Welcome, and thank you for standing by. [Operator Instructions] This call is being recorded. If you have any objections, please disconnect at this time. Now I'll turn the meeting over to your host, Mr. Matt Rohrmann, Head of Investor Relations. Sir, you may begin. .

Thank you, Nicole. Thank you, and welcome to our Third Quarter 2015 Earnings Conference Call, which is being hosted by Dominic Casserley, Chief Executive Officer of Willis Group Holdings. A webcast replay of the call, along with a slide presentation to which we'll be referring, can be accessed through our website.

If you have any questions after the call, my direct line is 1 (212) 915-8180..

Please note that we may make certain statements relating to future results, which are forward-looking statements as that term is defined by the Private Securities Litigation Reform Act of 1995.

Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those estimated or anticipated. These statements reflect our opinions only as of today's date, and we undertake no obligation to revise or publicly update them in light of new information or future events.

Please refer to our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2014, and subsequent filings as well as our earnings press release for more detailed discussions of the risk factors that may affect our results. Copies may be obtained from the SEC or by visiting the Investor Relations section of our website. .

Also, please note that certain financial measures we use on the call are expressed on a non-GAAP basis. Our GAAP results and GAAP to non-GAAP reconciliation can be found in our earnings press release and slides associated with this call. .

I'd now like to turn things over to Dominic. .

Thanks, Matt, and welcome, everyone, and thank you for joining us today to talk about our performance in the third quarter. With me today are John Greene, our Chief Financial Officer; Nicolas Aubert, CEO of Willis GB; Todd Jones, CEO of Willis North America; and Tim Wright, CEO of Willis International. .

Let's turn to our results. In short, we executed well and delivered strong performance in a challenging economic and insurance environment. I will start by looking at some of our key financial metrics.

Earnings per share increased 56% on an underlying basis, driven by strong revenue growth of over 10% from our organic business and our acquisitions, combined with strict cost management..

If we look at the business just on an organic basis, then commission and fee growth was 3.3%, in line with our expectations of mid-single-digit organic growth for the year. We were able to increase the spread between organic commissions and fees growth and organic operating expense growth to 230 basis points above our 200 basis point target.

This drove expansion of our operating margins on both an underlying and organic basis. I am particularly pleased with our consistency on this front as this marks the fourth consecutive quarter of margin expansion..

These strong results are attributable to the continued execution of our 3-pillared strategy to create value, which I will review briefly now. The first pillar is driving organic growth via our diversified portfolio of risk advisory, brokerage and human capital and benefits businesses.

We delivered on that, as demonstrated by the solid organic revenue growth from our portfolio that I mentioned previously. John and I will provide more detail on the drivers of the business lines and of our overall financial results later in the call. .

The second pillar of our growth strategy is execution of our strategic M&A program. We target firms that are complementary to our existing businesses and then work with our new partners to drive enhanced performance. Our underlying commissions and fees grew 10.5% in the quarter.

I noted the 3.3% organic C&F growth earlier, and the additional 7 percentage points attributable to M&A is evidence of good progress in this area. .

Now the quarter marked our first full period with Miller Insurance Services as part of Willis, and the relationship is going very well. We solidified Miller's partnership with one of its largest clients earlier in the quarter by agreeing to sell a 16.9% stake to BB&T to align our interest.

This is a strategic transaction that was part of the anticipated plan since discussions with Miller first started, even though negotiation and execution were delayed due to some additional regulatory requirements. .

We also announced the acquisitions of several targeted purchases to enhance our current product and service offering, PMI Health Group in the U.K., Elite Risk Services in Taiwan and CKA in Australia. Looking ahead, we have 2 of our most important, most transformative deals ahead of us. Our acquisition of Gras Savoye remains on track.

In parallel, we continue to work towards our proposed merger with Towers Watson, a transaction that we strongly believe will accelerate growth for both businesses and generate substantial value for all shareholders. .

Our third pillar is the transformation of our service delivery and our financial performance through our Operational Improvement Program. As with the past 3 quarters, the impact of the Operational Improvement Program is evident in our financial performance.

The program continues to exceed our expectations, generating $33 million in cost savings in the quarter, bringing the year-to-date total to $63 million. These gains are a big driver of the increased spread between organic commissions and fees and expenses.

With another quarter of progress under our belts, we have even greater comfort in our ability to meet the increased targets for our overall cost savings and organic spread this year that we announced with second quarter earnings. .

So bottom line, we made significant progress across all 3 pillars of our strategy again in the third quarter, resulting in mid-single-digit organic revenue growth, over 10% underlying revenue growth, improved profitability and positive operating cash flow, overall, a strong performance. .

