Good day, ladies and gentlemen, and welcome to the Towers Watson Third Quarter Fiscal Year 2015 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, today’s program is being recorded. I would like to introduce your host for today’s program, Aida Sukys, Director of Investor Relations. Please go ahead

Good morning. Welcome to the Towers Watson earnings call. I’m here today with John Haley, Towers Watson’s Chief Executive Officer; and Roger Millay, our Chief Financial Officer. Please refer to our website for this morning’s press release. Today’s call is being recorded and will be available for replay via telephone for the next 2 days by dialing 404-537-3406, conference ID 23646444. The replay will also be available for the next 3 months on our website. This call may include forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934 that involve risks and uncertainties. For a discussion of forward-looking statements and the risks and other factors that may cause actual results or events to differ materially from those contemplated by forward-looking results, investors should review the forward-looking statements section of the earnings press release issued this morning, a copy of which is available on our website at www.towerswatson.com, other disclosures under the heading of risk factors and forward-looking statements in our most recent Form 10-K and our other filings with the SEC. Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this earnings call. During the call, we may discuss certain non-GAAP financial measures such as adjusted net income and adjusted earnings per share. For a discussion of these non-GAAP financial measures as well as a reconciliation of these non-GAAP financial measures under Regulation G due to the most closely comparable GAAP measures, investors should review the press release and the accompanying financial tables we posted on our website this morning. After our prepared remarks, we’ll open the conference call up for your questions. Now I’ll turn the call over to John Haley.

Thanks, Aida. Good morning, everyone, and thank you for joining us. Today, we’ll review our results for the third quarter of fiscal 2015 and our guidance for the remainder of the fiscal year. Before reviewing the detailed quarterly results, I’d like to mention the Saville Consulting Acquisition which was announced on April 27. Saville Consulting adds market leading assessment tools which enhance our already comprehensive suite of HR solutions and advisory services. With that combination, we can better access the fastest growing part of the Talent and Rewards market related to talent management and technology. This acquisition will allow us to deliver products that should grow significantly over the next several years consistent with our overall long-term growth portfolio strategy. For the third consecutive quarter, we’ve posted strong organic revenue growth. Reported revenues for the quarter were $921 million, an increase of 2% over the prior year third quarter reported revenues and up 7% on an organic and constant currency basis. Our organic growth rate adjusts for changes in foreign currency exchange rates, acquisitions and divestitures. Our EBITDA for the quarter was $205 million or 22% of revenues. The prior year third quarter adjusted EBITDA was $183 million or 20% of revenues. Continued strong top-line results and the focus on cost efficiencies have helped to drive EBITDA and margin. For the quarter, diluted earnings per share were $1.49 and adjusted diluted earnings per share were $1.63. Every region experienced revenue growth this quarter. We’re especially pleased to see that EMEA posted strong results for two consecutive quarters now. Revenue growth plus cost management over the last two quarters have generated the strongest margins in more than two years. Once again, the Benefits Exchange Solutions and Talent and Rewards segments delivered strong results. Strength in retirement, healthcare consulting and pension administration…

Thanks John, and good morning to everyone. I’d also like to add my congratulations to our associates and welcome the associates from Saville Consulting. Historically, acquisitions have not only enhanced our marketing offerings but have helped bring new ideas to the table and fostered greater innovation. I’m really pleased to have the associates from Saville as part of the team and about the enhancements they bring to our market offerings. Now, let’s turn to the financial review. As a reminder, our segment margins are before consideration of discretionary compensation and other unallocated corporate costs, such as amortization of intangibles resulting from merger and acquisition activity. This was another great quarter as John mentioned with a high level of performance across our key financial metrics. We set another quarterly record of EBITDA margin driven by strong project work and cost control in what is normally a high-profit margin quarter. Given the expected volatility of areas such as project work and pension expense, we think the go-forward sustainable margin is more on the 20% range than the 21% range we’ve seen year-to-date. For the quarter, the Benefits segment NOI margin was really strong at 39%, up from 34% last year. The strong revenue growth in retirement and Health and Group Benefits and cost management drove the margin increase. This was another impressive quarter for the Benefits team. I should note that the March quarter tends to be a strong margin quarter as this is one much of the annual defined benefit pension valuation work has performed. Exchange Solutions had a 21% NOI margin as compared to 23% in last year’s third quarter. OneExchange Retiree led this segment with 45% NOI margin as compared to 36% last year. The profitability was driven by a strong annual enrollment season and an increased membership base.…

Thanks Roger. And now we’ll take your questions. [Operator Instructions]. Our first question comes from the line of George Tong from Piper Jaffray. Your question please.

