some comments about how we see the fourth quarter shaping up, and provide some early thoughts on full year 2024. Then I'll provide some comments on our typical modeling helpers using the CFO commentary document that we post on our website, and I'll conclude my prepared remarks with a few comments on cash, M&A, and capital management. Okay, let's flip to page 3 of the earnings release. All-in brokerage organic of 9.3%, which, as a reminder, does not include interest income like some of our peers report. Organic, including interest income, would be about 12%. A few sound bites. First, in total, we came in a little bit better than we foreshadowed at our September IR day due to really strong results from Reinsurance and London Specialty. Second, base commission and fee organic was strong at 9.6%. Third, supplementals and contingents together up 5%. At our IR day, we flagged some softness, mostly related to the Maui fires. Since then, we have also seen a very slight uptick in expected insurance carrier loss ratios that also had a modest, unfavorable impact to organic. Regardless, 9.3% in total without interest income, 12% with. Both are fantastic results for the quarter. One special mention, Pat discussed that global renewal premium increases, we were seeing around 10% this quarter. On the surface, it might appear this increase is a bit lower, maybe about a point, from what we said in September and also from second quarter. It's important to note, when we look at our data by line and customer and then adjust for mix, the renewal premium increases for the third quarter are very similar to second quarter. Please don't interpret that there has been any meaningful shift in the market. We're just not seeing that. Looking ahead to Q4 organic, over the last year, we have reminded that we have an accounting headwind to overcome. Recall in Q4 2022, we booked a change in estimate related to our 606 deferred revenue accounting. That will now create a more difficult compare. Call that about a point of organic headwind. Again, no new news here, but just a reminder as you update your models. Controlling for this, we see fourth quarter underlying organic growth approaching 9%, but the headline might look more like 8%. If we post that, that would mean full-year brokerage organic in the upper 8s, pushing towards 9%. Again, these percentages do not include interest income. What a great year that would be. Flip now to page five of the earnings release, to the brokerage segment, Adjusted EBITDA table. We posted an Adjusted EBITDA margin of 32.4% for the quarter. That's up 55 basis points over third quarter 2022's FX adjusted margin. That's great work by the team to end up a bit better than our September IR day expectations. Looking like it, looking at, margins like a bridge from Q3 2022, organic gave us 80 points of expansion. Incremental interest income gave us 90 basis points. Rolling M&A, mostly Buck, which naturally runs at lower margins, impacted it by about 65 basis points. We also made incremental technology investments, call that about $7 million, and had some continued inflation on T&E, call that about $3 million, which in total used about 50 basis points. Follow that bridge, and the math gets you close to that 55 basis points of FX-adjusted margin expansion in the third quarter. As for our adjusted EBITDA margin outlook for the fourth quarter, we expect about 40-50 basis points of expansion. And remember, that's off of fourth quarter 2022 margins recomputed at current FX levels. However, unlike the past few quarters, where FX created some noise, we're fortunate that now there's not much impact to consider, so much easier to model. If we deliver on that full year 2023, which show margins expanding 30-40 basis points or 80-90 basis points, levelizing for the rolling impact of Buck, that would be a terrific year. Looking ahead to next year, we are just beginning our budgeting process, and our--but our early, our very early thinking is that organic, we're seeing organic in that 7%-9% range. As for margins, we would anticipate seeing some margin expansion starting at 4% organic growth, and perhaps if we hit 7%, call it around 50 basis points of expansion. And also, one other modeling heads up, please don't forget, first quarter 2024 margins will have a slightly tougher year-over-year compare since Buck will still be rolling into our results. Okay, let's move on to the risk management segment and the organic and EBITDA tables on page 5 and 6. A really strong finish to the third quarter, 17.9% organic growth and margins at 20.4%.... As Pat mentioned, we continue to benefit from higher claim counts related to the new business wins from the second half of 2022. Looking forward, we see organic in the fourth quarter around 13% and margins just above 20%. Organic does reflect the lapping of last year's newer large business wins, and margins remain terrific. So if we deliver on that, full year organic would be above 15% and margins pushing 20%. That would be another record year for Gallagher Bassett. Looking ahead to full year 2024, our early thinking is