Welcome to Marsh & McLennan's Conference Call. Today's call is being recorded. First quarter 2021 financial results and supplemental information were issued earlier this morning. They are available on the company's website at mmc.com. Please note that remarks made today may include forward-looking statements, including certain expectations related to COVID-19 and other matters. Forward-looking statements are subject to risks 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 Marsh & McLennan website.

Thank you. 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. Joining me on the call today is Mark McGivney, our CFO; and the CEOs of our businesses, John Doyle of Marsh; Peter Hearn of Guy Carpenter; Martine Ferland of Mercer; and Scott McDonald of Oliver Wyman. Also with us this morning is Sarah Dewitt, Head of Investor Relations. Marsh & McLennan had an outstanding start to 2021. Our first quarter results were excellent, and we are well positioned for a very good year. Even though the pandemic is ongoing, our underlying revenue growth of 6% is the highest in over 6 years and accelerated sequentially across every business. We also grew adjusted EPS by 21% and generated significant margin expansion. Our business has proven resilient throughout the pandemic. And with the global economy now beginning to turn the corner, we saw an acceleration in our growth. With 6% underlying growth to begin the year, we now expect full year 2021 underlying revenue growth to be at the high end of our 3% to 5% guidance range and possibly above. As we look ahead, the outlook for the U.S. and many of the countries we operate in is encouraging. However, many parts of the world continue to suffer with high levels of infection, and there is still a significant amount of uncertainty. GDP in the U.S. was close to flat in the first quarter and strong levels of growth are expected, starting in the second quarter, due to a rebound in demand as the impact of vaccines takes hold, along with favorable economic comparisons to a year ago. Meanwhile, in India, Brazil and many other parts of the world, case counts continue to rise and broad levels of vaccination remain a long way off. Our proprietary pandemic navigator now forecasts that the U.S. will achieve the herd immunity threshold by early to mid-summer, and we see a fairly similar time line in the UK. These milestones bring hope for reopening and economic growth, although it will vary by country. We are also mindful that the risk exists and that there still are many unknowns, such as variance of the virus, the efficacy of vaccines on the variants, the duration of immunity and vaccine hesitancy. But we are resilient and are confident we will be able to adapt to a wide range of scenarios, just as we have since the beginning of this crisis.

Thank you, Dan, and good morning. Our first quarter results were outstanding, and we are well positioned for a very good 2021 despite the continued uncertainty associated with the pandemic. Underlying growth accelerated across all of our businesses, and our margin expansion and earnings growth were impressive. Consolidated revenue increased 9% in the first quarter to $5.1 billion, reflecting underlying growth of 6%. Operating income and adjusted operating income were both approximately $1.4 billion. Our adjusted operating margin increased 260 basis points to 29.6%, GAAP EPS was $1.91, and adjusted EPS was $1.99, up 21% compared with the first quarter a year ago. Looking at Risk & Insurance Services. First quarter revenue was $3.2 billion, up 11% compared with the year ago or 7% on an underlying basis. This marks the highest level of underlying growth since 2012. Adjusted operating income increased 17% to $1.1 billion, and our adjusted operating margin expanded 210 basis points to 36.6%. At Marsh, revenue in the quarter was $2.3 billion, up 13% compared with a year ago or 8% on an underlying basis. This was Marsh's highest level of underlying growth in nearly 2 decades. Growth in the quarter was broad-based and driven by double-digit new business growth and solid retention and was impressive considering Marsh's strong growth in the first quarter of last year. The U.S. and Canada division delivered another exceptional quarter, with underlying revenue growth of 9%. This is the highest quarterly underlying growth U.S. and Canada has achieved since we began reporting their results, and they have now averaged 6% underlying growth over the last 12 quarters. In international, underlying growth was strong at 6%, marking the highest underlying growth since 2013. EMEA was up 6%, with strong results in each region, including in the UK. Asia Pacific was up 8%, a strong rebound from the fourth quarter and comes on top of 6% growth in the first quarter of 2020. And Latin America grew 6% on an underlying basis, continuing to show sequential improvement. Guy Carpenter's revenue was $895 million, up 8% or 7% on an underlying basis, driven by strong growth in North America, EMEA, Global Specialties and Latin America Treaty. Guy Carpenter has now achieved 5% or higher underlying growth in 12 of the last 14 quarters. In the Consulting segment, revenue in the quarter was $1.9 billion, up 6% from a year ago or 3% on an underlying basis. Adjusted operating income was $370 million, and the adjusted operating margin expanded by 330 basis points to 20.5%.

