威達信集團 (MMC) 2010 Q3 法說會逐字稿

Welcome to MMC's conference call.

Today's call is being recorded.

Third-quarter 2010 financial results and supplemental information were issued earlier this morning.

They are available on MMC's website at www.MMC.com.

Before we begin, I would like to remind you that remarks made today may include statements related to future events or results which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are subject to inherent risks and uncertainties.

In particular, references during this conference call to anticipated or expected results of operations for 2010 or subsequent periods are forward-looking statements, and MMC's actual results may be affected by a variety of factors.

Please refer to MMC's most recent SEC filings as well as the Company's earnings release which are available on the MMC website for additional information on factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.

I will now turn this call over to Brian Duperreault, President and CEO of MMC.

Thank you.

Good morning, and thank you for joining us to discuss our third-quarter results reported earlier today.

I'm Brian Duperreault, President and CEO of MMC.

Joining me and presenting on the call today is Vanessa Wittman, our CFO.

I would also like to welcome our operating companies' CEOs to today's call, Dan Glaser of Marsh; Peter Zaffino of Guy Carpenter; Michele Burns of Mercer; and John Drzik of Oliver Wyman.

Also with us is Mike Bischoff, our head of Investor Relations.

I'm pleased to report that in the third quarter, MMC produced strong revenue growth of 7% or 4% on an underlying basis.

We are seeing some signs that the effects of the Great Recession are diminishing, however, overall economic conditions remain weak.

Also, the Insurance Services segment continues to face the challenges presented by soft market conditions in the global property-casualty marketplace.

Even in this difficult operating environment, however, each of our four operating companies produced revenue growth on both a reported and an underlying basis.

This is the first quarter this has occurred since 2007.

About six weeks ago, MMC held its first Investor Day under this management team.

I was very pleased so many members of the investment community were able to attend, and many others took advantage of the opportunity to watch our live video webcast.

The entire program, which included presentations by each of the heads of our operating companies, as well as Vanessa's financial overview, remains available for viewing on our website, MMC.com.

I would like to spend a few minutes reinforcing some of the major themes I talked about at Investor Day in making the investment case for MMC.

In the 40 years after Marsh & McLennan Companies became a public company in 1962, two of our most notable hallmarks were sustained growth and adjusted earnings per share and total return to shareholders.

However, MMC operated in a crisis mode from late 2004 through the end of 2007.

As a result, new management was installed nearly three years ago.

Since then, we have successfully resolved legacy issues that prevented the Company from operating at its fullest potential.

Today, MMC is comprised of four great companies -- Marsh, Guy Carpenter, Mercer, and Oliver Wyman.

Each is a leader in its field and is led by a strong management team focused on enhancing growth and revenue, and more importantly, earnings.

Our goal is to establish MMC as an elite global growth company, not just in relation to our direct competitors, but with respect to other leading global companies.

To return to a record of superior long-term performance, we will focus on four major pillars in the coming years.

First, growth.

We are committed to generating long-term revenue and earnings growth.

MMC should produce long-term organic revenue growth at least equal to global GDP growth, augmented by acquisitions.

And a continuing focus on expense discipline should expand margins and lead to 10% growth in operating income in a multitude of operating environments.

We are beginning to see the results of the strategy in MMC's financial performance for the first nine months of 2010, which is more indicative of our performance in any one particular quarter.

Through the third quarter, MMC produced 11% growth in adjusted operating income.

This was in an operating environment in which MMC's underlying revenue rose 2% but adjusted underlying expenses were held to only 1%.

Also contributing to long-term earnings growth is prudent and effective capital management, including the disciplined redeployment of excess cash into accretive acquisitions and share repurchase.

We have completed six acquisitions so far in 2010.

Four of these were in the Risk and Insurance Services segment, including Haake Companies, Thomas Rutherfoord, and The Bostonian Group.

These were part of our Marsh & McLennan Agency strategy.

We also acquired the insurance brokering operations of HSBC.

In the third quarter, we completed two acquisitions at Mercer.

In July, we acquired Innovative Process Administration, a provider of health and benefit recordkeeping and employment enrollment technology.

And in August, we're acquired ORC worldwide, a premier provider of HR knowledge, data and solutions.

Total consideration for these acquisitions exceeded $500 million, $300 million of which was in cash.

This illustrates our capacity to make investments in our businesses.

Another effective method of returning capital to shareholders and contributing to long-term growth in earnings per share is share repurchase.