pointing towards 9%-11% organic and margins around 20%. Okay, let's turn to page 7 of the earnings release and the corporate segment shortcut table. In total, adjusted third quarter came in $0.03 better than the midpoint of the range we provided during our September IR day. Two reasons: First, lower borrowings on our line of credit as some M&A opportunities were pushed into October and November, and second, lesser FX remeasurement headwinds. Let's move now to the CFO commentary document to page 3. A couple of things versus our September IR day estimates. Third, you'll see third quarter amortization expense is better by $7 million. But remember, this is non-cash and doesn't impact adjusted EBITDAC nor adjusted EPS. This was simply due to balance sheet true ups when we get our third-party M&A valuations. Then you'll also see depreciation is a touch higher by $2 million, but that is offset by change in acquisition earn-outs, which is lower by $2 million. So no net, no net impact there. Looking ahead, we've updated our fourth quarter numbers and footnotes, so just do a double check of your models. We will also update this page again during our December IR day and give you a first look at 2024 numbers. Flip over to page 4 of the CFO commentary document, to the corporate segment outlook for the fourth quarter. Only real movement is that Q4 interest in banking expense is up a bit, reflecting more anticipated borrowing. Moving to page 5, this is the page that shows our tax credit carryforwards. As of September 30, we have about $670 million available, a nice future cash flow sweetener that helps fund future M&A. When you turn to page six, you'll see the rollover revenue table for third quarter. The rollover revenues for the third quarter were $153 million. That's a little better than our IR day expectation, mostly due notably to one merger that really hit it out of the park during the second half of September. It really shows you the potential upside mergers can see after joining Gallagher. Looking forward, we have included estimated revenues for M&A closed and announced through yesterday. That's important to note. These numbers already include expected revenues from Eastern and Cadence. We've assumed a mid-fourth quarter closing date, so please don't double count. As we always say, please don't forget, you need to make a pick for future M&A also. In terms of funding M&A, first, available cash on hand at September 30 was around $550 million. Second, our fourth quarter is historically a very strong cash flow quarter. Third, we currently have nothing outstanding in our line of credit, so we can use that or do a bond offering. Finally, if we close a lot of the tuck-in M&A pipeline that Pat discussed before year-end, we may use a small amount of stock, but call it a couple of hundred million dollars. As we consider these alternatives, we're always being very mindful of maintaining our solid investment grade rating also. As for 2024, we are currently estimating about $3.5 billion of capacity to fund future M&A, using only free cash and incremental borrowing. Okay, those are my comments. Another fantastic quarter by the team. It's looking like another fantastic year. Congratulations to Patrick and Tom on their, on their new roles. We have terrific momentum taking us into 2024. Back to you, Pat. Okay, I think we're ready for some questions and answers. Operator, will you open it up? 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 comes from the line of Rob Cox with Goldman Sachs. Please proceed with your question. Hey, guys. Thanks for the outlook on the organic growth for 2024. Just curious, you had previously mentioned that you didn't think there would be that much of a difference in sort of the, you know, different areas within the business growing at different rates. I'm curious if you have any updated thoughts on how different businesses may perform in 2024 versus 2023. Rob, thanks for that. I think let us get through the budget process here. We'll have more for you on our December IR day, but right now we're not seeing anything significantly different, kind of across the portfolio of operations. But it's going to roll up somewhere into that 7%-9% range as we're looking at it now. Okay, got it. Thank you. And then just on the 2024 margin expansion of 50 basis points, if, if you could achieve 7%. Just curious on if that includes impacts from investment income or, you know, maybe a potential slight uplift from some of these, higher margin acquisitions you've done recently? All right. So three things in there on that. Right now, the way I got to that number, doesn't assume much, incremental lift from investment income. It does assume a little bit of a drag from one quarter of Buck rolling into our numbers, that naturally runs lower margins. But by and large, maybe those two offset each other a little bit, and maybe there's a little, extra, roll-in impact from M&A from Buck. The rest of the M&A that we're planning on in our, our outlook for next year comes in pretty close at the same margins that we're at. Great. Thanks for the