Aon plc. - Class A (AON) — Q4 2021 Earnings Call Transcript

Thank you, and good morning, everyone. Welcome to our fourth quarter conference call. I'm joined by Christa Davies, our CFO; and Eric Andersen, our President. As in previous quarters for your reference, we posted a detailed financial presentation on our website. Our strong performance in 2021 is the direct result of deliberate steps we've taken that are enabling us to win more, do more and retain more with clients. We're driving top and bottom line results and are exceptionally well positioned to continue to deliver ongoing performance in 2022 and over the long term. Most important, we want to express deep gratitude to our Aon colleagues around the world for their performance and results this year and for everything they've done for clients and for each other. Our colleagues delivered a fantastic Q4 and a very strong finish to an outstanding year. We achieved organic revenue growth of 10% in the fourth quarter, with double-digit growth in Commercial Risk and Reinsurance, driven by net new business generation and client retention. In Commercial Risk, we saw strength across the world, driven by net new business and retention in the core. We also saw strength in more discretionary areas of the portfolio as economic growth and client activity continued to increase, including double-digit growth in project-related work, and in transaction solutions as our teams responded to M&A deal flow and increased client demand. Within Health and Wealth Solutions, we saw double-digit growth in priority areas that we've been disproportionately investing in, in the last several years, including voluntary benefits in Health Solutions and in delegated investment management in Wealth Solutions, which remains an essential part of our portfolio. Our full year organic revenue growth of 9% reflects the strength and momentum of our Aon United strategy, which is designed to drive top and bottom line results. To that point, operating income increased 17% year-over-year; full year operating margins expanded 160 basis points to 30.1%, with margins of 32.8% in the fourth quarter, reflecting ongoing efficiency improvements, net of investment and long-term growth; earnings per share increased 22% for the full year; free cash flow exceeded $2 billion; and we completed $3.5 billion of share buyback in 2021, a strong indication of our confidence in the long-term value of the firm. Looking forward to 2022 and beyond, we continue to expect mid-single-digit or greater organic revenue growth, margin improvement and double-digit free cash flow growth. Looking back on the year, we would offer three observations that drove performance in '21 and reinforce our continued strong momentum in 2022. First, as complexity and uncertainty has increased around the world, clients are demanding a partner capable of providing them greater clarity and confidence to make better decisions that will protect and grow their businesses. In 2021, organizations and individuals continued to face the ongoing challenges of COVID and resulting effects in supply chain, growing concerns over climate change, commercial property, retirement readiness, regulatory changes, cyber and workforce resilience. Against that backdrop, our decade-plus focus on Aon United and the content capability it allows us to deliver has never been more relevant. Second, our colleagues feel that relevance, and they take great pride in our ability to deliver existing and new sources of value to clients. They recognize that these external challenges facing our clients create opportunity for them to bring better solutions and grow professionally. We know this is what engages our colleagues and why they're feeling more relevant, more connected and more valued. And we're seeing the impact of this focus. In our recent all-colleague survey, engagement levels remain at all-time highs, in line with top-quartile employers. Ultimately, we know that by creating an exceptional colleague experience or ensuring a better client experience, both of which translate into better performance for the