As I announced at Investor Day, the Board of Directors has authorized a $500 million share repurchase program.

Since we have been in the blackout period related to third-quarter earnings, we have not yet activated this program.

However, now that we have announced our third-quarter earnings, we will begin buying back our stock.

Over time, effective capital management can translate compound annual growth of 10% in operating income to earnings per share growth approaching 13%.

Another element that contributes to annual shareholder returns is MMC's attractive dividend.

Reflecting the recently announced dividend increase, our current yield is 3.2%.

Long-term shareholder returns of 16% are what MMC was able to achieve during its first four decades as a public company, and this is what we are targeting for the future.

The second pillar of our corporate strategy is maintaining low capital requirements.

As a professional services firm, we do not require significant capital investments to successfully run our businesses.

We, therefore, expect to maintain low capital requirements in each of our operating companies.

In fact, we're targeting a level of capital expenditure in the coming year of approximately $230 million.

The third pillar is high cash generation.

Our business generates strong cash flows.

However, over the last few years, we've used these cash flows to restructure operations and deal with legacy issues, which averaged around $500 million per year, so our ability to reinvest in a classic growth manner was limited.

Now that restructuring and legacy issues are largely behind us, we expect our businesses to generate over $1 billion of cash on an annual basis.

Following dividend payments currently at $450 million, we're left with approximately $550 million of excess cash that we can redeploy in acquisitions and share repurchase.

Finally, lowering our risk profile -- over the last several years, we have implemented enhanced organizational, operational and risk management measures, including a focus on enterprise risk management that are designed to reduce the Company's risk profile.

To summarize, our strategy is to focus the Company on the characteristics that create great value for investors -- growth, low capital requirements, high cash generation, and a low risk profile.

It is our belief that emphasizing these four pillars, successfully combined with strong businesses operating in global markets, and disciplined capital and expense management, should produce superior long-term returns to our shareholders.

Now let me turn it over to Vanessa to review our third-quarter results in more detail.

Thank you, Brian and good morning, everyone.

I will begin with an overview of MMC's consolidated earnings for the quarter.

Then I will discuss the results of the individual operating companies.

I will close with some observations regarding MMC's financial position.

On a GAAP basis, EPS in the third quarter was $0.30, which included $0.22 from continuing operations and $0.08 from discontinued operations.

Discontinued operations primarily include the gain on the sale of Kroll, the related tax benefits, and Kroll's operations in the third quarter.

The related tax benefits were slightly higher than the preliminary tax benefit recognized in the second quarter.

In the third quarter of 2009, adjusted EPS was $0.48, which, as you may recall, included an $0.18 tax benefit.

On an adjusted basis, EPS in the third quarter of 2010 was $0.27.

Adjusted EPS includes $4 million of operating income from Kroll through the closing of the sale.

This compares with Kroll's adjusted operating income of $21 million in the third quarter of 2009.

Accordingly, the sale of Kroll negatively impacted this year's third quarter by $0.02 a share.

Due to declines in our private equity portfolio, which are reported on a one-quarter lag, we recorded an investment loss of $2 million in the third quarter.

In last year's third quarter, investment income was $22 million.

Looking ahead to the fourth quarter, we anticipate investment income of approximately $15 million compared with $23 million in last year's fourth quarter.

Interest expense in the third quarter of $60 million was similar to prior quarters.

However, with the repayment of the $550 million debt maturity in September, we expect interest expense to decrease beginning in the fourth quarter.

Turning to the results of MMC's operations, unless indicated otherwise, my references will be to underlying revenue, underlying expenses, and adjusted operating income.

We achieved growth in both revenue and operating income in each of our businesses, not only in the third quarter, but for the first nine months of the year.

On a consolidated basis, operating income rose 7% to $269 million compared with last year's third quarter.

On a reported basis, third-quarter revenue for Risk and Insurance Services rose 8% to $1.3 billion.

Excluding fiduciary interest income, underlying revenue growth was 3%.

Operating income increased 4% to $165 million from $158 million last year.

Marsh had a strong quarter despite the continuation of soft market conditions in the global insurance market.

On a reported basis, revenue rose 9% in the third quarter to $1.1 billion.

On an underlying basis, growth was 3%, reflecting a sequential improvement for the fourth quarter in a row.

The strong performance in the third quarter was achieved with consistent revenue growth across all geographic operations.

The positive momentum in new business generation also continued in the third quarter.

Year to date, global new business growth was 8%.

Client retention rates also stayed strong, in line with the first half of the year.

