Welcome to the Marsh & McLennan Companies conference call. Today's call is being recorded. First quarter 2016 financial results and supplemental information were issued earlier this morning. They're available on the company's Web site at www.mmc.com. Please note the remarks made today may include forward-looking statements. Forward-looking statements are subject to risk and uncertainties and a variety of factors may cause actual results to differ materially from those contemplated by such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, including our most recent Form 10-K, all of which are available on the MMC Web site. During the call today, we may also discuss certain non-GAAP financial measures. For a reconciliation of these measures to the most closely comparable GAAP measures, please refer to the schedule in today's earnings release. I'll now turn the call over to Dan Glaser, President and CEO of Marsh & McLennan Companies.

Thank you, Matt. Good morning and thank you for joining us to discuss our first quarter results reported earlier today. I'm Dan Glaser, President and CEO of Marsh & McLennan Companies. Joining me on the call today is Mark McGivney, our CFO, and our operating company CEOs – Peter Zaffino of Marsh, Alex Moczarski of Guy Carpenter, Julio Portalatin of Mercer, and Scott McDonald of Oliver Wyman. Also with us is Keith Walsh of Investor Relations. Before we begin, I would like to highlight a recent addition to our management team. Earlier this month, John Doyle joined Marsh as President, reporting to Peter Zaffino. John is also a member of the Executive Committee of MMC. Many of you know John, a highly regarded insurance industry leader. Most recently, he was CEO of AIG's Commercial Insurance business worldwide. John's appointment illustrates our continuing commitment to retain and attract talented professionals to Marsh & McLennan. Before moving on to our results, I thought I would spend a few moments talking about Brexit. It is a timely issue with the upcoming June vote. We have a significant presence in the UK and in Europe. And London is important as a major global insurance center. As you would expect, we have considered the potential ramifications for MMC. As I have said previously, we are supportive of the EU and believe Britain's inclusion makes both Britain and the EU stronger economically, politically, and strategically. On a macro level, while difficult to predict what the ultimate effects might be, Brexit would likely create an environment of uncertainty and volatility for the UK and the entire EU. This could last for last several years with potentially significant economic and political outcomes. The EU would be a weaker institution without the UK, which is its second largest economy…

Thank you, Dan. And good morning, everyone. In the first quarter, we delivered solid underlying revenue growth in each of our operating companies, while maintaining control of operating expense. GAAP EPS rose 3% to $0.91. And adjusted EPS increased slightly to $0.92. As Dan mentioned, I will walk you through the retirement related items that make our earnings comparisons to last year's first quarter challenging and give you more clarity around our underlying results. You will recall, in the first quarter of 2015, we recognized a non-recurring credit of $125 million as a result of changes to our US retiree medical plan. Late in 2015, we made additional retirement plan changes that essentially replaced this credit not only for 2016, but beyond. As discussed on our last two earnings calls, the most impactful of these changes was to divide our US defined benefit plan into two separate plans. As a result of these changes, coupled with the many other factors that go into the measurement of our annual pension expense, we expect the year-over-year decline in retirement expense for 2016 of approximately $30 million or $0.04 per share. Although retirement expense will decline for the full year, it increased in the first quarter of 2016 compared with a year ago because of the significant credit we recorded in last year's first quarter. The increase in retirement expense in the first quarter of 2016 compared with the first quarter of 2015 was roughly $0.10 per share. Eliminating this impact, in the first quarter of 2016, MMC produced double-digit growth in adjusted EPS, high-single-digit growth in adjusted operating income, and meaningful margin expansion in both segments. For the year, we expect to generate underlying revenue growth, increased operating margins in both segments, and strong growth in earnings per share, with improving growth…

Thanks, Mark. Matt, we're ready to begin Q&A.

Thank you, sir. [Operator Instructions] We’ll go first to Jay Gelb with Barclays.

Thanks and good morning. It would be helpful, Mark, for us if you could just give us what your view is of baseline 2015 adjusted EPS as there are a lot of moving parts last year, especially around the retirement plan?

So, Mark, you want to take that?

Yeah. Sure, Jay. I think the best way to think about this is 2016 reflects a good baseline. It’s really the one-time nature of the credit we had in the first quarter of last year, which I said in my prepared remarks, if you look at year-over-year retirement expense, the impact was roughly $0.10 a share in the first quarter. But I think 2016 is a good baseline.

In terms of the outlook for close to the 13% EPS growth for 2016, I’m just trying to figure out what 2015 baseline was…?

Remember, when we talked about last year, we encouraged people to think about our full year results. So I think if you look at our results for the full year, our $3.05 last year is a good number for us for baseline for 2015.