Hi, thanks, good morning. Can you discuss the progress in your selling season for 2016 in Exchange business and how discussions with potential clients have evolved from last year?

Well, as we mentioned in the script there, I think we’re seeing an increase in RFPs, we’re particularly seeing an increase in third quarter RFPs from them. We are, so that’s up, there is more interest in that. I think it’s early to say whether that will lead to more sales or not, but there is certainly a lot more interest that we’ve seen as a result to that. The other thing I’d say is that we do see adoption rates as being higher in the small and medium sized market than in the medium to large market.

That’s helpful. And how much contribution from off-cycle selling activity do you expect from Liazon this year? And in addition to Starwood, any other large off-cycle enrollments you expect?

We don’t have any large off-cycle enrollments that are scheduled at the moment. And Liazon is, Liazon does sell things throughout the year but there are still also one where the bulk of them are January 1 implementations.

That’s helpful. And then lastly, can you talk about your expectations for margin upside in the Exchange business and how margins have performed relative to your expectations?

So, I don’t know, Roger, you may want to comment on this. I think the, we had projected margins in the mid-double digits there for Exchange Solutions, in the 15% range or something like that for this year. I think when we think about the upside, we haven’t really given any guidance or any specifics about that. We do think that this is a business that it fit, as it scales, there should be opportunities for margin expansion but we haven’t attempted to quantify that yet.

Yes, I mean, and the only other thing that we’ve said over time with scale that the business on the whole should be at least slightly above where our administration businesses have been, which is kind of an average margin business for us. And just relative to this year, I think we’re pretty much right on the guidance. So, I think we’re on track and then it depends on how fast things build over the next couple of years as to how rapidly the margin comes up.

Great. Thank you.

Thank you. Our next question comes from the line of Tim McHugh from William Blair & Company. Your question please.

Hi, yes, you made the comment about just following up on the Exchange I guess the small mid-market channel. I guess, can you talk about the brokerage relationships it sounds like you’re still seeing a lot of lead flow but have you kept most of the key relationships there, have you developed new ones, just give an update I guess on how as a sales distribution strategy for Liazon at that part of the market how that’s still looking for you guys?

Yes, so, thanks very much for question Tim. So our current number of broker partnerships with Liazon, that Liazon has is 680 and that’s up from 463 a year ago. And of the top 20, we’re partnered with 13 of the top 20 brokers. So, we’re seeing some increases there, the bigger ones we had both years anyway, so the increases that maybe as dramatic as it seems from the numbers, but still we’re continuing to see the broker channel growth.

And you haven’t, there’s no attrition of any major ones I guess underlying?

No.

Okay. And is the comment around the mid to large part of the market meant, I mean I guess is that less than you would’ve expected at this point, or I guess you’re describing growth as kind of that can mean a lot of I think most people expect growth, so I guess how much growth? Yes.

No, I mean, I just think going into this I think at least I started off with the idea that there was, wouldn’t necessarily be a big difference across by size of company as to how fast they started to adopt it. And as we get into it, we’re seeing that large companies are probably little slower to adopt. And so, that’s really what we were reporting.

Okay, thank you.

Thank you. Our next question comes from the line of Sara Gubins from Bank of America Merrill Lynch. Your question please.

Good morning. First just a question on margins, so your EBITDA margins are up about 210 basis points year-to-date but the guidance suggests that the fourth quarter could be down or maybe up just a very little bit. Could you talk about why the fourth quarter might look so different from the rest of the year? And then your comment about sustainable margin being more like 20% might even suggest that we would see margin compression from here. And so I’m trying to think about what would drive margin compression in years to come as opposed to maybe not the same kind of expansion that you’ve seen recently?

