Good afternoon. Welcome to Arthur J. Gallagher & Company's third quarter twenty twenty-four earnings conference call. Participants have been placed on 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 laws. 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 and CEO of Arthur J. Gallagher & Company. Mr. Gallagher, you may begin. Thank you very much. Good afternoon, everyone, and thank you for joining us for our third quarter 2024 earnings call. On the call for you today is Doug Howell, our CFO, other members of the management team, and heads of our operating divisions. Before I get to my comments about our financial results, I'd like to acknowledge the damage and devastation caused by the recent storms and floods. Our thoughts are with those impacted by these events, including our own Gallagher colleagues. Our professionals are hard at work, helping clients sort through their coverages, file claims, and ultimately get losses paid. I'm really honored to be part of a company and an industry with such an important responsibility, helping families, businesses, and communities rebuild and restore their lives, and that's a noble cause. Okay, on to my comments regarding our financial performance. We had a great third quarter. For our combined brokerage and risk management segments, we posted 13% growth in revenue, 6% organic growth, which does not include interest income. Reported net earnings margin of 15.5%. Adjusted EBITDAC margin of 31.9%, up 123 basis points year-over-year. GAAP earnings per share of $1.90, and adjusted earnings per share of $2.72, up 16% year-over-year. Another fantastic operating quarter by the team. Moving to results on a segment basis, starting with the brokerage segment. Reported revenue growth was 13%. Organic growth was right in line with our expectations at 6%, which, as we forecasted, reflects about a point of timing headwind from those large life cases we have highlighted over the past couple of quarters. Doug will provide you with some good news from October related to these sales in his remarks. Adjusted EBITDAC margin expanded 137 basis points to 33.6%, which was better than our IR Day expectations. Let me give some insights behind our brokerage segment organic. Within our P&C retail operations, we delivered 5% in the U.S. and 7% outside the U.S. Internationally, Australia and New Zealand led the way with organic of more than 10%. The U.K. was up 6% and Canada was flattish. Our global employee benefit brokerage and consulting business posted organic of about 4% and a few points higher, excluding the timing differences from the large life case sales. Shifting to our reinsurance, wholesale, and specialty businesses, overall organic of 8%, so very strong growth, whether retail, wholesale, or reinsurance. 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, were up 5% and little changed from the 6% we discussed at our September IR Day update a few weeks ago. Most lines and geographies had very similar renewal premium changes through all three months of the quarter, with a couple of exceptions. September casualty renewal increases outside the U.S. were lower relative to July and August, driven by changes in business mix. Additionally, large account and E&S property renewal premium increases were a bit less in September than the first two months of the quarter. But neither of these appear to be a trend. Thus far in October, we are seeing large account property and international casualty renewal premium increases higher than September. Breaking down third quarter renewal premium changes by product line, we saw the following: property, up 4%; general liability, up 6%; commercial auto, up 7%; umbrella, up 10%; workers' comp, up 2%; D&O, down about 5%; cyber was flat; and personal lines, up 11%. So overall, increases continued to be broad-based and rational in our view, with carriers still cautious and pushing for rate where it's needed to generate an acceptable underwriting profit. We shine in this environment. Our job as brokers is to help clients find the best coverage while mitigating premium increases. So while not all of the increases ultimately show up in our organic, a rational market allows us to further differentiate ourselves with our leading tools, data, and expertise. Let me shift to the reinsurance market.... The July first renewal season saw modest property price declines concentrated at the top end of reinsurance towers, while casualty renewals saw terms and conditions tighten and some modest price increases concentrated in the U.S. Clearly, a lot has happened in the property market over the past month, which is now adding some complexity to January first property renewals. It's still early, but we now believe a flattish renewal is more likely than the downward pressure previously being discussed. And don't forget, U.S. hurricane season is not over for another month. For casualty risks, we believe reinsurance will remain cautious heading into next year, especially if there is more noise related to U.S. reserve adequacy. We think differentiating underwriting practices will likely be the key to a successful renewal for clients. Overall, the reinsurance industry remains adequately capitalized and is likely to meet capacity demands at the upcoming January 1 renewals. We continue to believe Gallagher Re will perform very well in 2025, regardless of how the market environment unfolds in the near term. Moving to some comments on our customers' business activity. Our daily revenue indications from audits, endorsements, and cancellations were again in positive territory for the third quarter. While the amount of upward revenue adjustments isn't as much as 2023, they are running in line with 2022. So client business activity remains solid, and we are not seeing any signs of a meaningful global economic slowdown. Within the U.S., the labor market is on solid footing. In fact, the number of open jobs increased in August and remained well above the number of unemployed people looking for work. Overall, job growth, upward wage pressure, and rising medical cost inflation continued to challenge employers