威達信集團 (MMC) 2025 Q4 法說會逐字稿

Hello, and welcome to Marsh's earnings conference call. Today's call is being recorded. Fourth quarter 2025 financial results and supplemental information were issued earlier this morning. They are available on the company's website at corporate.marsh.com.

Please note that remarks made today may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties and a variety of factors may cause actual results to differ materially from those contemplated by such statements.

For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, including our most recent Form 10-K, all of which are available on the Marsh website.

During the call today, we may also discuss certain non-GAAP financial measures. For a reconciliation of these measures to the most closely comparable GAAP measures, please refer to the schedule in today's earnings release. (Operator Instructions)

I'll now turn this over to John Doyle, President and CEO of Marsh.

Thank you, Andrew. Good morning, and thank you for joining us to discuss our fourth quarter results which we reported earlier today. I'm John Doyle, President and CEO of Marsh. Joining me on the call are Mark McGivney, our CFO; and the CEOs of our businesses: Martin South; Dean Klisura, Pat Tomlinson and Nick Studer. Also with us this morning is Jay Gelb, Head of Investor Relations.

2025 was another good year for Marsh. We executed well against our strategic objectives and delivered solid financial results. Total revenue grew 10% to $27 billion with underlying revenue growth of 4%. Adjusted operating income increased 11% to $7.3 billion. This is on top of a 11% growth in 2024.

Our adjusted operating margin improved 30 basis points, marking our 18th consecutive year of reported margin expansion and adjusted EPS grew 9%. We generated 25% growth in free cash flow and achieved our capital deployment objectives. We invested approximately $850 million in acquisitions and returned significant capital to our shareholders.

This included a 10% increase in our quarterly dividend and a $2 billion in share repurchases, the largest annual amount in our history. We also successfully completed the integration of McGriff, our largest acquisition ever, launched our new brand and announced the Thrive program, all of which improve our growth profile in the years ahead.

I want to take a moment to talk about our strategy and the opportunities we see. Marsh is a market leader with a proven track record of growth and exceptional performance. Our success is driven by the unique strengths of our businesses, market-leading positions, a data and analytics advantage and most importantly, the talent and dedication of our colleagues.

Looking ahead, we see an opportunity to deliver even greater value to our stakeholders. Our vision is to be the most impactful professional services firm in the world, not just in insurance but across risk, reinsurance and capital, health and talent strategies, investments and management consulting.

Our clients face increasingly complex challenges and new opportunities. They rely on our expertise across critical areas where we are market leaders and where our scale and specialization are a distinct advantage. Last quarter, we introduced Thrive, a growth program aligned with our vision and core principles.

We expect it to provide greater financial flexibility and organizational agility over the next three years. Thrive is already unlocking the capacity to invest in emerging areas with meaningful economic opportunity such as digital infrastructure, health care, private capital, insurance capital strategies and energy.

It's also enabling us to increase investment in frontline talent and integrated solutions across our businesses. With Thrive, we can more powerfully and efficiently invest in one brand. Two weeks ago, we officially launched the new Marsh, ringing the closing bell of the New York Stock Exchange and introducing our new ticker symbol MRSH.

Our new expanded Marsh brand better supports our business strategy and simplifies our value proposition for clients. This was highlighted at the World Economic Forum Meeting in Davos last week, where Marsh colleagues met with government and business leaders.

Together, we discussed geoeconomic compensation, AI and digital infrastructure, health and longevity, investment strategies, and resilience and transformation in an uncertain environment. The client and even societal impact that we can have when we bring our full capabilities together under the Marsh brand is a sustainable advantage.

Another important part of Thrive is the formation of business and client services. Through BCS, we're building a data and technology ecosystem that harnesses AI and advanced analytics to improve client outcomes and drive operational excellence.

While we've improved efficiency through technology and moving workflow to cost-effective locations over the years, BCS is a fundamental change in our operating model and it accelerates expense savings and investment in AI and automation.

BCS has introduced dozens of AI-driven productivity tools and we're ramping up adoption to give our colleagues an edge. We're also focused on launching one-of-a-kind technologies, client-facing technologies such as Sentrisk and [ADA], which I've mentioned on prior calls. We see strong growth potential in client-facing technology, virtual agents and chatbots. I look forward to continuing to share our progress on Thrive in the quarters ahead.

Turning to market conditions. We continue to see a competitive insurance and reinsurance environment. According to the Marsh Global Insurance Market Index, primary commercial insurance rates decreased 4% in Q4, driven largely by property. This follows a 4% decline in the third quarter of 2025. As a reminder, our index skews to large account business.

Rates in the US were flat. UK, Canada and Latin America were all down 7%. Europe and Asia declined mid-single digits and the Pacific region had double-digit decreases. Global property rates decreased 9% year-over-year compared with an 8% decline in the prior quarter. Global Financial and Professional liability rates were down 4%, while cyber decreased 7%.