Despite an increase in pension expense, growth in operating expenses was 3% in the quarter and only 1% for the first nine months.

Guy Carpenter continued to generate revenue growth despite the significant headwinds of declines in pricing within the reinsurance markets and increased retentions by clients.

On a reported basis, revenue increased 4% to $233 million.

On an underlying basis, Carpenter's revenue grew 3%.

This is Carpenter's seventh sequential quarter of revenue growth, an outstanding performance considering the operating environment.

This growth reflects Carpenter's high client retention and new business production, driven particularly by its international operations.

This continues Carpenter's strong new business over the past two years, where it has gained market share from all segments within its competitive environment.

In our Consulting segment, reported revenue rose 5% to $1.2 billion.

Underlying revenue growth was strong at 6%.

This represents the third consecutive quarter of growth and the highest growth rate at Consulting in the past nine quarters.

Growth in operating expenses including higher pension expense was 5% for the quarter and only 1% through the first nine months.

Operating income increased 11% from $130 million to $144 million.

For the nine months, operating income rose 16% from $335 million to $387 million with margin improvement of 110 basis points.

Mercer's reported revenue increased 6% in the third quarter to $881 million.

Underlying revenue growth was also 6%, a marked improvement compared with last year's third quarter that felt the full impact of the global recession.

Retirement consulting revenue, though down slightly from last year, was substantially stronger in the third quarter than the first half of this year, led by growth in Canada, Latin America, and Asia Pacific.

Health and benefits registered its strongest performance in two years.

Revenue rose 8% in the third quarter, driven by increases in the US and Asia Pacific.

Rewards, Talent & Communications produced double-digit revenue growth, its strongest performance since the first quarter of 2008.

This was driven by growth in human capital consulting in the US, Canada, and EMEA, as well as a resurgence of demand for compensation surveys.

Outsourcing revenue was up 4% in the quarter, driven by new client wins in the US and Asia Pacific.

Affirming our strategy to provide enhanced investment solutions for our clients' retirement plans, Investment Consulting & Management increased 17% for the third straight quarter with strong growth in all geographies.

Mercer's operating income increased in both the third quarter and year to date.

Oliver Wyman also generated strong revenue growth in the third quarter, which continues the improvement that we have seen throughout this year.

Reported revenue grew 3% to $322 million while underlying growth was 6%.

Among its industry specialties, financial services, representing almost 40% of revenue, continued its outstanding performance.

Revenue rose double digits for the third consecutive quarter, reflecting the improving demand from this sector.

Oliver Wyman also generated strong growth in the healthcare, transportation, and consumer sectors.

Oliver Wyman produced strong growth in operating income and margin improvement for both the third quarter and the first nine months of the year.

Cash at the end of the third quarter was $1.7 billion compared with $1.5 billion at the end of the second quarter.

In addition to our normal cash generation in the quarter, we received cash proceeds of $1.13 billion upon the closing of the Kroll transaction.

Major uses of cash in the quarter included a $550 million debt maturity in September, $400 million for the Alaska settlement, a $200 million tax-advantaged discretionary contribution to our US pension plan, and $50 million for several small acquisitions.

It's important to note as I outlined at Investor Day that there are substantial tax benefits associated with some of these actions.

For example, we expect to receive a cash tax benefit of roughly $280 million from the sale of Kroll.

We achieved this benefit because we carried back a tax-basis loss on the sale of Kroll against a gain on the sale of Putnam we realized in 2007.

We also expect cash tax benefits of $160 million from the Alaska settlement and $70 million from our discretionary pension contribution.

So in aggregate, we have over $500 million of cash tax benefits.

Roughly $200 million should be received by the end of this year, $230 million in the first half of 2011, with the remainder realized over time.

As you heard Brian say, we expect to begin our share repurchase program shortly.

With that, let me turn it back to Brian.

Thank you, Vanessa.

Operator, we're ready to take questions.

(Operator Instructions).

Keith Walsh, Citi.

Good morning, everybody.

Two questions first for Dan, just on brokerage -- the plus 3 admittedly a lot better than what I was looking for at least, but what I want to understand is why the 50 basis point decline on the margin.

Maybe if you could help me understand why we're not seeing the operating leverage there, and then I've got a follow-up for Michele.

Okay, so let me approach this in a couple of ways.

One, you know that our revenue in the third quarter is the lowest revenue that we have in the year, quarter by quarter.

And our expense base does not reflect that same seasonality.

So our expenses stay pretty stable over the course of the year.