With that overview, I'll now walk through the quarter in a bit more detail, beginning with Willis International. International saw underlying revenue growth of 29.4%, another very strong performance that reflects the contributions of Max Matthiessen and the IFG pension and benefits business.

Organically, International grew 8.6%, bringing its organic growth to a solid 7% year-to-date. With the exception of CEEMEA, where we saw declines in Russia, the segment generated growth in all regions in the quarter with double-digit growth in Latin America and mid-single-digit growth in Western Europe.

We also saw modest growth in Asia as overall strength in the region was partially offset by a year-over-year decline in China. .

Now as you know, we've been expecting to see some softening in Russia due to economic conditions there, so that comes as no surprise. In China, we saw some deferred projects due to economic uncertainty in the quarter, offsetting strong growth in the first half of the year.

And we retain our optimism around the long-term growth prospects for this market. Overall, it is a testament to the strength of our portfolio that we were able to produce 8.6% organic growth in the quarter despite softening in 2 of our largest economies, and we expect International to finish the year on a strong note. .

Turning to Willis North America. We saw underlying revenue decline of 3.8% as a result of steps we've taken to exit several noncore businesses in our markets. On an organic basis, the business was flat.

However, it should be pointed out that in this quarter, always the smallest for North America, we experienced timing differences versus the prior year in some business lines, with certain sales shifting into the fourth quarter. This was most notable in the health care industry group.

Adjusting for the timing of these sales, Willis North America would have reported modestly high quarterly organic C&F growth..

Now let's turn to Willis Capital, Wholesale and Reinsurance, which includes Willis Re, Willis Capital Markets & Advisory, our Wholesale business, including Miller and Willis Portfolio and Underwriting Services, which encompasses our programs business.

CW&R achieved underlying growth of 32.6%, driven by a full quarter's contribution of Miller Insurance Services as well as SurePoint Re. As impressively, organic commission and fees increased 8.8%. We saw revenue growth across most of the portfolio with solid growth in Reinsurance and our Capital Markets & Advisory and Wholesale businesses.

The Willis Re performance is notable, given the continuing challenges of the reinsurance markets. Willis Capital Markets & Advisory had another strong quarter of performance driven by capital raising and advisory mandates completed during the quarter. .

Moving beyond the organic performance in CW&R, let me make one comment about our largest acquisition in this segment, Miller Insurance Services. Miller, as expected, is performing very well.

While our overall expectations for contributions from Miller remain unchanged, the business generates most of its earnings in the first half of the year, and this seasonality impacted profitability in the quarter. .

Let's now turn to Willis GB, which is made up of our Great Britain-based Specialty and Retail businesses. Organic commissions and fees declined 70 basis points as solid growth in P&C and strong growth in financial lines were more than offset by declines in Transportation and Retail.

I mentioned last quarter that the segment is executing an operational turnaround. The team held expenses relatively flat in the quarter and has reduced expenses 3.4% year-to-date. Year-on-year, Willis GB profits are up. We remain positive on the prospects for this business.

So overall, a solid performance that again demonstrates the strength of our business and the effectiveness of our execution in a challenging global economic environment. .

Now let me turn the call over to John, who will walk you through the numbers in more detail.

John?.

Thank you, Dominic. Good morning to those on the call. I'll be working off the third quarter slide deck, which is available on our website. .

On Slide 3, you can see our EPS walk. As Dominic said, Willis grew underlying earnings by 56% over the same quarter last year. This was driven by underlying revenue growth of 10.7% and continued successful execution of our cost management initiatives. On a reported basis, our results reflect adjusting items that, in total, added $0.50 per share.

The largest factor in this was the release of a valuation allowance on deferred tax assets of $0.60 per share. As a result of the valuation allowance, we reported a tax credit of about $110 million. .

$0.60 from the deferred tax valuation allowance and $0.07 related to the gain on the disposal of a noncore business; and 3 negative items, $0.09 for restructuring charges associated with our Operational Improvement Program, $0.07 from M&A transaction-related cost and $0.01 related to the devaluation of the Venezuelan bolivar. .

I should also point out that, as expected, headwinds from foreign exchange began to ease in the second half of the year. When we spoke to you on our second quarter call, we said foreign exchange headwinds would reverse to a degree in the third quarter.

As you know, in the first half of the year, foreign exchange was a headwind of $0.13 per share to our bottom line. In the third quarter, the combination of translational and reval FX resulted in a benefit of about $0.04 per share.