That’s what I thought. Just wanted to make sure. My second question is on the share buybacks. The $2.3 billion of capital deployment in dividends, share buybacks, and acquisitions was the same, as you said, at the end of the year. The buyback pace is a little faster than I would’ve anticipated in the first quarter, so I just wanted to get a sense of whether $1 billion of share buybacks in 2016 is still a reasonable assumption?

Jay, we’ve never outlined a number of $1 billion. We actually said a couple of times in previous calls that we expect the return of capital to shareholders to look more similar to 2014, which was a number of like $2.3 billion. And so, if you look at that, and you say, ‘well, dividends are going to be $650 million to $700 million,’ it leaves you about $1.6 billion, maybe $1.7 billion between acquisitions and share repurchase. Just to be clear, share repurchase for us is an important commitment, and our commitment is to reduce the share count each year. We actually favor organic investments in our business, our dividend strategy, and our acquisition strategy over share repurchase. But if we favor share repurchase over building cash on our balance sheet, and I think that’s the way to look at it.

I appreciate that. Then my final question, I’m certain my estimates are not as important, based on the actual results, the RIS margin for this quarter is a lot higher than I would’ve thought and Consultings margin was lower than I would’ve expected. Is there anything we should keep in mind on that mix of margin, especially relative to the year-over-year comparisons?

No, I think when you look at – and I’ll hand over to Mark in a second because he can go through a little bit about what was in the first quarter of last year versus what’s not. In our view, both RIS and Consulting have been on a multi-year expansion of margin track, and that’s continuing. And the noise in terms of the big credit that we had in the first quarter of last year, what we said last year was that, it did not impact Consulting all that much, but it was really weighted toward RIS. And that maybe is one of the reasons why you were talking about your estimates a second ago. But, Mark, what would you say about that?

Just a couple of things. I would say the first quarter 2016 represents a fair baseline. And when you look back to last year, remember that the two headwinds we were dealing with – both a significant increase in pension expense and FX and the one-time credit, so – and I know it’s a little tough to compare year-over-year. If you think about what a good baseline is, I think our results this year are fair – a fair baseline.

Thanks very much.

Okay, take care, Jay. Next question?

We’ll go to Quentin McMillan with KBW.

Thanks very much, guys. I just wanted to touch on the strong growth that you had out of the US and Canada. You put up 10% growth overall. The 2% organic was maybe just a touch below what I would’ve expected, but the 9% M&A growth, can you talk about where the growth – how the growth is working for Marsh & McLennan Agency, maybe where Marsh & McLennan Agency’s overall revenue base is currently, and any expectations that you sort of have for that business and related to the M&A growth?

So, basically, I’ll start it off and then I’ll hand over to Peter to talk a little bit about MMA and MMA strategy. And, first of all, we’ve always been a company that is built upon underlying growth and growing our existing businesses on a same office, same line of business basis and making sure that we never become reliant on acquisitions for growth. Having said that, we have an acquisition strategy. And over the last couple of years, we have acquired more firms and committed to more capital to acquisitions because of the opportunities that we saw. None bigger than Marsh & McLennan Agency. But, Peter, you want to talk about where MMA is currently?

Sure. Thank you, Dan. The answer is going to be very similar to some of my commentary in some of the prior quarters. The premise behind MMA has been that the middle market in the United States provides an opportunity for higher growth in the large accounts base, and that has largely proven to be true. We think it’s a very good segment. We’ve acquired the highest quality agencies, just adding Celedinas in the first quarter which is a high net worth personal lines agency, best-in-class, out of Palm Beach. We’ve shared best practices. We’ve been heavily investing in sales capacity. And we have a very balanced business between employee health and benefits and property and casualty. So we’re very pleased with the acquisitions that we’ve made. Strong organic growth. And I think the last part of your question was just roughly what the size is. And we think, by year-end, with no more acquisitions, if we weren’t to do any – we do have a very strong pipeline – but as of today, the annualized revenue is approximately $950 million.

Thanks very much. And then secondly, just a slightly bigger picture question, a couple of the underwriters have talked about a little bit of a back-and-forth with the brokers in terms of commission percentage and what’s going on with the weaker rate environment. Can you guys just comment in terms of what you’re seeing in working with your underwriter partners and the give-and-take between what your commission rates have been and where that stands now?