firm. And third, we continue to accelerate our innovation strategy by using our Aon United operating model to replicate successful solutions and applying those capabilities to new client bases, paving the way for innovation at scale. We're incorporating our data, analytics and insight to direct existing capabilities to previously unmet client needs. This allows us to serve existing clients in new and customized ways, bring existing solutions to new clients and expand our addressable market. Let me highlight a few examples that demonstrate how we scale innovation to help our clients, both in new ways and from new sources. Historically, you heard us talk about Aon Client Treaty, pre-underwritten insurance capacity we established at Lloyd's that we used to offer clients more easily and efficiently access capital for their placements. When we designed this program over five years ago, we analyzed every historic placement, quantified the risk parameters around business replacement on Lloyd's and then prearranged capital to back those risks. Aon Client Treaty provides more efficient access to capital for clients and insurers, and we see ongoing opportunity to apply this concept to different geographies and risk classes using the same proprietary data and analytics backbone supported by Aon Business Services. One new offering derived directly from this capability is a solution the team designed called Marilla, which enables reinsurers and investors to invest across our global reinsurance client portfolio. This provides a broad entry point into global reinsurance risk that benefits our clients by enabling capital to access markets more efficiently. This first-of-its-kind solution could not have been designed without a proprietary analytic capability, and we see important opportunities to build on this platform for future growth across Aon. Another example to highlight is within voluntary benefits, where we're developing innovative solutions at scale and driving double-digit growth. The offering combines user insight around enrollment from our active healthcare exchanges and capabilities from acquisitions like Univers and Farmington. Our analytics platform and dashboards assess and illustrate planned features, product usage, claims experience and overall plant performance, providing insight into employee demand and satisfaction. This work has been formed by 20 years of enrollment data from over 4 million participants, which enables us to rapidly develop bespoke solutions for our clients that strengthen their total rewards offering and reinforce their human capital strategy at a time when this has never been more essential. These examples demonstrate how we help our clients access capital end markets in ways that never existed before. Within that backdrop of increasing and changing risk, we're not only bringing our clients better solutions, we're also working more closely with them to understand their biggest challenges, which in turn guides further innovation. Our focus on building innovative capabilities that scale across Aon to better meet our clients' needs is also highlighted by our recent appointment of Jillian Slyfield as our Chief Innovation Officer. Jillian's digital experience and deep connections with Aon and across the industry position her exceptionally well to ensure that we're rapidly distributing new solutions to clients. To summarize, 2021 was a year of incredible performance and a year that positions us for growth, innovation and momentum for 2022. As we look forward, this momentum is further reinforced by global economic and societal trends and the resulting challenges and opportunities for our clients, which means that our Aon United strategy becomes even more relevant as we help clients make better decisions to protect and grow their businesses. The capability and track record that we've built gives us confidence in our ability to drive further value for our clients, colleagues, society and shareholders. Now I'd like to turn the call over to Christa for her thoughts on our financial progress in Q4 and 2021 and our long-term outlook.