Global Casualty rates increased 4%, with US excess casualty up 19%, reflecting ongoing pressure in the liability environment and workers' compensation decreased 1%. In reinsurance, the property cat market continued to soften as reinsurers pursue growth by deploying more capital. Price decreases accelerated at January 1, [cedents] achieved double-digit rate reductions for non-loss impacted cat placements. Demand increased 5% to 10%, depending on region and segment with buyers seeking better risk sharing such as aggregate and other covers.

In casualty, we continue to see price increases driven by rising rates in the primary market which has made it an attractive growth opportunity for reinsurers. The cat bond market had another record year with 86 new bonds issued totaling more than $24 billion in limits.

Dedicated reinsurance capital is projected to increase 9% to $660 billion at the end of 2025, driven by growth in traditional and alternative capital. With ample capacity, including new casualty sidecars, reinsurers are seeking profitable ways to deploy capital.

Turning to health trends, our surveys indicate medical costs are expected to continue to rise in 2026. In the US, we are estimating a 7% increase while other regions of the world will experience high single to low double-digit increases.

We continue to help clients balance cost reduction measures with their need to maintain high-quality benefit plans. As always, our focus remains on helping all of our clients navigate these dynamic market conditions. Now let me turn to our fourth quarter financial performance and outlook which Mark will cover in more detail.

Consolidated revenue increased 9% to $6.6 billion, growing 4% on an underlying basis with 2% growth in RIS and 5% in consulting. Marsh risk was up 3%. Guy Carpenter grew 5%, Mercer increased 4% and Marsh Management Consulting which was formerly reported as Oliver Wyman Group grew 8%. Adjusted operating income grew 12% and adjusted EPS for the quarter was $2.12, up 10% year-over-year. We also repurchased $1 billion of our stock in the quarter.

Looking ahead, despite headwinds from lower interest rates and decreasing insurance and reinsurance pricing, we are well positioned for another solid year. We expect underlying revenue growth in 2026 to be similar to last year. We also anticipate continued margin expansion and solid adjusted EPS growth. Of course, this outlook is based on current conditions and the economic environment could change materially from our assumptions.

In summary, we're pleased with our 2025 performance. We executed on our strategic objectives and continued our track record of strong results. The Thrive program will drive growth through investments in talent and AI, strengthen our brand and generate greater efficiency.

I would add that this is my 40th year in the business world, and I've never seen such a complex environment for our clients. While we are not facing one global crisis, we are in an era of poly crises, ground wars, trade wars, culture wars, social unrest, AI disruption and extreme weather are all creating enormous challenges for businesses. But there is also opportunity in the complexity.

If clients can anticipate the environment, sees the potential of AI while managing the risks and have the right advisers to guide them. It's why I'm so optimistic about Marsh's future. Our perspective shaped by 155 years of helping clients build the confidence to Thrive, sets us apart. Our ability to see the risks and opportunities and support clients with advice and solutions will benefit them and make our relationship invaluable.

With that, I'll turn the discussion to Mark for a more detailed review of our results.

Thank you, John, and good morning. Our fourth quarter results represented a solid finish to the year, reflecting our strong position and execution despite a more challenging environment. Consolidated revenue increased 9% to $6.6 billion with underlying growth of 4%, which came despite a headwind from fiduciary interest income.

Operating income was $1.2 billion and adjusted operating income was $1.6 billion up 12%. Our adjusted operating margin increased 40 basis points to 23.7%. GAAP EPS was $1.68 and adjusted EPS was $2.12 up 10% over last year. For the full year, underlying revenue growth was 4%. Adjusted operating income grew 11% to $7.3 billion. Our adjusted operating margin increased 30 basis points and adjusted EPS increased 9% to $9.75.

Looking at risk in insurance services, fourth quarter revenue was $4 billion up 9% from a year ago or 2% on an underlying basis. Operating income in RIS was $830 million. Adjusted operating income was $1.1 billion up 11% over last year and the adjusted operating margin was 27.6%, up 60 basis points from a year ago.

For the full year, revenue in RIS was $17.3 billion with underlying growth of 4%. Adjusted operating income increased 12% to $5.5 billion. The adjusted operating margin was 32%. At Marsh risk revenue in the quarter was $3.7 billion up 10% from a year ago or 3% on an underlying basis.

Marsh risks underlying growth in the quarter face tough comparisons to last year's fourth quarter due to elevated claims activity in our current flood business and the renewal of 18-month policies in Latin America. In US and Canada, underlying growth was 3%, reflecting good new business growth overall and continued momentum in MMA.

In international underlying growth was 4%, with EMEA up 6%, Asia Pacific up 2%, and Latin America down 4%, reflecting the impact of 18 month policy renewals. For the full year, Marsh Risk's revenue was $14.4 billion with underlying growth of 4%. US and Canada grew 3% and international was up 5%.

Guy Carpenter's revenue in the quarter was $215 million up to 7% or 5% on an underlying basis. Growth remained solid despite softer reinsurance market conditions and came on top of 7% underlying growth in the fourth quarter of last year.