Thanks Sarah. We move on quite quickly as we talk about margins. So, being above 20% at quarters for us, this is the first year that we’ve been there. And as we’ve been talking about the year, with the tremendous activity, project activity we’ve had this year particularly in bulk lump sum, that’s something as we know is episodic in years, where we have that kind of activity it drives much higher margins. But we think going forward right now we don’t know whether I guess when the next burst of that kind of activity will be. And so, we think the underlying, the message we’re trying to send is the underlying sustainable margins when we don’t have big project activity like that is more in the 20% range. So, I wouldn’t characterize it as margin compression, it’s just reflective more of the project volatility that we have in the business.

Okay. And then, separately on investment could you talk to us about how you’re thinking about longer opportunities in the investment segment particularly given your comment around clients thinking about moving to delegating services? And I’m wondering if you think that you have the right positioning or if you might need to change or add more broadly to your offerings?

Yes. Well, I think the investment business as you know has been a great business for us with real opportunity. And it’s been on the list really at least since we merged Towers Perrin and Watson Wyatt as one of the things that we would target for growth. And we continued to look at that and we think again, the longer - we’ve made longer term organic investments to turn more to delegated and to funds and continue to consider acquisition opportunities that would enhance that movement.

Thank you.

Thank you. Our next question comes from the line of Ashwin Shirvaikar from Citi. Your question please.

Thank you, guys, and congratulations on the strong quarter. My first question is on the pension and administration side the implementations that you’re doing there’s a good number of them. And when we look at the sort of the P&L implications down the road when the implementations are complete, how should we think about those, when the revenues actually start flowing through what can that mean for the growth rate?

Well, I mean, those, as you know Ashwin, those implementations take some time. But I think the nine that we referred to in John’s remarks are going to start coming in over the next couple of quarters. So, probably mostly during the first half of fiscal ‘16, and so that will add nicely to overall benefits growth, it’s not, those are not of the kind of materiality that they move things as much as like the bulk lump sum projects move them but it will be a nice addition to the growth for this segment next year.

Okay. And then the small and midsize client demand in Exchange that you mentioned and then in your prepared remarks as well as commented on in answer to the first or second question there. Can you talk a little bit more about sort of the dynamics of this segment in terms of profitability, I would imagine that smaller clients even though they might take longer to decide what to do once they decide it is easier to implement and so on? So, any implications from that?

Well, I think if I followed your question, kind of the impacts of small and medium-sized versus large size client additions.

Right.

Clearly, in terms of driving profitability if you add a big piece of business, I mean, that’s going to accelerate the margin growth. But there is a lot that can go into a very large implementation. So, there is work and cost associated with that. I mean, I think, it’s probably not a word that we used here at Towers Watson, but I think of the small and medium sized business more as a flow kind of a business, I mean, it’s a process, the routine is set up. That’s why they’re able to go later in the year with implementations because it’s something that you can do a higher volume in a shorter period of time. So, I think in both cases, scale will build margin but it could be more dramatic and obviously with the big ones we got a couple of big ones at the same time.

Yes, I think that’s exactly right. The only thing I would add is, just if you think about the point Roger just made that you have to decide the big ones much earlier in the year because they’re more complex, there is more to be done in implementing them. Another way of thinking about that is there is more of an investment from us in terms of putting them up and getting them ready to go. So that probably means you’re more profitable in the long-run once you have them running but there is a bigger short-term investment.

Okay. And that’s kind of what I was thinking of as well as you can probably keep taking on smaller contracts until let’s call it all various.

That’s correct.

Yes, okay. My last question if I may the change in mortality rates and so on happening, those assumptions that came out, obviously the impact on cash funding and P&L impact as well for your clients. Can you walk through how that has impacted either one-off project activity to analyze the impact, is that still ongoing, pretty much behind us some? And then how does that just one more thing that finance sponsors then have to think about, right? So does that increase or decrease down the road their desire to do risk transfer or bulk lump sum transfer?

