Good day, ladies and gentlemen, and welcome to the third-quarter 2016 Willis Towers Watson earnings conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would like to introduce your host for today's conference Ms. Aida Sukys, Director of Investor Relations. Ma'am, please go ahead.

Thanks very much and good morning everyone. Welcome to the Willis Towers Watson earnings call. On the call today are John Haley, Willis Towers Watson Chief Executive Officer, and Roger Millay, our Chief Financial Officer. Please refer to our website for the press release issued earlier today. Today's call is being recorded and will be available for a replay via telephone through Monday by dialing 404-537-3406, conference ID 4925029. The replay will also be available for the next three months on our website. This call may include forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995 involving 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 statements, 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 willistowerswatson.com as well as other disclosures under the heading of risk factors and forward-looking statements and our most recent annual report on Form 10-K and quarterly report on Form 10-Q and in other Willis Towers Watson filings with the SEC. Investors are cautioned not to place undue reliance on any forward-looking statements that speak only as of the date of this earnings call. Except as required by law we undertake no obligation to revise or publicly update forward-looking statements in light of new information or future events. During the call we may discuss certain non-GAAP financial measures. For a discussion of the non-GAAP financial measures as well as reconciliations of the non-GAAP financial measures under Regulation G to the most directly comparable GAAP measures investors should review the press release and supplemental slides we posted on our website. After our prepared remarks we will open the conference call for your questions. Now I will turn the call of the John Haley.

Thanks, Aida. Good morning, everyone. Today we will review our results for the third quarter of 2016 and provide updated guidance for the full year of 2016. We will also provide consolidated 2016 and certain pro forma 2015 financial results. Our segment results for this quarter are presented based on the new Willis Towers Watson structure. We provided historical Willis Towers Watson segment information in an 8-K filed on July 14, 2016. I’d like to take a few minutes to address the management changes we announced last week. First, I’d like to thank Dominic Casserley for his contributions to Willis and all of his efforts in assisting in the creation of Willis Towers Watson. Dominic has been a terrific partner throughout the entire transaction and integration process. Second, I’m extremely pleased with the appointments we’ve made to the Investment, Risk & Reinsurance and the Corporate Risk & Broking businesses and to the Americas region. Not only have we enhanced the operating committee by increasing the strength of the brokerage perspective, but I’m very excited about bringing the vision and passion Carl Hess, Todd Jones and Joe Gunn bring to their new roles. I’m confident that based on their previous success and the depth of their knowledge of our business they will continue to be strong and effective leaders. Now let’s turn to our results for the quarter. Reported revenues for the quarter were $1.78 billion, a 2% increase on a pro forma basis compared to the prior year. This includes $51 million of negative currency movement on a pro forma basis. Commissions and fees for the reportable segments were up 2% on an organic basis. The net loss attributable to Willis Towers Watson for the quarter was $32 million as compared to the prior-year pro forma net income of $209…

Great, thanks John and good morning to everyone. I'd like to add my congratulations to Todd Jones, Carl Hess and Joe Gunn. I'm excited about how the experience Todd, Carl and Job bring to the table aligns with our long-term opportunities and goals. Based on their proven track records I'm confident in their future success. Now for our financial results; as a reminder, our segment margins are before consideration of unallocated corporate costs such as amortization of intangibles, restructuring costs and certain integration expenses resulting from mergers and acquisitions. The segment results include discretionary compensation. Income from operations for the quarter was $1 million, or 0.1% of revenues. The prior-year third-quarter pro forma operating income was $104 million, or a 5.9% of revenues. Adjusted operating income for the quarter was $243 million, or 13.7% of revenues and the prior-year quarter pro forma adjusted operating income was $267 million, or 15.3% of revenues. As we highlighted earlier, revenue pressure and seasonality related to Gras Savoye impacted the third-quarter margin. Income from operations for the first nine months of 2016 was $463 million, or 7.8% of revenues. The prior-year first nine months pro forma operating income was $632 million or 11.3% of revenues. Adjusted operating income for the first nine months of 2016 was $1.25 billion, or 20.7% of adjusted revenues. And the prior-year first nine months pro forma adjusted operating income was $1.13 billion, or 20.3% of revenues. The GAAP tax rate for the quarter was 46% and the adjusted tax rate was 22%. Before we discuss the segment operating margins, I'd like to remind you that we provided recast segment operating income for the prior periods in the 8-K we filed on July 14, 2016. Additionally, our segment margins are calculated using total segment revenues. For the third quarter the…