I guess that’s confirmation that prices – or at least waiting levels are under pressure when you get some of the tit-for-tat between the brokerage community and the underwriting community. The people around this stable have been on both sides of that aisle and have been involved in the market for a long time. So we’ve seen many cycles. And so, I would say right of the back, this, to me, doesn’t strike us as unusual in any way. The market itself, over the last 30 years, has almost always been highly competitive with bouts of reactionary, episodic tightening. But, in general terms, it’s usually always very competitive. And so, we have built our business around the capability of operating in highly competitive insurance market cycles, not around operating when the market is tightening. I can’t really explain to you in depth. I’ll leave it up to them as to why underwriters write more new business when rates are declining than when rates are rising or why they are willing to provide higher levels of retail commissions when rates are reducing versus when rates are rising. I’ll leave that over to them to talk through. But we are operating in our strategy. We don’t think anything untoward. Our relationships with our carrier partners are very close, perhaps closer than at any time in my career. We work on a lot of strategic projects together, showing how we can build our business and grow the pie to the mutual benefit of our clients. Do you have any other questions?

No, that’s great. Thanks very much, guys. And congrats on the quarter.

Okay, next question please.

We’ll go to Michael Nannizzi with Goldman Sachs.

Thanks. Just to pick up on that a little bit on the MMC Agency side, what is organic growth – the organic and inorganic growth look like as far as that subset, MMC Agency? Is that something you could just give us some indication of what that’s tracking right now?

No, I don’t think we’re going to break out the Agency as a subset. We haven’t done that before. And I know if we do it once, we’ll do it forevermore. So I think we’re going to keep that to ourselves. I would say what to refer to is the strategy that we laid out all the way back in late 2009. Our basic premise was, we believe we could create the highest quality agency in the United States and end up with a SMEs and middle market and upper middle market company which was well balanced between property and casualty, employee benefits, and personal lines, and that that would grow faster organically than overall Marsh at a similar or higher level of EBITDA margin. And that strategy is holding. But we’re not going to break out the subset.

Got it. I guess it’s getting close to Guy Carpenter size. Does there comes a point in terms of just thinking about standalone, where you’ll consider that or it is what it is?

We are currently in the it-is-what-it-is phase of development of MMA. But it still has a tremendous amount of runway. And I imagine, at some point in time, we will consider whether that should be broken out and shown separately. But it certainly won’t be anytime in the near future.

Got it, okay. And then, just quickly on the Consulting side, with Oliver Wyman growing as fast as it has, with all due respect, you guys have been talking about slowing growth there for a long time. It just keeps going. How should we think about the margin impact in Consulting if Oliver Wyman continues to run ahead of the rest of the business from a growth perspective? Was that a net headwind or a tailwind for margins of that segment if that continues to happen?

Couple of things. I think it’s important for us to have an overall view of the Consulting segment. One, you have to just start with looking at the size of Mercer relative to the size of Oliver Wyman and recognize that if Mercer isn’t generating margin improvement, it would be very hard for the segment to show margin improvement regardless of where the top line is for Oliver Wyman at any point in time. Clearly, we are pleased with Oliver Wyman’s revenue performance over the past two years. But I would just caution everybody that the vast majority of Oliver Wyman’s revenue is non-recurring project work. And so, new projects have to be added continuously for us to even maintain levels of revenue, let alone grow it. So we know, as a leadership team, that Oliver Wyman will have a more – higher level of volatility on the top line than any of the other three opcos. And that is one of the reasons why we have built a model where Oliver Wyman’s compensation model is very performance-sensitive. So their expense base naturally – their expense base, which is largely compensation and benefit, naturally flexes with their revenue line, and so – up or down, Oliver Wyman has much more of a revenue impact on MMC than an earnings impact.

Perfect. Thanks so much.

Okay. Next question please.

We’ll move next to Elyse Greenspan, Wells Fargo.

Hi, good morning. I was hoping to spend a little bit more time on Guy Carpenter. The growth was stronger than you saw within Marsh in the quarter. I know that’s an area that you guys have been making some new hires. Are you going to just talk about the new business and the growth that you are seeing there, as well as just provide an outlook on based on the current market conditions for the balance of the year?

Sure. Alex?

Okay. We’re very pleased with the 3% underlying growth. That’s probably stronger than we had expected and we had strong new business and the pipeline remains good. Tailwinds, we’ve been facing for the last five years, but we still achieved organic growth in 27 of the last 29 quarters. So we are a sort of forward-leaning company and we know how to grow it. New business was very good in the specialties area, in EMEA. The other regions were strong, particularly on the retention side. The new hires that we brought in have had some effect so far, but actually we’re expecting to see more of that effect coming through the following months, particularly as we increase our participation with the larger companies, with a very nicely balanced organization, and we think that we’ll be able to continue with moderate growth for the rest of the year.