For the full year, Guy Carpenter generated $2.5 billion of revenue and 5% underlying growth. In the consulting segment, fourth quarter revenue was $2.6 billion up 8% or 5% on an underlying basis. Consulting operating income was $483 million and adjusted operating income was $550 million up 10%.

Our adjusted operating margin in consulting was 20.8%, up 10 basis points from a year ago. For the full year, consulting revenue was $9.8 billion, reflecting underlying growth of 5%. Adjusted operating income increased 10% to $2.1 billion, and the adjusted operating margin increased 40 basis points to 21.1%. Mercer's revenue was $1.6 billion in the quarter, up 9% or 4% on an underlying basis.

Health grew 6%, reflecting continued growth across our regions, especially in international. Wealth was up 5% led by our investments. Our assets under management were $692 billion at the end of the fourth quarter, up 1% sequentially and up 12% compared to the fourth quarter of last year.

Year-over-year growth was driven primarily by acquisitions and the impact of capital markets. [Career] was down 2%, reflecting continued softness in project-related work in the US and Canada, partially offset by sustained demand in international good growth in our workforce products.

For the full year, revenue at Mercer was $6.2 billion with 4% underlying growth. Marsh Management Consulting generated revenue of $1 billion in the fourth quarter, up 8% on both a GAAP and an underlying basis, reflecting solid demand across most regions and sectors.

For the full year, revenue in Marsh Management Consulting was $3.6 billion an increase of 6% on an underlying basis. Fiduciary interest income was $92 million in the quarter, down $20 million compared with the fourth quarter of last year, reflecting lower interest rates.

Looking ahead to the first quarter, based on the current environment, we expect fiduciary interest income will be approximately $83 million. We're making good progress on executing our Thrive program. We continue to expect to generate $400 billion of total savings, a portion of which will be reinvested for growth, and incur approximately $500 million of charges to generate the savings.

Total noteworthy items in the fourth quarter were $210 million and included $112 million of costs associated with Thrive. Interest expense in the fourth quarter was $235 million. Based on our current forecast, we expect interest expense will be approximately $240 million in the first quarter.

Our adjusted effective tax rate in the fourth quarter was 22.1%. This compares with 21.3% in the fourth quarter last year. For the full year, excluding discrete items, our adjusted effective tax rate in 2025 was 25.3% compared with 25.9% in 2024.

When we give forward guidance around our tax rate, we do not project discrete items.

Based on the current environment, we expect an adjusted effective tax rate of between 24.5% and 25.5% in 2026. Also note that our adjusted effective tax rate in the first quarter last year included a meaningful discrete benefit related to share-based compensation. Based on our current estimates, we do not expect to see a benefit in Q1 this year.

Earnings Capital Management, our balance sheet. We ended the quarter with total debt of $19.6 billion. Our next scheduled debt maturity in the first quarter of 2026 when $600 million of senior notes mature. We generated strong free cash flow in 2025 of $5 billion up from $4 billion a year ago.

This reflects the underlying strength of our business and discipline in managing working capital. Our cash position at the end of the fourth quarter was $2.7 billion. Uses of cash in the quarter to total $1.9 billion and included $444 million for dividends, $481 million for acquisitions and $1 billion for share repurchases.

For the full year, uses of cash total $4.6 billion and included $1.7 billion for dividends, $847 million for acquisitions and $2 billion for share repurchases. I want to take a minute to reiterate our approach to capital management.

We've consistently followed a balanced capital management strategy that helps us deliver solid performance in the near term while investing for sustained growth over the long-term. We prioritize investment in our business both through organic investments and acquisitions.

We favor attractive acquisitions over share repurchases and believe they are the better value creator for shareholders and the company over the long-term. However, we also recognize that returning capital to shareholders generates meaningful returns for investors over time and each year we target raising our dividend and reducing our share count.

Looking ahead to 2026, based on our outlook today, we expect to deploy approximately $5 billion of capital across dividends, acquisitions, and share repurchases. The ultimate level of share repurchase will depend on how the M&A pipeline develops.

According to our outlook for 2026, we are well positioned for another solid year. We currently expect underlying revenue growth will be similar to the level we generated in 2025. We also anticipate another year of margin expansion and solid adjusted EPS growth.

With that, I'm happy to turn it back to John.

Thank you, Mark. Andrew, we're ready to begin the Q&A session.

(Operator Instructions)

Gregory Peters, Raymond James.

Hi, good morning, everyone. So for the first question, I'd like to go back to your comments on AI and digital infrastructure. And I guess I'm curious how you think the trends of investment in these areas by your clients could affect the long-term revenue outlook for RIS and for the Consulting business and the health business, where I guess there could be some potential rising employment volatility?

Yes. Thanks, Greg. We're excited about the investment in the digital infrastructure world. We expect roughly $3 trillion of investment over the course of the next five years or so. It's been an area of focus for us for some time.