Thanks so much, Greg, and good morning, everyone. As Greg highlighted, we delivered another strong quarter of performance across our key metrics to finish the year. In the quarter, we delivered 10% organic revenue growth, the third consecutive quarter of double-digit organic growth, which translated into double-digit adjusted operating income and adjusted earnings per share growth, continuing our momentum as we head into 2022. As I reflect on full year results, first, organic revenue growth was 9%, including double-digit growth in Commercial Risk Solutions and Health Solutions. I would note that total revenue growth of 10% includes a modest favorable impact from a change in FX, partially offset by the impact of certain divestitures completed within the year, most notably, the Retiree Health Care Exchange business, as we continue to shift our portfolio towards our highest growth and return opportunities. As we look to 2022, we're continuing to monitor various macroeconomic factors, including the underlying drivers of GDP; asset values, corporate revenues and employment; inflation; government stimulus; and the impacts of COVID variants, all of which impact our clients and our business. We continue to expect mid-single-digit or greater organic revenue growth for 2022 and over the long term. Moving to operating performance. We delivered substantial operational improvement, with adjusted operating income growth of 17% and adjusted operating margin expansion of 160 basis points to a record 30.1% margin. The investments we have made in Aon Business Services give us further confidence in our ability to expand margins, building on our track record of approximately 100 basis points average annual margin expansion over the last decade. We previously described the repatterning expenses that incurred within 2021, which have no impact on year-over-year margins. While certain expenses may move from quarter-to-quarter, we do not expect further repatterning. We expect the 2021 expense patterning to be the right quarterly patterning going forward before an expense growth. During the year, as we previously communicated, we saw revenue growth outpace expense growth and investments. While we do expect expenses to increase in 2022 due to certain factors such as increased investments in colleagues and a modest reduction of T&E, we think about growing margins over the course of the full year. We expect to deliver margin expansion in 2022 as we continue our track record of cost discipline and managing investments and long-term growth on an ROIC basis. We translated strong adjusted operating income growth into double-digit adjusted EPS growth of 22% for the full year, building on our track record of double-digit adjusted EPS growth over the last decade. As noted in our earnings materials, FX translation had an unfavorable impact of approximately $0.03 in the fourth quarter and was a favorable impact of roughly $0.23 per share for the full year. If currency remains stable at today's rates, we would expect an unfavorable impact of approximately $0.16 per share or approximately $48 million decrease in operating income in the first quarter of 2022. In addition, we expect noncash pension expense of approximately $11 million for the full year 2022 based on current assumptions. This compares to the $21 million of noncash pension income recognized in 2021. Turning to free cash flow and capital allocation. We continue to expect to drive free cash flow growth over the long term based on operating income growth, working capital improvements and structural uses of cash enabled by Aon Business Services. In 2021, free cash flow decreased 23% to $2 billion, reflecting strong revenue growth, margin expansion and improvements in working capital, which were offset by a $1 billion termination fee payment and other related costs. I'd observe that excluding the $1 billion termination fee payment, free cash flow grew $400 million or approximately 15% from $2.6 billion in 2020. Our outlook for free cash flow growth in 2022 and beyond remains strong. Given this outlook, we expect share repurchase to continue to remain our highest return on capital opportunity for capital allocation as we believe we are significantly undervalued in the market today, highlighted by the approximately $2 billion of share repurchase in the quarter and $3.5 billion of share repurchase in 2021. Over the last decade, we've repurchased over one-third of our total shares outstanding on a net basis. In 2022, we expect to return to more normalized levels of CapEx as we invest in technology and smart working. We expect an investment of $180 million to $200 million. As we've said before, we manage CapEx like all of our investments on a disciplined return on capital basis. We also expect to invest organically and inorganically in content and capabilities to address unmet client needs. Our M&A pipeline is focused on our highest priority areas that will bring scalable solutions to our clients' growing and evolving challenges. We continue to assess all capital allocation decisions and manage our portfolio on a return on capital basis. We ended 2021 with a return on capital of 27.4%, an increase of more than 1,500 basis points over the last decade. Turning now to our balance sheet and debt capacity. We remain confident in the strength of our balance sheet and manage liquidity risk through a well-laddered debt maturity profile. In addition, we issued $500 million of senior notes in Q4. As we said before, growth in EBITDA, combined with improvements in our year-end pension and lease liability balances, increases the capacity we have to issue incremental debt while maintaining our current investment-grade credit ratings. Our net funded pension balance improved by nearly $500 million in 2021, reflecting continued progress and a result of the steps we've taken over the last decade to derisk this liability and reduce volatility. This reduction in volatility is significant for many of our clients, who still have pension obligations on their balance sheets. Current market conditions and funding status are giving many clients a chance to reduce the risk of future volatility related to funding status or regulatory changes. Our retirement team's insight and analytics in this space can help our clients access new capital to efficiently reduce their risk, often with a partial pension risk transfer, creating a long-term opportunity for us to help our clients manage their balance sheet risk effectively. In summary, 2021 was another year of strong top and bottom line performance, driven by the strength of our Aon United Strategy and Aon Business Services. We returned nearly $4 billion to shareholders through share repurchase and dividends in 2021. The success we achieved this year provides continued momentum as we head into 2022. We believe our disciplined approach to return on invested capital, combined with expected long-term free cash flow growth, will unlock substantial shareholder value creation over the long term. With that, I'll turn the call back over to the operator, and we'd be delighted to take your questions.