color. Thanks, Rob. Thank you. Our next question is coming from Elyse Greenspan with Wells Fargo. Please state your question. Hi, thanks. Good evening. My first question, reinsurance. Pat, you guys said, 20% organic growth in the quarter. You know, that's the strongest you guys have printed since you closed that deal. Obviously, Q3 is smaller from a revenue perspective, but I was hoping, you know, is there more within that number? And then, you know, when you guys are guiding to 7%-9% next year, I mean, what are you assuming just in terms of the momentum and the growth within that reinsurance business? That's a good question, Elyse. I think as Doug said earlier, we're just in the throes now budgeting, and I'd have to say that the reinsurance team has outperformed our expectations. They came aboard and have just continued to do an unbelievable job, and that 20% does include new business and great retention. When I look forward, I'm not going to comment on rate. I'm not there yet. I got to get their professional view as we get into the budget. I think that new business momentum will be good. I think retention will continue to be very, very strong. Would I tell you that I think we're going to see 20% organic next year? I don't know. That'd be awfully hard, but I'm really-- this is a good business for us. The market there, similar to what we're seeing on retail, we are not seeing softening. As we said in our prepared remarks, there's capacity, but you're going to pay for it. And I don't think that's going to change between 1/1 and 7/1 next year. So I think that what you've got is kind of an interesting market, and again, this is if nothing happens in the cat world. So I'm not trying to waffle here. I don't have a really good, clear answer for you at this point. Yeah, Elyse, I think I said to Rob, I said, "Let's give you that. Let's give more flavor by division in December." As you know, that'll be. We'll be talking to you again in six weeks. And then, you know, a good problem to have, the results there have been really strong. I know there's an earn-out associated with that transaction. Is that something that you would account for in 2025, or, is that something that's already been accounted for? I think we'll have. Okay, the way it works is that we'll have to, it gets triggered off of full year 2024 revenues. Because it's heavily skewed towards 1/1 renewals, I think we'll have a pretty good estimate of where we sit here before December. So I think I'll be able to give you a number on what we think we're going to end up booking for, for acquisition earn-out payment. Now, we adjust that out, but I think I should have a good number by our December IR day, and then that would be paid out in the first quarter or second quarter of 2025. Okay, and then the M&A pipeline sounds, you know, still pretty robust. Doug, you mentioned that some deals was, were pushed into October and November. Are those, you know, the Eastern and the Cadence transactions, or are there other transactions that were pushed from a timing perspective that could be forthcoming? I would say that it was more so the Eastern transaction, and it wasn't necessarily pushed. You have to file an HSR on that. So really, our early estimates of maybe getting it done in September might have been a little optimistic on that, but I wouldn't. There's nothing else that you don't know about, let me put it that way. Okay. Thank you. Thanks, Elise. Thank you. Our next question comes from the line of Paul Newsome with Piper Sandler. Please state your question. Good afternoon. Congratulations on the quarter. Thanks for the call, everyone. Thanks, Paul. I wanted to ask a little bit more about the M&A environment. Is there anything to be read here that, you know, some of these big deals are coming out of banks? And, you know, maybe just some thoughts, if you have any, about sort of how the buyers may be changing in this environment. I think we've been waiting for shifts in the market, but at least I've been sort of surprised at how they sort of happened or not happened in the last couple of quarters. But love your thoughts on that. Well, I'll give you some, and then Doug can make some comments as well. I do think, and we've said this before, that some of the competition relative to some of the private equity stuff is a little bit less robust. There is still plenty of competition, and if you put a nice piece of property out for bid, you're going to get a lot of bids. There's good competition for these good properties. I can't get into the strategy of the banks as to why they're deciding now is the time to exit, we've seen that across a broad base. I think it's probably because multiples are at very, very solid, high, high levels. You know, whether smart money thinks that those multiples may at some point in time begin to diminish, I'm not sure. But we've had incredible success with our friends at M&T, we're very excited about Eastern and Cadence, and frankly, if there's other banks that are looking in that direction, we're, we're a very good place to look. In terms of other M&A opportunities, you've