Thanks Mark. Operator, we are ready to begin Q&A.

Thank you. Our first question comes from Mike Zaremski with Credit Suisse. Your line is open.

Hey, great, good morning. First question, thinking about some of your comments about organic growth, so this quarter, clearly, excellent 6%. I believe, Dan, you said that for the full year, you could potentially be over the guide. And you also said you expected Mercer’s organic growth levels to improve in 2Q. So if I understood correctly, then I think it implies that there might be some deceleration in parts of the business in later quarters. So maybe just kind of curious, were there any kind of one-time items in nature or things we should be thinking about in the back half of the year that could show less positive momentum?

Sure. So, why don’t I take that to begin with, and then I will hand off to each of our business leaders, so they can talk a little bit about their growth prospects and how they looked at the quarter and what they are looking at going forward. I would just start by saying we have got real momentum right now. I mean the U.S. economy is getting stronger. The JLT integration is well behind us, and the combined organization is emerging from the pandemic strong, focused and on our front foot. New business generation was terrific across the business and in particular, at Marsh and Oliver Wyman. So when Scott and John speak, they can talk to you a little bit about their new business. But overall, retention was strong, growth was broad based. On the RIS side, pricing is a tailwind, and we are benefiting from some disruption in flight to quality. That said, Mike, there is nothing one-off or unusual about our results. So, we are not really going to get into, in coming quarters, do we expect a deceleration. Obviously, as Mark was saying, we start to get some easier comps on the top line and some tougher comps on the expense line, but it will play itself out, and we expect to have a very strong year. But why don’t we start with Marsh, and John to just talk about growth a little bit. John?

Thanks Dan. Mike, as Dan noted, nothing particularly one-off in nature about the growth in the quarter. I was very pleased with the start to the year. Mark gave a bit of an around the world view in his prepared remarks. But just a little bit more color. Specialty growth was particularly strong in the quarter, in FINPRO, in our private equity practice, construction and energy, also very, very strong results in the quarter. We had good growth in benefits. Our MGA and affinity operations also had a good quarter. So, I was quite pleased with it. I think we executed well for sure. Dan talked about our new business. The renewal line was strong as well. We are very, very focused in what’s still a very difficult market for our clients. But I think we are positioned well. And as Dan noted, the economy is picking up in some important markets for us. There is still obviously some uncertainty as Dan and Mark both noted in the macros, but I am very, very pleased with the start to the year.

Thanks, John. Let me go to Peter for a couple of minutes. Peter, Guy Carpenter has grown considerably and consistently over a number of years now. But Peter, what are you thinking about growth right now?

Thanks Dan. Mike, our model is consistent growth over a long period of time. I think we have demonstrated that, as Dan said. We do benefit from the rate increases that are going on in the market. But the bulk of our income is coming from new business wins, and it’s well balanced across all of our businesses from North America, Latin America, Middle East, Asia Pac, global specialties, all have recognized strong growth in the first quarter, and we see the same holding true for Q2. Now Q3s tend to be very small quarters for us. So, there is more volatility inherent in them. But over the past few years, we have shown once again that even with smaller quarters, based on the disciplined approach we had to new business and the approach of growing in any market condition, we have demonstrated our ability to grow.

Thanks Peter. Mike, you mentioned Mercer. So Martine, you want to talk about growth at Mercer?