Hi, thanks. Good morning. My first question refers to some of Christa's comments about your plans for organic and inorganic investments in the upcoming year. I am trying to understand the expected increase in expenses for 2022 and any insights you might have on how margin expansion could trend in relation to the average of 100 basis points you mentioned over the last decade. Thank you.

Thanks so much, Elyse. As we stated previously, our goal is to grow margins each and every year, including in 2022. And we expect 2022 margins to be driven by accelerating revenue growth; portfolio mix shift to higher-growth, higher-margin businesses; and leverage from Aon Business Services. You've seen our track record, as you mentioned, of driving 100 basis points of margin expansion a year over the past decade, with some years a little more and some years a little less. We did deliver above-average margin expansion of 160 basis points in 2021. And there will always be lumpiness from quarter-to-quarter, which we did see this year, in terms of the timing of investment and discretionary expenses. So are we going to expand margins in 2022? Absolutely. And as we look to 2022, we also expect investments in colleagues, some ongoing reduction of T&E and investments in long-term growth. So we expect to drive margin expansion, net of investments, over the course of the full year.

Thank you. In terms of capital, you repurchased $2 billion in the fourth quarter, which is a significant amount. Looking ahead, while I understand you do not give specific guidance on buybacks, can you help us consider the potential for capital returns by taking into account your expectations for free cash flow and any additional leverage linked to your EBITDA growth? What is your outlook on the capital available in 2022 and beyond?

Absolutely. And look, we do expect double-digit free cash flow growth for the foreseeable future. So we have substantial cash flow generation capacity, and we're in a really strong capital position. And so you're right, Elyse, the first starting point is expectations for free cash flow, which is double-digit over the long-term and incremental debt capacity. So as EBITDA grows, you should expect us to add debt, keeping our leverage ratios in line with our current investment-grade ratings. And then what we would say is we continue to follow a very disciplined return-on-capital approach to allocate that capital. And you saw that with share buybacks remaining the highest return on capital opportunity across Aon, $3.5 billion repurchased in 2021 and $2 billion in Q4, giving you a sense of how undervalued we think the stock currently is. But in addition to investing in share buyback, Elyse, we have a substantial M&A pipeline, and we expect to do M&A during 2022 in areas of high growth but high demand from clients. We also expect to invest organically in our colleagues, whether it's in technology to scale innovation across the globe. And so we're really excited about the $4 billion of capital return to shareholders in 2021. And we're also really pleased with the return on capital of 27.4% in 2021, an increase of over 1,500 basis points over the last 10 years.

Hey, good morning. This is Charlie on for Mike. So Aon has been ahead of the curve building collaborative workplaces via less real estate. Does Aon expect to undergo any cost-cutting measures similar to some peers who have announced for more expense saving initiatives?

We prioritize our entire design and approach around client delivery, which we strive to achieve by supporting our colleagues. Our main focus will always be optimizing this perspective. As you've noted, we've implemented several innovative strategies to strengthen this approach, which has yielded excellent results for both our clients and colleagues. We will continue in this direction. On the expense side, we'll make the necessary investments, as Christa mentioned, based on return on invested capital, which has proven to be very successful for us. We'll seek opportunities for optimization and invest where it enhances outcomes for our clients and colleagues. This has been our strategic approach, and it has worked extremely well for us, especially as circumstances continue to change.

Okay. Great. And then you noted in your slide deck that exposures in pricing on the P&C side were modestly positive. Can you talk to us about what you're seeing in terms of momentum there? And whether you have an outlook on the P&C pricing environment for '22?

Go ahead, Eric.

Sure, Greg. Thanks. I want to highlight that the pricing environment is just one aspect to consider. We also need to take into account growth in exposure and other related factors. Our focus when working with clients is primarily on risk identification and management. There are many measures they take that don't involve the market. Additionally, they have financing options, meaning they can leverage their own resources for protection. When they decide to transfer risk, they have several tools available to them. They evaluate retentions, coinsurance, deductibles, terms and conditions, and limits. We aim to provide our insights, data, and analytics to guide them in making informed decisions. Therefore, discussions about market rates do not always correlate directly with what clients actually purchase. The carrier's comments about market fluctuations do not necessarily reflect what clients do with their own portfolios.