got 30,000 agents and brokers across America. A good number of them are still owned and run by baby boomers. They're good businesses. This has been a very robust time for them. The last five years have been outstanding for them. A lot of change going on in our market, an awful lot of data and analytics that they can't compete with. Now, you have the advent of AI, which is coming on stronger and faster than I think any of us thought, and I think people look at it and say, "Maybe it's time to check who's out there. Maybe now is not a bad time for me to look. And when you take a look at our pipeline, we gave you some numbers today. I mean, it's just incredibly robust. Then, completely shifting to a different topic, if I could. There's been some comments this quarter, I think, about the shift back and forth between excess lines and specialty and the standard carriers. I was wondering if, from your perspective, you're seeing any of that shift back to the standard carriers, or really anything that's major from a terms and conditions environment? No ... sort of excluding pricing? No, we're not. I mean, the stuff that's in the E&S market has gone there for a reason, and that is growing every single month in terms of 15%-20%. Our submissions at RPS are up substantially this year. We measure that every day, frankly. And our submissions into RPS, our wholesaling operation, are at an all-time high. Property, in particular, is a big driving line, for sure, and there just is a lack of capacity, and it is getting to, you know, it continues to be, you know, whoever can tell the best story might just get a quote. So no, I'm not seeing, and we are not seeing terms and conditions soften while things still stay in the excess market, and we're not seeing business flow back to the primaries. Great. Thanks, I always appreciate the help. I appreciate the help, guys. Thanks, Paul. Thank you. Our next question comes from the line of Greg Peters with Raymond James. Please state your question. Good evening, everyone. Hey, Greg. Pat, I feel like you have been saying you feel like you're just getting started for over 20 years now. That's true. I guess no change there. Can we go back to your comments on the bank acquisitions? And I think you said some of the banks, Cadence and Eastern, are getting solid high multiples for those businesses. I think those were your words. And I look at the CFO commentary, and it looks like you're inside that, you're looking for your multiples are paying are 10-11x EBITDA. Is that inclusive of Cadence and Eastern? Because it feels like those numbers were the multiples for those businesses were a little bit higher. Yeah, typically, what we do is for a larger transaction like that, and we have a couple of, you know, one a year or something like that, we typically exclude that. The purpose of that disclosure is really showing you what we're seeing in the tuck-ins. The reality is, we're still seeing great opportunities, you know, a little north of 10 times, maybe sometimes you get one at 12, some at 10. But there's a ton of tuck-in opportunities that are still realizing there's terrific value in that 10-12 range. And the reason why is they understand that they have careers inside of Gallagher afterwards. Their employees and their producers and themselves have great careers inside of Gallagher. So what a terrific thing. Sell your business at 10-12 times. Come in and work, take on increasing responsibilities, double your agency or your location. So the reason why we can still be effective buyers at 10-12 times is the future opportunity of getting better together. We said it for 20 years since I've been here, when 1 + 1 is equal 3, 4, and 5, that's what they're seeing. So we continue to click those off day in and day out, kind of in those multiple ranges. Okay, that makes sense. Then on those larger transactions, it doesn't seem like maybe I'm—I don't know the answer. So is there a lot of synergies to be harvested from, you know, as you integrate the businesses, or are these standalone teams sort of like what you got with the WTW reinsurance operations? No, I think here's the thing. I think with Eastern and Cadence, I mean, it's not. There's very few human synergies to be gained on this. As a matter of fact, they do a really great job servicing their customers and selling the insurance, but there are efficiencies that can be gained through a common general ledger or common agency management system, only needing one cyber, you know, a protocol that runs over your platform. So there are some synergies there, but those are in the $3 million, $4 million, $5 million type numbers, not in the $25 million, $30 million, or $40 million type numbers, so. The real, the real kicker there, Greg, is that look at these bigger deals run by banks, and this is why we say it very much feels like we're buying somebody similar to us.... These are, these are firms that were rolled up by the bank. Typically good community people. I've heard 3, 3, 3 separate outreaches from Cadence people in the last two days, that I've known in one instance, that they came in