Okay, thanks. And then just a little bit on the growth within Marsh, I know you mentioned strong growth still within MMA, but, overall, Marsh did slow a little bit in the Q1. How do you think about the next three quarters of the year? Any growth trends that might cause you to change that outlook or you might think that the number might come in a little bit higher during the back half of the year?

Peter?

Thanks, Elyse. In a business the size of Marsh, there’s always a lot going on. As you said, the 2% underlying growth, if you compare it to the fourth quarter, I would encourage just to take a look at the full year. The first quarter 2016 does represent the 24th consecutive quarter of underlying revenue growth. So I’m very proud of Marsh that we’ve been able to build an organization that can generate organic growth in the short, medium and long-term. As Dan mentioned and I reiterated, we have very strong performance in MMA, but we also had solid growth across our emerging markets and very good growth in employee health and benefits. Having said that, there were few things that tempered growth in the quarter. The first quarter is highly dependent on the mature markets within Marsh, particularly Continental Europe, which renews about half of its book in the first quarter. And we have a terrific business in Continental Europe. But just based on the macros and insurance conditions, it has historically grown in the low-single-digits and that’s what happened in this quarter as well. We are facing some headwinds in the insurance market. We know there is an abundance of capacity. We’ve had a little bit of pricing pressure in the quarter. It did temper, but it is – it’s been happening for the better part of the last few years. And we continue to weather the slowdown in some of the commodity-based economies like Australia, Canada, Brazil. Great businesses, but just a little bit of tempered on the growth. So if I step back and take a broader view, I’m really pleased with the key fundamentals, meaning the clients that we’re retaining, strong new business, continue to expand into new products, had a terrific progress we’ve made on cyber. We’re about up 80% year-over-year on brokerage and in premium and expect to see a very strong trend continue. And our investments are highly driven by delivering superior value to clients and I feel really good where we are.

Thanks, Peter. Elyse, anything is?

Just one quick question, in terms of – you guys did mention on the leverage increase modestly, building up in the first quarter. How do you think about your leverage ratio for the balance of the year and just in terms of how that might impact your capital return? Thank you.

I think the way to look at it is is that the leverage ratio will move around a little bit with EBITDA and with the timing of when we raise debt and that sort of thing. But we ended last year at about 1.6. And whether we were at 1.5 or 1.8, we’re in a range of debt-to-equity type of – debt-to-EBITDA type of leverage. I would say we’ll just remain in that range for the foreseeable future.

Okay, thank you.

Next question please.

We’ll go to Larry Greenberg with Janney.

Good morning and thank you. Just going to try one more on M&A. So the contribution in the quarter for Marsh was higher than it’s been in a long time. I’m just wondering, given the transactions that you’ve done to-date, is that a reasonable run rate contribution for the next quarter too?

I think I’ll start with that. But I would say it really depends on the timing of when the larger acquisitions come in. I don’t have the schedule right in front of me, but my guess is that that kind of run rate only lasts for a short period of time until we start laughing when we pull in other acquisitions from previous years. And so, from that standpoint, it’s dependent in large part as to whether we do anything in the short term now either in terms of what kind of acquisitions we put on. But, basically, when we look at acquisitions’ overall impact on revenue, it’s been between 2% and 3% over the last several years. And I think that’s probably, as a total company, a better way of looking at what acquisitions are doing to our revenues, 2% to 3%.

Okay. And then, Mark, I know you said FX de minimis over the balance of the year, but will we still see a negative impact in the second quarter and then maybe that offset over the second half?

Mark, do you want to take that?

I think, Larry, and as I said in my prepared remarks, this change – and I just want to emphasize that the outlook that we’ve given is based on rates – spot rates this week. We’re at the point where the euro is now up 5% from where it was a year ago, the yen is up 9%, and the Aussie dollar is flat. But if we had gone back a month ago, the guidance would have been different. So just take it all with a grain of salt. But that de minimis comment would carry for the next three quarters, so second quarter as well.

Thanks.

Next question please.

We’ll move to Kai Pan from Morgan Stanley.

Thank you and good morning. So first question for Mark. And thank you for the detail about the EPS impact year-over-year. I just want to drill down to the margin impact because looks like, by my calculation, if you take out $125 million margin benefit in the first quarter 2015, so the year-over-year margin actually improved about 170 basis points. I just want to confirm that. And also, if that’s the case, so it’s very strong compared with the margin expansion for the past few quarters. So I just wonder, given the current 3% to 5% organic growth, you can still deliver that strong margin expansion going forward.