We have a digital infrastructure practice and a global leader and head of it. The investment comes from lots of different parts of the economy, not just hyperscalers, of course. And so we've been focused on it, and we're quite excited about the investment there. I think you're right, the job market is soft, right? So at least many labor markets are soft. And so this is a good area for us to be focused on.

And our focus, of course, risk advisory, risk financing, but also capital management, workforce strategies, energy solutions, community engagement, right? There's real complexity to the build-out of all this infrastructure. So it is a big opportunity. And maybe, Greg, what I'd do is have our business leaders talk to you a little bit about each area and kind of what we're focused on.

Martin, maybe you could talk a little bit about what we're doing at Marsh.

Of course, John. Thank you.

Marsh Risk, I should say.

Thank you. Yes. Marsh Risk has long been a leader in the technology sector, and we continue to build on that legacy with a very strong presence in the digital infrastructure landscape. This includes the fabrication plants, data centers, ancillary services, builders, designers, communities and beyond that, power and energy and supporting operations.

Over the next five years, it's estimated that between 2,000 to 3,000 data centers will be constructed worldwide, and we're already well on the way to establishing our preeminence in this ecosystem as a trusted partner.

From our calculations, in '25 alone, Marsh US had the leading market share of the $205 billion in data center construction values. In Asia, we're the clear leader serving six of the largest foundry businesses, the 4 largest memory IDMs and the largest semiconductor tool manufacturers clients. As a trusted risk adviser, our capability support clients with builders' risk and property insurance, ongoing coverage in capital facilitation.

We're supporting clients with asset revenue and contract, what we're calling our life cycle work, supply chain issues, assessing revenue streams and reviewing contractual obligations. We recognize the insurance capital is -- capacity is a critical factor in supporting growth.

And to address this, we're collaborating with Guy Carpenter and insurers to develop innovative capacity solutions, for example, Nimbus, our facility, which just this week, doubled its capacity to $2.7 billion. All of this underscores our preeminence in the digital infrastructure space and our commitment to helping clients manage the risk in one of the most dynamic and fast-growing sectors globally. We see tremendous possibilities ahead and are very well positioned to capitalize on that.

Thanks, Martin. Dean, how are you supporting the effort at GC?

Thanks, John. Greg, as Martin said, I think this is a significant new business opportunity in 2026 for both cedents and reinsurers. There's been estimates of up to $10 billion of new premium entering the market in 2026 because of these opportunities. And the market needs more capacity. No cedent is going to put up billions of dollars of capacity for a single location risk. So that's a real issue.

All of our clients want to write data centers across 10-plus products globally, but they require additional reinsurance protections. Everybody is concerned with accumulations in portfolios, and we're solving that right now for our clients. And I think we need to bring new capital to the market. It's not going to just be traditional reinsurance capital.

The introduction of third-party capital and securitizing some of these risks via sidecars and other vehicles is going to be critical. And these are going to have to be deep pocketed investors given the size of these risks. But we think this is the single biggest new business opportunity in 2026.

Yes. Thanks, Dean. So Greg, I talked about the abundant capacity in the market driving price down a bit, but there are segments where the industry is stressed. Pat, how about at Mercer, what are we doing there?

Yes. Thanks, John. And thanks, Greg. I appreciate the way you asked the question and how it had to do with employment and talent. On the data center infrastructure side in that ecosystem, what we're seeing is we're seeing employers, they need to think really strategically about their talent to be able to drive these large programs.

The unique skills that are involved are evolving fast. Critical talent is in limited supply. So things that we're doing are -- things like workforce planning projects, skills assessment and development, a lot of mobility and rewards and health care plan designs, all on top of clients' minds out in the field right now.

Martin had mentioned in Asia specifically. And I will say that's an area where there's heavy, heavy focus on this. A couple of examples of some of the things we're doing for clients on project size. We're working on in the semiconductor industry around large global mobility policy redesigns to enable overseas expansion.

If you think about the expansion inside of the data center ecosystem and the fact that it's going much more global, and whereas a lot of that was more local before for the Asian companies, they're really thinking about those global mobility and how to get people with the right skills to the projects that they need all over the world.

And then you also think about the talent change that's happening and upskilling the current talent. So we've also done some really large technical skills design projects for some of the clients to assess and develop the skills they need in the workforce.

And that goes across the ecosystem. It's not just the data centers themselves. But if you think about the manufacturers of a lot of the supplies that go to building chips, the gases, the raw materials, we're seeing projects really across the spectrum there.

And Nick, how about at Marsh Management Consulting, how are we helping our clients?

Yeah. I think it's well covered by my colleagues, but maybe just to sort of put a wrapper around it, our portfolio is totally unique, both in terms of the advisory businesses that exist across all four of our businesses, but also the strength and depth of Marsh Management Consulting within which sits Oliver Wyman Marsh business.

We have the ability to be very integrated, not just in the construction of new data centers, but in the 90% of existing data centers that are needing to become AI-enabled. So we're working with colleagues across our businesses to help manage that transformation, integrating strategy, risk and execution planning. And we're also seeing strong demand in our energy practice around power, around grid strategy, around supply chain resilience, around the navigation of regulation.