Yes, so we’ve done some estimates of the impact of the consulting on the mortality assumptions that we think that quarter two, it was probably worth about $8 million in revenue to us, and quarter three probably about $3 million. And this is really at the end of the cycle for this because now that year end is behind them, most companies are not going to continue to examine this assumption at all. And in fact that the $3 million that we think we got this quarter is actually less than we got in the quarter three last year from people looking ahead and see what the mortality assumption would be. So, I think, I think it was not in, it was something that we were glad to get that extra revenue but it’s, I think it’s pretty much gone now.

Got it, thank you guys.

Okay.

Okay, yes.

Thank you. Our next question comes from the line of Shlomo Rosenbaum from Stifel. Your question please.

Hi, good morning. Thank you very much for taking my questions. John, I’m just trying to gauge what you are referring to in terms of the Actives exchange. Is there an increase in competitive issues going on that makes it sound like it’s just a little bit at least the tone seems a little bit slower or is it just hesitation from big clients to pull the trigger? That seems a little bit frustrating. And am I reading you correctly that it really seems just a little bit slower than what you had been expecting?

Yes. I think if I were to, if I were to think about my own personal expectations as to how this was going to work, frankly it’s not really any different than what I projected. There had been a number of studies that came out that had sort of explosive growth occurring in the first few years there. And so, I think a lot of the times when we’re on the calls, we’re answering questions about comparisons to some of that explosive growth. I think a couple of things, what we were trying to characterize though about the large and the small and medium sized and the difference in the take-up rates, I think one of the things that happens is large clients have the tendency to go through an RFP process for things. And when they go through an RFP process, it involves, it’s not just that’s more cumbersome in it of itself it tends to involve more areas of the business. And so they’re looking at it. And so that’s just inherently a slower process. And I think from our standpoint, we think we have a big competitive advantage in the large market and so we would like to see the large market, going as faster and faster than the small to medium size. We’re happy to get business anywhere. But we would like to be able to take advantage of our competitive advantage there.

So, are you guys tracking in line with what you thought last quarter? I mean, last quarter basically the Actives looked like they were going to be a little bit lighter and the Retirees were going to be a little bit larger ending the year at about 1.2 million. Are you still tracking along those lines?

Yes, we’re tracking right in line with that Shlomo. And I mean, one of the things, I’m glad you asked this question. We didn’t intend to give the impression that things are slower than we had been projecting, they’re not. And in fact as I said, we’re actually seeing more RFPs.

Okay. And then I talked to one of your clients who said that the costs were actually 8% lower than what they had initially expected from being on the Exchange. And I was just wondering when you have clients that are actually experiencing that how easy is it or is it still a challenge to go ahead and approach some of the other clients and say hey, this is a meaningful change or how hard is it to turn a reference-able client into nudging them over the edge?

Well, I think the - every turn we have one of these client experiences or they get on to the Exchange, they see how much their employees like it, and they see how much they can save. And I wouldn’t say it’s typical for our clients’ cost to be 8% less than they had expected it would be. But in general, we are reasonably conservative in projecting what the cost savings are, so, almost all of our clients see costs that are even less than we had projected. And that’s a positive message I think to take out there. And I think it is something that distinguishes some of our projections from maybe some others.

Okay and one last one just for Roger. How much of the revenue in the quarter would you say were some timing pull forward from what you initially expected in the fourth quarter?

I don’t have a number off hand. I will say Shlomo that if you maybe to put the question in a different vein, we ended up at 7% constant currency growth. I think we expected for the second half of the year to be more mid-single-digit so we were probably at couple of points ahead of where we expected to be. And I think we’re still saying over the fourth quarter that we expect to be in the mid-single-digit, maybe a point or so in growth below where we otherwise would have been. So I think it’s in those kinds of orders of magnitude.

Thanks.

Thank you. Our next question comes from the line of Dave Styblo from Jefferies. Your question please. You might have your phone on mute.