Thanks very much Roger. And now we will take your questions.

[Operator Instructions] Our first question comes from the line of Shlomo Rosenbaum with Stifel. Your line is open. Please go ahead.

Hi, good morning and thank you very much for taking my questions. John, can you just talk a little bit about the progress to date versus the long term goals? It's slower out of the box on the revenue side and clearly you need the CRB segment to pick up in revenue growth on an organic basis to get to where you want to be in a couple of years. What are you seeing internally in the business that makes you feel comfortable that you are going to see that progress over the next year or so?

Thanks Shlomo, I think as we came into this year we could see there were some headwinds in some of the businesses that we were facing a little bit. I think we've seen North America has been a place where we've probably seen it, particularly in CRB more than in some areas although International has also been a place where we've experienced a good bit of a decline there. We see those things as being turning around somewhat next year. I think we had tough comparables on the International, for example, last year. We had some reversals of some income that we had booked in 2015 that occurred this year that we have gone on. I think when we said what we were going to try to do this year it was first we were going to try to make sure we got the right kind of margins and then we were going to use that platform to build with profitable revenue growth. I think that's still been our focus. We feel pretty good about coming in at exactly what we had said last quarter with the EPS. We might be a percent or so lower on or at the bottom end of the revenue guidance that we gave last quarter. But we still feel we will come in right around there. I think with the new team we have in place, too, I think one of the things I like about that with some strong brokerage representation from North America leading both CRB and the Americas geography, I think we are well poised to turn around North America there. So I do feel like we have the right people there. We have the right offerings and I think we just need to build on that.

So is there anything marketwise that you feel has increased headwinds in North America broking or do you really think it's a people item or a combination?

I think you always have a little bit of loss whenever you go through some big changes like this in the merger that we did. So I think we probably lost a little bit of that. I think as we put the organization together we probably made it a little too complex, too, and I know one of the things that both Todd and Joe Gunn are focused on is making sure that we streamline some of the organization and are spending more time with clients and less time internally.

Okay, and then in the IRR business it seems the guidance implies a pretty big step down next quarter. And is there -- can you just give us a little bit of a thought as to what's in play over there and is that something that we should continue to see those kinds of declines or is that specific to the quarter but don't think about it that way for say next year or so?

I think IRR it's a mixture of a number of businesses. As we said in the script, the Capital Markets business is a relatively smaller part of that overall portfolio but in this particular quarter, best quarter ever in the third quarter of 2015. And nominal revenue is really -- I mean, it was pretty close to zero so it was really quite nominal revenue for this year. And it reflects the fact that there's just been a dearth of deals in the insurance business generally. And so we are not expecting to see, for example, that to pick back up in the fourth quarter, although we do see some signs that 2017, we have had a couple of wins recently that could very well deliver some nice revenue in 2017. So we will have to see about that. Reinsurance we have, we are facing some headwinds in Reinsurance. Our Facultative Reinsurance, of course, is off in CRB, so we don't report that in IRR. And that's the part of the business that's been growing more than the tree. We see that business as still facing some headwinds. I think some of the restructurings that our clients have done and some of the just withdrawal of Reinsurance from the market as you've seen some big mergers have also contributed to headwinds for us there. So again we are not projecting that the fourth quarter is going to be a big improvement there either. I think some of the other businesses, investment which has been down for a number of quarters here we saw some real improvement in the third quarter, and I think we feel better about the fourth quarter now than we would have a quarter or so ago. And I think we are beginning to see some signs in the Risk Consulting & Software of a bit of a pickup. So it is a mixed bag. But I think we continue to see pressure on Reinsurance and we continue to see Capital Markets as being down. And I think overall that's what contributes to a lower forecast for the fourth quarter for that segment.