Yes. Sure, Dan. We are very pleased with our quarterly – quarter 1 2021 results, especially since we were facing a comparison of 5% growth same quarter last year. We have seen increased demand in our services, sequential revenue growth months-to-months during the quarter and a return to growth actually in March. We know that during the pandemic, clients have postponed discretionary work due to uncertainty and also employment levels have dropped. But now we expect tailwinds from economic and job growth partially offset, of course, by the continued structural decline in the client benefit. But clearly, we see a return to growth for the rest of the year, starting with Q2. In terms of demands, our investment business, investment management business, in particular, with lots of demand in the alternative space, and ESG and being seemed investment opportunities is strong. We started the year with strong inflow. Demand for digital solutions around the whole of business is also strong. Health has been resilient through the pandemic, and we see lots of demand in our Darwin health platform and global benefit management. And we have seen quite a good uptick in Korea as well with demand for engagement surveys, transformation of the workplace, return to a new normal redefinition of the way to work. So overall, it looks like a strong rest of the year for Mercer.

Okay. Thanks Martine. So, we have often said how Oliver Wyman is a bit more sensitive to business confidence, economic outlook, etcetera. And their strong growth actually bodes very well for the company overall. But Scott, do you want to talk a little bit about Oliver Wyman and how you see at least the quarter and the next couple of quarters?

Yes. Happy to round out on growth for us. So, we had a really strong quarter, as you saw. I think that is driven by business confidence across really all of our sectors, particularly strong growth in the U.S. and Europe. And the growth was really widespread across all the types of business we do, whether that was a growth strategy, digital or technology transformation, some restructuring and in new areas like climate and sustainability. So, it felt really healthy. I think though, Mike, given the volatility in our business, it’s just important to maintain a long-term perspective. And we continue to be able to think we can grow the business at mid to high-single digits over the long-term. In the shorter term, with the current robust demand, the strong new sales, combined with the weaker performance from last year, we may exceed that long-term target in any quarter and possibly for the year overall.

Thanks Scott. So Mike, I know that was a lot, but I figured there would be a lot of questions on growth we might as well go around the horn and hear from our business leaders. So anything else, Mike?

Yes, that was great. And one last quick follow-up, I believe you – Dan, you said the Marsh pricing index came in at 18%, down a little bit from 22% quarter-over-quarter. I think some investors may want to focus on that stat. So, I just wanted to get maybe potentially some more color. Pricing clearly is a tailwind. I know you said that, but I believe the majority and maybe vast majority of your revenues are on a fee basis. So, I think the beta in terms of kind of sensitivity to pricing, It’s not as influential as other brokers that are maybe more commission based. I am trying to – maybe if you can give any color around how to think about the deceleration in pricing? Thanks.

Sure. And let’s just be clear. We are on the client side of the table. So, these are – even at an 18% deceleration from 22% in the quarter sequentially, these are trying times for our clients and Marsh brokers are working really hard to put together the best package, the best solutions in the circumstances. John, you want to talk a little bit about commission versus fee and the impact of the rating environment on your overall growth just, in general terms?

Sure. Mike, about 60% of our revenue is commission based, but about 50% of Marsh’s total revenue is exposed P&C pricing, right. So we have commission in the benefit side as well in some markets. So as Dan noted, it’s still a very, very difficult market for our clients. And obviously, an uneven economy for so many of our clients. And so our clients, of course, are adapting to that. Some in this market and certainly throughout 2020, we are choosing to retain some more risks, whether it’s through higher retentions or lower limits. Our captive management business is experiencing pretty strong growth as well as an indicator of maybe how our clients are reacting to the market. But it’s still a difficult market. The D&O market, the excess casualty market in the U.S. and the cyber markets remain the most challenging. On the other hand, the work comp pricing continues to be pretty favorable for our clients and was modestly down. Pricing was modestly down in that product area here in the United States. So, the underwriting community is clearly concerned about elevated cat activity was obviously a busy cat quarter in the United States in the first quarter. The word lost cost inflation, lower interest rates, but my expectations is that we will continue to see some moderation of price increases throughout the rest of the year. Again, I expect prices to be up year-over-year, but I do expect them to be up somewhat less than they get up in recent quarters.

Thanks John. Next question please?