looking for ways to grow their workforce and control their benefits costs. Regardless of market or economic conditions, I believe we are well positioned to take market share across our brokerage business. Remember, about 90% of the time, we are competing against the smaller local broker that cannot match our client value proposition, niche expertise, outstanding service, and our extensive data and analytics offerings. Putting this all together, we continue to see full year 2024 brokerage organic around 7.5%, and that would be another outstanding year. Moving on to our risk management segment, Gallagher Bassett. Revenue growth was 12%, including organic of 6%. We continue to benefit from excellent client retention, increases in customer business activity, rising claim counts, and new business wins. Adjusted EBITDAC margin was 20.8%, 35 basis points higher than last year and a bit above our September IR Day expectation. Looking ahead, we see organic in the fourth quarter around 7% and full year organic pushing 9%. Margins for fourth quarter and full year should be in the 20.5% range, and that, too, would be another outstanding year. Shifting to mergers and acquisitions. During the third quarter, we remained disciplined, completing four new mergers at fair prices, representing $47 million of estimated annualized revenue. For those new partners joining us, I'd like to extend a very warm welcome to the Gallagher family of professionals. Looking ahead, we have more than one hundred mergers in our pipeline, representing approximately $1.5 billion of annualized revenue. Of these 100 potential partners, we have about 60 term sheets signed or being prepared, representing around $700 million of annualized revenue. Good firms always have a choice, and it would be terrific if they chose to partner with Gallagher. Let me conclude with some comments regarding our culture. As we passed our 40th anniversary as a public company, I believe our greatest differentiator continues to be our bedrock culture. It's a culture that runs towards problems, not away from them. A culture that supports one another and embraces teamwork. A culture that is grounded in the highest standards of moral and ethical behavior. It's a culture that will continue to guide our success for many years to come. Frankly, we love this business. We enjoy taking care of our customers, and that is the Gallagher way. Okay, I'll stop now and turn it over to Doug. Doug? Thanks, Pat, and hello, everyone. Today, I'll walk you through our earnings release. First, I'll comment on third quarter organic growth and margins by segment. Then I'll provide an update on how we are seeing organic growth and margin shape up for fourth quarter and provide an early look on 2025. Next, I'll move to the CFO Commentary document that we post on our IR website and walk you through our typical modeling helpers, and I'll conclude my prepared remarks with my usual comments on cash, M&A, and capital management. Okay, let's flip to Page 3 of the earnings release. Headline brokerage segment, third quarter organic growth of 6% without interest income. That's right in line with our September IR Day forecast, during which we signaled about a point of headwind due to the timing of large life sales. Recall that these life products are interest rate sensitive, so as we've been discussing, clients were waiting for lower interest rates. Well, the good news Pat mentioned happened over the last month or so. We are now seeing clients fund their policies. In fact, here in October, we have already caught up more than half of what had slipped from earlier quarters. So the quarterly lumpiness that we have been highlighting throughout the year is starting to swing the other way here in October, and thus, we are currently seeing fourth quarter organic towards 8% and full year pushing 7.5%. As we start to budget for 2025, our early thinking is brokerage segment full year organic growth might be in the 6%-8% range. If so, that could mean a 2025, similar to how 2024 might ultimately play out. We'll provide some more on our 2025 thinking at our December IR Day, but an early read-through is, we remain upbeat on our ability to grow, given the investments we have been making in the business, from adding niche experts, to rolling out new sales and support tools, to expanding our data and analytics offerings. We believe these actions are leading to higher new business production and strong client retention across the globe, and as Pat described, the market environment is still a tailwind for us. Flipping now to Page 5 of the earnings release, to the brokerage segment adjusted EBITDAC table. Third quarter adjusted EBITDAC margin was 33.6%, up 137 basis points over last year and above the upper end of our September IR Day expectations. Let me walk you through a bridge from last year. First, if you pull out last year's 2023 third quarter earnings release, you would see we reported back then Adjusted EBITDAC margin of 32.4%. But now, using current period FX rates, that would have been 32.2%. Then, organic and interest gave us nearly 150 basis points of expansion this quarter. Finally, the impact of M&A and divestitures used about 10 basis points of margin this quarter. You follow that, and that will get you to third quarter 2024 margin of 33.6%, and that's the 137 basis points of brokerage margin expansion. That is really, really great work by the team. As we look ahead to fourth quarter 2024, we are still expecting margin expansion in the 90-100 basis point range. And again, that would be off of fourth quarter 2023, adjusted margin for FX, which currently is estimated to be about 20 basis points lower than last year's headline margin of 31.6%. If we do that, that would mean full year 2024 could show about 70 basis points of margin expansion and 90 basis points, excluding the first quarter impact from the roll-in of the Buck merger. Okay, let's move on to the risk management segment and the organic and EBITDAC tables on Pages 5 and 6. It was another solid quarter. We posted organic of 6%. That's a point lower than our IR Day guidance