So, changes in expense have a more material impact on the third quarter than they would on any other quarter.

So specifically to your question, my management team and I are very much focused on making sure that expense growth does not exceed revenue growth.

That's sort of a basic operating principle.

So in direct answer to your question, I think you'd have to look at pension expense and the growth that we had in pension expense this quarter.

That represented about half of that 3% increase.

And so from that standpoint, it really masks in this quarter our underlying performance.

Okay.

That's helpful.

And then for Michele, the same question basically but a little different.

The plus 6 in Consulting, again, much higher than I was looking for, but you got 60 bps of margin, but it seems you're operating leverage in this business maybe isn't as great as it is in brokerage.

Can you maybe talk to that a little bit?

Sure.

I think first of all, we had the same issues as Dan in terms of a one-time or pension expense difference in terms of different in that if you compare it year over year, you get a much different answer than you would on a run rate basis normally.

So you take that out and think about that a little bit differently.

Otherwise, I think the company is perhaps somewhat less leveraged than a brokerage company.

That said, we are in the business of producing scale businesses.

So whether it's outsourcing, whether it's investment management, whether it's our data business, all these have scale characteristics.

So our expectation is that you will see positive leverage in this business as we enter growth and growth especially looking like the growth that we were able to produce this quarter.

Okay, thanks a lot.

Brian Meredith, UBS.

Yes, good morning.

A couple questions here -- the first one, back to Dan.

Were there any headwinds in the quarter from the recent acquisition that you made, meaning, was that a hurt to the margins potentially here?

The acquisitions overall for the year are not really going to do anything for us on the bottom line.

They will be -- I think in this quarter, we had a $3 million or $4 million benefit to earnings as a result of acquisitions.

And so it's overall, if you look at our acquisitions, the largest ones are the aggregate of the agencies, and you've got purchase accounting which works its way through, so from a margin standpoint, it won't be a help for another two or three years.

You know, we don't have -- because of our building with platform hubs, by definition, we don't have synergy with regard to those sort of acquisitions.

And then our other large acquisition during the year was HSBC Insurance Brokers, and really we've spent this year getting that business right.

And from that standpoint, we -- the synergy value from that will show up next year.

Okay, great.

And then could you talk a little bit about exposures; what you are seeing out there from an exposure standpoint?

Is it flattened out, getting any better?

Yes, I would guess on the overall margins, you would say it's getting a little bit better, but certainly nothing that makes us overly excited.

I mean I did think that we had very broad-based growth this quarter.

If I just put that in context a little bit, we had 31 countries that grew more than 5% organically.

And of those countries, 19 of them grew more than 15%.

So there's definitely not only some exposure movement, but there's some projects that are being done that had been taken off the table awhile back.

Great.

And lastly, could you just comment on the pipeline for M&A, what it looks like?

Yes.

The pipeline for M&A looks great.

I mean we've got Dave Eslick and his team within the Agency are very active.

We're talking to a lot of people.

And I will just reiterate, we don't have a budget or a plan in terms of what we have to acquire and when.

What we really have is a strategy, and that strategy is a multiyear strategy, and so we're talking to a lot of people.

The first thing is, is there a fit, and does the management team have experience in doing fold-ins and bolt-ons and that sort of thing.

And then, of course, the economics have to make sense.

But I'm very pleased with where we are on a pipeline basis.

And so you will be seeing us doing acquisitions over the course of the coming months and years.

Excellent.

Thank you.

Larry Greenberg, Langen McAlenney.

Thank you and good morning.

I guess this is for Vanessa.

Is it too soon to give any color on pension expense for next year, and whether further contributions might be made this year?

Two pieces I'm presuming of your question, Larry.

First, you are spot on; it is too soon to make the call on next year's pension expense.

It's a 12/31 calculation and driven by the interrelationship of a lot of complicated factors.

We also do not have a definitive plan for incremental contributions for the rest of this year.

Okay.

Thank you.

Meyer Shields, Stifel Nicolaus.

Thanks.

Let me start with a question for Michele if I can.

Can you give us any guidance in terms of the relative margins within the various Mercer businesses?

I'm asking because we are seeing very varied organic revenue growth and I'm trying to figure out what impact that has on the margins.

We really don't disclose relative margins or even margins for Mercer individually.

I think the way I might think about it is that the margin expansion you might see is particularly relevant in the scale businesses I mentioned in the last question.

Okay, that's helpful.