Based on current rates, we now expect FX to negatively impact the full year by $0.11 to $0.15, so a little higher than our previous outlook. As we expected though, the bulk of this impact was felt in the first half of the year. .

In all, I'm pleased to report that the third quarter continued the solid trends we've seen throughout the year. Positive performance, both organically and from our M&A strategy, coupled with our cost management initiatives, combined, these factors drove margin gains and generated a $0.05 improvement in underlying EPS. .

Let's turn to Slide 4. As a reminder, as always, the difference between reported and underlying revenue in each segment is the foreign currency movement, and the difference between underlying and organic is the net impact from acquisitions and disposals.

At a group level, underlying commissions and fees grew by 10.5%, driven by Willis International and CWR..

Dominic has described the drivers of performance in each segment, so I'll just add a little depth. Quarter-over-quarter, foreign currency movements negatively impacted our revenue by about $47 million, reducing the group's underlying commission and fees by 640 basis points.

Internationals results reflect the contribution of our acquisitions, primarily Max Matthiessen and IFG, which together added approximately $30 million in revenue in the quarter. Within Capital, Wholesale and Reinsurance, our underlying growth reflected the first full quarter of contribution from Miller Insurance Services.

Miller added $33 million in revenue in the period. Organic growth in the quarter was driven by our M&A Advisory business. In Willis North America, Dominic mentioned the revenue timing we saw in third markets. Beyond this, our construction book returned to more typical growth levels and was up 10% in the quarter. .

Let's turn to Slide 5. The middle of the chart shows organic expense growth, which is a modest 1%. This was another quarter in which we were able to control organic expenses while generating [indiscernible]. Underlying operating expenses were 10.3% to $780 million, driven by salary and other expenses related to our acquisitions.

This increase, once again, below our growth in underlying commissions and fees, created 20 basis points of positive underlying spreads. We continue to be very pleased with our performance on cost management and its significant impact on profitability. .

Let's walk through salary and benefit expense on Slide 6. Here, too, we again successfully controlled costs in the quarter. On the top part of this chart, you can see we had another strong quarter of performance. Underlying salary and benefits increased 7% to $569 million with all of the increase resulting from the net impact of M&A activity.

On an organic basis, salary and benefits were flat at $525 million, driven by our FTE management initiatives..

Let's go a bit deeper into the FTE discussion on the bottom of the chart. As you can see, organic headcount rose by 2.5% from the same period last year. All of this growth came from our expansion in lower-cost offshore or near-shore locations. In fact, onshore organic FTEs declined by 500 year-over-year and were down 200 from year-end 2014.

This is consistent with our strategy of relocating FTEs to lower cost regions.

As I've mentioned before, the peril of [indiscernible] associated with the Operational Improvement Program will mean temporary FTE growth in some [indiscernible] as we maintain our service costs [ph], but the need for this overlap will decline over time, and we will see a related reduction in costs. .

Turning to Slide 7, which focuses on organic metrics, by the way, my favorite slide. As you can see from the chart, the combination of our solid organic revenue growth and our focus on cost savings are combining to draw -- drive strong organic performance.

We are very pleased with the consistent improvement in the organic spread between revenue and expense growth. The graph on the left shows that the current spread between organic commissions and fee growth and expense growth has reached a new high of 230 basis points. The impact of this can be seen in the graph on the right.

Organic EBITDA has grown $20 million or more than 23% over the same period last year. This marks the fourth consecutive quarter of expansion in organic spreads, a fact we're very proud of. This is strong evidence that our revenue growth and cost savings initiatives are bearing fruit. .

Finally, on Slide 8. I just want to remind you of our commitment to the Operational Improvement Program. You can see here that we continue to make progress against the program's key objectives. It's achieving everything we hoped it would. We are well on track to achieve or exceed our recently increased cost savings target of $80 million.

Progress on the Operational Improvement Program continued in this quarter. Our efforts included the establishment of 3 low-cost service centers in China, Bulgaria and Central Florida.

So let me finish by saying that with another quarter of delivery under our belts, we're in a strong position to achieve our stated goals for the full year and deliver the growth and profitability we targeted. .

And now let me hand it back to Dominic. .

Thanks, John. Before we open the call up to your questions, let me leave you with a few thoughts. .

This was another strong quarter, with results driven by execution on our 3-part value-creation strategy. Our organic performance continues to be solid, and we are confident in meeting our outlook for mid-single-digit revenue growth and at least 200 basis points of positive spread for the 2015 full year period. .

Our carefully targeted acquisitions made a significant contribution to our underlying growth. We expect that the positive impact of our acquisitions on our growth will continue in the fourth quarter and into 2016. .