because we just missed qualifying for a full revenue bonus related to one large account. That said, Gallagher Bassett continues to see excellent client retention and strong new business production, and still delivered an Adjusted EBITDAC margin of 20.8%, which is up 35 basis points over prior year and ahead of our IR Day expectation. Looking forward, we see organic of 7% and margins around 20.5% in the fourth quarter. If we were to post that, we would finish the year with organic pushing 9% and margins of approximately 20.5%. That, too, would be great work by the team. As for 2025, our early thinking is for organic growth, similar to the brokerage segment. Call it in that 6%-8% range. Turning now to Page 6 of the earnings release in the corporate segment shortcut table. In total, adjusted third quarter numbers for interest in banking, clean energy, and acquisition costs came in within our September IR Day expectations. The corporate line of the corporate segment was below our expectations, due to approximately $9 million of additional unrealized, non-cash, foreign exchange remeasurement expense that developed during September and wasn't included in our IR Day forecast. After tax, call it about $0.03. That has already reversed here in October, so it really is a non-cash nothing in our opinion, but the accounting does cause some noise. Let's now move to the CFO Commentary document. Starting on Page 3, modeling helpers. There's no new news here other than FX, so just consider these updated revenue and EPS impacts as you update your models. Turning to the corporate segment on Page 4 of the CFO commentary document. No change to our outlook for fourth quarter. Flipping now to Page 6, to our tax credit carryforwards, shows $796 million at September 30th. While this benefit won't show up in the P&L, it does benefit our cash flow for the next few years, which helps us fund future M&A. Turning to Page 6, the investment income table, we are now embedding two 25 basis point rate cuts in the fourth quarter of 2024, and have updated our estimates in this table for current FX rates. Punchline here is our fourth quarter estimate does not change much from what we provided at our September IR Day. Shifting down that page to the rollover revenue table, the third quarter 2024 column subtotal is $111 million and $141 million before divestitures. These are consistent with our September IR Day expectations. Looking forward, the pinkish columns to the right include estimated revenues for brokerage M&A closed through yesterday. So just a reminder, you'll need to make a pick for future M&A. And when you move down on that page, you'll see risk, the risk management segment, rollover revenues for fourth quarter 2024 are expected to be approximately $15 million. So moving to cash, capital management, and M&A funding. Available cash on hand at September 30 was about $1.2 billion. Considering this balance and our strong expected free cash flow, we are in an excellent position to fund our robust pipeline of M&A opportunities here in 2024. We currently estimate capacity of around $3 billion for M&A here in 2024, and it's looking like we could have another $4 billion to fund M&A in 2025, all while making solid, maintaining a solid investment grade rating. So it's another excellent quarter in the books. Through the first nine months of the year for our combined brokerage and risk management segments, we have delivered revenues up 16%, organic growth of 8%, net earnings up 20%, adjusted EBITDAC up 18%, and adjusted EPS up 17%. Those are terrific numbers and reflect an unstoppable culture. We are well on our way to another great year of financial results. Hats off to the team for all of their hard work. So back to you, Pat. Thanks, Doug. And Operator, if we could go to questions and answers, please. Sure. 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're 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 Mike Zaremski with BMO Capital Markets. Please proceed with your question. Hey, thanks for the questions. First one is on the bridge from in the brokerage segment, from 3Q organic to 4Q organic, to kind of the two-point uplift sequentially. Is are you saying most of that is life insurance? And if not, you know, it sounded like RPC was still, you know, kind of more muted. But are you saying RPC is kind of lifting off into 4Q? Is trending higher into 4Q? Just trying to understand some of the pieces there. All right. So if you're, I think when you say, you know, renewal premium changes is what you're referring to as RPC, I'm assuming. Yeah. We're not seeing underlying that our rates, that what we're seeing for rates are not different all that much in the third quarter at all, compared to what we saw in the first two quarters, and I think you're seeing that in a lot of the carrier releases right now, too. So rates for the fourth quarter, we're assuming about the same as what we're seeing here, yeah, in the third quarter, which is the same as in the first and the second. As for the increase next quarter, yes, we are getting about a point of additional organic growth from the life insurance sales. But when you bake all this in, we think that it's. We're running around 7.5% in our business right now. That's the underlying growth. When you, when you take out the puts and takes quarter- to- quarter, you know, we're, we're nicely in that 7%-8% range. Okay, got it. So no, no other seasonality or anything there. Okay, I guess- We are a little slow on the fourth quarter. It's not as big a quarter for reinsurance for us, and that has been an organic leader, or, you know, over the last couple of years, so yes, we do have a little bit of that impact because we're not so heavily weighted in the fourth quarter to reinsurance. Okay. All right. That makes sense. Okay, switching gears a bit to, I guess, the margins or just if I look at fiduciary investment income, looks like it was much better than expected, but I think you're guiding down. What caused the spike, and why is it expected to go back down? I think you have to look at our premium funding business there. When you take