I guess, I don't know if this is for Brian or Vanessa, but should we anticipate share repurchases over let's say a longer period of time to outpace the shares issued either in compensation -- or in combination of compensation and acquisition?

Well, yes -- the -- the point is to make -- is to use the cash either through a repurchase or accretive acquisition, so there is that competing situation.

But with respect to share repurchases, certainly it would make sense to eliminate the dilution from the compensation side.

And then, with respect to the acquisitions, if they are accretive, I guess I'm under less -- I feel under less pressure; if it was an accretive deal using stock, it's probably a good use of the stock, so I wouldn't feel as compelled there.

It's more a balance on future usages as opposed to what we did in the past.

Okay.

If that helps.

Yes, it does.

And, can we get any update on contingent commissions -- I'm sorry -- discussions that have been going on this year?

Contingent commissions discussions?

I guess that's you, Dan.

Sure.

I mean I think from our perspective, we've been pretty consistent and pretty clear.

We believe that contingent commissions should be part of a broader discussion around carrier revenue streams, and that all carrier revenue streams have the potential for a conflict of interest.

And so therefore, we're really focused on the internal systems and controls we have to manage conflicts, and also our transparency and disclosure practices.

You know, in terms of contingencies specifically, we have said that we do not intend to take contingent commissions in our core brokerage business in the US and Canada and actually probably in a few other large countries as well.

But having said this, it doesn't mean that we are not looking to improve our carrier revenue stream.

So we're actively negotiating with carriers on basic commission levels, on enhanced commissions, on fee-for-services, and we've been successful throughout this year in doing that, and I believe that will continue.

Okay.

Thank you very much.

Adam Klauber, Macquarie.

Operator, why don't we move to the next and maybe Adam can come back in.

Jay Cohen, Bank of America Merrill Lynch.

Yes, thank you.

I just want to follow up on the pension expense going forward.

While it's too early, obviously, to forecast for next year, could you make an assessment, though, if you said things like interest rates, currency were going to remain the same for the balance of the year, given that assumption, what would you expect for pension expense 2011 versus 2010?

Jay, I really think it's misleading to make a call with even current interest rates when we have seen year end's volatility.

For example, in 12/31/2008, the movement, an overnight movement in the rate caused an incremental, fairly sizable incremental expense.

So I am not comfortable speculating on today's rates holding at 12/31.

Yes, Jay, I think if we could do it, we would do it.

It's just too complicated.

It's not fair for anybody.

So when we have the number, as soon as we feel confident, we will do it.

I think we certainly did it last year when I did our fourth-quarter earnings call, and we will certainly give you the information then.

(multiple speakers) We can wait for that then.

Second question, on the consulting side, can you talk about the revenue that's associated with some of the deals that you completed in the quarter?

Michele?

Sure.

A couple of deals -- IPA and ORC, one in the outsourcing in health and benefits arena, and the second in the mobility business.

And the revenue characteristics will be helpful for us next year.

We did see some revenue come through in this quarter with regard to ORC.

But both of those are deals that will provide new capabilities for the firm that will lead to revenue growth both independently as well as in bundles.

And in the case of IPA specifically, will allow us to build out product and solution that complement our existing capabilities.

So individual revenue from that organization as well as revenue growth, we will see coming because that product and solution just gets better with the IPA technology that we acquired.

Can you quantify how much revenue they would add annually, just from the deals that you -- from the existing revenue they had, just for modeling purposes for our standpoint?

Neither deal is significantly large in terms of revenue number.

I would be hesitant to go off the top of my head, but I think maybe Mike can follow up with some estimates from what we disclosed.

Both of those deals, the way I would look at them from their incremental revenue from them alone, will not be super -- a material amount to Mercer overall.

But as they are bundled with our other services, they will add additional value.

So it's two pieces to that; organic from them alone as well as well as what we were able to do with them as a bundle.

I think it's probably best that we come back to you on that one individually.

As Michele said, this is Mike Bischoff, in our schedules, you can see that for Mercer, the acquisitions were 1% and that's roughly $900 million.

So it was about $8 million or $9 million in the quarter, Jay.

Great.

Thank you.

Adam Klauber.

Thanks.

Is the organic growth we are seeing in brokerage -- do you think that's sustainable?

And what sort of growth did you have in the UK and US?

Okay, so a couple of things.

As I've said in previous quarters, it's a difficult marketing environment, and so it's hard to actually see any real trend.

I mean I am happy that this is the fourth quarter in a row of sequential improvement in our growth levels, but it is a very challenging market, particularly in mature markets.