And one of our biggest capability practices around cost. Most of the cost work we're doing at the moment is being done to fund investments in growth and to fund investments in both resilience and in AI and in this whole space. So we really bring a uniquely integrated set of capabilities.

Thanks, Nick. So sorry, Greg, that was probably a little longer than you expected, but we're excited about the space. We have a unique breadth of capability, and we see it as a real meaningful opportunity going forward. Do you have a follow-up?

I absolutely do. That was good detail. So I guess I'd like to zero in on the headline in reinsurance, in particular, in property, more broadly speaking, where we're seeing some pretty strong rate reductions. And of course, that's excellent news for your cedents. But on the other hand, when we're sitting back here on the outside looking in, that looks kind of scary from the potential of organic revenue growth. So I'm mindful that you talked about increased demand but I'm hoping you can just reconcile the moving parts as we process these pretty dramatic rate decreases in reinsurance.

Yeah. Yeah. I'll -- thanks, Greg. I'll ask Dean to talk a little bit about -- obviously, we don't guide by business, but we're -- we had a decent finish to the year and a good year overall. At Guy Carpenter in what was a soft market last year. And so we expected a challenging market into 2026. And certainly, the first of the year would indicate that we're getting kind of what we expected.

As you mentioned, it's good for our cedent clients, which is terrific. We have seen demand pick up in some spots, which we didn't see much of last year. So we're excited about that. But we're also focused on some different areas to advise clients on in the reinsurance and capital space. So Dean, maybe you can talk a little bit about what you're seeing.

Yeah. Thanks, John. And Greg, you touched on the headlines. They've been well articulated. Property cat pricing rate environment will certainly be a headwind as we move through 2026. In addition, the interest rate environment. That said, I remain really upbeat on the fundamentals of our business. with our talent and capabilities. Our data and analytics platform is a key differentiator. We continue to attract top talent at GC.

We've grown our headcount for five years in a row and made some really big time hires in the marketplace that are making an impact on the business. Despite all this, Greg, we had record new business in 2025 and a really strong fourth quarter of new business, and we feel good about that momentum.

I would highlight a couple of things. We're seeing a lot of diverse areas of new business I've spoken in the past about capital and advisory, our investment banking group, never more impactful for our clients, giving the flow of third-party capital into the marketplace right now. I highlighted that in data centers.

We're winning impactful engagements from our clients around M&A advisory, raising third-party capital, fairness opinions. You've read a lot about sidecars, billions of dollars of new capital flowing into the market for the creation of casualty sidecars. We're right in the middle of that.

A lot of client interest, as you know, around Lloyd's platforms, quite a bit written about that, structured solutions, obviously, a red hot cat bond market. So there's a lot to kind of think about that. And we think -- more broadly, we think the casualty market now is a clear growth opportunity for brokers and reinsurers even though renewal outcomes were in line with expectations, we think this is a true area of growth.

I mean you think about -- Martin talked about 19% rate increases in casualty in the fourth quarter. That's flowing straight through to quota share contracts in our portfolio, which is the majority of our portfolio. You think about casualty side cars, third-party capital, everything happening in the casualty world. We're seeing strong growth in our casualty portfolio at [one on one]. So we think we have plenty of sources of new business growth and opportunities for growth that maybe didn't even exist a year ago.

Thanks, Dean. So lots for us to work on there, Greg. And we will have headwinds, obviously, from the pricing market in property cat but lots of areas of growth for us to get focused on. So Andrew, next question please.

Thank you.

Mike Zaremski, BMO.

Hey, great. Thank you. Maybe back to thinking about all your good commentary, both today and in the past about kind of AI and just expense initiatives, including Thrive. When we think about Thrive, would you say that encompasses a lot of the new AI technologies that you all are deploying? Or is there -- should we kind of expect kind of more to come?

You've had a number of companies kind of specifically guide to how AI could change their headcount numbers. So just curious if there's overlap there or maybe you'd expect something a separate announcement in the coming quarters or years?

Well, Thrive is, as I mentioned, Mike, is it's a growth program, right? It will certainly fuel efficiency and help us with margin expansion but it's also going to enable us to accelerate investment. You're asking about AI specifically but also investment in market-facing talent that will help us grow -- continue to grow our company.

But bringing BCS together, our operations and technology teams together under the leadership of Paul Beswick and learning from and exploring the best technologies that have existed in each of our businesses, bringing them together, bringing some scale benefits to it will accelerate the path that we're on.

We're excited about that path on AI. We've introduced, as I mentioned, dozens of productivity tools to our colleagues. We're an early mover on this. Paul and his team have done a terrific job. We'll continue to introduce new productivity tools, but also we're quite focused on ramping up production. We need more of our colleagues to become power users of those tools, and that will drive further efficiency for us.