a look at the table on Page 6 of the earnings release, I don't think we've changed our estimates all that much, excuse me, of the CFO Commentary. I don't think we've changed all our comments all that much for the fourth quarter. Okay. Okay, got it. You also realize there can be some times where we have, obviously, fluctuations in our fiduciary cash balances, too, that can impact that number. Okay, got it. And I guess, just Doug, as a follow-up to some of the comments you made earlier on renewal premium change. So, you know, actually from a number of the carriers we've seen so far, we have seen an uptick on the casualty side in terms of pricing. And I know in the past too, you guys have had a view that, you know, what you're hearing from carriers is that, you know, they're under-earning on some of the major casualty lines. So is that still kind of in your thought process as you think to the-- you gave us some, you know, tidbits on how 2025 could play out, that there could be some price hardening on the casualty side? There's definitely some price concern on casualty across the board, and I don't know if that'll filter into discipline on their part to continue to take it up more than we're presently seeing. But as you heard us earlier, umbrella's presently rising at about 10%. The only line in casualty that seems to have a difficult time finding bottom is D&O. The rest, however, are showing strength. Thank you. I just got one number here. Our U.S. business, you know, our casualty lines are up a full point, third quarter versus second quarter. Thank you. Our next question is from the line of Rob Cox with Goldman Sachs. Please proceed with your questions. Hey, thanks. So appreciate all the guidance on the brokerage organic. I was just curious about the components. I think in the beginning of this year, you guys had talked about maybe it was a third, a third, a third exposure, new business, and pricing. I was just curious how you guys expect that might unfold in 2025? I think it's gonna be half, new business in excess of, lost business, and I think that it's gonna split the rest of it between exposure and rate. Okay, got it. That's helpful. Yeah, just curious, maybe it's a little bit tough to go through all the comments, but it seemed like maybe international retail decelerated a little bit more than the U.S. this quarter. I guess I was just curious also on your views between international and U.S. retail going into next year. Well, I think that you're gonna see strong international growth. That's where our strongest component is right now, and that does not seem to be backing off. So, if you look at our prepared remarks, we talked about the fact that, we're a good part of our growth this quarter was international. Let me see if I can find that. Yeah, and the Australia and New Zealand operations killed it this quarter, so they're up nicely. Canada is a little flattish. I mean, if you- Yeah wanna do that. If you look at the U.K., there was a mixed issue there in the third quarter also that you to see through, but by and large, I wouldn't say that there's matters anywhere that are causing us concern. International is up 10% this quarter, and Doug's count is right. The led by New Zealand and Australia. Thanks, guys. Appreciate it. Thanks. You're welcome. The next question is from the line of Elyse Greenspan with Wells Fargo. Please go ahead with your questions. Hi, thanks. Good evening. My first question, you know, embedded within your fourth quarter guidance, the 8% brokerage organic, is there any assumption for an impact on continued commissions from the recent storms? Yeah, we don't think we're gonna be heavily impacted, maybe a couple of million bucks from the storms, but that wouldn't move that. Maybe it moves it ten basis points. Okay, and then, within the guidance, right, I think you guys said six to eight brokerage for next year. Are you assuming? Yes. You know, what are you assuming for the benefits business, right? I understand there was some seasonality this year. Are you just assuming it's kind of in line with the rest of the segment? I know you typically wait a little longer to give the by segment guidance, but just because that's brought on some volatility this year, I wanted to get a sense of where you think that will, you know, head next year. Listen, if you, if you want to pick the midpoint of that range, maybe benefits is around five and reinsurance is around nine, something like that, when you're looking for a couple points on either side of the midpoint. For next year? Yeah, for next year. Okay. And then, you know, with the M&A, I know like deal flow, right, has probably been a bit lighter through the first three quarters, right, than what we've seen in prior years. Do you guys think, just given it's a presidential election year, has that caused, I guess, a slowdown in just the closing of transactions? And are you expecting, you know, more activity in the fourth quarter, early next year? How do you guys see things on that front? I think if you take a look. This is Pat. If you look at the general marketplace in terms of acquisitions, there's been a bit of a slowdown in general across the board for the last year. We've got a great pipeline. In my experience, we've got one of the best pipelines we've ever had. So I think that possibly when the discomfort, if you want to call it that, or concentration on this election finally ends, clearly, if the Democrats get in, I think there could be a rush for the door. I don't know what happens in the case the Republicans win. But at any rate, I think when things settle out, we do think there'll be continued great opportunity, and I do think that there'll be a return to a little bit more robust market. Yeah, I think if you looked at a year to date in 2021... 