The impact of the Operational Improvement Program continues to be very positive. We are making excellent progress towards our goals and have now seen 4 consecutive quarters of margin growth in the process. We also continue to expect that the program will turn cash positive, with cost benefits exceeding restructuring charges in 2016. .

In short, our performance has been a result of the hard work and execution of our team and staff, driving progress across all 3 pillars of our strategy. This has put us in a position to succeed and create a significant momentum that we will carry into our proposed merger with Towers Watson..

Let me spend a moment on the transaction as our shareholders are asked to vote on it on November 18. We are as convinced as ever that this proposed merger will bring together highly complementary businesses and efficiently connect each to new customers, geographies and markets.

The result is expected to be an acceleration in the ability of both companies to achieve their goals, driving revenue, cash flow and EBITDA growth superior to what either could achieve on its own. Both companies have the skills and experience to make this combination a success and generate significant value for shareholders.

We are deep into integration planning and look forward to creating value for our shareholders, colleagues and clients. .

With that, I will turn it back to the operator, and we can take your questions. .

[Operator Instructions] The first question comes from the line of Cliff Gallant of Nomura. .

I was hoping you could talk a little bit more about the North America revenue organic numbers being flat. And I know you did address them and said that you'd see -- that on a normalized basis, you would've seen a little bit of growth due to timing issues.

But I was wondering in terms of the outlook, particularly given the pricing cycle, what you think is a reasonable organic growth rate over the next, say, 18 months. .

So I would say, overall, that we remain very, very confident about our North American franchise overall, and of course, it's an important part of what was the proposed merger with Towers Watson. But let me turn over to Todd to talk about the specifics of the situation. .

Yes. Thanks, Cliff. I think, as noted, we tried to be pretty specific about some of the impact in the quarter specific around the timing issue.

We still remain -- despite the fact, as you noted, that it's a tough market and we've got some pricing headwinds that we see increasing during the course of the year, but still remain really bullish in our ability to grow.

Organically, all the key drivers that we look at in terms of our production force, our pipeline and what's going on in terms of new business conversion, along with client retention, suggests the business is operating well.

We feel like we can always do better, of course, but we feel like we're set up to finish the year strongly and go into 2016 the same. .

Okay. Actually, I had one other question that was unrelated. But during the quarter, you also announced a small transaction with BB&T regarding to selling part of the Miller, and I was just little curious about that after you had just closed on acquiring it.

And could you tell us a little bit about what was happening there?.

Yes, sure. It's Dominic again. As I hope we tried to make clear, the negotiations with BB&T were running in parallel with our negotiations with Miller from day 1. And so it was always part of the plan, from very early in these discussions, that Miller would be -- BB&T would be part of this story.

It just took longer to close that part of the transaction because of more complicated regulatory issues that had to be gone through by all the parties involved to make that. So you shouldn't see this as a situation where we invested in Miller and then a few months later, we sold part of the investment.

In fact, we had always planned for the situation you now see. It just took longer to execute the BB&T part of that. .

The next question comes from the line of Kai Pan of Morgan Stanley. .

So first question is on your margin. It looks like the underlying operating margin expanded 30 basis points year-over-year while the organic, actually, margin expanded 240. So I think the delta probably is some drag from the acquisitions. I just want to see if you can specifically address 3 items there.

One is, what's the underlying margin of the acquired business? And secondly, what's the impact of the amortization and how long will it last? And the third is, any seasonality on acquired business that's different from your core book?.

So I'm going to hand over to John in a second, but you highlighted the key issues actually quite well. The underlying margin is -- as we think, is attractive. Obviously, amortization increased, and you -- we actually laid out how much it went up, of course, in one of the slides earlier. And so that obviously had an impact.

And definitely, the seasonality of Miller has quite a big impact here. As we said, the vast majority of its profits are made in the first half of the year, so it does impact the numbers.

But John, do you want to add anything on top of that?.

Dominic, you summarized the key issues there. Let me just add a couple of points here. So we previously gave some guidance that the acquisitions would deliver somewhere between $55 million and $65 million of EBITDA for the year. On an annualized basis, we're on track to hit that. Now as folks on the call probably know, Miller timing was a bit delayed.

We were waiting for approval from the FCA to commence the transaction. And as a result, a certain amount of earnings actually that we anticipated when we gave that guidance actually ended up residing in Miller books pre-transaction. So again, on the annualized basis, we're on track to hit the guidance we provided for the year.

Due to the timing, we're going to be off of that somewhere between $5 million and $10 million. And Kai Pan, the other question regarding amortization of the intangibles, in the quarter, it was a $15 million increase from the M&A activity. The lion's share of that was from Miller.