Yeah, Mark, you want to take that?

As I’ve said in my prepared remarks, the net impact is about $0.10. If you do the math, it’s roughly $75 million. So, remember, the $125 million one-time in the first quarter of last year, so pension expense is also down this year somewhat as well. So you really have to take out both pieces. So we did say we had – when you make this adjustment, meaningful margin expansion overall and in both segments. But I think if you use $75 million, not the $125 million, you get closer to the right ZIP code.

Okay. And then the larger picture question is that a lot of carriers talking about market disruption from both M&A as well as some reorganizations. I just wondered, from a brokers’ perspective, where do you see opportunities?

So I’ll take that broadly and then I’ll other hand over to Peter to talk a little bit more about the impact of re-underwriting and acquisitions and consolidation. Generally, when we look at it, I think we said it in a couple of calls ago, with all the consolidation, there’s actually more insurance companies in our space in the United States than there were 10 or 15 years ago. And so, it’s still a very fragmented, competitive marketplace. And we see very little – there used to be – when I look earlier in my career, say, 25 years ago or so, there was this huge qualitative difference between the larger carriers and midsize carriers. Because the midsize carriers, in large part, are staffed in leadership teams with people who came from the larger carriers, that qualitative distance between the two doesn’t play out quite as readily. And so, there’s ample companies for us to talk to and have meaningful relationships with and discussions with our clients with in a tripartite way. We have really core relationships. If anything, this level of refocus from some of the larger carriers has created a deeper closeness between the working teams at Marsh and their counterparts in the underwriting companies to make sure that – we want our clients to be with people who want to write that account. And so, we want to make sure we know clearly what the underwriting appetite is and what the commitment to the future is. And so, therefore, there’s been a lot of dialogue and a lot of interaction at a strategic level. So we feel pretty good about where we are. But, Peter, you want to add to that?

Yes. I don’t think there’s much to add, Dan. I think you covered most of the key points. We want to make sure that we are focusing on providing the best advice to our clients, with all the changing dynamics that are happening in the industry. While there’s been a decent amount of changes, perhaps through acquisitions and some of the leadership changes, by and large, across the world, the risk appetites have not changed that much. We are trying to find ways in which we can create more product, whether it’s in cyber or in terrorism or making sure that we simplify the insurance product. And so, I would add, as Dan said, we have such a close relationship with so many of the insurance companies and trading partners that we’re always trying to improve the experience for our clients and making sure that we are anticipating the changes that are happening around the corner and not just being stagnant in today’s market. But by and large, we don’t see anything that is a major dislocation for clients and I think it’s – we will continue to trade as we have in the past.

Thank you.

Thank you. Next question please.

We’ll go to Sarah DeWitt with JP Morgan.

Hi, good morning. On the brokerage organic growth of 2%, is that a level where you think you can expand margins over the long-term?

Peter, you want to take that? And why don’t you talk about a little bit more broadly because we don’t do margins for individual opcos? But if you just look at that kind of level in RIS overall, what would your comments be?

The 2% long-term growth, it’s hard to make significant investments as well as expand margin. But we’ve been making a lot of investments over the past five to seven years. And we are in a place where if we had 2% over the short, medium term, I think there are opportunities to expand margin because we built in a lot of efficiencies within Marsh. An example would be, in the United States, something called a Qualified Solutions Group. It’s an investment we made three or four years ago to streamline the process of placement, working with insurance companies to get more contract certainty, using technology to make it more efficient for our client experience, and just getting a better product with some of our largest trading partners. That is something that, I think, will yield deficiencies and opportunities for margin expansion through top line growth and lower expense. So we’ve made a lot of investments over time. But if you’re in a multi-year 2%, it is hard to expand margins. But don’t think that’s the world we are in.

Okay.

Any other questions, Sarah?

And just to clarify, the 3% to 5% organic growth this year, is that for each segment or just the company overall?

No, that’s when we look at the company overall.

Could brokerage, risk and insurance services be in that range as well?

It’s hard to tell. Certainly, our expectation is not that we have any kind of long period where brokerage is operating below 3% organic growth. But there could be periodic periods where that happens and we’ll manage the business accordingly. If I look at my brokerage segment and you effect for the pension credits we were talking about before and eliminate those from last year and this year in terms of the way you look at the business, both segments increased their margins. So RIS increased their margins in the first quarter despite the level of growth. And so, I’m pretty comfortable we could manage the business. But we’ve said several times in the past, as a company, we believe we drive for margin when the company grows at 3% or better. And if the company grows less than that, our margins may improve because of the efficiency gains et cetera. But our view is, generally, we are more comfortable growing margins when our organic growth is 3% or better.