2020 and 2021, we were closing around 17, and 2022, we closed 19. Year to date, 2024, we're at 27. Yeah, last year, we closed 37 year to date on these tuck-in deals, acquisitions. So it was a little slower this quarter, but I think as you heard from Pat's pretty detailed comments, our pipeline is terrific right now. Then one last one on, like, that corporate line within the corporate segment. Doug, I thought you said that it was worse, right, than September IR Day because of the FX remeasurement, but that reversed in the fourth quarter. That's right. But then the Q4 guide for corporate didn't change. Are you just not modeling that in yet? Yeah, it's a good point. We might be a little bipolar on that. We might have been able to schedule a couple extra pennies on that line for the reversal of what we saw at the end of the third quarter, but that bounces around quite a bit. So I think that we'll see what happens. Again, so we just didn't feel like for a couple of pennies, it was worth changing that number. Okay, thank you. Thanks, Elyse. The next question is from the line of Gregory Peters with Raymond James. Please go ahead with your questions. Yeah. Good afternoon, everyone. Hi, Greg. Just building on your last answer on acquisitions, one of the things that struck out, or stuck out to me, I should say, is as I was going through the supplement, was the weighted average multiple for tuck-in pricing of acquisitions came down a lot in the third quarter. Is there any, maybe you can just help me understand what happened, why the multiple came down, because I don't feel like multiples are coming down in the marketplace. And Pat, in your prepared remarks, you seem to emphasize your price discipline a little bit more than usually referenced in talking about tuck-in acquisitions. Yeah, when we prepared the remarks, Greg, we just did discuss whether in the past we've been undisciplined. Understood. No, I think it's just a good reminder. You know, we have a lot of people who listen to these calls, our own people included, and this is a theme for us, that we want to do great deals at the right price. We've done that now for a good 30 years, and it's just a reminder to our own folks and to our listeners, that we do a lot of acquisitions. We try to maintain a good discipline around the pricing, and we seem to strike a fair balance between that and the great people who join us. The multiple for the third quarter acquisitions came down materially. It's like I felt like I took a step back in time. One of those acquisitions was not priced what I would say... It was priced a little under market because we have some opportunity to help it get better. Okay. Another sort of nitpicking item, you know, you were going through your earnings press release, and I was going through the adjustments to earnings, you know, to get to your adjusted EBITDA. I'm on Page 5 of brokerage, and one of the things that stuck out to me is just the huge jump up in workforce and lease termination-related charges in the year, this year versus last year, in the third quarter versus the third quarter last year. Is there something going on on a bigger scale? Is this more offshoring that's going on? Or maybe you could just help. I know it's a small item inside your income statement. Maybe you could just give us a sense of what's going on there, please. Listen, Greg. I'm sorry, Pat. I was just going to say, Greg, you hit on the offshoring thing is really continues to be a very strong play for us. And, you'll recall years ago, we started with a very small group. We're twelve thousand five hundred people strong there now, and as we do acquisitions and go across the board, illustrating the type of quality and the speed with which we can do things like issue certificates, there's pretty quick adoption. It's pretty good. Yeah, I think you're seeing, Greg, you're starting to see the flywheel just getting stronger and stronger as we benefit from scale, we benefit from technologies that we're deploying, and we're benefiting from our offshore center of excellence. It just, you know, gives us an opportunity to continue to optimize our workforce, and so I think you're seeing that this quarter. Yeah, it popped up a little bit because we had some opportunities to optimize our workforce, so you'll see that from time to time. Great. And then just step back, macro question, and this will be the last one. You know, I know your commercial customers, you know, set their budgets for the year. In the past, given, you know, the robust rate increases that you've had to sell, it seems like the market's beginning to stabilize a little bit more than, say, for it was two years ago. How are the budgets... When you hear from your customers, how are the budgets changing for their insurance spend? Is it, you're seeing more flat budgets? Are you still seeing them assume- No You know, increases? Give us a sense of what's going on there? Really not flat, Greg, two for two reasons. Exposure units, thankfully, are continuing to grow. This is how we go through our daily review of the things that are coming through audits, et cetera. We're seeing a robust economy, and that's clearly in a big part of the middle market, so from SME, all the way through large accounts, we've got the data on that. People are expanding their exposure units, so budgets are going up. Secondly, we're very, very cautious. We are not leading customers to believe that there's any kind of nirvana relative to rates. That is not what's happening. We show them our detail that we go over with you quarterly. Property is up 4%, general liability is up 6%. You may not deserve that, that may not hit your P&L, but on the other hand, you may deserve 2025, and this is a rational market, and we got to talk through that. Which leads us right into discussing how much you retain, what you bring back into the coverage stack that you might not have had before. And that's where the real strength and art of being a broker is understanding that appetite for risk that each individual account has, working with those primary buyers to decide how they're going to get their best spend. And it's not a discussion all around rate by any means. Yeah, I think you take the chaos out of the pricing cycle and have this rational pricing cycle that we're seeing right now. Our guys will show the tools and capabilities that we have, and that will shine through and differentiate ourselves. That's why