Okay, Thank you..

Good morning. Thank you for the call, everyone. I was hoping you could provide more insight into the connection between organic growth and margin expansion over time. The industry rule of thumb has typically been around 3% to 4% organic growth, which is generally correlated with margin expansion. However, there are some people suggesting that the pandemic may have disrupted this relationship, and I would like to hear your thoughts on that.

In terms of our top line, we've made significant strides in organic growth, strengthening our ability to meet client demands, which are evolving and increasing. We've reached mid-single-digit growth rates and expect to maintain this momentum in 2021, 2022, and beyond, as we tap into both existing and new markets. Additionally, we've seen margin expansion over the past decade through various growth environments, and we anticipate continuing this trend. Eric, do you have anything to add?

I would say there are several areas where we continue to drive growth and have built our strategy to deliver value to clients. We focus on how we connect what we do globally and ensure we are introducing new solutions within our existing business. We're identifying growth opportunities by connecting different capabilities across our historically separate business units. This can involve leveraging insights from our reinsurance business for corporate clients or aligning our human capital capabilities with our risk management services. We're combining existing capabilities in innovative ways to address clients' challenges. Additionally, we are concentrating on new growth areas, such as cyber, where it involves more than just providing insurance policies; it requires risk mitigation, identification, and new skills to add real value. Similarly, in terms of climate, we aim to provide better insights that allow our clients to manage present climate challenges while investing in future solutions. We recognize that issues once considered long-term risks are now immediate concerns for everyone. Our goal is to utilize our existing capabilities in new ways to achieve better outcomes for our clients, and we see opportunities for growth both now and in the future.

Great. My second question, I'd like to ask about the M&A environment for the industry. It seems like we continue to hear lots of comments that private equity is interested in, in just about everything brokerage. And there seems to be just an endless supply of new roll-up companies, new probably roll-up companies. But it's hard to be outside in the know if that environment really is getting a lot more competitive and valuations are arising, or if it's more of a stable view. What's your take on the current environment?

So Paul, one of the things we do is start with client needs and then build our M&A pipelines around the opportunities with the highest growth, highest margin, and highest return on capital. These opportunities align with the major areas of client demand, such as health and associated benefits, delegated investment management, and data analytics. We focus on building relationships with companies well before they enter a process, so we’re not competing with others. We are establishing connections in sectors like cyber, intellectual property, and data analytics-intensive businesses, and we're excited to integrate that capability into Aon. We anticipate doing even more of this in 2022.

Okay, thank you very much. Appreciate it.

Good morning, and thank you for taking my question. I have one question. I noticed that you ended the year with 215 million common shares outstanding, along with nearly 2 million dilutive equivalents. However, at the beginning of the first quarter of 2022, you indicated a diluted share count of almost 224 million. Could you explain why that share count is expected to increase?

So we have actual shares outstanding in Q4 2021 of 221.4 million. And then we have a few diluted shares, which get you to 223.7 million is the estimated Q1 2022 diluted shares.

Okay. So that's apples to oranges. Okay. And maybe could you just remind me the stock-based compensation, does that flow into adjusted EPS?

Yes, of course. So when you issue shares, you increased the share count related to stock-based compensation. And so if you think about the actual shares issued each year for the last couple of years, it's been going down substantially, while the dollar amounts of stock we issue has remained the same. So we've been very disciplined about the granting amount we're giving out. But obviously, as the stock price increases, the dilutive impact decreases. So in 2021, as an example, we issued 1.7 million shares.

Thank you.