Our next question comes from Elyse Greenspan with Wells Fargo. Your line is open.

Hi. Thanks. Good morning, my first question, digging into another topic, expenses. In your prepared remarks, you mentioned continued low T&E in the first quarter. You also mentioned, right, some tougher comps year-over-year. And then obviously, once we get towards herd immunity, right, we could start to see somewhat of a pickup in T&E. But can you just help us think through the expenses? Any sense of how we should think about kind of run rate when we kind of get through COVID in terms of what says you can guys can kind of potentially keep on an ongoing basis?

Sure. So at least many companies, including Marsh & McLennan reduced expenses significantly, particularly in the second quarter and third quarter. And as you know, last year, we started coming back. It had positive expense growth in the fourth quarter because we did some hiring and that sort of thing. The largest reductions were in T&E and our view is that will be a gradual comeback. We believe people will travel with more purpose and more for thought than pre-pandemic, and we are certainly going to encourage that within the company. We are going to try to get away from the – anytime anywhere, hop on an airplane culture and pause and say, okay, there are important times where you go visit a client or you go visit a market. That’s absolutely to be sure. But we have proven that we can operate effectively remotely. And so we want to create that a little bit of pause and say, “Can I do this?” via a remote access like a Zoom or Teams, etcetera. And so it also is important for us in terms of as we manage our carbon footprint going forward, and it’s important for other companies, I think to act in a similar fashion. So, now one thing that let’s not lose sight of, even though there may be some pressure as some expenses start to come back, as we go through the year. That’s actually good news. That means that the world is recovering, the economy is recovering that means business is getting back to normal, that has growth implications for us. And longer term, we have learned a lot during this pandemic period, and we believe we can be a leaner, more agile organization. And that has implications. That means that while the office is core to our culture, and is a central part of how we operate, we know we can operate with more flexibility and more agility than we have done in the past. And longer term, that has implications for our real estate expense, which are quite heavy. And so I would expect that we will be able to get some savings there over time. Do you have another question, Elyse?

Yes. Thank you. And then my second question on the capital side of things, you guys alluded to, right, you did one deal in the Q1. My sense is that we are kind of seeing a little bit of a slowdown around some broker deals just as we – I think the expectation, right, that we could see a pickup later on in the year when there is certainty around tax reform. So, I guess I wanted to see if you guys kind of agreed with that when you were thinking through the capital plan for the year? And then did you say where we are in that $3.5 billion as of the end of Q1?

Sure. So a couple of things, and then I will hand over to Mark. I mean overall, just to bear in mind that PayneWest is April 1. So that was not a first quarter item. It’s beginning of the second quarter. But we wanted to call it out because it’s an important acquisition for the company. We have been at it for 150 years, and we have been acquiring firms for that entire period of time. Let’s not forget Henry Marsh and Donald McLennan came together and formed Marsh & McLennan. And so we don’t pay much attention to what’s happening to the tax rate, capital gains or what interest rates are because we are not looking for companies to combine with and to join us who really are just playing the economics. We cultivate relationships over long stretches of time. We almost always for our important acquisitions are in exclusive discussions with the other company. And we are coming together because we see value on both sides. We can grow better together. We can serve clients better together, etcetera. And so I don’t believe that we don’t have a budget around acquisitions. We go through our process and what happens, happens as we go through. But ultimately, let me hand to Mark and he can talk about capital management more broadly and what we have available for this year and our expectations of how we would likely use it. But Mark?

Thanks Dan. So Elyse, let me just run you through. So we still expect, as you said, roughly $3.5 billion of capital deployed this year, and I will just run you through the math of how that breaks down. We have already spent the $0.5 billion that we had targeted on deleveraging. So as I mentioned earlier, we pulled forward our July debt repayment. Dividends will run around $1 billion, and that leaves $2 billion of that $3.5 billion available for M&A and share repurchase. Dan mentioned that we closed our PayneWest, which was a chunky deal. And our M&A pipeline remains full. It’s always hard to predict how much we will actually do. But our hope is that we see a meaningful amount of M&A this year. But we also expect that we will see a meaningful amount of share repurchase, at least enough to see our share count go down this year.