when I said before that I see a better new business versus lost business year next year than we've even seen in the last couple of years. By the way, to that point, Greg, we can take clients into our data now, and I think you know this. We can say, "Clients like you buy this, and their quotes and cover looks like this, and by the way, their costs are this." Well, why is that? Think about selling or buying a house on the street. One's been taken care of, looks pretty darn good, has street appeal. The other looks like junk. Guess who gets the better price? Why don't we try to get you looking more like the house on the street people want to buy? That, back to my point of art, is what it's all about to be a good broker, and that's why when we get a rate environment like this, I feel very confident talking to our salespeople about, "We, we better see some increased sales, folks. Let's go. ... Fair enough. Thanks for the answers. Thanks, Greg. The next question is from the line of Dean Criscitiello with KBW. Please proceed with your questions. Hi, I was hoping if you guys could provide maybe some additional color on the sequential decrease in the organic growth in brokerage, especially in the context of that, you know, renewal premium change holding up pretty strong sequentially. Listen, I think I said earlier that our first quarter is strong because it's a heavy reinsurance quarter, right? We've talked about some of the life insurance being a little lumpy, but if you bounce those two things out of there a little bit, again, we're running around 7.5% organic growth each quarter. So while it looks like that on the face, yes, we're at 6% now, but we warned that there was a full point of headwind against that. Also, we're not seeing substantial rate differentials, you know, rates between the quarters. So really underlying it, when you carve out the seasonality of a couple of our businesses, some of the mixed differences between when property renews versus when casualty renews, the life lumpiness, you got to take our word for it. It's pretty steady underlying. Other than that, you know, those things that I've said. So it's pretty steady right now underlying. Yeah, and if you want to go back three or four years, D&O is up 300%. So by line, by geography, these rates do make a difference. They move. So we're not seeing a D&O renewal anywhere near the 300%. In fact, they're... it's off five or six. So the percentages do move. This is not an environment where you say for the next 10 years, good news is it's 4% a quarter, big bang, boom. Got it. That makes sense. And then my, my second one, a few of your competitors have made some large acquisitions to help, you know, improve their middle market capabilities, and I was wondering what, what implications do you think that have on the competitive environment going forward, sort of being that you guys are, you know, a dominant player in that space? I don't think it has any impact, to be perfectly blunt, on our business at all. Okay. Thank you. Thanks, Dean. The next question is from the line of Mark Hughes with Truist Securities. Please proceed with your questions. Yeah, thank you. Good afternoon. Doug, could you give early margin thoughts for 2025 for brokerage and risk management? I have not. I will in December as we go through the budget, but I will say this: you know, we post 6%-8% organic growth next year. It's there, Mark. There's an opportunity for us to continue to get better. Our scale advantages are coming through our technologies, using the offshore centers of excellence. It still gives us an opportunity in an environment that we're seeing with current wage inflation, with current inflation in the, you know, in other categories of our spends, that we continue to have opportunities to get better and better. And when you're punching out 6%-8% organic growth, the underlying margins will absolutely have opportunity for expansion. Very good. And then could you give organic broken out by the wholesale components and then reinsurance? I think you might have given those collectively at up 8%, but do you happen to have the components of that? Yeah, you know, listen, some of, like, our affinity businesses might be at 12%. Some of our program businesses might be around that 6%. I think our open brokerage is, you know, somewhere around 9%, 8% or 9%. The reinsurance is somewhere around 8% or 9% this quarter. So I would say other than a couple, you know, maybe the affinity business is just a little better this quarter and maybe the program business just a little below that 8%. But the reason why we loved them together, and it was just to shorten the script, but, it, you know, there's not a lot of difference when you're looking at, you know, around 8%. Understood. And then, any comment, Pat, on the mix shift out of admitted into the E&S lines? Yeah, I think it's a really interesting one, Mark. I think we're seeing continued tremendous submission supply into our wholesaling operation, RPS. That has not slowed down, which is really interesting, and we are not seeing accounts flowing back to the primary market at any great extent. So the excess and surplus market, which we know has gobbled up a big chunk of the P&C market over the last five, 10 years, seems to be continuing its growth, and it's maintaining its accounts. And I think that's, you know, we've got people in RPS that bring more than just pricing to the deal. There's a lot of expertise there. There's a lot of layering and structuring that goes into some of these deals that your local retailer, ourselves included, quite honestly, 50% of our wholesale business goes to RPS. That's for a reason. So, I think it's both professional capabilities as well as market access, and that market is still growing nicely. Thank you very much. Thanks, Mark. Our next question is from the line of Alex Scott with Barclays. Please proceed with your questions. Hi, thanks for taking my question. So I mean, when I hear what you're saying about reinsurance and the strength and growth there, the wholesale business, you know, seems like it's growing very nicely as well. You