Hi, good morning. There were many questions and concerns regarding the implications of the Willis deal. However, your organic growth doesn't appear to have been significantly affected. Could you elaborate on that? Additionally, I've noticed that your expenses show an increase only in the compensation and benefits category compared to a couple of years ago, while other expenses have decreased. Are you possibly having to increase pay to retain talent, perhaps due to inflation or the fallout from the deal?

Jimmy, thank you for your questions. Let's begin with the first. As we look ahead to maintaining momentum in 2022, 2023, and 2024, we see a strong and unique opportunity for Aon. To address your inquiry about our future direction, let's consider our current standing and financial performance. We achieved 9% organic growth, a 30% margin, and double-digit free cash flow, along with colleague engagement at 80% and voluntary attrition below pre-COVID levels. Client demand, as Eric mentioned, is high and growing, as well as evolving. The momentum we enter 2022 with is remarkable across financial performance, colleague engagement, and client needs. It's essential to analyze what has driven this success. The strategies responsible for our current performance are the same ones that will sustain our momentum moving forward. Our progress is rooted in a decade of efforts on Aon United, especially the refinements made recently. This is aligned with our blueprint for Aon Business Services, our innovative initiatives, and our systematic global approach to leadership. Our brand and talent are interconnected, enhancing the strategy we've implemented. Furthermore, client needs in traditional sectors are demanding increased capabilities, necessitating a more integrated approach. Aon United, which has been compelling for the past decade, has become even more relevant in a post-COVID world as clients seek greater solutions. Additionally, the opportunities for colleagues and career paths have become more exciting and promising. We're making a significant impact in areas that matter to clients, which translates to better career paths and more opportunities for professional growth and wealth creation for our team members. We feel fortunate as Aon is well-positioned to succeed now and in the future, with robust momentum backing us. While I addressed the first question, Eric, do you have anything else to add regarding our direction?

Yeah, Greg, I think you covered it really well. I think the client demand question we talked about a few minutes ago. But as we work with the clients on their risk today and help plan around the risk of the future, it really is an opportunity for us to show the value of our operating model. So we can bring the capabilities of our firm to a client in the way that they want to use it and provide the insight that looks at a risk holistically, not just as an insurance risk, not just as a talent risk, but really pull all of it together at one point. And you see that in the resilience work that's being done out of our human capital and risk teams together. You see that in reinsurance risk, a couple of those different examples we talked about. But the operating model, I think, provides us with a competitive advantage that is different from what you see in the marketplace, connecting globally by using our ability to talk to clients' segments with industry backgrounds, really understanding their issues and then bringing that capability. Anybody can say it. It is absolutely critical to do it to be able to meet these needs of the future, but also having an Aon Business Services as the backbone of the firm, where we're able to leverage the data and analytics, be able to leverage our scale, provide the level of service that clients are looking for in a way that drives efficiency that allows us to invest back in the talent that you need, the new channel that you need to draw into a firm to be able to handle issues like cyber, like climate, like resilience and those types. So we feel really good that the model that we've put in place really does give us an ability to meet those needs going forward.

And then on your comp and benefits question, I think you said expenses are going up. We are absolutely investing in our colleagues. We're investing in our current colleagues, in talent and development, in wealth creation and in hiring great new talents to serve unmet client needs. And we're excited about being able to continue to do that into 2022 as well as continue to invest in growth areas across our business in the context of driving margin expansion for the full year.

Okay. And how do you think about inflation affecting your business? Obviously, to the extent the premiums go up, that helps you. But are you seeing evidence of wage inflation as well? First, if you could just comment on the positive and negative of the pickup in inflation?