to kick the tires with us in 1998. And I remember the guy. He wrote to me and he goes: "Hey, I came with, I came with Shorty," and I remember Shorty, "And I came with Jim," and I remember Jim, "And I can't tell you how excited we are." Now, what we're bringing to them, that Cadence could never do, is that whole discussion of moving upstream. We can show you statistically that our closing rate on bigger deals, and I'm not talking risk management, huge accounts. I'm just saying the bigger deals that are generating over $125,000-$150,000 of commission, are significantly greater today than they were five or 10 years ago. This is what we're giving them the opportunity to go after. They're typical agents in these banks that look just like everybody else, and now they're gonna go out, and frankly, they're gonna have our tools, and they're terrifically excited about it. So that's, I think, the whole synergy thing. This is not take out headcount. This is turn them on, show them what we do, give them the tools, and watch them eat the market all around them. Okay, that makes sense. I guess the final question, I know, I think it was Paul was trying to get at this, but, frankly, we're hearing of some stress in some of the PE-backed roll-ups, where the combination of higher interest costs and earn-outs are pressuring their free cash flow. What's your view of some of those smaller entities that might be having problems? Could we see you be interested in some of those properties at some point in time if they should become available? Well, here's the thing. First of all, Greg, we'll look at every single opportunity we can, and our first question every single time is: What's the culture? What was it that went into this group? In most of these, there are situations where we didn't succeed in buying something they bought. Let's talk about that around this table, not with them in the room. XYZ didn't sell to us. Why is that? Okay, fine. What's left there? And yes, I would say that there are some of those that we would be interested in, but we'd have to get through this whole cultural piece. You know, when you chose not to join Gallagher, I'll tell you the one main reason why you chose not to join Gallagher is because you didn't want change. Our competition has done a very good job of saying: Hey, why join Gallagher when I'll give you the money? I'm going to give you the cash, keep some in. Our returns have been terrific. You'll get a second bite on the apple, and you don't need to change anything. You don't need to change your name, you don't need to change your agency system. While they've been doing that, we've been building power to power, data, analytics, capabilities, and vertical strength. They've got none of that. Now it's coming to roost with higher interest rates and tougher earn-outs, and you got to make do on... You got to come do on your promises. Yep, we'd look at them, but we're going to have to fall in love. Thanks for the detail. Thanks, Greg. Thank you. Our next question comes from the line of Mike Zaremski with BMO Capital Markets. Please state your question. Hey, good afternoon. Mike. Maybe I missed this, but on the Cadence deal, is it-- am I right to looking at the revenue and EBITDA disclosure that Cadence has a 36%-37% margin, which is pretty, pretty great? Also on the deal, you called out tax benefits, and I don't recall you guys calling out tax benefits in the past. Yeah. All right. Hey, first, you're right, you're right. I think it might be about 34%, but I, I think let's not quibble over a point or two on that. I think that when it comes to the tax benefit, I think it's important on these margin. We always get a, we always get a step up in basis on smaller deals, but on many larger mergers, that the sellers are not willing to allow a step up in basis. In this case, the sellers were willing to, and we paid a little bit more cash up front on it. But certainly, we're going to get $250 million worth of deductions over the next 15 years. You present value that back at 5% or 6%, you get something to $150 million. So it really doesn't impact them all that much because I don't know if they're going to... They might be able to shield it with NOL carryforwards or something like that, but it benefits us a lot. So to be able to, to achieve that, and it's not all that important in many times for, let's say, a PE firm that buys a bigger one or it trades because they've got the large interest shield coming off of the, the high levels of debt they run there. So but for us to be able to, to negotiate that benefit and to be able to have a seller that's willing to, to allow that benefit to pass up, it makes a big difference. So in this case, this is a true win-win for them. They get more cash, we get more cash, and it brings our multiple down considerably on it. This is not using our clean energy credits. You know, we have $670 million of clean energy credits available. Think about that. We'll use those over the next few years. It's almost like we have another free Cadence coming our way because of those tax credits. So, tax does matter. In