And a typical life on this stuff is 7 years, and each successive year, it declines. So essentially, it's a double-declining balanced methodology. So hopefully, that gives you the information you were looking for. .

That's great. Just follow up on the underlying margin.

Are these acquired books similar to your core book? Or is there sort of room for improvement there as well?.

Yes. So whenever we've done one of these deals, we try to pay a reasonable price for the EBITDA that the business will generate. And then separately from the valuation that we use, we typically build in some anticipated cost synergies, which would drive margin north.

Honestly, the deals we did, excluding Miller, slightly lower margin rates initially, which we think will build over time. And by the way, the price we pay reflected those lower margin rates.

So again, we're really comfortable with this pillar, this strategy, and we're happy that each of the acquisitions we've done are performing to the pro formas that we modeled when we decided to commence the transaction. .

Great. My last question is on the Operational Improvement Program. It looks like the spending for the quarter is slightly less than like the run rate and seems like you have a big catch-up to achieve, that $140 million spending for the -- in the -- for the full year.

On the savings side, actually, coming ahead of -- if you look at the run rate and only leave you about $70 million for the first quarter.

Is that -- can you talk about -- little bit about the timing of your spend and the savings?.

So you did your homework. So the spending is actually forecasted to be $140 million. We see that coming in perhaps lower in the total year outlook. The range of that is somewhere between $2 million and, call it, $8 million depending on timing of some exits. And the savings rate is actually -- it's been a positive story throughout the program.

So we're optimistic that we're going to deliver the $80 million on the savings and perhaps a bit more. .

The next question comes from the line of Jay Cohen of Bank of America. .

Just a -- I guess, really a quick follow-up on the last question.

Can you actually quantify the drag from Miller in the third quarter?.

Yes, I try to -- that's getting quite specific, Jay. But why don't I go back to the information that I provided on the last question. So the total year guidance was $55 million to $65 million. I think we're going to come a little bit short on that, maybe $10 million short in the calendar year.

But on annualized basis, we'll be at the numbers that we talked about. .

I was just thinking from an EPS standpoint, what the drag from Miller was, if you have that. If you don't, that's okay. .

Yes. $0.01 is the ballpark. .

Okay. And I assume the fourth quarter will feel somewhat of a drag as well, given that you have those expenses, but the revenues tend to be first half-weighted. .

Yes. Yes, that's a fair point. .

Okay. And I'd say just in general, when there is this kind of seasonality with an acquisition, maybe you did talk about it and I missed it, but that's really helpful, that kind of detail before you announce earnings is really helpful. And thanks for the details here. I appreciate it. .

Yes. And Jay, the driver, that was actually the timing. It closed just over a month later than we thought it would. .

The next question comes from the line of Meyer Shields of KBW. .

So one basic question to begin. There was $9 million of other income.

Is that the source of the $0.07 of excluded gains on disposals?.

Yes. Yes, Meyer. There was $14 million of gains on disposals that we stripped out of organic and underlying. .

Okay. So the underlying -- so let me say, without that, there would've been a $5 million loss in other income. .

Yes, and that would've been primarily FX reval. So there's nothing else flowing through there. .

Okay. That's helpful. Second, I guess the press release noted some timing issues, both in North America and Great Britain, and Dominic touched a little bit on the North American side, and I was wondering whether there's any more detail or color we can get on maybe how much revenue was pushed to the fourth quarter in both these segments. .

So there's a little bit of timing in GB. I'm going to turn to Nicolas just to give a little detail on timing issues in GB. .

Yes. So thanks, Dominic. Last year, we had slightly more business in aerospace. And in space, in fact, in this quarter, this has been delayed in our planning for this -- for Q4 of this year. So that's a seasonalization impact.

Across-the-board, we've got good growth in P&C and in franchise and slightly some shrinkage in marine cargo, notably, and in the retail network business. So that's the significant changes versus prior in terms of top line. .

Okay.

Was there any timing impact on the expenses in the segments?.

Timing on the expenses impact? No, not really, no. .

Okay, perfect. .

There was -- so just a minor comment maybe here. There were some releases last year that, of course, did not impact this year. And we had also a slight difference in the accruing of the AIP, so the bonuses last year versus this year. That's one -- the only changes. .

The next question comes from the line of Ryan Tunis of Crédit Suisse. .

My question, I guess, is on some of the pension expenses here that's been a tailwind. And I think John called it out on the last quarter. And I think it's helping -- it's been a tailwind for expenses by about $60 million this year. I just wanted to make sure I'm thinking about that the right way, that as we head into '16, that'll be in the base.