And then on the growth side, we're excited about that, too. I mentioned Sentrisk and Aida during 2025, two market-facing tools. We have others in development that are SaaS-like models that will drive revenue growth for us over time. So we're excited about that and also investing in tools that will make our producers more efficient. In terms of jobs, clearly, there are job families that will be more impacted than others. But for the most part, these tools are going to make our people better and more efficient and able to serve clients in a better way.

Okay. That's helpful. My follow-up is on your organic growth comments for the coming year. I think good to hear sentiment, fairly poor on the overall sector. So if we -- is it fair for us, if we look at the current kind of quarterly organic trend line, should we expect Consulting to lead the pack on organic while maybe risk runs a bit lower given the backdrop in P&C? Or would your enthusiasm about data centers, for example, or et cetera, offer upside to brokerage as '26 progresses?

Yeah. Look, obviously, we had a slower growth in the fourth quarter in RIS than we did earlier in the year, but it's a quarter. We had a good year of growth overall. I mean you think about Marsh Risk -- excuse me, make sure I get this right. Marsh Risk, it's 155-year-old business, maybe more relevant than it's ever been.

We had 15% GAAP growth in Marsh Risk last year and 4% underlying growth. So we know how to grow our businesses. Now every year creates it's kind of different challenges and opportunities. I wasn't trying to guide to strength in one area. We see good opportunity across all of our businesses.

I think maybe a little bit more color on 2026. I mean, as I said, I see a similar environment to 2025. From what I see, it's an uneven economy. I mentioned some areas of focus. We talked about digital infrastructure, for example, but I talk about health care and energy and some other areas, private capital that we see areas for real growth there.

We will see headwinds from pricing and interest rates. We expected that. It's the good and the bad of the geopolitical environment, right? For any of us who may have hoped for a calmer 2026, I think less than a couple of weeks in, we knew that, that wasn't going to be the case, right? So -- but we've all built muscles and skills around navigating those environments.

So I'm optimistic about 2026, whether it's the -- again, the industry sectors that I talked about, MMA is strong and front-footed. We've now got the team from McGriff that makes us better and stronger, and the team has settled there.

Thrive, again, is that capacity engine for us to drive earnings growth, but also investment in talent and technology that will sustain our growth over time. The complex macro environment, I mean, our unique capability set, as I mentioned, I was in Davos last week, a lot of discussion, of course, about our risk businesses and our clients are quite satisfied with the work that we do there, but a lot of discussion was around our capabilities at Marsh Management Consulting and Mercer. So a lot of good discussion there.

And so -- and then we have a strong balance sheet, I would point out as well. And as you know, M&A is a core competency of ours. We have a strong pipeline. So we're excited about that. And I think there's a lot for us to get after in 2026.

Thank you, Mike. Andrew, next question please.

David Motemaden, Evercore ISI.

Hi, thanks. Good morning. John, you spoke last quarter just about the talent situation, some teams that have left. And I'm wondering if we're seeing any of that impact in the results this quarter, specifically within U.S. and Canada?

And then how we should think about that in 2026, but also thinking about some of the teams that -- it sounds like you guys are going to be hiring. So I'd be interested in what are some of the focus areas to maybe offset some of that headwind from the teams that you lost?

Yeah. Thanks, David. Look, overall, from a talent perspective, we have an excellent brand in the market. We're 95,000 people strong and growing, by the way. Our colleague retention remains strong. In fact, it's above historic norms. Our colleague engagement scores, and we're in the business of advising clients around colleague engagement.

Our colleague engagement scores are exceptional. Our talent strategy, which is supported by a colleague value proposition, it's all about making our colleagues be their best at Marsh, be their best inside of our company. And so I feel terrific about that, and I'm very, very confident that we have the best and deepest teams on the field.

We have a culture that sets us apart. We're collaborative and team-based and our colleagues are supported with the best teammates in the world and the best tools in the world. And so we're not a place for mercenaries to be clear. And we embrace a competitive market for the talent. We added to market-facing talent in the aggregate last year.

Obviously, it's up and down in different parts of the world. We try to manage that according to opportunity. The team dynamics that happened over the course of last summer aren't helpful, of course, but they're not material to our results. And so it becomes a bit of a distraction. And of course, again, given our brand, we're able to get back at it.

So we added the talent last year. We're going to add again to the market-facing talent on the field. And so I feel good about how we're positioned. And I would also note that if there are folks out there that are either going to violate their covenants or steal information from us, I'm going to call you out, and I'm going to do everything I possibly can to hold you accountable. Do you have a follow-up, David?

Yeah, I do. I appreciate it. And then just on the -- I think I heard $205 billion in data center construction values that Marsh US handled the leading market share in 2025. I mean, was that -- it didn't look like that had a meaningful impact on the results with the, call it, 3% underlying growth for the year.

Is that something -- I mean, we can all look at the hyperscaler CapEx and try to do the math. But is that something you think is going to have a material impact on the growth in 2026 and it's just going to sort of get offset somewhere else. But I guess, I'm just trying to kind of square some of the comments that you made just with the sort of stable underlying revenue growth outlook.