If I could sneak in just one P&L or balance sheet question for Roger, did the DSOs spike up a lot this quarter? And if so, can you give us a little detail on that?

Yes, not based on our numbers, Shlomo. So I think in total in our numbers we're a little over 100 days this time. I think that's maybe a couple days higher than in the June quarter but not a big spike up.

Thank you. And our next question comes from the line of Greg Peters with Raymond James. Your line is open, please go ahead.

I guess I just wanted to circle back. You gave some excellent color on organic. Can you speak to customer retention specifically in Corporate Risk & Broking and IRR, especially in light of some organic challenges that you are having there?

Yes, our retention rate is in the low 90s, which is I think about what -- that's about the traditional rate. I think it's standard for that. I think where we've been seeing the pressure on the CRP is actually some new business wins haven't been as high as we might have hoped, and so that's been more the issue than the renewal rate, Greg, retention rate.

So I'm just trying to marry that. Roger you said on your path to margin expansion for 2017 assumes organic growth. Just trying to parse out exactly what you mean by that. And then the follow-on to that, John, would be it doesn't seem like there's a lot of changes in the numbers with the third-quarter result that would represent new headwinds towards your 25% EBITDA margin target in 2018. But perhaps you could talk a little bit about anything that's changed from Analyst Day to now that might have adjusted your thinking.

Yes, actually, thanks Greg for that. And I will let Roger maybe address that, but let me just address the sort of the macro point you raise there. We don’t actually see anything in these results that have really changes our thinking from what we presented in Analyst Day. I mean when you look as I said at where we project our earnings will be this year, we are still right where we thought we would be at Analyst Day and actually we are even more confident that will be in the range we guided to. So we feel very good about that. The kinds of things, when we talked in Analyst Day we talked about what we needed to do to deliver in 2017 and then 2018. We knew that this 2016 had been a tough year and that it was going to continue to be a bit of a tougher year. But I think we feel like we have everything in place to get to where we need to in 2018. Roger, do you want…

Yeah, I will just comment, Greg, on my words there and that they weren’t intended to be profound words. It was actually more, and I don’t say mathematics in front of John, it was arithmetic. But what really we challenged ourselves to do this quarter was step back and say do we start to see the seeds of momentum shift towards our margin expansion goal. And while we are still in this period of, one, having comparison, two big acquisition periods so that makes it a little difficult on a comparison side, and so the comparisons aren’t really apples-and-apples, year-over-year. But we took a look sequentially at what we saw in the numbers and given the actions we know we’ve taken this year. The path to margin expansion is continuing the kind of growth as we’ve had this year, albeit at a low level, and then if sequentially costs are going down the way margin enhancement pops is you get to a quarter where you are comparing to a year where you began the cost reductions and revenues have been growing through that period and the margin enhancement pops. And so the only point I was trying to make is, and again with a lot of noise in the system and you have to adjust for things that are seasonal in nature, but we believe that we see a sequential cost-reduction momentum, which means that when we start comparing next year to 2016 that we would expect to see margin enhancement. So I didn’t mean anything particular by citing organic growth, just saying that’s the calculation.

Perfect. Just a cleanup question on the tax rate, it’s been running ahead pretty much all year of where you thought it would be. When do we start factoring in a lower tax rate for 2017 or 2018 or do we still keep it at the mid-20s?

Yeah, I mean, I think my view on tax is, one, there is enough complexity there is I don’t like to declare victory on a year until you close the year out. So we are hopeful and as you can tell we dropped our guidance a bit this quarter, hopeful that we conclude that this kind of range is where we’d like to see going forward and then maybe set a new goal. But I'd really like to close this year out before we talk about what 2017 and 2018 might look like.