this case, we think that conservative view of that benefit is $150-some million. Okay, okay, interesting. Thank you for the explanation on that. I guess this one probably for Pat, this one question is for Pat, and congrats to Tom and Patrick on their new appointments. I'm just curious on, Pat, will these new appointments cause any of your existing managers, other than yourself, to share responsibilities that they didn't previously share? Oh, there'll be some follow-on promotions. Sure. There's good opportunities for everybody at Gallagher. Yep. Were these promotions well, well telegraphed, or did it come- Pardon me? Were these promotions like well telegraphed like kind of over time or- Mike- Or these kind of, I'm going to answer you with a Gallagher answer: There's not a lot secret at Gallagher, right? Yes, I would say that these moves have been telegraphed over about 20 years. Okay. Just, just making sure. No problem. Okay. I'll, I'll stop there. Thank you. Thanks, Mike. Thank you. Our next question comes from the line of Mark Hughes with Truist Securities. Please proceed with your question. Yeah, thank you. On the... Did you give any guidance on the corporate segment profits for 2024? Any early thoughts there? We haven't, and can you give me till December? I know you're trying to figure out your 24 models. You might want to take what we did this year and just take it by line by line and make a sight pick on it to see what you're thinking, what, what, what would happen there. I know it's really difficult to do, Mark, because of FX remeasurement gains. I know we put some acquisition costs through there that can be lumpy. And there's a lot of tax, you know, restructure numbers that run through there as we implement tax planning strategy. I know it's really difficult, but if you—could you just give me till December, and I can get that to you? Yeah, yeah. All right. Um- We get this every year, so I just need to. Any thoughts on medical inflation? Just curious to get the... I think the benefits is being helped by higher healthcare costs for employees, but the medical inflation impact on, say, workers' comp or GL. You know what? It's, it's interesting you should ask because we were talking about that with the board, this week, and yes, you know, we're seeing a lot of pressure on medical costs. Fully insured renewals at our largest carriers are showing 7%-9% increases right now as we speak. When you start to take retentions, and you start to get in the stop loss market, we're seeing averages there closer to 17%-18%. That's on premium now. That's not on the underlying costs, but that's because more of the claims are tagging those carriers. So they're, they're not only trying to move away in terms of the low end of the cost, but also they're, they're having to pay that. So if you take a look at all of it, all in, Mark, I'd say that our numbers that we're seeing are about 8%-9%, and that's embedded both in work comp as well as health insurance across the United States. Thank you. Thanks, Mark. Thank you. Our next question comes from the line of David Motemaden with Evercore ISI. Please state your question. Hey, thanks. Good evening. Hello. Hi, good evening. I was wondering if you could just help me think through just how much of the organic growth over the last several years and even this quarter is driven by, you know, just the macro environment versus what you guys have been doing behind the scenes to accelerate share gains. Because it feels like there's been a lot going on to help you guys gain share and that the share gains are accelerating. I'm just wondering, I know it's kind of a big picture question, but, you know, as you guys head into, you know, next year and you think about that 7%-9% organic, I guess, how much of that do you think is coming from market share gains as you guys continue to execute versus like, you know, rate and exposure improvements? Well, let me split the question with Doug in this regard. Let me talk about market gains in terms of share gain, and then he can tear at the numbers a bit. We are—we're seeing, and we're measuring this literally every single day, every month. We know now where we're producing business. We know, for instance, that 90% of the time we compete with somebody smaller than we are. We know exactly what's happening in our verticals. We have 32 verticals that we're very, very clear on management expectation, knowing what's going on, building products and what have you. That's in the property and casualty arena. We have another 7 or 8 in benefits. In those verticals, we know that our growth rate is substantially greater than what is in our just general book of business. So internally, we know that we are taking definite share in those verticals, and I would probably... I, I'd throw out a number. Mike, maybe you'd throw a number out on the table of what? In terms of? Just in terms of the growth rate in the vertical- Oh. - as opposed to general. 19% of our new business. So 19% of our new business falls- Into one of our verticals. Into one of those... 