Yes. We do see wage inflation in our business. We saw that in Q3. We expect that to continue into 2022. But what we would say is, while we continue to invest in our colleagues, which we think is terrific, we expect to offset that with efficiencies driven by Aon Business Services at scale. And so that offset and continued sort of efficiency there allows us to continue to drive margin expansion. One of the other macro things I might add, just while you're on inflation, is interest rates. So if interest rates were to continue to rise, that is a very positive dot for us in 3 key ways: fiduciary investment income increases, every 100 basis points in short-term interest rates, there's an increase of $60 million top line and bottom line for Aon; the second is pension liability comes down, and then the third, which you may think is a negative, but is not, interest expense and our entire debt portfolio has fixed interest, fixed rate interest, so there's no impact on debt. So inflation, we do expect, longer term, to be a positive for our business. Short term, there's sort of a wage inflation impact for sure. Interest rates is positive on 3 fronts. So we do think the macro environment is very positive for our business.

Thank you.

Good morning, thanks. Historically, you've been able to increase the margin in part. I think you said you focused on high-growth, higher-margin businesses from a business mix perspective, but also you divest historically low-growth, lower-margin businesses. So on the second part, as we look at 2022, 2023, is there still a fair amount of lower growth or margin parts of the business that you could divest?

I mean what we would say is we continue to manage the portfolio actively and continue to invest in higher revenue growth, higher-margin businesses. We will continue to divest lower revenue growth, lower-margin, low return on capital businesses. I think there's fewer of them left in the portfolio. So you saw us do that with the Retiree Health Care Exchange business in Q4, but there's also a huge opportunity with Aon Business Services to invest and improve the efficiency and therefore, increase the margins of the existing businesses to help them scale globally in much more efficient ways and to scale innovation in more ways. So yes, we'll continue to be an active manager portfolio, but Aon Business Services is probably a much bigger lever for us in driving margin expansion going forward.

Kind of this is also a very dynamic conversation. Every year, every situation evolves over time. And it's led to a 30% margin, which we believe, as Christa described very clearly, with real, real upside over time as we move through that. But also, if you could call out return on invested capital, this process has led to 27% in change return on invested capital, which is really a phenomenal outcome in terms of sort of what it's been able to do. So it served us well. And businesses that were in the performing category 2 or 3 years ago, we have to continue to improve, and we're looking for ways to do that. So this is really not just about the static but about the dynamic and how it evolves over time. And that the process that Chris and the team has set up has really served us well. I think because there's probably like more like on the return on invested capital side, almost like 1,500 basis points over the last 10 years, surpassing even what we've done on margin.

Okay. And then just one follow-up. On the Health Solutions business, you did quite well this year. From what I understand, that business has been impacted in that business across the market, has been impacted by some HR managers being very, very busy during COVID and not always having the time to be more offensive, do more discretionary projects. Are you seeing sort of that macro environment beginning to turn? Are HR managers getting more engaged, what they do more for the workforces as we go into 2022?

Adam, the activity has dramatically increased and continues to do so. Whether this leads to immediate revenue or future revenue, the chance to collaborate with people leaders and our clients globally is exceptional. As you mentioned, the demand is significant, not just for immediate support for employees but also concerning resilience and all aspects of workforce and talent. We're excited about this area from both a talent and health perspective. It is also linked to retirement matters, as we aim to help employees become more effective leaders and individuals in their daily roles, extending beyond specific benefits. We see tremendous opportunities in health worldwide, not just in the US. As Eric mentioned earlier, this aligns with demand in other areas that impact employees, such as retirement and its related aspects.

Greg, I would like to make a quick comment. When we refer to our colleagues as whole people, we're considering not just the professional aspects but also their well-being, which is currently a significant focus for all our clients. There is also a growing interest in understanding what their benefit programs look like on a global scale and how to harmonize them. The global benefit strategy that companies are adopting aims to facilitate the movement of talent across borders to seize opportunities. This becomes a crucial part of what a human resource professional is evaluating. Additionally, it aligns with the goal of utilizing talent where they can create the most value for the company while also enhancing individual career opportunities.

All right. Thank you very much.

Thanks very much. I just want to say, on behalf of Christa, Eric and I, thanks very much for joining this quarter and look forward to our discussion next time. Take care.