know, when I look at the 6%, you know, and maybe run rate closer to, you know, 7% and change, but does that mean, you know, I guess it obviously means that the businesses other than reinsurance and wholesale, like the more core retail, is doing something lower. Is there anything, you know, that's causing some of the price there to not flow through? Is that just maybe some of the property deceleration we saw? I'm just trying to understand, you know, that piece of it specifically. What are some of the trends you're seeing in puts and takes headed in the next year for, you know, the core retail piece of it? Yeah. Always keep in the back of your mind our benefits business. That business is running around 5%. You know, take out the large life cases and stuff that bounce around a little bit. So, as you think about those that are above that, you know, 7% range, yeah, you've listed them, but you also have to remember that the benefit business is naturally runs down below that level. Some of our actuarial services businesses run a little bit lower than that. But as I look across the organic, across all the operating, we mentioned that Canada was about flat. But by and large, there's a few that offset each other, but it's not like there's any one particular area that is systemically running below that level right now. Got it. And then maybe if we can go back to reinsurance. I mean, the growth rate you're anticipating sounds pretty robust there, despite the flat pricing. And I just wanna see if you could add some color around that. I mean, does that have to do with demand? Can you talk a bit about what you're seeing in terms of your clients' demand for reinsurance? Yeah, I think demand seems very, very strong, which is good news for us. Also, I think our level of expertise in helping clients in a market environment where there is capacity, and they can move around how they play in that capacity. It's a very strong demand for our consulting capabilities around reinsurance. What's the next move for the carriers that are our customers? So you have both. You've got demand. I think you have more utilization. There's strong growth at the primary level, and all that flows up into the funnel for reinsurance. And as one of the top three players in that business, we have a lot of good prospects on the list. Great. Thanks for the responses. Sure. Thanks, Alex. Our next question is from Katie Sakys with Autonomous Research. Please proceed with your question. Hi, I apologize. Thank you for the question. There might be some background noise. There's a fire drill going on right now. I wanted to circle back to the subject of valuations, so you're thinking about acquisitions in the middle market that are, you know, really concentrated in excess of $15 million of revenue. We've seen a couple of those lately, and the multiples on those deals have been a lot higher than we've seen in the past. I was curious how that compares to what you guys are seeing for those larger middle market deals, and whether your appetite to participate in larger acquisitions has shifted at all? Listen, I think that there's no question the larger you are, probably the higher the multiple might be for somebody that's out there looking for an opportunity. But, you know, when we look at our tuck-in acquisitions, I think that people understand that we'll pay a fair price, and the advantage is they get to stick with us. They get to become in, and they get to work inside of a broker. It's a broker selling to a broker. They understand that if they decide to take our stock, that they get to participate in equal form as you do, as I do, as Pat does, everybody else in this room. It's one stock for every person. They get our resources. They get to put their employees and their clients into an environment where actually joining us is going to deliver considerably more career value and more insurance value to their customers. So many times they look at it, and they say that they get the opportunity to continue on doing what they're going to do, and so they get excited about a 10x, 11x, or 12x. That's the reality about it, is they're making a great return for their family, and they know they get to continue doing it with us for as long as they would like to do, in their career, and that's valuable to them, too. Don't forget that. Let's also take a look at the landscape. Now, we don't talk about this, I think, enough, because the big deals get big headlines, and they are big platforms. We estimate there's 29,000 agents and brokers in America. Last year, Business Insurance, last July, Business Insurance ranked the top 100 in the United States. Number 100 did $30 million in revenue. So there's 28,900 brokers in America, that's firms, not people, that are out there trading. And that's why we say 90% of the time, which continues to be consistent over the last decade, when we compete in the marketplace, we're competing with somebody smaller. And it's probably less than 10% of the time, really, that we're competing with Marsh & Aon, who are the only larger brokers in the world today. It's not that we don't compete. We do. There's a robust market at the top end. When you think about that, we can use our funds, as Doug says, at lower multiples. We can have 100 of these opportunities in our pipeline. We can be pricing out 70 of them and possibly put on $1 billion of revenue with people that want to join us, haven't joined somebody else, want to bring their culture and their people aboard, a culture that fits and matches theirs. As Doug said, a brokerage run by brokers. It doesn't get the press, but it seems like a pretty good strategy and a good use of our cash to us. Got it. Thank you so much for the color. Hey, you better evacuate, Katie. Our next question is from the line of David Motemaden with Evercore ISI. Please proceed with your question. Hey, good evening. Just had a question in brokerage, and the contingents were up 24% on an organic basis. I was wondering if you could just talk about what was driving that in the quarter? Yeah, listen, I think that, you know, when you're talking about that, it's