Thank you. Our next question comes from the line of Ryan Tunis with Credit Suisse. Your line is open. Please go ahead.

Hey, thanks. My first question I guess is just on how to think about variable compensation. And I was wondering if in a year where organic is slower does that change the relationship of variable comp to revenues? In other words, is there margin expansion coming through this year in some shape or form because organic growth hasn't been quite what you guys thought it would be at the start?

Maybe I will start with just a more numerical discussion and John might have some philosophical comments. So certainly we have incentive compensation programs across our businesses that are sensitized to performance and you can see in our numbers that the segments, there's a pretty broad diversity of performance in the segments. So there is a reduction at this point in incentive compensation, total dollars versus what the target amounts might be, and so we have had some adjustments over the last couple of quarters. In terms of getting where we are right now and getting to the end of the year and having a material impact on margins, I don't think those adjustments are at that level. I guess the other thing just in terms of the way the accounting works that I'd observe is what we called in Towers Watson discretionary compensation, which was a quite material item financially relative to a total year, it's not as material for Willis Towers Watson because there are more separate sales compensation programs in Willis Towers Watson. So, anyway, long and the short is pure bonus not as impactful as Towers Watson was, but there have been some downward adjustments and that's a part of that supported margins somewhat.

And I guess the only thing I would add about that is to say that we do have a pay for performance philosophy and we expect to pay our people better when results are good and not as well when results are not good. So we tend to maintain our variable compensation plans of all different stripes, when we add them altogether we come somewhere in the low 30s as a percent of our pretax pre variable comp margins. So they do adjust, but they actually don't tend to affect the margins themselves that much because they tend to be a constant percentage of that.

Okay. That's really helpful. Then I guess my follow up is just thinking about organic on the Reinsurance side, I think listening to John talk about these headwinds, it comes across as sounding environmental softness in North America Treaty Capital Markets. And I guess if you could just elaborate him why you think it's environmental as opposed to more broadly maybe some loss of market share, because when we look at competitors that are quite a bit bigger than Willis I guess in Reinsurance we are still seeing organic hold up reasonably well. So if you could just elaborate on why what gives you confidence that it's environmental at this point. Thanks.

Yes so I think Reinsurance is a -- it's an interesting one. If we look at North America which is where we have experienced, I think, some of the biggest headwinds, we actually have exceeded our new business targets so far this year. So the new business part of it has gone relatively well. What has hurt us is A; there has been some of the existing clients are buying less reinsurance and so we've seen that occur partly because people are buying less reinsurance, partly because mergers have actually just taken, just cut the market in total, and then we've also seen, we've had a couple of clients that have restructured things, some of the reinsurance programs, which have led to revenues being shifted to different years. And we've seen that on a couple of big ones that have had a material impact on our results. When we look at it overall the Reinsurance, it does tend to be a little lumpy from year to year when we compare our results to we were looking at one of our big competitors the other day and they were minus 4% last year and they are plus 1% this year. So we had a better 2015 and a little bit lower 2016. I think we tend to look maybe at a little bit longer trends than just a year or so. But when we look at it we fundamentally are encouraged by the fact that the new business efforts have been strong even in North America and, in fact, have exceeded targets. And that is what makes us think going into 2017 we are well placed.

Okay and I guess one thought I had is the legacy Towers risk business that you guys kept when you sold the old Reinsurance business to JLT, have there been any revenue dissynergies in that business from I guess now bringing Willis Re back into the fold? Has there been softness do you think there that's at all related to merger, and how big is that revenue base for the legacy Towers risk business? Thanks.