Great. That’s helpful. Thank you.

Thanks. Next question please.

Next, we’ll go to Dave Styblo with Jefferies.

Hi, good morning. Thanks for the questions. First one was, just a little bit on the competitive landscape, and one of your peers earlier reported about retention levels that just weren’t as high as they had wanted. Curious to hear or see, are you guys continuing to track along what you’d expect for your given market share, your pro rata growth of the end market or has this been a period where you’ve maybe been able to pick up a few lives – excuse me, some additional membership to – from the employer base to help offset the pressures that we’re talking about in Continental Europe and so forth?

Yeah, I would say, overall, throughout, whether you’re looking at Consulting or RIS, our account and revenue retentions are very consistent with where they’ve been in the past. And so, there has been no impact. We absolutely do believe in each of our segments that there is a potential future benefit from flight to quality in times of uncertainty and volatility, which we would pick up in the future. But, today, it’s very competitive. We’ve been maintaining our positions on accounts and our client level of retention and revenue retention on those clients is very consistent with how it’s been over the last several years.

Very good, okay. If I could drill into the margins a little bit more, starting in RIS, so I know in the first quarter of 2015, I think you guys talked about a normalized margin of 27.6%. So off that, we’re up 150 basis points, so maybe some of the pension changes here helped that a little bit. But can you bridge us to the increase, especially in light of the organic growth being maybe at the lower end of your range? I know, obviously, you’ve made these investments you’ve talked about over the last five to seven years, maybe that’s paying dividends. But was there any sort of one-off activity that helped margins or what is driving that margin increase?

I’ll just repeat some of the things that I’ve said earlier in previous years. Margins are important, obviously, and they are part of how we drive to get to our long-term CAGR of 13% on EPS. But when we run our business and we create our own strategies, margins are one of the financial metrics that we care about least. We look at organic growth. We look at operating income and earnings growth and we look about the air between our revenue growth and our expense growth. And so, margins are a natural outcome of us managing the business properly, right? So that is the fundamental strategic view. I can tell you, I really don’t give a hoot about margins in any one quarter. We run our business in a way of, how did we do over the course of year – one year and multiyear basis. Our margins have been on a track. We’ve been talking about margins with the investment community for a lot of years now. And I just have to say that 2016 is going to be the ninth consecutive year of margin expansion and the seventh consecutive year of margin expansion in both segments. And so, our margins are going to go up as an outcome of the way we run the business. But in terms of the inside baseball of margin in one quarter versus margin in another quarter is not meaningful to us.

Fair enough. Fair enough. Thanks.

Okay, thank you. Next question please.

We’ll go to Ryan Tunis with Credit Suisse.

Hey, thanks. Hate to follow this up with another question on margins, but just curious, thinking about the currency, that’s clearly been a headwind for so long. How should we think about that? Is that – does it flip to a tailwind? What’s been the headwind for margins, if any, and what type of positive impact could that have if the dollar is no longer a headwind?

If you look over the past several years, we’ve talked, for example, how constant currency last year, we would have produced something like 14% or 14.5% EPS growth rather than the 8% or 8.2% or so that we posted. So, clearly, it’s been a headwind for, like, five years. I should say, over a 20-year period, it’s been a wash. But in shorter periods, it, obviously, has an impact. If we get a tailwind on FX, boy, will we be happy? And it would translate into easier ability to make our typical long-term 13% CAGR on EPS. And so, we view that as an absolute positive development if it happens. But I’m not sure if there is anything more I can say on that. Mark, do you have anything?

2015 was such an unusual year for FX. But, generally, FX has kind of gone plus and minus in a range and it has generally a modest impact on margins that we really haven’t talked about. And the impact even in the early part of this year has been relatively modest. So we really don’t think about it all that deeply in a normal year.

Okay. So modest impact on margins. And then, I guess, just shifting gears over to Mercer. And, I guess, looking at the organic growth in investments and just trying to parse through how much of that is just difficult comps, the new business environment, or to the extent to which the macro environment or just the investing environment in general could drive what organic growth could end up being for 2016?

Ryan, I want to give you a pat on the back because I was worried about Julio napping at the end of the table. So, Julio, you want to take that?