So when I look at the quarter and the year, we're 1% year to date in terms of growth.

We're 3% in the quarter, and so I believe positive territory is sustainable, but I wouldn't necessarily say that any particular number within that range would be sustainable.

I think we would be in that range.

The other thing is, in terms of the US, we do disclose the US/Canada division.

Canada represents about 10% of the overall division, and that division's growth in the quarter was 3%.

We don't disclose the UK separately from EMEA, although, I do want to say that the UK is the largest country by far in the EMEA division, and that that division grew 1% in the quarter.

Great.

One more follow-up.

You talked about acquisitions.

What's the potential over the next 12 months to see a large sort of franchise defining-type acquisition?

I guess I should answer that one.

Well you know, large franchise changing acquisitions by definition aren't that common.

So, the betting instincts in me would say it's probably not a great chance.

You know, we have a strategy that I think is going to do us a great service over time.

And that is each -- and it's not limited to Marsh.

We are out -- as Michele pointed out, did a couple of acquisitions at Mercer this quarter that keep the momentum going, add to our capabilities, enhance our franchise, fill us out.

And if you go back to my four pillars, that growth, we want it to be sustainable; we want it to be long term; we want you to be dependent on it.

You could -- of course, we've got to execute.

So it's not necessary for us to make those kinds of acquisitions.

And when you look at our portfolio of companies, and I emphasized in the beginning, we have four fabulous companies.

And so, they're pretty good in their own right, you know.

There -- it's hard to find where we are really so lacking that we need to make that change.

However, having said all that, we are opportunists.

We -- if opportunities arise where we could do something that would absolutely be in your best interests and the rest of our -- those who follow us and our shareholders, we are going to do it.

But frankly, you just can't bet on those kinds of things.

But you can, I think, more easily, bet on our ability to find good quality companies that add year after year, year after year to the Company.

And that's the strategy we are employing.

Great.

Thank you very much.

Jay Gelb, Barclays Capital.

Thanks.

My first question is, what's the expectation for issuance of shares when related to compensation?

Well, I think if you look at our history, it's fairly consistent.

I don't think we have any plans to do something out of norm with what we've done in the past.

I don't think I would say anything more than that, Jay.

Okay.

Have you quantified that at all?

We go through the process starting soon when we evaluate the year.

Of course, we have to -- it is based on performance, so -- performance isn't quite finished yet, but, we have budgets and plans and expectations, but the actual quantification takes a little more time.

Okay.

And then more broadly, can you talk about the potential to expand the Risk and Insurance Services adjusted margin in 2011?

It looks like it will be mostly unchanged in 2010, and so it just -- just wanted to give you an opportunity to maybe talk about next year.

Well, long term it's our plan to expand.

You know, we're going to expand that margin kind of the old fashioned way, right?

We continue organic growth and manage our expenses.

We believe we can do that over time.

Now 2011, you know, we may have some more headwinds.

As Dan pointed out, we continue to have headwinds in both economics and in the soft market conditions that we are facing, the low interest rates, all those things.

Pensions, you know, have been an issue.

So, it just makes the job a little harder, but the expectations, we will find some way to get the margins expanding and -- I don't know what 2011's margin is going to be.

But it's certainly our plan to continue to maintain the discipline around both playing offense and defense.

Thank you.

Thomas Mitchell, Miller Tabak.

Miller Tabak.

Yes.

As I understood the discussion, you have used the -- you have dedicated all the proceeds of the Kroll sale, but you are expecting major tax benefits in cash form coming in in the fourth quarter and next year.

Is it reasonable to assume that you will redeploy most of those cash tax benefits to share repurchases?

Well, you know, Thomas, it's a nice position to be in when we have the cash.

You know, I pointed out, we've been in -- we've been putting cash out for other reasons.

Now we can actually use it, and I told you what we would do.

Once we pay the dividend, when you look at the rest of this cash that we either have on hand or we're generating, and we are looking for creative acquisitions or share repurchase.

So those are the two choices, and they remain the two choices, and I'm not going to handicap which one is going to get most of the money.

Okay, thanks.

And I'll turn it back over to Mr.

Duperreault for closing remarks.

Okay.

Well, thank you very much.

Thanks for joining us today and for your continued interest in the Company.

And before I close, I just want to make sure that if you haven't seen the Investor's Day presentation, go to MMC.com.

I think you will find it very interesting.

And again, thank you.

We will talk to you next quarter.

Bye.

This concludes today's presentation.

Thank you for your participation.