another $7 million-$8 million of where it developed from. We just had, you know, between our benefits business and our U.S. retail business, that's where we picked up a few extra contingents in the quarter, or our estimation for those contingents in the quarter. So there was nothing special in there. Again, you know, we might give a couple million of that back next quarter because of the storms and floods, but by and large, it, I would say around the possibility of what could happen, it was a few million dollars in both of those businesses. Got it. Okay, that's helpful. And then I guess just a bigger picture question. You know, I heard the commentary on the term sheets being prepared, or that have, you know, in the process of getting signed with $700 million of revenues. Do you have any stats historically on just how many of those close? Like, what percentage of those closed in the next year? Just to help us level set how much the contribution could be going forward. We really don't. David, here's the thing, every one of these is a very interesting story unto itself. You've heard me say, I mean, I think the longest time we spent talking to a prospect and getting to know each other was 20 years. So sometimes they happen in a quarter, sometimes they take a couple of years. And but when we get to pricing and we get to putting together a letter of intent, we're getting serious, and that's a deal that's gonna get decided in the next six months. So I don't really have a stat on how many of those do close, how many don't. It's a full-on sales process. It's just like selling insurance, frankly. If you don't have a lot in the hopper, you're not gonna close a lot. Yeah. No, no, that makes sense. We feel very good about these 60. You know, you can ask me this every quarter, and I will try to give some color. Right now, we feel very good about the deals that we're proposing right now. I would think we'd have a good shot at an awful lot of those. Okay, that's good to hear. And then, just finally, so it sounded like the U.S. retail P&C organic slowed a little bit. I think it was 5%, if I heard that right, and I think it was 6% last quarter. Was that just the large account property business that you were talking about that has re-accelerated here in the fourth quarter? Yeah, listen. I'm just looking at my sheet here. If it moved, it moved a half a point, one way or another. We did have more. You know, first quarter was just a little bit better than that, but second quarter is about the same number as what we've got right now. Great. Thank you. Thanks, David. Our next question is from the line of Grace Carter with Bank of America. Please proceed with your question. Hi, everyone. I was hoping we could talk about the contingents a little bit more. Just given kind of the ongoing conversation around the casualty market, I was wondering if how y'all are thinking about any potential risk of maybe some of the pressures from the casualty line that we saw in contingents last quarter, resurfacing over the next few months? You know, if it did, we're talking a few million bucks. I mean, I wouldn't call that as being a systemic issue that we're gonna have to face. Just like with the storms, it's a few million. You know, there are some corridors, you know, that we do have caps in our contingents, and so sometimes if the carriers have, let's say, maybe a loss, more losses than they had hoped, it may still let us get to our full contingent level because there's caps on that. So right now, we're not seeing a lot of pressure from that in, not only in our past book, but as we look forward, in the booking. If carriers continue to strengthen their casualty rates the way they have been and what they're saying and what we're hearing from them, what we're reading about what they're saying, it should maintain our contingent level also. Thank you, and just a quick follow-up on the lumpy life sales. If I'm understanding correctly, y'all are expecting pretty much all of the timing issue to work itself out in 4 Q, or should we expect any sort of kind of lagging impact from that in early 2025 as well? What I said is already here in October, we have recouped half of what had been the timing that had come out of this first and second quarter. Excuse me, second and third quarter. So we're gonna pick up. So far it's half. We think that we've got a pipeline maybe to recover it all between now and the end of the year, and then we'll start over again. Just like every other sales organization, we got to start over next year and go out there and see if we can gen up some opportunities. But this product is becoming more and more necessary for many not-for-profits in order for them to be competitive in their executive benefit package. This is a product that we think has long legs over the next, you know, many years, you know, several or many years. Thank you. Thanks, Grace. Thank you. Our last question is from the line of Mike Zarembski with BMO Capital Markets. Please proceed with your questions. Oh, great. Just a quick follow-up on life insurance. So, just, ballpark, what percentage of your brokerage revenues are life insurance? And I don't know if you want to split, break it out into this new product that might be more lumpy or just growing faster over time than just, you know, traditional life. The lumpy business that we're talking about is about a $125 million business. Okay. Then, okay, that helps explain why it could move organic by that much. Okay. Thank you. That's all. Have a nice... Thanks, Mike. I think that's it, operator. Thank you again, everyone, for joining us this afternoon. We had an excellent third quarter, and we're well on our way to delivering another excellent year of financial performance. I'd like to thank our 55,000 colleagues around the globe for their hard work and dedication to our clients. We look forward to speaking with you again in person at our December investor meeting in New York City. Thank you very much for being with us this evening. We'll talk to you then. This does conclude today's conference call. You may disconnect your lines at this time.