Yes, so I think no, there haven't been -- certainly there's no net revenue dissynergies and I don't think there have been really any revenue dissynergies to speak of. Interestingly enough, I referred in the script to businesses spontaneously working together. And I think it's the Reinsurance and the RCS business which have actually led the way in terms of doing that. So our Reinsurance folks have reached out to the RCS folks, have been adopting some of their models, have been using them in joint client presentations. And we've seen getting some synergies across business lines. Probably the poster child for that right now is our Reinsurance and our RCS folks. So we don't see a big difference there. Roger, what is the number on the size?

I think with RCS is what $275 million, $300 million, something like that? That neighborhood.

Okay. Thanks for your answers.

Thank you. And our next question comes from a line of Quentin McMillan with KBW. Your line is open, please go ahead.

I think one of the things, and I know you gave a lot of organic color that is confusing people, is just the change from what you saw as of September 29 at the Investor Day on the organic growth and the lowering of that. You were at 2% to 3%, you go to 2%. It's not a huge change but really just want to know what changed in the last 30 days and is that also related to your decision to change leadership at Corporate Risk & Broking post the Investor Day?

So I'll let Roger talk about the numbers and how we got to that because it is a mix of a lot of different things. But let me just address the leadership changes. As we were looking out as to what we need to deliver in 2017 and 2018 I became focused on making sure I had the team that I had the most confidence in to deliver those results. And I made the changes to put that team in place. And so it wasn't anything specific about just one quarter, it was a matter of identifying the team that I felt the most confidence in.

I would just say on the guidance question that even though Analyst Day was at the end of September, as you probably know in the CRB business there can be some big transactions that may or may not happen at the end of the quarter and in our forecasts, our internal forecasts which advise guidance, we had anticipated some larger transactions that would generate meaningful revenue for us and ultimately they did not come in by the end of the quarter. So CRB was the biggest piece of the miss in driving the reduction.

That would sort of imply that the fourth quarter should be very strong because those contracts would have just rolled into the fourth quarter, correct?

There are items that we hope for the third quarter that we now expect in the fourth quarter.

And just shifting to the free cash flow, your 2018 guidance of 1.3 to 1.4, I just wanted to clarify one expectation for that. At the Analyst Day you guys did break out the $10, $10 EPS, you get there from 2.5% top-line growth, 25% EBITDA and 8 million decrease in shares. Is the free cash flow $1.3 billion to $1.4 billion number based on those same expectations or are there any differences in how you get to that free cash flow expectation?

They are based on the same level and they are based on our belief at this point that free cash flow while balance sheet items go in there and there will be puts and takes year to year, but over time that free cash flow should fall into the range of adjusted net income. So the adjusted net income underlying $1.3 billion to $1.4 billion is consistent with the $10, $10 plus that we've talked about. And the $1.3 billion so, and it's to the exit rate of 2018 into 2019.

Meaning you will finish 2018 with $1.35 billion or a roundabout in free cash flow?

Well no, so the difference, so the big reduction or detractor from free cash today are all the restructuring and integration costs. We don't get out from under those until the end of 2018. So that's why, so the $1.3 billion to one $4 billion is saying, look, if you are running at a $10, $10 level for adjusted EPS, adjusted net income that underlies that and you are out from under the restructuring and integration costs then you’re at $1.3 billion to $1.4 billion.

Okay, so the reported number will be lower but adjusted for the restructuring it should be that number? Okay. Thanks very much, guys.

Thank you. And our next question comes from the line of Mark Marcon with Baird. Your line is open. Please go ahead.

I’m just wondering if the some of the headwinds in CRB and IRR don’t really abate, and let’s say that revenue ends up being a little bit lower than the 2.5% in terms of getting to the 2018 target, how much room for adjustment? It seems like you have lots of different levers to pull in order to be able to still get to the 10, 10. Can you just talk about that a little bit?