And I wanted to know if there's anything on top of the $60 million in the next year that could impact the way we think about the expense comparison. .

Okay. So thanks for the question. So I'm just going to backtrack for the folks that are on this call. So there's 2 elements of the pension credit. So one has to do with the asset performance of the business, which typically is hard to predict. And we saw about $15 million to $20 million of benefit from that.

And then the other aspect of the pension benefit related to the freezing of the pension that we did earlier in the year, which drove the balance of the credit coming through the P&L. So both will be in the base year-over-year when we look forward to next year.

The one point that we're mindful of, and you folks that are trying to build out projections should be mindful of, is the underlying asset performance of the pension assets that could create some variability in the numbers.

So we're -- it's certainly a nice benefit for this year, but it was certainly a lot of hard work on the part of the management team to get us to the position where we were able to freeze it and execute a benefit, not only through the P&L, but on the overall pension deficit, which came down substantially as a result of this. .

That's helpful. I think my follow-up is probably for Dom, and it's on -- just thinking about, I guess, natural expense growth without thinking about the cost saves. You talked about mid-single-digit organic growth.

But looking into 2016, I guess free cost saves, what type of expense growth do you think you'll probably have to obtain those type of organic revenue objectives?.

Okay. I presume by Dom, you meant Dominic, but I will -- we'll bear with you on that one. So the way we think about this is the following. We see the Operational Improvement Program as enabling us to continue to invest in the front office and in revenue-generating activities. So yes, it is obviously improving our economic performance.

You've seen the results. You see the margin spread we're getting year-on-year. But it also is enabling us to invest in the business. And so the revenue -- organic revenue growth we're getting today and the organic revenue growth we're getting going forward is enabled by the continued efficiencies we're generating.

I mean, for instance, we don't generate over 8% organic revenue growth in International without obviously adding people. You would expect us to be doing that. These are growth markets for us. On average, we think that with the sort of organic growth we're looking at, we need sort of cost growth of about 3% across the portfolio.

And then obviously, what we're seeing is the Operational Improvement Program as it plays through is meaning the net growth number is much below that. So that's broadly what we're looking at. .

The next question comes from Josh Shanker of Deutsche Bank. .

Yes. I want to follow up on Cliff's question a little bit. I'm interested in this secondary part of the Miller transaction. When you bought Miller, you moved certain assets of Willis Wholesale into Miller.

In the business that was transferred -- or the share of the business that was transferred to BB&T, did they acquire that Willis business as well?.

So we actually transferred some activities from Willis to Miller and some activities from Miller to Willis. BB&T is a pari passu investor in the net Miller business, alongside Willis, on the same terms and conditions. .

So will they benefit from business that was formerly Willis business being written under the Miller name today?.

Sure. Just like they're not benefiting from bits of the Miller business which have been moved into Willis, right? They are pari passu investors in Miller alongside us, yes. .

And why did it make sense? Why -- I know you left 10% or so with the original Miller personnel as incentive comp.

Why does it make sense to share the Miller pie with minority investors?.

Well, they're not just minority investors. BB&T, as you know, is one of the top 6 insurance brokers in the world, have major flows into London, and so that is an attractive part of the arrangement, obviously, if you think that through going forward as well as, of course, being an interesting player in the North American market.

So all in all, we're very, very excited about the net economic impact for Willis of BB&T coming into the Miller arrangement. .

The next question comes from Paul Newsome of Sandler O'Neill. .

One housekeeping thing.

I'm just curious, when Willis decides to exit a business, but it's not selling that business, just shutting it down, does that get included in your definition of organic growth?.

I'm trying to think if there are any examples of that. .

So let me go back.

So if business -- if Willis decides to shut down a business rather than sell it, is that inorganic? Is that the question?.

Yes. .

Then the answer is absolutely yes. .

Okay. And then I just want to -- sort of a broad question, outside of the -- obviously, the Towers deal, you're still buying some and presumably looking to buy businesses. I'd love your take on just kind of what's happening from an M&A perspective in the insurance brokerage business.

And my sense is things are getting more expensive, and I wanted to know if that was true. .

Yes. So we obviously -- and I think because of our emerging track record in the acquisition space and the things we have done and the happiness, I think, of the new teams who have joined us, we get to see lots of opportunities these days.

And we are -- all I can tell you is we are extremely disciplined in thinking through the net present value of any move we might take. The -- it is true that certain assets are being priced up, particularly those where the private equity industry is also a potential buyer.