19? Ninety-two. 92. That's what I thought. I just heard 19. I apologize. So, each of those are growing faster than the general book. So I, now you, again, you've got to look at rate, and you've got to look at exposure and all that other stuff. But when you talk about share, there is absolutely no, no doubt. You go back to Doug's comment. An acquisition can be 1 + 1 = 5, because when Gallagher shows up with the relationships and the, and the capabilities of the local broker and brings those relationships together with what we have as capabilities and, and the culture works, we don't have to force sharing on people. The fact that they could pick up the phone and say, "I've got a college or university. I've never worked on one before. Can somebody help me?" We will swarm that opportunity. We will write that college or university. They'll get their fair share. Everybody wins, and we're not fighting that as a local entrepreneur who doesn't want to play with the big boys. Uh-uh, that's the excitement. So I know that's a long-winded, weird way of saying it, but we are definitely taking share. To the numbers, Doug, I throw it over to you. Listen, of that 7% organic growth next year, next year, I'd say that half comes from net new business wins, so taking share. I would say a quarter is coming from, exposure units, and another quarter is coming from rate. If you're at 9%, you probably got a third, a third, a third in there. Got it. That's, that's really helpful. I appreciate that. And then maybe just to follow up, you know, we've seen obviously the two, the Cadence and Eastern deals on top of the M&T bank broker last year, or earlier this year. I guess I'm, I'm sort of wondering, you know, as we think about the sustainability of that organic, I know you're the preferred provider for, I think it was Cadence. I guess, how do you manage the fact that, or the potential that there might be, you know, more of like an open process for some of those existing customers, now that, you know, it's not wholly owned? I don't know if that's something that you guys have, have worked through planning or, you know, just maybe help us think through that. Well, I'll help you think through it, and probably the people from Cadence Bank would say he's maybe talking off the top of his head, blah, blah, blah. But I don't think the bank did much to help them produce insurance. Like, probably hurt their production, which is why when you look at some of these deals, the board goes, "Well, where's the growth?" Cadence and Eastern, good growth, but the fact is, those people have gone out and scrapped for that business around the bank relationship, which was, of course, when they bought those firms, supposed to be the golden nugget in terms of being able to produce business. That just isn't true. In fact, I think we're going to unleash an opportunity to really grow the top line. Got it. That's really helpful. Thanks. Thanks, David. Thank you. Our next question comes from the line of Meyer Shields with KBW. Please proceed with your question. Great, thanks. Two big picture questions. One, there's been some press about larger insurance brokers getting back into wholesale. Would that matter at all to Gallagher? Not really. If you take a look at our wholesale business, RPS, we do not mandate inside Gallagher, so it's not 100% Gallagher placements there. We did consolidate down to a smaller number of players, and RPS does about 50% of Gallagher's placements, so we're very cognizant of what the world is like out there. But really, RPS trades with 15,000-18,000 independent agents, and RPS does not trade, particularly at all, with our three larger competitors. So if they were the ones to choose to come back into the market, we think it would have virtually no impact on us at all. Okay, that's very helpful. Second question, and this relates to what you've been talking about, Pat, with the additional resources that being part of Gallagher brings. How rapidly can acquisitions take advantage of that? And is there something we should factor in when we're modeling acquired revenues? Day one, and I do mean day one, and the team will swarm that opportunity. Now, do they get used to operating that way? Have they got the customer teed up? It takes. It's still a learning curve, in all fairness, Meyer. They'll call, and we'll jump on the plane and have a shot at that university, but it will probably be a year or two before we land it. So I can't sit here and go, day one, it just ratchets up. But I'll tell you what it does. It gets everybody in that firm excited. It worked. Gallagher helped. You can't believe it. We turned this risk manager on their head. This is really cool. Next time around, what's the strategy? What's the methodology? So the resources are truly available to that team on day one. Now, would I factor into the earn-out? Some of them take great advantage of it, and it really does help. It makes their earn-out. Others, as I said, it's a longer ramp-up speed, and it's just a matter of the individual leaders. Yeah, one thing I would say, we, I think we actually understate true organic because we don't consider any new