Good morning, thanks for taking the questions. I want to circle back to the Exchanges here real quickly and come back to a comment that you said about the Retiree side if we could feather out the two segments. On the Retiree side I think you said you’d expect enrollment in ‘16 to look similar to the ‘15. Are we talking something in the magnitude of about 200,000, 250,000 lives? Is that what you are sort of insinuating in those comments?

I’m not sure. So the comments were that what we’ve, the commitments we have from clients now that that would equal based on our estimates of how many of the eligible and how many would actually roll that we’re right now at about a place that would be equal to or better than the enrollments that we had at 1/1/15 and the sales season goes on. So, we didn’t give a number but we had about 160,000 enrollments on 1/1/15. So I think those are the data points that we have.

Okay, yes, that’s what I was looking for. That’s helpful. And then so, moving over to the Retiree side, I completely understand your comments about the adoption and we’ve been hearing that from some of your peers, too, that the smaller and midsize are adopting a little bit faster. Is the net result of all that so far sort of steady Eddie growth as she goes or can, I’m trying to also triangulate with comments that you said in there about seeing higher RFPs. Is the net result of all that growth, enrollment growth that would be faster in terms of total numbers than what you experienced this year the same or is there possibly somewhat of a slowdown or deceleration in growth on that side of the business?

I don’t think we see a slowdown in the growth there. I think we probably see something more like what we’ve seen in the last year. I think, as we look at our over say the next several years, we’re looking at maybe 30 million employees in our addressable market to move to private exchanges within the next five to seven years, I mean, we still think that’s a reasonably good number. It is hard to predict the adoption rate year-by-year, but we do get a sense that the adoption rates will pick up in advance of 2018 when the excise tax is implemented. And we’re still targeting about 25% market share.

Okay.

I’ll just add maybe just to this theme of the RFPs and everything. I mean, I think we do all need to consider, while it’s hard to build models today. The reason we’re pointing out the RFP activity was that last year at this time there was very little RFP activity. So to us, that’s a very positive indicator that the market continues to grow, the interest is strong. That’s what you would expect to see. So, I think we see positive signs out there even though getting decisions made is, it’s a longer process obviously than the small and mid-size market.

Okay, thanks for the color on that. Kind of coming back to the previous question more so on a year-to-date basis the results have been obviously strong and peppered with several comments of timing or transactional or M&A related that suggest some of it might be not necessarily recurring or sustainable. So, along those lines on the top line do you have a sense of what percent of the revenue is recurring or sustainable over the longer term here?

Yes, I just say to try and characterize this is as well as we can. Certainly again the bulk lump sum activity which we said last quarter was running at a rate of 50 million to 60 million in the first half of the year and we thought it was going to be down to 10 million or 12 million in the second half of the year. So that gives you some order of magnitude for the bulk lump sum and what the variability might be. And this year is quite similar actually to the year we had in fiscal ‘13 where we had that big surge also on bulk lump sum. So, that gives you an idea, and again we don’t know what fiscal ‘16 is going to look like in bulk lump sum activity. Otherwise we do, we comment on the project activity, the M&A driven activity, not to say that we won’t have that next quarter or in the couple of quarters after that. But that it’s just less predictable. We’re in an environment, now we’re that activity is strong. We’re running, we think again the underlying run-rate for the business is mid-single-digits kind of revenue growth but that’s looking across several quarters. So, it’s just, it’s an environment, it’s a strong environment for us, I think that’s the theme that we really wanted to get out in our remarks. But it’s, quarter-to-quarter little more difficult to predict.

Okay. And if I could just lastly squeeze one in on housekeeping for FX I think you had called out $90 million of headwinds being absorbed this year. How does that change in fiscal year ‘16? How much incremental FX headwind do you expect based on how things are shaking out at this point?

Well, I wish I knew. I would say so, the big drop can’t put a precise data on it, but it was around the turn of the calendar year that FX pressure increased. So from a year-over-year point of view, if things stay around where they are now, the first half of next year would have pressure as well, and then we’d start laughing the periods of rates where they are now in the second half of fiscal ‘16. But it’s quite a bit of volatility right now, so it’s difficult to say exactly where we’re going to be.