Thanks Mark. Next question please.

Our next question comes from Phil Stefano with Deutsche Bank. Your line is open.

Yes. Thanks. Good morning and looking at the organic growth, I guess for international, in particular, I was surprised that the strength just given how it feels like the vaccination rates and the impact of COVID is still a bit of a headwind there. I was hoping you could talk about the potential that the different regions have to the rollout of the take-up rate of vaccinations and how we think about economic development and it might be trailing. Could there be slowdowns coming as we see fourth waves that we are fortunately not going to get in the U.S.?

Yes. I mean, we had good international growth overall in the company, both in Marsh, but also on OW and Guy Carpenter as well. And Mercer had sequential growth. So overall, I mean I would also bear in mind that over the last couple of years, we have digested the biggest acquisition in our history, and that had some headwind with us as well in terms of revenue growth. And we have seen – and disruption. So, we have seen a nice comeback in places like Latin America and also in Asia Pac than what we have been experiencing for the last year or so. But the big winner, in terms of turnaround, was UK. John, you want to talk about your business in the UK a little bit?

Sure, Dan. Phil, as you noted, there, of course, will be ups and downs on a global basis in any kind of normal economy. And obviously, we are still recovering and still in the pandemic, as Dan noted in his prepared remarks earlier. But I was very, very pleased with our performance in the quarter in the UK. It’s been a bit of a stress point for us over the last 18 months or so. Some of it related to just indigestion from coming together with JLT and some headwinds there. But we saw good growth, a lot of it from our middle marketing UK business, but also in the specialty areas, as I noted before, particularly strong growth in our financial lines business. The D&O market, as I said earlier, is difficult for our clients, very, very meaningful cyber growth in the UK and construction and energy were off to a terrific start. Elsewhere in the world, I think just another bright spot to point out, we saw very, very good new business growth in Australia. So, I was quite pleased with that. So yes, it was an improved performance by the international team, and we expect continued good momentum.

Anything else, Phil?

Yes. I have then a follow-up on the M&A discussion from earlier. Dan, you had mentioned when you buy things, you tend to be kind of the sole buyer at the table. I am sure there is a political way to ask this, but I am just going to be direct, so apologies. But Aon and Willis is going through a transaction, and it feels like there is going to be some businesses that come out of this that ultimately need to be divested. As I think about your global position, can you be involved in the process, right? Not whether or not you choose to be and anything is going to happen, but just given your size, is this a process you can be involved in? And can you take a look at kind of what’s being shopped?

I mean, I think the general idea of divestment would be to satisfy regulators’ concerns about having enough competitors in the marketplace. So, it would be unusual for them to look to us as a possible answer. I mean we are open to all ideas, but ultimately, I think it’s unlikely that we would be a participant in all a very small area in that kind of vein. Now having said that, there are plenty of very good, high quality firms that we are in discussions with. And so when we look at our M&A pipeline, we look over the course of years, not over the course of months, and we have got a very rich pipeline of companies that we are having discussions with. So, we feel very good about our ability to continue to add to the strength. And I would just use that as a backdrop to growth in general. Like we generally feel that underlying growth is the most important measure to evaluate the health of the overall organization. So, our focus is generally on underlying growth. But every once in a while, you have to look at GAAP, what’s the company doing on an overall basis. And if I just look at RIS, as an example, first quarter last year, we grew a very big organization on a GAAP basis, 20%, and followed up in this first quarter by an 11% on top of the 20% on a GAAP basis. We are significantly growing the organization. And on the consulting side, it was more like a 5% on GAAP last year, followed by a 6% this year on GAAP. So we are having good underlying performance, but we are also having a much larger organization and growing a much larger organization. Next question, please, operator.

Our next question comes from Jimmy Bhullar with JPMorgan. Your line is open.