Yeah, Ryan. Thanks for waking me up. Very appreciated. Let me see if I can do a little level-setting and then I’ll get into the investments business. The Mercer portfolio, as you know, is a pretty diversified and balanced portfolio, whether you speak of it in terms of geography or line of business or any kind of portfolio or client segment. And as you can imagine, there can be puts and takes across a portfolio in any one quarter. But we have consistently now delivered growth for several quarters in a row. More importantly, we are well-positioned to continue to produce short, medium and long-term profitable growth. As you’ve heard me speak about before, we’re very disciplined in disinvesting in areas where we cannot achieve that profitable growth and investing in areas that we can on a consistent basis. A good example of that is the way we repositioned the portfolio around growth strategies; investments being one of them; health exchanges; workday implementation, you’ve seen us invest there; Alexander Forbes, improving our geographic footprint; while disinvesting, for example, in the recent decision be made on DC admin recordkeeping business. So we continue to do that as a dynamic and discipline in the organization that’s now built into our culture. As it relates to the investments business, I think you already mentioned that we had a tough comparison in the quarter to the first quarter 2015, in which we had exceptional growth of 13%. I must tell you, though, that overall, though, investment pipeline is strong. It’s looking good. There will be some, again, gyrations because of external environment on occasion. But the investments we’ve made and the kind of client organic growth that we are experiencing continues to give us great confidence that they will contribute to profitable growth.

Okay. And then I just had one really quick one for Mark. Just thinking about the pensions stuff, I don’t want to call it the offset, but the lower pension expense this year, is that more disproportionately located in Risk Services versus Consulting? Thanks.

Mark, do you want to take that?

No, I would think about it sort of distributed – there are many ways to get at it. But, no, it is something – our employee populations participate across our operating companies in our plan. So I think you can think about it, if you use revenue as a base or employees as a base or comp and benefits, I think you’ll be fine. But it affects the whole company.

Next question please.

We’ll go next to Charles Sebaski with BMO Capital Markets.

Good morning. Thank you for getting me in. I know there’s been a lot of talk about margins and I don’t want to talk about them from the basis of this quarter or quarter-over-quarter. But I’d appreciate you guys’ thought on a multi-year basis. What can the business get assuming you keep your 3% organic growth, right? There’s margin. Is there an upward bound, I guess, is what I’m thinking? If you think about – if I think of the RIS business, it was 22.5% operating margin last year. Can this be a 26% or 27% business in the future? Is there headwinds where you get – a point where you reach where it’s – that’s as far as it goes at the compensation levels or other parts that there is just some natural impediment? Where is the upward bound in a normal operating environment for the business?

Yeah. There’s a couple of things. One, you’ll know that I don’t actually like creating target numbers on things like margin because I think targets have a way of people trying to get there or touch it as being, ‘okay, target achieved,’ and then you see it shrink back again. At the end of the day, I do not want to create boundaries on how either of our segments could perform in the future. We have all kinds of advantages in terms of efficiency, technology, expense synergies, revenue synergies that we’re capturing within the company. So comparisons to how the company operated in a decade or 15 years ago are not really that relevant for us. So I keep it very open in terms of – what I do say and what I know Peter and Julio and Alex and Scott say when we’re talking to our teams is do not drive for margin at the expense of investing for the business or for organic growth. And so, from that perspective, I just think it’s important for you to know the way we look at it. Having said all of that, we’ve been talking about margins essentially for the last eight years. And the story for us has been pretty consistent. We expect to be able to grow margins because we run our business in a way that expenses almost always grow at a slower pace than revenue. We expect to continue to do that. Clearly, that level of difference varies based upon when our margins get up to, let’s say, very high levels sometime into the future. Then we’ll be very happy to grow expenses at the same pace as revenue because we would have such a fantastic business. We already have market-leading margins relative to the mega brokers, and so we feel pretty good about where they are. And I’ll just remind everybody that when we look at margins and talk about it, we look on a multiyear basis. As I look over the last four or five years, both segments have grown margins between 400 and 500 basis points. And so, I could’ve easily set a target or some sort of threshold number four of five years ago because I remember conversations where people would say, ‘well, do you think you can grow your margins 200 to 250 basis points from where they are today?’ And, boy, am I glad that we didn’t say yes to that and create some sort of hurdle to where we’ve now felt we’ve achieved it, so now we won’t grow them anymore. We’re just going to let the businesses run and see where that takes us. But we’re quite confident that 2016 will be the seventh consecutive year that you see expansion in both segments.

Okay. And I guess into the business and I think one of the things that might be helping that, I’d be interested in any kind of color on the Marsh ClearSight, on the data and analytics. I guess I’m curious, at this point, how prevalent that is within the book of business, if you could give any kind of example on how that might be helping to lead organic growth or just improving the business or retention as that part of the business seems to be gaining importance and recognition?