business, net new business wins by those mergers in the first year. That doesn't get counted as- Definitely ... our organic. Definitely. I don't know, is it $20-$30 million more of net new, maybe across the business every year? I don't know. It might be worth, you know, 20 basis points on our organic growth over the course of a year. So I think it naturally understates it. But I think the point is, like I said on this one just a minute ago, we had a merger partner that just crushed us here at the end of September, and that doesn't go into organic, but it sure impacts our acquisition revenues. Now, we try to give you that when we do these projections, so look at that on page 6 of our CFO commentary. But the point is, the great mergers are the ones that come in, hit the ground running, use our resources and capabilities, and next thing you know, over the next two, three, four years, they're just hitting it out of the park. And we, we've showed you in our IR day, things like our Gallagher Drive. One, just one item that is so cool to these people, and it's basically the ability to sit with a client and say, "People like you buy this. And here's what the lines of insurance are that are going to these types of truckers in your area or construction companies or senior living. Here's the layers that they're buying. And by the way, you're holding a $10 million liability limit. Most of your competitors are paying 20 or buying $20 million of umbrella. Let me show you the losses we have in our book that have pierced the $10 million. You probably ought to buy the 20. There's reasons that-" It blows the competition away, and our merger partners can't wait to get their hands on it. That's one thing, and there's a dozen of those. Okay, that was very helpful. Thank you so much. Thanks, Mark. Thank you. Our last question is coming from Yaron Kinar with Jefferies. Please state your question. Thank you. Good afternoon. I apologize. I had some technical difficulties, so I hope I'm not asking stuff that's already been asked. With regards to Eastern Cadence, do they have any different seasonal patterns? I think you touched on growth on the margin profile. But I'm curious if that margin profile kind of holds true to what you see in brokers already- Yeah. throughout the year? No, no, there's no seasonality. Yeah, the- Okay. The biggest, remember, we're seasonally larger quarter, primarily because of our benefits and because of our reinsurance. Our P&C business is fairly steady throughout the year over the four quarters. You know, maybe it's 23%, one quarter, 27% another, but we're not getting the wild swings like you do in reinsurance and employee benefits. Got it. And do either of those deals fill any kind of vertical space that you were looking to boost up, or is it more of a geographic play? What's the rationale there? Mike, go ahead. Yes, this is Mike Pesch. So I would say both of them are, in their geographies, are strong where we are maybe strong in other industries. So in Cadence and their perspective, we do a lot of public entity in the mid-south region, and that's not one of their strengths, but they do a lot in construction and manufacturing, so it complements us really, really well. It's one of the reasons we like them so much. Eastern is the same way. If you look in New England, New England is heavily weighted towards life sciences, technology, and D&O, and they balance that book considerably with a lot of other industry verticals, including construction. So it is a very much a complementary business to each of those areas. Got it. And then one quick one to end up. Corporate expenses were quite high this quarter. Were there anyone else there? I think when you look at it, if you look at the adjustment, if you look at it on an adjusted basis, there were some tax and litigation items; we adjusted that out. On an adjusted basis, it's kind of noisy. Comp might be up $3 million-$4 million. I think we're a little further ahead on our corporate bonus accrual than we have been in the past. And when you look at operating expense, it looks down considerably on an adjusted basis, but that's the FX remeasurement gains that you're seeing. So if you're looking at it on a pre-tax basis, on an unadjusted basis, that's what you'll see in there. But there's nothing fundamentally underlying our expense structure in the corporate segment. Thanks so much. Thanks, John. Well, thank you again, everyone, for joining us this evening. To our 50,000 colleagues across the globe, thank you for your hard work this quarter and every quarter. Our operational and financial success is a direct reflection of your efforts. As pleased as I am with our third quarter performance, I'm even more excited about our future. Future organic prospects, future M&A opportunities, and our ability to become more productive and increase quality. We look forward to speaking with the investment community in person at our IR day in December. Thank you again, everybody, and have a good evening. Thank you. This does conclude today's conference call. You may now disconnect your lines at this time.