Yeah, I think I will let Roger will probably have some things to add to that, but I think, Mark, if you remember that slide we had from Analyst Day, one of the points of that was to show that there were a number of different levers, that if you grew at 2.5% then you had a 25% tax rate and you reduced 8 million shares you could get the 10, 10. If you grew it 4.5% then you had a 25% tax rate and you only reduced by if you’ve got 2 million or 4 million shares you could still get the 10, 10. So what we were trying to illustrate is we did have a number of levers to pull. We tended to focus in that one on even at a relatively low growth rate we could still get to 10, 10 if we were buying back enough shares. but in addition to that we could, we didn’t factor in what happens if our tax rate is better than we had suggested, for example, so we have a couple of different levers that we could pull.

Great. And then.

Roger, do you want to?

Yeah, just I will just add maybe another element of context, which is look every year one of the things we do, I would say, pretty thoughtfully is step back and say what are our best opportunities? As you said Mark, and I agree and John went through it, we do have a number of levers and we will continue to do that relative to shareholder value in general but then the specific targets that we’ve set out. That’s generally how we meet our commitments is adjusting with the times, finding the levers and executing on them.

Great. And then could you talk a little bit about some of the things that you think Todd and Carl will end up doing a little bit differently? I know it’s early, obviously, but just in broad strokes here were some of the reasons behind the changes and some of the different executional elements that might go into reaccelerating growth in those areas.

Well, so first of all, when Dominic indicated his intention to leave at the end of the year, we had to find a replacement for running IRR. And I think one of the things that we especially like about Carl, he had run the investment line of business for both Watson Wyatt and Towers Watson as part when he was running that, he was part of a leadership team in that segment. And at the time it included both Risk, Consulting & Software and the Reinsurance business that we had at Towers Watson. So Carl has some background in all three of those areas. I think the background he has in investment will serve him well in understanding the Capital Markets part of the business, also. Carl is one of the smartest people we have in the organization, and I think he will be a quick study on the other parts of the business too. So we liked his background. We like the fact that he has been involved with delivering high revenue growth in the areas he's been in, and he understands the importance of generating profitable revenue growth. So he was I think a very good fit for that. In terms of CRB and North America, as I mentioned in the script one of the things that I thought we needed more of a perspective on at the operating committee was our brokers. And by moving Todd who has a brokerage background and then putting Joe Gunn in charge of North America, we have increased some of that perspective on the operating committee and I think that will be very helpful. Both Todd and Joe I think are hard charging folks who understand what we need to do to build up the brokerage business in North America. And I think that's going to be one of their key focuses in the short run. And as I said earlier, I do think that this is a business that we probably have over complicated our structure a little bit, and I do think some streamlining is probably called for.

Our next question comes from the line of Kai Pan with Morgan Stanley. Your line is open. Please go ahead.

Good morning. Thank you. On your buybacks $300 million this year plus dividends probably close to $500 million and you have free cash flow generation about $650 million this year. I just wonder going forward was the free cash flow generation will be mostly used for shareholder returns?

I think that one as we've said before we love to balance those two. We think certainly this year we are leaning to share repurchase. Returning cash to shareholders is very important to us and we think is appropriate at this point. And we are in the process right now of formulating our plans once we are complete with the $300 million. And I think in the short term we will be highlighting where we come out of that.

But just as a matter of philosophy I think shareholder returns are what we probably see is the highest priority.

Good. And then I just have a quick numbers question. On your presentation at Investor Day you mentioned that the integration cost will be about $150 million to $175 million in 2016. I'm assuming that will be mostly to achieve the $100 million to $125 million of cost synergy. Then you have about $100 million each year in 2017 and 2018. I just wonder are those additional restructuring costs and what kind of savings could coming from that?

So there are various activities and I think we might have referred to this at Investor Day. Some of the actions that you take are short term and, I don't know, low-hanging fruit or whatever but very targeted and happened in the first year. Then some like things that require, let's say, combining systems, so finance and HR systems and the related technology, that's a multiyear project. So the benefits come in gradually and later in the integration period. Something like real estate, as well. While we have overlapping real estate it's best to execute those combinations when leases are closer to co-terminus. And so it's those kind of things that extend into '17 and '18, bigger process and technology changes and the real estate.