Hi, good morning. Most of my questions were answered, but a couple of points. First, on the deal environment, can you talk about competition for deals, especially sort of small and mid-sized deals? It seems like valuations have steadily gone up over the past few years. And then on pricing, you spoke about sort of a slowdown in reinsurance and a slowdown in overall – in your index. Can you talk a little bit more detail about lines of where you have seen the most noticeable change over the past 3 months, up or down?

Okay. So I will talk about your M&A point, and then I will hand off to John and Peter Hearn, so they can talk a little bit about the rate environment and a little bit more debt, although that’s really inside baseball. Ultimately, when we look at deals, as I mentioned before, we are not chasing any deals. Your conclusion that multiples have gone up over the last number of years is absolutely true. Multiples are higher, which means we should be more selective. And it means that we should understand the pro forma calculations in a deep way, because most of these organizations are private. So, the pro forma results are far different than the actual results over the previous years and there can be a disconnect in terms of what expectations are versus the reality of a performing business. Now, our goal is actually to buy high quality firms. That’s our primary goal. Firms that match our culture, where there is good chemistry, where the leaders plan to stay in the business and keep growing the business. And there are a number. It’s still a very fragmented market, and there are a number of small to mid-sized companies in which we are able to speak with who really recognize the value of Marsh & McLennan. I mean we can demonstrate the companies, the amount of additional mega producers that are developed post-acquisition by Marsh & McLennan than existed pre-acquisition. So, joining Marsh & McLennan is good for the production force of these companies. And that is a – that’s our unique selling proposition. The capabilities and resources of the organization broadly enable producers to be more successful than they otherwise would be. But John, do you want to talk about rating environment? And what’s been moving around the most? Yes, I think it’s pretty high level, and then we can move on to Peter on that.

Sure Dan. Jimmy, I covered it before. What I would say is that in most geographies and in most major product lines, there was a slight moderation in the average price increase in the first quarter as compared to the fourth quarter. It was pretty consistent, I would say, is probably the most notable thing when you look at it on a line-by-line basis and country-by-country basis. So prices on average, again went from 22% to 18%. As we have shared in the past, this is – our index skews to large accounts. The middle market pricing is more modest than that. I think the most notable quarter-to-quarter change was in cyber, where the average price increase actually doubled from the fourth quarter into the first quarter from high-teens to mid-30s. And so – and as you might expect, given the exposure environment there, our cyber sales are growing quite rapidly at the moment.

Thanks. Peter, do you have anything to add?

No. I would reflect much of what John says, Jimmy, in that reinsurance pricing has been reasonably consistent by line of business over the past several quarters. And I think it’s – the capacity is adequate, demand is high. As John said, lines of business, like cyber, have been more capacity constrained, but there is still capacity available at a price. And I think at the end of the day, the reinsurer approach to our client base has been reasonable, and it’s been based on experience and exposure of the individual client. And so prices, I wouldn’t say, have gone down. I would say prices have moderated, but that’s based on capacity. But it’s a function of exposure and experience by client. It is not a broad based across the board rate increased for everybody regardless of how you performed.

Thank you.

Thank you. Next question please.

Our next question comes from David Motemaden with Evercore ISI. Your line is open.

Hi, good morning. I have a question just on some of the disruption that the Aon-Willis deal could be having in the marketplace as you look at teams and hiring? Maybe you could just talk about how that’s progressing? And Dan, I think you talked about adding 500 people in headcount last quarter in terms of strategic hires. I was just wondering maybe to give an update on that this quarter? And how you see that progressing throughout the year?

Yes. I mean, we expect to be a real employer of choice in the business. And – but we are a big company, we have got 76,000 people. So, whether we lose a team of 20 people or hire 10, or 20, or 30 individuals, ultimately, it’s not a huge needle mover for us, but it’s a way for us to build our strength, build on the mountain of talent that we already have. The 500 net headcount increase in the fourth quarter didn’t all come from Aon and Willis, although the majority did. And I think in the first quarter, we are up over 100 heads net from Aon and Willis. And I would expect that kind of thing to continue. This is a competitive environment and I do believe working at Marsh & McLennan is a choice, not just for companies going through consolidation, but for experts broadly within our industry.