Yeah. Look, David, it's hard to -- in this environment, it's hard to look that far ahead given -- think about all the things that have happened just in the last 30 days. But we're excited about the investment in digital infrastructure more broadly.

We very much believe that we're the market leader in it. Some of the investment that happened -- last year happened and we're 4% or better underlying growth in all of our businesses last year. So it was a factor in our results last year, but there's much more in front of us than is behind us in that build-out. And so we think we're well positioned to help clients invest and invest in a wise way. So thank you.

Andrew, next question.

Brian Meredith, UBS.

Yeah, thanks. John, I was hoping you could talk a little bit about ex the whole data infrastructure stuff, what are clients, call it, insurance budgets looking like in 2026? Are they looking to maybe increase the amount of coverage they're buying given some of the price breaks they're getting in property and particularly given a lot of the uncertainty in the world vis-a-vis '25 or maybe there's some more uncertainty.

Brian, it's -- I mentioned that it's an uneven economy, right? And so obviously, there's -- you look at the US economy, for example, which is where we're most exposed to an economy around the world, the growth ex digital infrastructure is not inspiring, right? And so I mentioned that as background because our clients are all over the map in terms of what they're ready to spend.

What I would say more broadly, we talked a bit about pricing in the market, and that's welcome certainly to our retail clients, but also our cedents as well at Guy Carpenter, welcome relief after several years of price increases.

But it is quite clear that the cost of risk is continuing to rise, right? I mentioned excess casualty pricing in my opening comments. That is a market that's obviously exposed to the liability environment in the US. So liability costs are going up.

More and more of the economy are exposed -- is exposed to extreme weather. And then I talked about health care costs. So all of those factors, while prices may be down, at least in the property casualty markets and reinsurance markets in the moment, eventually, those costs will have to catch up with inflation.

We're advising our clients to buy more coverage, particularly in casualty, given what's happening and the increase in the number of nuclear verdicts, growth in lit funding and all the factors that are driving meaningful inflation in liability-related costs.

So we're advising them, Brian, but many don't, right? Many are looking to harvest the savings. And if they're in an industry that's in a lower growth mode, trying to generate decent earnings in a tougher growth environment. I hope that helps, Brian.

Yeah, that's very helpful. And then the next question, going back to AI. I mean, I'm hearing some in the marketplace that for the Management Consulting business, formerly Oliver Wyman, that there could be some project-related stuff that actually goes the way of AI and maybe a headwind. Maybe you could kind of talk about that. Is that true? What are the potential maybe revenue losses that you could see at Oliver Wyman?

Sure. Sure. Thanks, Brian. So obviously, Oliver Wyman had a terrific year last year and a very, very strong finish to the year and demand is strong. As I mentioned, we had great conversations with both our commercial clients and government clients last week in Davos. But Nick, maybe you could talk a little bit about outlook and also the impact of AI in our business.

Yeah, for sure. Maybe just on outlook, first of all, over the last five years, it's been a pretty volatile, fast-changing environment for clients, but also for management consultants. I think I'm tickled that we just registered our first $1 billion quarter, five years ago, we were just submitting over $2 billion for the year. So 75% growth over that period. And we think the outlook is robust.

If anyone else wants to ask a question, I'm happy to talk about the different segments of the business. But in the interest of time, we've had three of our best ever sales months over the last five months. The pipeline is pretty good. And ultimately, I think in the whole AI transformation of industry, there's a lot of sort of shenanigans going on. There's a lot of people claiming AI as a driver for different changes for headcount reductions and so on.

What we see in our business is that the use of AI tools and agents has had a significantly positive effect on productivity. We have leveraged our Consulting teams better. But frankly, we're not really being paid for the things that AI can do at this stage. We're paid for helping clients deliver outcomes rather than for assembling third-party available information or things like that. So within the business, maybe 30% of our work draws on advanced analytics and AI.

We've been using AI in that space pre-LLMs, machine learning and so on for decades. And we've responded to that piece of the trend by launching our DNA business. It stands for Data and Analytics, but we think that this kind of analysis is in our DNA. So there's a pun there.

The second piece is our Quotient platform, which delivers AI work for clients, AI transformation for clients. And we do that in partnership with many players in AI infrastructure with hyperscalers, with start-ups. We have a number of execution and delivery partnerships. And that is the fastest-growing part of Oliver Wyman within Marsh Management Consulting.

The third is this area you're talking about, which is support for the enhancement and evolution of our own delivery model, through proprietary agents and assistance. That is replacing some tasks. But actually, at the moment, I expect to hire the same or more junior staff members, because they are quite AI literate and they are able to use these tools very, very well in the support of our client work.

And then finally, and I think this is a massive trend. We're doing a lot, as I indicated earlier, a lot of work on performance transformation on cost and efficiency, which is driven by the need for our firms to invest in growth and invest in AI. So an industry influx for sure, but not one at the moment, which is experiencing headwinds -- revenue headwinds because of this.

Thanks, Nick. Brian, thanks for those questions. Andrew, next question please.