Okay, thanks.

Thank you. Our next question comes from the line of Tobey Summer from SunTrust, your question please.

Hi there, thanks this is Frank in for Tobey. I wanted to ask quickly out about the Saville Consulting acquisition. Any color you can give us on either margins or profitability there relative to this kind of core business or potential opportunities you see for that acquisition as it impacts profitability going forward?

Yes, I mean, as we’ve said, it’s relatively small to relative to the total company. But we expect that their margins will be at or, they’ll add into Talent and Rewards, at or slightly above the margins that we run at now.

Okay, great, that’s helpful. And there’s a lot of uncertainty regarding healthcare reform and private exchanges as we go into the Supreme Court ruling. Are there any features that could change that may impact the adoption rate or the long-term prospects in terms of regulatory environment?

We don’t, I think if the plaintiffs succeed there, the question then would be what kind of changes are made to, how Congress and the President react to that. So, aside from any financial implications that might apply to employers if their exposure to employer mandate penalties is reduced, they could face significant strategy decisions for addressing different rules across the states. They could have challenges in communicating and educating their employees about any new landscape. And all of those things would probably increase our healthcare and communication and change management consulting work in the light of the decision. But it probably depends on what happens. It runs from unless there is some big changes that Congress and the President would agree to in the light of a particular decision there, it runs from I think not much impact to maybe a little positive.

Okay. And lastly I wanted to ask about off-cycle enrollments. Can you remind us what that means for the business model and what you guys are doing to initiatives to drive off-cycle enrollment?

Well, I mean, one of the things, what it does for the business model is it enables us to keep a cadre of our more experienced benefit operatives there throughout the year, and to keep them employed full-time. And that helps, it’s a more attractive proposition for those individuals. It keeps them at the company and make sure that they’re ready to go even when the on-cycle enrollments come up. And so, one of the things we like to do is to offer employers the option to do the off-cycle, they probably get more attention and somewhat better service as a result of doing that. We don’t have any other particularly big differences that we do there. But some people like the idea of getting the extra attention in service.

All right, great. Thank you very much.

Thank you. Our next question comes from the line of Greg Peters from Raymond James. Your question please.

Good morning. Thank you for hosting the call. If we reflect on all your comments on the special assignment work consolidated margins and if you step back and you are able to achieve your earnings per share target of $6.03 to $6.10. I’m just curious how much of that results will be attributable to the special assignment bulk lump sum one-time project work?

Well, I mean, again, so you have the bulk lump sum numbers that we talked about earlier. So I think 60 million this year roughly versus 30 million or so in fiscal ‘14. And you have the enhancement and the Benefits margins. Again otherwise, I mean, I don’t have a number for you but we’ve talked about the M&A type projects in Talent and Rewards, that’s one of the accelerant. So, there is probably somewhere around I don’t know three to five points of the growth would be a ballpark number off the top of my head, maybe in the Talent and Rewards growth that is project driven, which is not a huge number for the company. But so those are the main things that I would think about.

On the Risk and Financial Services segment, can you provide further color around the performance of the consulting and software component? Can you speak to any opportunity if there exists any for growth in that business going forward?

Just in the software side or?

Software and the consulting split the chunk into two pieces.

Well, I mean, we’ve said, we haven’t really quantified but the software piece has been growing impressively in the last couple of years. And we expect it to continue to grow in the consulting side, particularly again as you’ll recall, a year or so ago 15 to 18 months or so took a pretty big step-down. So, we continue to be in an environment with kind of modest consulting decline, mostly offset by software growth.

At what point do you expect the consulting side to bottom out?

I mean, I think as we’ve talked about before, they are generally big project cycles in that business where you’d have a surge of M&A type activity or a big change in the regulatory environment. And really those are the kinds of things that it generally takes to move that business to higher level of revenue performance. And we don’t see that right now.

Okay. Thanks for those answers, Roger. Just one follow-up on the Exchange front especially in the context of your comments about small and midsize companies and their take-up rates there. Are you seeing any difference in appetite between the fully insured versus the self-insured options and can you also speak to your competitive position relative to the other private health insurance exchange owners?