Got it. That’s helpful. Thanks for that Dan. And then I guess just another question. Just taking a look at other operating expenses, those were down quite a bit year-over-year. I think it was down 10.5% year-over-year versus basically flat last quarter, both against pre-COVID comps. I guess I am wondering, were there any timing or sort of delayed expenses this quarter outside of T&E or any sort of other sort of COVID-related expense reductions during the quarter?

Yes. No, the comparison is a bit different. Things like meetings, for example, like you take the first quarter, what do you do when the year starts, you get together and you talk about growth. So, that happened in 2020. It didn’t happen in 2021. But – so meeting some advertising, some use of facilities, that sort of thing. But we are not really overly concerned about the expense comparisons. We were always working to move our other operating expenses down. To me, the glory would be a nice, solid, chunky comp and ben ratio and a much lower other operating expense ratio. That’s the kind of thing over time that we want to do. And we have all kinds of initiatives in the firm to try to reduce other operating expenses as a way to deliver better margin, but also to deliver better comp and ben ratios as well. And as you will note, comp and ben ratios were up in the quarter. And so that to me is a pretty good thing. Other operating expenses down, comp and ben flat or up. That’s a pretty good result, with delivering big margin expansion for shareholders as well. Next question please.

Our next question comes from Meyer Shields of KBW. Your line is open.

With a question for Peter, you have described, I think consistently high reinsurance demand and solid capacity. Does the Florida – the upcoming Florida reinsurance renewals, does that look any different than what we have seen so far in 1.1 and 4.1?

Peter, right over to you.

Yes. Thank you, Dan. Meyer, if we look through the rest of the year and obviously, June, what is the next big renewal date, I think we have to separate Florida from the rest of the – of our portfolio because it’s a different animal in a lot of different ways, not only from a regulatory environment, not only from a capital environment, not only from a capacity environment, not only from a legal environment. So, as we look out into the rest of the year, we anticipate that for the broad percentage of our portfolio that pricing will remain consistent. Again, as I just said, it isn’t based on individual client exposure and experience. Florida, obviously, has gone through quite a turbulent time not only from a loss standpoint, but an underlying erosion of capital due to heightened litigation. What that’s resulted in is demand is actually going to be less because people are re-underwriting their books of business to deal with some of the spikes and exposure that they have. But overall, I would say there is more than enough capacity in Florida. And for the non-frequency layers and more capacity layers, there will be plenty of capacity. And for the lower down, higher risk layers, pricing will go up. We are still unsure as to what the dimensions are. We are expecting mid to high-single digits for loss experience, high loss experience. And it’s still wait-and-see. But a lot of the capital in Florida comes from third-party capital, unlike the rest of our portfolio say for our retrocessional business.

Okay. That’s tremendously helpful. Thank you. And then I was hoping to slide in a question for John. When you look at the small account component of your domestic P&C business, can you talk about how that – whether pricing or underwriting asset has changed over the last 3 months to 6 months?

Sure, Meyer. Really, in most market cycles, middle market, the small commercial pricing just doesn’t move with the same level of volatility that we see in the upper middle market and in large multinational accounts. And that this market cycle, really the last couple of years, it’s been quite consistent with that observation. We saw, most of last year, small commercial. And there is a bit of not every insurer looks at the market kind of the same way, but small to the lower end of the middle market, we saw low-single digit price increases most of last year. It accelerated a bit in the fourth quarter to mid-single digit increases, and that’s what we observed in the first quarter as well. What I would note in that segment where we do see more commission than we do in other parts of our business. Work comp, though is a huge part of our business there. And as I noted earlier, work comp pricing remains pretty favorable for our clients.

Thank you. I would now like to turn the call back over to Dan Glaser, President and CEO of Marsh & McLennan, for any closing remarks.

Thank you. Thanks, everybody. I thank everybody for joining us on the call this morning. I want to thank our 76,000 colleagues for your perseverance under trying circumstances. These are the moments when our clients need us most. Thank you all very much, and I look forward to speaking with you next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect.