Good morning. Welcome to the Willis Towers Watson First Quarter 2019 Earnings Conference Call. Please visit our Web site for the press release and supplemental information that was issued earlier today. Today's call is being recorded and will be available for the next three months on our Web site. Some of the comments in today's call may encompass forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risk and uncertainties. Actual results may differ materially from those discussed today and the company undertakes no obligation to update these statements unless required by law. For a more detailed discussion of these and other risk factors, investor should review the forward-looking statements section of the earnings press release issued this morning. As well as other disclosures in our most recent Form 10-K and other Willis Towers Watson SEC filings.

Okay. Thank you. Good morning everyone and thank you for joining us on our first quarter earning call. Joining me here today, Mike Burwell, our Chief Financial Officer and Rich Keefe, Head of Investor Relations. Today, we will review our results for the first quarter of 2019 and the outlook for the remainder of the year. We are pleased with the results this quarter. We were able to generate strong organic top-line growth of 5%. And this marks the third consecutive quarter in which we have generated 5% or more of organic revenue growth. Moreover, this quarter, we faced a challenging comparables 6% organic revenue growth in the first quarter of 2018. Despite that challenge, we still manage to generate strong organic revenue growth and more important, we delivered profitable growth with meaningful margin expansion of 200 basis points and double-digit adjusted EPS growth. As we discussed at our recent Analyst Day, we have a disciplined strategy focused on generating profitable growth and we feel positive about the strong progress that we have made in this area. I believe this progress is a testament to the immense talent and effort that our colleagues around the world bring to the table on a daily basis. I would like to take the moment now to recognize their hard work and dedication. Their commitment to client service and living our values and are making deep and lasting impacts on our business, I'm very proud of what they have achieved for the company for our clients and for our shareholders and what for bringing our story to life. I thank them for their efforts and for another solid performance this quarter. We remain committed to our strategy and we are pleased with the progress that has been made, but we are not standing still. This is demonstrated by a recent announcement to acquire TRANZACT. We are extremely excited to bring TRANZACT into our Willis Towers Watson family. They bring exceptional talent and capabilities to bear including a leading technology driven direct to consumer solution platform and we think they will be a great fit within our company.

Thanks John. And I'd like to add my congratulations to our colleagues for another good quarter. And thanks to our clients for their continued support and trust in us. First quarter represented a good start to the year with strong organic revenue growth, robust margin expansion and underlying adjusted EPS growth. Now I'll turn to the overall detailed financial results. Let me first assess income from operations. Income from operations for the first quarter was $359 million or 15.5% of revenue up 420 basis points from the prior year first quarter income from operations of $259 million or 11.3% of revenue. Adjusted operating income for the first quarter was $492 million or 21.3% of revenue up 200 basis points for the prior year first quarter adjusted operating income of $443 million or 19.3% of revenue. Let me turn to earnings per share or EPS. For the first quarter of 2019 and 2018, our diluted EPS was $2.20 and $1.61 respectively. For the first quarter of 2019, our adjusted EPS was up 10% to $2.98 per share as compared to $2.71 per share in the prior year first quarter. FX was modestly worse than previously anticipated due to a stronger U.S. dollar resulting in a significant net unfavorable impact or approximately $0.12 in the quarter. Likewise, as previously guided, we're adversely impacted by a decrease in non-cash pension income compared to the prior year which results in a year-over-year decline of $0.12 in the quarter. Excluding the combined headwinds from currency of $0.12, the reduced pension returns of $0.12 and a little bit higher tax rate of $0.02 versus a prior year adjusted EPS growth was approximately 20%. From an effective tax rate perspective, our U.S. GAAP tax rate for the first quarter was 18.8% versus 16.3% in the prior year. Adjusted tax rate for the first quarter was 20.1% up slightly from the 19.7% rate in the prior year first quarter. This increase in the effective tax rate for the quarter compared to the prior year was primarily due to additional taxes on global intangible low taxed income or GILTI. And we continue to evaluate the impact of global tax reform on our effective tax rate including the effect of new taxes associated with computations for changes resulting from updated interpretations and assumptions issued by the taxing authorities.

Thanks very much Mike. And now we'll take your questions.

And our first question coming from the line of Greg Peters of Raymond James. Your line is open.

Good morning. I'll ask a couple of questions. First on organic growth; the first quarter result running ahead of your full year guidance, if I reflect back on the last couple of years, it seems like the second quarter has always been a struggle, but nevertheless, with you running ahead of your guidance it's suggesting that maybe some of the quarters may be lower going forward than where you were in the first quarter. Can you comment?

Yes. I think, Greg, we don't reflect our guidance for what we think are relatively smaller changes we don't. So Mike even though we had the negative currency effect is bigger than we anticipated, we're not changing our guidance, we have a range there. And similarly with the revenue even though we're a little bit ahead in the first quarter, we're not changing our guidance right now. So we don't adjust for every small little thing.

I got it. I thought we were done with ASC 606, but it popped up in Mike's comments and if I'm not mistaken, the benefit to 2019 was going to be in total around $40 million and you've only booked $11 million of that. So that leaves $29 million to fall through in the second, third quarter, is that correct?

Yes. I'll let Mike comment on that, but let me just say I had -- we were talking about this the other day about 606. I thought we were done with it too and I was telling folks that have reminded me from the scene in Carrie where the hand comes up out of the grave to strangle you. We just can't seem to get rid of this the effects of the standard so up. Mike?

Yes. So, Greg, the number actually is $59 million in total and the remainder above the $11 million that I commented on in my prepared remarks will happen by the end of the third quarter.

I love the analogy. And so should we look at this $59 million as recurring in nature going forward. So, when I think about 2020 et cetera or is this one time where it gets pulled out of 2020 in comparison to 2019.

Now, it'll be recurring going forward, is how we think about it.

All right. I guess the final question would be around the adjusted operating margin, 20% is your target for the year. And then, I look at the segment results and I've always felt like CRB had the most opportunity and yet it looked like, it was a drag on the consolidated adjusted operating margin at least in terms of improvement in the first quarter. Can you give us some updated perspective on how that might progress through the year?

Greg, so when we look at it. I mean there's no doubt we continue to see opportunity in that business. Todd Jones and the management team they're very focused on it. And we saw improvement in the first quarter in terms of overall margin improvement. We continue to think of opportunity that we'll see and continue to see that happening. So, as we look at the quarter, we're pleased with the progress they're making. We still see more as about 50 basis points improvement is what we saw in the first quarter for CRB.

Okay, great. Thanks for that.

Try to compare that to others. It's hard to compare that to the improvement in other segments because in HCB some of the 606 changes in other things, so we feel pretty good about the CRB, they're making -- as I said in my remarks, they're making good steady progress at the margin improvement exactly what we're looking for.

I have other questions, but I'll follow up offline.

Okay.

Our next question coming from the line of Elyse Greenspan with Wells Fargo. Your line is open.

Hi. Good morning. Thank you. My first question, I'm just trying to get a little sense of the organic revenue outlook for HCB for the balance of the year. So, the previous question you addressed the fact that we have some rev rec benefit coming back into numbers. But then, that was offset this quarter by some timing issues in retirement. And then, also by the triennial valuation cycle. So do either of those -- do the impact of either those of two items benefit you in the back three quarters, are these things that we should be thinking about as being a headwind to organic within HCB for the balance of the year?

Yes, Elyse. We really purposely stopped giving the segment guidance and really looking at the totality around the 4% overall. But, we feel really good about the HCB business and their ability to continue to drive revenue growth. We're not overly concerned from the triennial impacts coming forward. They're very small, but we feel very confident, the management team and what that business is going to continue to drive and really contribute as we said on an overall basis around that 4%.

I would say that the impact of the triennial valuations tends to be more pronounced in the first half of the year than in the second half.

Okay. And then, in terms of IRR, you guys called out that wholesale organic was down around 6%, I believe due to reduced marine business within Miller. Could you just provide a little bit more color there and if that's something we expect to continue and was that the driver of the margin deterioration within IRR in the quarter?

Yes, Elyse. We were just calling out a particular businesses that we had seen, we just started seeing as much -- continued growth in that particular business. But, so yes, that's what we were -- that's what we're highlighting.

The margin story is a little bit complicated with some of the expenses and everything.

Yes. I mean you do have -- we also have some expenses that we have included in there as we run-off -- continue to run-off and close out of our securities business. And equally when you look at where the market has been in terms of some of our performance fees, but we view those all this timing and we still feel confident back in terms of our overall guidance from an EPS standpoint, at $10.60 to $10.85 range.

Okay. And then, in terms of the TRANZACT deal is and I know you said you guys will update on EPS guidance for that next quarter. Is the right way to think about it in that -- you're getting that business right. If the deal closes in the third quarter, the fourth quarter would be their strongest earnings quarter that relative to that type of seasonality there that would technically be accretive relative to your initial guidance or am I missing something and thinking about it that way?

Well, there is something you need to be careful about because we were planning to buy back shares. And if we don't buy back shares and we do TRANZACT instead. Those two were offsetting whether they offset exactly or not that's something, we'll address later on.

Okay. Great. Thank you very much.

Our next question coming from the line of Mark Marcon with Robert W. Baird. Your line is open.

Good morning, John and Mike. I'm wondering if you can talk a little bit more about TRANZACT just in terms of what you've seen post the announcement just in terms of their continued momentum. They've been growing their policies at a rapid rate of 25% to 30%. Wondering if that's continuing if that from what you're seeing from an update perspective? And then, what are you hearing with regards to, obviously, it's early in the political season, but if Medicare ends up being expanded and includes say 50 plusers. How is that going to end up impacting their business?

Yes. So I think, first of all, we're continued to be pleased with the performance of TRANZACT and they're doing very well. And in fact we expect to -- we had some sort of performance-related elements to the deal and we expect to be paying off on them. Ideally, we'd like to pay off on all of them. They really grow. But, TRANZACT continues to do -- continues to do very well and we're looking forward to getting together with them. From the viewpoint of a Medicare expansion, whether it's even to 62 or down into the 50s, I think one of the things we found particularly attractive about the TRANZACT deal is that, if the Medicare space does expand at all that just opens up an enormous market. He has said even an expansion down to 62 would -- what's that like 10 million new lives or something like that?

Yes.

So, all of that would be good for our business we think.

That's great. And then, can you talk a little bit about what you're seeing in Great Britain. You talked about HCB and CRB, just wondering how should we think about it because this has been dragging -- Brexit's been dragging on and I'm just wondering, what you're hearing from your people over there and how they're dealing with the uncertainty?

Yes. So I would say, I think it's actually been surprising at least to some of us that how that there's relatively little disruption on our day to day work. I mean when we talked about some of the impacts in GB, when we talked about HCB, you noticed what we were talking about was the triennial valuation cycle not Brexit itself. So, we're not necessarily seeing a big impact from there. Even CRB which I mentioned it had a nominal decline in Great Britain. Actually the performance of CRB was really pretty good and it was ahead of what we had our internal projections. And the reason is, we had several a one-off natural resource projects last year that we knew were not going to be recurring. So then coming in where they did was actually ahead of where we are. Brexit is something that's been weighing on the British people and British business for a couple of years now. But we're not seeing any necessary acceleration of that I don't think. And so like everybody else we're just waiting to see how this plays out.

Yes. Maybe John, I would just add one comment and that is to Mark. I mean, obviously, clients come first for us and obviously clients and colleagues. And we've been thinking about various scenarios and various alternatives, obviously, giving our presence and where it sits in that marketplace for some period of time and have continued, I've been working at the detail level at least -- in terms of working out the various alternatives. So, just to add to John's comments.

Terrific. Thank you.

Our next question coming from the line of Mark Hughes with SunTrust. Your line is open.

Hello. I don't hear anything operator.

We may have lost the operator.

Olivia?

Olivia? Can you hear something?

Participants' lines are open.

John, can you hear me?

Oh, okay. We can hear you now.

Okay. Very good. Looking at the BDA business last year the margin was relatively stable through the first three quarters. Looks like both in absolute dollars and percentage, would we think that should be the same this year kind of relatively steady in terms of that loss?

Yes, but less of a loss. I mean obviously our team there led by Gene Wickes has been very focused on cost management and continue to -- continuous improvement like all of our segments, continued focused on it. And so, I think that's a fair assumption, but I would say that they're focused on continuous improvement.

In the reinsurance part of IRR, I think you talked about the momentum and renewal. Any comment on how much of that is market conditions you're just seeing more activity renewal rates are possibly improved or market share gains?

I think it's a combination of all of those so. And we don't -- we can't actually break that down, but I think I wouldn't underestimate the impact of just a change in reinsurance buying behavior among clients too. So, that definitely is an element of it.

When you see a change in behavior?

So, in other words buying more reinsurance.

Got you. Thank you.

Thank you. And our next question coming from the line of Paul Newsome with Sandler O'Neill. Your line is open.

Good morning. Thanks for the call. Is there any offset to the FX and your thinking about guidance for the year that sort of offset to get us back to the overall total guidance in there that you would highlight?

Make sure I follow your question. I guess what I heard you asking is, is saying look with FX at -- $0.12 overall for the first quarter, we had updated our guidance to $0.15 headwind for the year and we did not change our guidance, we kept it at $10.60 to $10.85. So then, therefore, that's what we're assuming, we're going to be able to absorb that within that range that we said would be there. And there's really no change to margins. So that's how we're thinking about it. Call me, if that is -- I'm not responding…

That's exactly what I was seeing if there was some sort of -- if you think essentially the strong organic growth offset or anything that you thought you'd want to point out.

Now, we just thought we would still be in that range.

Okay. I was hoping you could talk about a little bit of the market environment particularly for the brokerage operations and two things I would like you to touch on. One, obviously, there seems to be something going on with insurance pricing? And the other is, there are comments about dislocation of lots of folks from the GLT merger and whether or not that's having any impact on your business?

Yes. So I mean I think -- look pricing is generally it -- each particular area has its own pricing changes. So auto is different from cyber whatever, but in general across most of them we're seeing modest price increases. I'd say that that's where -- there's a range everywhere. But they tend to be centered around modest price increases for most of them. I mean cyber is one particular example, worker's comp or both probably centered around zero change. No change in rates, but most of them have some slight one. So that's a headwind for us. The other thing, what was it, GLT. And look we have seen a -- there have been a lot of resumes on the market and I think that's no surprise. This could be an opportunity for us to add some key people. But I think we also want to be careful about just who we bring on and when. So we're approaching this very carefully.

Great. Thank you very much.

Our next question coming from the line of Adam Klauber with William Blair. Your line is open.

Good morning. Thanks. TRANZACT deal that that gives you obviously great exposure to the growing senior market. You mentioned part of the business is telesales, part of the business is digital. Give any sense just as far as that that senior market how much of the market is digital today in other words, how much of the market actually initiates or does the sales online versus more of the traditional channel?

I don't want to wing it here. We don't have a number on that right now. That's something we'll think about putting in when we do our update on TRANZACT for next quarter.

Okay. But as part of the thesis that digital online piece is going to grow pretty rapidly?

That's correct. We do expect that to grow. Yes. And it's one of things as we said, we liked a lot about TRANZACT.

And then thinking forward as you look at other potential deals over the longer term, is it -- are you thinking about more like TRANZACT that have that digital online exposure. Are those in the pipeline I guess what were your thoughts on expanding your digital footprint?

So I think something that has that kind of digital capability and that kind of exposure that's a feature that makes a deal more attractive. It doesn't mean that every deal has to have that there. So we'll be looking into that. But in general, what I laid out was where -- we're looking for businesses that are going to be high margin businesses either are already there, or have the capability to get there relatively quickly. We're looking for businesses that fit in and that are relatively near adjacencies to our existing business and we're looking for that simply put because we want to understand the businesses ourselves. We don't want to be acquiring things that we don't understand inside and out. So that's why we're looking for things that are relatively near adjacencies. But within that, if the deals accretive it's more attractive, then if it's dilutive, if it has more digital capabilities, it's more attractive than if it doesn't. So we'd be looking about that. Having said that, we're really focused on organic growth.

Great. And then, as far as you are -- the benefits business for a large and jumbo clients, some of the other competitors there's been some dislocation as you know some have been splitting their tech and consulting, some trying to figure out what to do with their technology. Has been a benefit in -- would you picking up clients in that large and jumbo market?

I don't know that we see that as having a particular large impact now.

Okay. Thank you.

Our next question coming from the line of Yaron Kinar with Goldman Sachs. Your line is open.

Hi. Good morning. And I apologize in advance I missed the first part of the call. Did you talk about the FX impact on margins then if not can you maybe talk about that now?

Yes. Really no real meaningful impact on margins from FX not material.

Okay. And then my other question, I guess I was caught off guard by the half year in terms of the triennial valuation cycle. Should there be any impact from that for the rest of the year and are there other maybe one-off that we should be thinking about for the rest of the year?

Yes. I mean I think the answer to that is no. I mean the triennial valuations have an impact the whole year. I mean it's this year compared to last year. The effect is more pronounced in the first half of the year than it is in the second half of the year. There's nothing else comparable to that. We did call out that the last year that the triennial valuations were a reason that we had good growth last year. So it was something we tried to signal then.

Okay. I must have missed that. And then finally, so the remaining $40 million of ASC 606 catch up in the second, third quarters. Should those be roughly evenly split or do you expect that to be more weighted to one and the two quarters?

I would think they'd be pretty even, I guess is the best way I would look at it.

Okay. Thank you very much.

Our next question coming from the line of Sean Reitenbach with KBW. Your line is open.

Hi. It seems like going back to wholesale, it seems like pricing in many wholesale lines is generally positive and modest really -- modestly accelerating, but revenues decline. Would you guys call it out to the Marine? Are there any concern about the net new business going forward and whether you'd expect kind of to see some positive movement from on renewals due to rate and that be positively impacted going forward?

Yes. As John said, we see the rate is -- depends on the line and in terms of modest increase in pricing. Obviously that's winning and continue to win more than net new business so it's both volume and rates. So, we've had -- as we've articulated a little bit of volume change here that's gotten a little soft for us. But let me tell you the management team is very focused on it and we manage it for the entirety of the year, so we're giving an update here at the quarter, but our expectation is to meet what we said in terms of objectives for the year.

Okay. Thank you. That's the only question I had.

And our next question coming from the line of Michael Zaremski with Credit Suisse. Your line is open.

We are not hearing anything.

I'm showing from the queue. At this time, I'm showing no further questions. I would like to turn the conference over to Mr. Haley.

Okay. Well, thanks everyone for joining us today and we look forward to updating you on our second quarter call in August.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Good day.