Yeah. I’ll just start by saying data analytics as a way for us to capture value from the scale advantages that we have in both of our segments is an important part of our future. And so, there is a significant amount of activity in each operating company in these fields of data analytics. ClearSight specifically is a unit within Marsh and, obviously, it has a focus on data and analytics, but Marsh’s focus goes far beyond ClearSight. But, Peter, you want to add to that?

Yeah. We’ve started this journey many years ago in terms of trying to harness and capture the rich amount of data that exist within Marsh to the benefit of our clients. We have expanded our analytics platforms to be able to give our clients much more insight in terms of volatility, any catastrophe exposure, predictive modeling and really tying it all together. One great example of that is, as we rolled out an IMAP technology – and we think it’s the industry’s only mobile real-time analytics platform – that allows our clients to have interactive discussions with us based on market conditions, based on overlaying a rich database to show them benchmarking and peer reviews and we do measure RFP statistics where we have a full comprehensive analytics approach versus a more traditional, and our win ratio is significantly higher. And I think we will continue to make investments on the data analytics side. We have a significant amount of claims data and want to be very focused on the SME segment as well in terms of providing insight.

Okay, thank you.

No, go ahead, Charles.

I was just wondering, is that data and analytics pushing down into MMA as well or is that product and service only within the more traditional Marsh side?

It is pushing into MMA as well. There is just a different value proposition for middle market clients than there is for large clients. So the actual delivery of that is a bit different. But, yes, it is going into the mid-market and providing insight.

Charles, and to other people on the call as well, I just want to make the point that data analytics and innovation in general is really across the piece. And there’s a lot of activity within RIS, but there’s certainly a lot of activity within Mercer and Oliver Wyman as well. Julio, you have a couple of things to say about that?

Yeah. We’ve been, of course, focusing on being able to understand more about behaviors of our clients and being able to apply it to some of our solutions. Health would be a very good example of that. As we continue to build, as an example, Mercer Marketplace, we’re building our own database that we can be able to continue to look at and analyze and be able to make solutions tied to the relevant outcomes of that data analysis. And so, we have a lot of work going on around that. The rest of our health portfolio, same thing. We’ve also introduced all sorts of different ways to be able to attract the demands that are necessary to be served for clients. For example, Mercer Match is a new innovation that we put together that’s based on collecting neuroscience data and also matching it with gamification, so that assessment of potential pools of candidates could be made much more easily with higher outcomes, positive outcomes for our clients. In addition to that, another example would be Harmonise which we have launched in the UK, which is database-driven analytics that allows us to, in one-fell-swoop tool, deliver push information for individual employees to make decisions about – informed decisions about their benefit choices. And that’s now been launched in the UK and also in Ireland. So the data is a very strong foundational base that is driving our innovations and our future solutions matching to our clients’ needs.

I think we have time for one more question, Operator.

We’ll go to Vinay Misquith with Sterne Agee.

Hi. Can we just stick with one question? Given the 2% organic growth in the brokerage operations, if you could just help me understand the puts and takes on two fronts. Number one, the economy and – the stabilizing economy and how it has had an impact on organic growth? And, two, pricing, because, historically, we've seen when pricing was weak in the industry, the economy has been much stronger. Thank you.

I’d just say a couple of things and then, hopefully, I’ll leave a little room for Peter. But just, overall, let’s not get too technical here, it’s one quarter. And if you look at the economic impact of one quarter, there’s usually a significant lag factor between what GDP is doing and what’s happening in the insurance arena. Peter, you want to talk a little bit about, let’s say, exposure units versus rates and where we end up on that, whether it’s positive or negative?

Yeah. Dan, thank you. And we didn’t talk a lot about pricing. But we did see pricing temper both sequentially and year-over-year in the quarter. So international business has a little bit more rate decrease when compared to the US and Canada. Property still leads the rate decreases, although it is tempering. And we have seen modest increases in exposure in total insured values, sales and payroll. And we’ve also had a number of yield initiatives across the world. So when we aggregate everything, it really does amount to a modest headwind.

Is that okay, Vinay?

Yes, thank you.

Okay, thanks a lot. And I’d like to thank everyone for joining us this morning. Even though he did not get a question, I’d like to thank Scott and the Oliver Wyman team for growing 15% in the first quarter. So thank you very much. I’d like to thank our shareholders for their investment in our company, our clients for their support, and our colleagues for their dedication. A core priority for us is to foster a culture of integrity, accountability and performance in everything we do. We are proud of the progress we have made and we’re excited about the path before us. Have a good day.

That does conclude today's call. Thank you for your participation.