Jimmy Bhullar, JPMorgan.

Hey, good morning. So John, you mentioned a couple of times, I think you expect organic growth in '26 to be similar to last year. My question is specifically on the Marsh Risk business. You've seen a slowdown in growth over the last three, four quarters from, I think, 5% in 1Q to 3% in the fourth quarter.

And you had been highlighting the last few quarters some of the headwinds that the business was facing. But it seems like from your comments that you're not expecting an incremental slowdown from here, and I think you're implying that it should be somewhat stable, but is that correct or not?

Good morning, Jimmy, thanks for the question. Again, we're 4% at Marsh Risk for the year. We cautioned you in the past not to over-index on any single quarter, and 15% GAAP growth at Marsh Risk for the year. So we feel good about that and obviously a tougher environment. Yes, there's some ups and downs in different parts of the world.

But as I mentioned earlier, we're adding to the talent on the team. We're using AI to boost productivity, but also to make our producers better. We'll see what the economy brings us. I mentioned a number of sectors where Marsh Risk and more broadly, we're investing in.

So we have -- we're optimistic about our prospects next year. And as I mentioned earlier, MMA, which is a huge part of our business there now is very much front-footed and executing very well. Do you have a follow-up, Jimmy?

Yeah. Just on -- and maybe for -- just on buybacks. You did a lot more than you've done on a quarterly basis, I think, the last several years. And not sure if that was partly a function of the stock price being lower, but maybe just give us some insight into why the buyback amount was as high as it was in 4Q?

Yeah, sure. Maybe I'll ask Mark to jump in on it, but we've continued with our balanced approach to capital management overall and returning capital to shareholders is an important part of that. But Mark, maybe you can talk about the buybacks in particular.

Jimmy, thank you. So we did ramp up buyback, obviously, in the fourth quarter. It's purely a function of the M&A pipeline. So as you saw, we had an active year on the M&A front. We completed 20 transactions or 20 acquisitions, but they were all relatively small.

So we only deployed about $850 million of capital to M&A. One of the reasons I reiterated our capital management philosophy and approach in my script was just to highlight that there's been no change in strategy.

So as we think about the $5 billion we're going to deploy this year, we have our targets for reducing our share count and increasing our dividend. But our bias is to deploy a lot of capital to high-quality accretive acquisitions and our pipeline is very active. So we're hopeful we're going to have an active year.

We did three acquisitions-related kind of businesses in Hawaii that we closed on in the December 1 that are part of MMA. So very excited about welcoming that team to our company. And as I mentioned briefly earlier, our pipeline is strong. And so we're excited to see what opportunities present themselves in 2026. So thank you, Jimmy. Andrew, next question please.

Meyer Shields, KBW.

Great. Thanks, good morning. John, sort of a big picture question. Obviously, there's been a lot of news about team lifts and the like. And I'm wondering, are you seeing any increase in the cost of brokerage talent, assuming that even if it's not impacting Marsh's results terribly, we're seeing a lot more movement between brokers?

No. Meyer, thanks for the question. I don't see broadly any more pressure in terms of inflation for comp and ben related inflation from this. I think what we've all seen over the course of the last year is some PE-backed businesses that are using, in my view, unethical and often illegal practices or yes, practices to build their businesses out. And so -- so anyway, it's an unfortunate thing.

As I said, I love to compete broadly and we think mobility for talent in the industry is a good thing. There's no question. I mean we want to have a not just a good front door and a welcoming front door to top talent, but a measure of turnover is useful to the organization. But let's compete in a fair way, ultimately, and it's been scaled up of late.

And so the best thing for us to do is continue to focus on our clients, building that colleague value proposition that makes us the most attractive place to work in the markets that we operate in and win on the field, and that's what we're focused on.

Okay. That's very helpful. And I guess another pricing question. We've seen, I think, a significant deterioration over the last couple of years in the valuation of publicly traded insurance brokers from an M&A front, how long does it take before that filters into M&A multiples?

Yeah. That's a really good question. It's a -- the market has changed a bit, right, as public company comps have come down over the last six to nine months or so. So I would say the bid-ask gap has probably grown. We've seen some pretty meaningful assets come off the market. We've seen at least one pretty good-sized deal trade at, I think, what was a pretty disappointing outcome for the sellers.

High-quality assets, though, are still kind of insisting on higher multiples. And so probably contributed to a little less deal flow overall in our sector last year. And yeah, it will be interesting. And I would say to -- I mean, it's a generalization, so be careful with it, but financial sponsors versus strategic buyers, that's kind of generally speaking, kind of where the gaps fall out. So we'll see what the market brings this year.

Again, we're quite excited about our reputation in the market, the relationships we've developed, and we see a number of different possibilities. So thank you, Meyer. Andrew, we need to bring this call to a close. And I want to thank all of our colleagues for -- I want to thank you all for joining us this morning. I also want to thank the best professional services colleagues in the world for their dedication to Marsh to one another and to our clients. So thank you all, and we look forward to speaking to you again next quarter.