Are you, okay, go ahead.

I mean, I think in general that we’d say that the demand environment for fully versus self is not much different than you would have expected when we started on the Actives Exchanges. And that’s a part of what’s driving the growth in the small and mid sector which historically has had more fully insured exposure. And the growth is more in fully insured in the small and midsize sector. And in the large sector which is greater than 90% self insured that’s where the interest is there, which is why we introduce self-insured. So, I think it’s not that different than we would have expected.

And just to close out on your competitive position relative to the other private health insurance exchange owners, are you seeing any new features from your competitors that have you concerned or just provide a brief update on that? And that’s the last question.

Yes, I don’t think the environment is changed all that much. I mean, I think we’re pleased with the approach that we took in terms of defining the product line of one exchange where we provide the capabilities across the board that our clients would want. And that we own our assets, I think that’s proven to be a competitive advantage. So I don’t think there have been any real changes in how competitors have approached the market recently. But I think it has validated our approach that we established a couple of years ago.

Perfect. Thanks for your answers.

Thank you. Our next question comes from the line of Andrew Steinerman from JPMorgan. Your question please.

Good morning. I had a question about the managed care organizations like Aetna that have put out their own exchange albeit a one carrier exchange but it does give employees an exchange option with more choice. Have you seen any change in the competitive landscape versus those carriers?

Not really.

Okay, thank you.

Thank you. Our next question comes from the line of Paul Ginocchio from Deutsche Bank. Your question please.

Thanks. Hi John I don’t know if you wanted to update where we might be for active enrollment at the end of fiscal ‘15 relative to your earlier expectations I think of almost shy of 300,000 net new enrollments. And also John looking at your Investment Consulting division maybe thinking about where you want that business to be in a couple of years. Would you add asset management to that or would you rather just add more Investment Consulting, investment outsourcing and sort of picking managers? Thanks.

Yes, okay, thanks Paul. So, I think we’re still on target for the original projections we had for the Active Exchange enrollments, so.

Yes, well as the same as we characterized last time are in total, we were there, but we were a little bit shy.

As he said, just shy of 300,000, yes.

And little more on Retirees.

Yes. So, we’re still there. I think on the investment side, we would, we have added some funds in the last year or so, and so I think we’re - we think that fits in well with the whole idea of delegated investment solutions anyway. And so, we look at expanding those, I think we consider that. But we do think just we are very much thinking that the notion of the delegated investment solutions approach is the one we want to be following.

That’s more through your current rollout of these different pooled funds, correct, not necessarily adding investment management?

Not necessarily adding even more investment management, no. I mean, we wouldn’t roll that out but it’s not necessarily, it’s not something that’s integral to the strategy there.

Great. Thanks, John.

Yes.

Thank you. Due to time constraints our final question comes from the line of Andre Benjamin from Goldman Sachs. Your question please.

Hi, thanks for taking my question. I don’t know if you answered this already, I’m jumping on a bit late but as I think about the margins for the various businesses you took up guidance for the quarter, or sorry this quarter for the year on the back of strong revenues and cost containment. Is there any reason why we should not assume stable or even continued expansion as we look into next year?

Yes, so maybe I’ll just maybe just try to characterize this and Roger may want to jump in with some more details on this. But if I think about last year and our margins, and one of the questions we were getting was, could we get our margins up to 20%. And this year, we’ve not only gotten them up to 20% but they’re actually somewhat over 20%. And the only caution we’re giving to people is, we’ve gotten them, we actually want to declare victory on the 20% and say we surely can get them there, and we think that that’s a good run rate. We think a couple of things that have gone well have contributed to being somewhat above 20% this year. And our caution is just to say let’s be careful about building that in for the future. But we’re pretty pleased that we’ve managed to get it up to what we think is the 20% as an ongoing run-rate for us.

Thank you.

Sure.

Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to John Haley for closing comments.

Okay, great. Thanks very much everyone for joining us this morning. And we look forward reviewing our fourth quarter results with you in August.

Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.