So you've obviously seen some of the things going on and going around the North American regional brokerage market, where you often do see very, very high prices being paid. We look at those somewhat askance, frankly, sometimes, at the prices we can't make the economics work.

So what we've been doing, as I -- as we said many times, is look at complementary businesses, critically businesses where the people involved want to be part of the Willis family. They're making a positive choice for Willis, not a positive choice to sell, but a positive choice to Willis.

And by the way now, some of them are starting to say, "We're making a positive choice for Willis-Towers Watson," even though that is not complete yet. And then we look very, very hard at the economics. And we've got to pass all those tests and all the integration and implementation charges before we will get close to moving forward. .

The next question comes from the line of Brian Meredith of UBS. .

A couple of quick questions for you here. The first one, following on Ryan's question on kind of underlying expense growth, John, I just noticed in the quarter, if you adjust for the savings in the quarter from the Operational Improvement, it looked like organic expenses, G&A expenses were up north of 5%.

Was there anything unusual in the quarter when it -- had it anything to do with the pension?.

Brian, no, there actually wasn't anything unusual. So I will say, it's a bit challenging just -- challenging just to take the Operational Improvement Program numbers right off the expense base and then calculate a growth rate.

Now as Dominic mentioned about, say, the investments we're making in International and those high-growth markets, there's a certain level of reinvestment related to any of those markets where we see opportunity to grow.

So the Operational Improvement Program, as we said initially, the majority of those savings will fall to the bottom of the line -- bottom line. And we are -- we're continuing to monitoring that, and we're actually well within that in terms of what's dropping.

So there wasn't anything unusual whatsoever, other than a certain level of inflation and some reinvestments, selective reinvestment in the business. .

Great. And then second question, just a quick numbers question. Any way we can get what the revenues were from Willis Capital Markets & Advisory in the quarter, just for modeling purpose. I know that's kind of lumpy. .

We don't break that out separately, so I'm not going to comment on that on the call. But I will say that it's -- it was up over 100% versus the prior year. .

Okay, great. And then the last question was I noticed an 8-K that came out, I guess, a day ago that talked about amendments to the long-term incentive program if the Towers Watson deal closes.

I guess, maybe can you talk a little bit about why the changes there?.

It's really around the metrics that we are able to use on that program. Obviously, it's the -- it's very simple, basically.

Our compensation committee looked at the challenge of our LTIP in the first tranche under the merged company, where it's not possible, really, to use the metrics we have before revenue and profit growth because the businesses aren't combined yet.

So the compensation committee had to look at what -- with a lot of outside advice, what was the right thing to do.

And so just for this tranche, literally just this tranche, we're changing them to performance relative to the S&P 500 with triggers [ph] relative performance to the S&P 500, because that was perceived to be the best measure we could use for this one tranche of LTIP. It's not a proposal that, that should be the long-term approach.

It's just for the specific tranche this time. .

Got you. And that was the tranche that would end a couple of years from now. It's not the one that would necessarily end by this year. .

It's the -- it's looking at the performance of the business '15, '16 and '17. .

Your next question comes from the line of Elyse Greenspan of Wells Fargo. .

I just had a few questions.

The first one, in terms of EBITDA that you guys mentioned from acquisitions for the year coming in a bit light of the $55 million to $65 million, just so we can accurately compare when we get to the end of the year, where are we sitting on a year-to-date basis relative to that metric?.

On a year-to-date basis, yes, we are 60%. .

Okay. So 60% of the $55 million to $65 million. .

Yes, with $5 million, call it, $5 million of timing that pushed into the following year. .

Okay, great. And then in terms of the Towers Watson merger, a few questions.

First off, what regulatory approvals are you guys still waiting on and -- waiting on for that transaction?.

We're waiting -- we're going through -- as you can imagine, the big markets in which we operate, we need to get regulatory approval from. We're going through that process. We're just waiting for a few of them to come through, and we're never quite sure of the timing. And we're obviously, very, very cognizant of the needs of our regulators.

But it's the usual big markets you'd expect us to be looking at. .

Okay. And then also in terms of that merger, I know that the combined company has laid out a bunch of revenue synergies that you've pointed to. I'm just curious of conversations -- a big piece of that was upside that you guys pointed to on the private health care exchange front, bringing Willis clients over to Liazon platform.

Have conversations begun with your clients in advance of this merger? Or is this something that you expect conversations to begin post close at the start of next year?.

So as you probably know, Willis has the Willis Advantage health care exchange offering, and it is the Liazon product, just white labeled as the Willis Advantage. And so we've been -- had that as part of our set of offerings we provide to clients, but it has been very much Willis providing a third-party product.