Do you expect to generate additional cost savings over time beyond the $100 million to $125 million outlined.

The 100 to 125 anticipated all those changes that I referred to.

Okay. So the total cost is about $375 million, for the saving about $100 million to $125 million?

Right. That's right.

That sounds bigger than the normal restructuring cost of about 1.25 times.

Yes, I mean some of it is, again, because you look at a project like an ERP project. There are some big changes that we're making as part of restructuring. Some of the real estate activities are quite expensive. So it's more than headcount-driven changes.

Thank you. And our next question comes from the line of Brian Meredith with UBS. Your line is open. Please go ahead.

A couple of questions. Roger, I was hoping to focus a little more on the expense side. Do you have an organic expense growth number on a year-over-year basis? If you factor out Gras Savoye what were expenses up on a year-over-year basis?

Yes, I think it's about -- well, actually I don't have a year-to-date number. But I think for the full year we're anticipating organic expense growth in the neighborhood of the level of organic revenue growth. Pretty close.

Pretty close to it. Got you. Then on the OIP program, still on track to achieve the $230 million of cumulative savings in 2016? And then on that, how much do you think is flowing to the bottom line at this point?

Well, the second question gets a little complicated but relative to all that's going on in the Company. But we are on track for the savings and the savings are realized. There's a very disciplined process to track both the exits as well as then how that relates to the additional folks that are added in Mumbai or elsewhere in the service centers. So those costs are quote, unquote dropping to the bottom line. Of course, as a result of both the shortfall in revenues versus what we expected and the plans that had been built for the year relative to that business momentum, that has certainly challenged our ability to show net margin expansion as a result of the savings that are going on, which is really I wanted to highlight that sequential cost momentum item that I talked about in my script. So while right now you see in the adjusted operating margin a little bit of increase it's not at all what you would expect based on the savings we are seeing in OIP plus merger. But we have been adjusting our expense levels all year as the year went by and we are now starting to see the results of that. In this 2017 planning period we continue to emphasize that, so we have our eye on the prize and we think we are starting to see the kinds of results financially that will lead to margin expansion, but we are not seeing it yet.

And the weaker-than-expected organic revenue growth, is it changing any of your thoughts as to how much needs to be reinvested back in the business to get that organic revenue growth going and maybe less falling to the bottom line of the OIP and the integration expenses?

I will comment on the idea of investments and John may have a comment or two, as well. I think, and it's why we cite the shortfall to revenues. I think there are areas in the Company; I would say specifically the legacy Willis International business where there had been tremendous success I guess over the last few years at least in growing revenues organically. Certainly as they had targeted that and anticipated that it would continue they did have plans of continuing to add resources and invest relative to that momentum. It certainly has halted here this year. So we have been in the process of both pulling back what had been identified let's say as targeted investment initiatives but also pulling back the momentum of cost growth relative to prior organic growth momentum. So it's been a major discussion item. Again, it's a major planning item and we are pushing that hard to make sure that where we are investing it's in places where there's good visibility getting a payback. If there isn't then we are not going to do it.

Thank you. And our next question comes from the line of Elyse Greenspan with Wells Fargo. Your line is open, please go ahead.

First off, is the currency impact that you guys are now, last quarter I think it changed to a $0.14 tailwind for the full year in terms of the EPS impact. What are you now expecting in terms of currency? I see the exchange rates you provided in guidance moved a little bit. And then also what was the currency impact on earnings in the third quarter versus what you are expecting for the fourth quarter?

I think overall, so year to date the FX impact on EPS is now $0.11. I will say that relative to the $0.14 I don’t think we had all of the hedging impacts in that $0.14. So the $0.11 is a refined number, and there was only a couple of cents in the third quarter.

Okay, so we will see most of the currency benefit at that point.

Negative, yes, headwind.

There was a couple cent headwind in the third quarter, just to be clear.

Okay. And the tailwind will be in the fourth quarter?

No. I don’t know that we have the guidance in the guidance what the FX impact would be. We can follow up with you on that.

Okay, that would be great. And then just in terms of I guess you guys there was an earlier question in terms of some compensation changes that were variable comps this year given publicly the weaker organic. I mean how are you guys thinking about that in terms of just retention overall? There's been some high-level departures from legacy Willis organization that you guys have seen over the past year. So how are you balancing I guess may be lower comp this year versus your desire to want to retain most of the employees that you have on the platform now versus potentially seeing additional departures of people you might potentially not want to lose?

Yeah, I mean, look I think we do have a pay for performance culture and we do pay people for results and I think we want to continue to do that. I think the people who are performing well will get compensated well, so we are not really too worried about that and I think we think we have the right kind of programs in place to incent the right kind of performance.

Okay, that’s great. Thank you very much.

Thank you. And our next question comes from the line of Mark Hughes with SunTrust. Your line is open. Please go ahead.

Thank you very much. I think you had mentioned last quarter that the adoption rate for exchanges was accelerating in the middle market, larger companies are a little slow to adopt. Your language at least in terms of the growth you expect 4Q to be a little more moderate. How are you seeing the development of that market now?

Yeah, so I don’t think we see the market developing really any differently. I think the point about the quarter four is just that for all of us in the Exchange business quarter four is the quarter where we are all implementing. January 1 is when all the activity occurs, and so we are all focused on implementing and there is not as much effort on the sales then. We will have all of the open enrollment season for Medicare is from October to December. The folks who have are with employers that have a calendar year plan, which is most of them, all of that enrollment occurs during this fourth quarter. So it wasn't reflecting anything different about the market, just saying that most of our attention is on enrollment now.

Thank you.

Thank you. And our next question comes from the line of Josh Shanker with Deutsche Bank. Your line is open. Please go ahead.

Yeah, thank you for taking my question. I just want to follow-up a little bit on again on the management. When we watched the Analyst Day on 9-30 I sort of assumed that Tim Wright and Dominic Casserley were the authors of the plan that was articulated for the traditional insurance brokerage type segment. Maybe that's an incorrect assumption to have. And given that we've seen 2% to 4% growth among your peers and probably about negative 2% at Willis, maybe the management change makes sense. I'm trying to figure out who's the author of the new strategy and why should we think that's going to work?

I think the strategy that we presented at Analyst Day was one that reflected really input from the whole operating committee and where we thought we were going. And I don't think no strategy is ever just one person doing that. So I think there was a group that were focused on that and, frankly, as I said Dominic indicated his intent to leave, and so we did have to find somebody to replace him. The other changes that I made were really more about putting in place what I felt was the team that was best able to execute in 2017 and beyond given the strategy that we had already developed.

Did you already know these changes would be made at the Investor Day but it was too early to let us know that?

No, if I had known the changes were going to be made I would have made them.

Okay. And the 2% organic growth for 2016 implies about 6% in the fourth quarter, without the JLT settlement you are at flat growth through nine months. It seems like a big haul to get 6% in the back half of the year. How confident are you on the 2% number?

You are saying 6% in the fourth quarter to get that? That's not correct. Remember the 2%, this is total revenue growth so it does include the JLT settlement.

Yes, I can go through the math excluding I think you need about 8%, I get flat without JLT maybe 60 bps of growth with the JLT settlement. Maybe my math is wrong but I think it's going to be you are confident on the 2%, I guess? A - Roger Millay This is organic constant currency, remember. But, yes, the 2% based on the forecast and, of course, you have the segment guidance as well, so you don't find anything in there that's 6% growth.

We are talking about growth for the Company as a whole.

Yes, I guess I will run the numbers again. I'm not quite there but that might be my bad math. I apologize.

I think we have that right, Josh. But we can follow up with you.

I think we are probably going to have to end this now. So thanks very much everyone for joining us this morning. And I look forward to talking with you at our fourth quarter earnings call in February.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.