The big change we're obviously going to have in -- once the proposed merger is approved and closed is that we will now be operating with an in-house product. We will be, obviously, much closer to the product development teams.

We'll be able to think through some of the incentive issues to really make the -- this product hum through our distribution force. But we already know the Liazon product. That's the point. .

Okay.

And how many -- at the end of this year, how many of your clients do you expect to be on the Liazon product?.

So we've given, on and off, updates on that thing, on that process. There's a very long pipeline of discussions taking place. As I described, I think, on previous calls, actually, for a company to move onto a platform like this is a big decision. We did it ourselves. Willis is on the Willis Advantage, and it was a major, major decision.

We have a very long platform. The numbers we will have by the year end will be in the teens, teens or low 20s. Maybe in the 20s. Todd, I'm looking at you, and you're nodding enthusiastically. So those sorts of numbers, but the pipeline is long. .

Okay. And then one last question.

In terms of the organic revenue growth, was there anything that impacted -- seasonally impacted the Reinsurance growth? Any onetimers in there that might have positively impacted that number in the quarter?.

So overall -- I'm going to hand over to John for a second, but overall, the Reinsurance -- remember, the Reinsurance business is a business which is much, much more concentrated by client -- by number of clients than any of our other businesses. The top 50, 70 clients dominate the revenues of that business, as you would expect.

So the timing of one or 2 clients can obviously affect the numbers in any particular quarter.

John, do you want to highlight any?.

I was just going to add that on the second quarter call, we did point out that we had some headwinds in Reinsurance from timing. And there was one customer, significant customer that pushed from second quarter into the third quarter, which did help the organic results.

But nonetheless, a positive performance from the Reinsurance team with and without that particular timing issue. .

The next question comes from the line of Dan Farrell of Piper Jaffray. .

I was wondering if you could give us any color on the current trends of results at Gras Savoye. .

So I'm going to turn to Tim Wright in a second. Overall, we remain very excited about the Gras Savoye situation. We're expecting to close that transaction in and around the year end. And of course, it will -- a material impact [indiscernible] of our company, the client base and the spread of our geographic reach.

We also are happy with the way the business is performing, and let me hand over to Tim to give a bit more color on that. .

Yes, thanks. Thanks for the question, Dan. As Dominic said, Gras Savoye is doing very well. I'd probably describe that in 2 parts. First of all, their business on a standalone basis. As you know, they went through a turnaround, an operation improvement program, a number of years ago.

And that helped with their cost base, and they've been focused very much on growing on that solid foundation ever since. We see continued strong organic growth in the business, not dissimilar to the sorts of levels of growth that we're seeing in the comparable businesses at Willis.

So that's very promising for the future and vindicates our decision to accelerate the acquisition.

The second part is that we're obviously working with Gras Savoye on integration planning, where that's possible at this stage before closing and identifying areas where we can create incremental value over and above that from bringing capabilities and relationships from each organization. That's progressing very well also.

So we are pleased with the progress on Gras Savoye on those 2 fronts. .

And then just a quick question on the U.K. business. How much of the challenge on organic growth do you think is related to pricing of some of your Specialty lines there? I know you have a lot of read [ph] in aviation.

And then how much is stuff that's within your control? I know you've been putting through some strategic initiatives there as well to try and improve it. .

Yes. So obviously, pricing in the Reinsurance and then spreading into Specialty lines is a well-publicized story. Let me hand over to Nicolas just to give a bit more color on that. .

Yes. Thanks, Dominic. Thanks for the question. Pricing pressure continues, but quite interesting. And because going off you referred to aerospace and aviation, despite the continuous pressure on aviation, our teams are quite successful. In fact, we are seeing some low-digit growth in addition.

When we talk about the reduction in consultation, in fact, that's essentially coming from marine. So despite the reduction of the pricing, we see some interesting prospects in terms of growth. And actually, we are seeing an acceleration of our new business growth. If you look at our new business in 2015, it's been increasing by 8% versus 4% in prior.

So interesting to see that, of course. Yes, rate reduction continues, but for us, the growth is going to be coming from new business generation. .

At this point, there are no questions in queue. .

Well, great. Let me thank you, everybody, for your questions. .

In closing, let me just reiterate the following. We are proud of the solid progress we made again this quarter. Despite a challenging environment, we delivered on all parts of our strategy. We are on track to meet the expectations we set for the year.

When we talk next, we expect it to be as Willis Towers Watson as we begin the next part of the journey to creating substantial shareholder value. .

Thanks again for joining us today. .

That concludes today's conference. Thank you all for joining. You may now disconnect..