AJG
#Well, we've closed four additional deals since the quarter ended, so we've got 12 done for the year, and the pipeline is robust.
Whether or not they actually close in the second quarter, third, or fourth, every single deal has its own life span, but we've got a very solid pipeline.
Thanks, <UNK>
Yes, Australia and New Zealand, in particular.
We're really happy with our position in the UK.
If you remember, just two or three years ago we didn't really have a retail presence at all.
Today we're one of the five largest players in that market.
That group has come together very well.
The re-branding has been done, it's all <UNK> now.
You recall it was Oval, Giles, and Heath.
We're Arthur <UNK> across about 70 outlets through the UK.
Yes, it's a competitive market place, just like the United States, Canada, Australia, New Zealand.
But we think we compete pretty well.
Yes, I think it's nice affirmation of what we saw, too, that there is good opportunity in the retail space in the UK.
I think there's lots of opportunity there.
There's still some private equity owned firms there.
They're going to have to do something as time comes up.
I think people realizing better to be with a strategic than with an independent or private equity owned.
We're seeing terrific opportunities there.
Thanks <UNK>.
The market place, I think, is probably a little bit more stable than I thought it was going to be coming into the end of the year.
October, November last year we saw probably a little bit softer market than we're seeing today.
Property is soft, no question about it, especially on the cat side, but probably a little bit more stable market.
I think our closing ratio's up just a bit.
We've got a very solid pipeline of new business opportunities, and our team is doing very well on new business.
I think also to add to that, the second quarter is our highest property quarter for us.
As you look at your models, I don't know if I would necessarily assume that it will be the same over the next three quarters.
You might want to caution yourself a little bit on the second quarter because of property rates.
Also, I think just since November and December, this is a stable environment.
I think our clients are having the opportunity to be able to see [really] the value that we bring.
In a stable environment we out-shine a lot of our other - smaller competitors, in particular.
When Pat's talking about our hit ratio being better, that's what we're seeing there.
Yes, to answer your questions backward, yes.
When mid-single-digits, we believe there's an opportunity to still hit our 17% margin target in each of the next three quarters ---+ which is expansion over last year.
In terms of what's happening on the organic side, if you go back and look at our supplement over time, there have been some periods where <UNK> Bassett's growth has been in the 5% or 6% range, and then it jumps up to the 10% or 12% range.
The reason why is that as we look at some larger accounts, they typically will incept on January 1 or on July 1.
There are some times where they ---+ we get them in the pipeline, let's say in 2015, hoping that the incept on January 1, but switching over to us can take some time.
But we see more new business incepting July 1 this year than let's say maybe in the past where it incepted on January 1.
It's a little bit of a step function a little bit of a step function type business.
Some of these are pretty large accounts.
We're seeing good ---+ we had 6% growth in the US.
Australia is largely flat at this point, but again, there's some big programs that are coming up for proposal over the next couple years down there.
I think what you're looking at is the head count on the brokerage side dropped about 45 heads between ---+ since the last period, yet we still had acquisitions that might have added 100 or 150.
We're probably net backwards 200 heads, and its largely as a result of our integration efforts, our productivity initiatives.
Most of that ---+ we didn't have big layoffs ---+ most of that was just through natural exits that happened in the business.
But it just shows that we're getting more productive every day.
Thank you.
Good morning.
It's a little less than 20%, but wholesale was up about 2% for the quarter.
Yes, they have head winds on the property side, and you need to know that the second quarter is their biggest property quarter.
Yes, let me tell you there's three answers in that question.
First, when it comes to the bankruptcies, most of those, when the coal mines go bankrupt it's usually holding company bankruptcy but the mines are still operating, because they have contracts they have to continue to deliver coal on.
A lot of these utilities have had ---+ required to take contracts.
The coal is still moving, even though the holding company might be bankrupt.
I think there's been five of them in the last year or so, as they restructure and make themselves more efficient.
Second of all, the power plants.
As you recall, when we put our clean energy plants in at a power plant, we put them earlier in the dispatch curve.
When we do our plants, these are plants that are more likely to run than let's say less efficient plants that only get dispatched during the high peak loads.
We are at the mercy of the weather.
We did have a little bit of a warmer winter that did impact us a little bit, but we still see that we're on track.
This program runs through 2021, so long-term displacement of coal to other fuels.
It takes a long time to displace a plants, and this program goes really for another five years.
Truthfully, the amount of displacement that's happened over the last eight years probably is not likely to repeat, because they displaced to natural gas in the plant that they couldn't.
They really can't move these plants to natural gas that we're operating on efficiently and effectively in the next five years.
In summary, I was going to say that I think we're still well positioned.
I still see us having 15% growth in our net earnings this year.
We still have other plants that we're working on putting in place that should continue to expand our earnings as you look into the future.
Overall, I would say it's a steady-state business.
Thanks, <UNK>.
Good morning, <UNK>.
No.
Yes, the way that their compensation raise increases happen, it doesn't happen in the first quarter.
You'll see that be more like 17% going forward.
17.6% on $200 million of revenue might have been $1 million less than what ---+ of expense than we expected initially, but I feel 17% in the next three quarters is achievable.
That's right, <UNK>.
I think, <UNK>, for us it's more execution than it is macro.
Those are big trading partners for us.
In each instance, we've got deep, very meaningful relationships with each of them.
Each have their own issues that they're dealing with, but our trading relationship is very strong and continues to grow with all three of them.
It's really not those three driving the market.
I think really, we know that 90% of the time when we compete, we compete with a player who's smaller than we are.
In our 32 ---+ in the United States, our 32 areas of focus, our verticals, are very strong.
We know those businesses, and we think we're probably tougher than anybody in any of those; and new business is very strong.
Yes, I think ---+ what I've been impressed with over the last five years is we've had ups and downs in various lines of coverage that have gone soft or hard, depending on what those lines of coverage need.
But over the last five years, we've seen more discipline on the underwriting side than I have in my 40-year career.
I think that remains.
I think catastrophe property clients deserve a decrease.
The wind hasn't blown.
There should be no shock to anybody that cat property is off.
When you take a look at workers' compensation, depending on the geography, the state, what have you, when it needs to go up it goes up a bit.
When it needs to come down it comes down a bit.
D&O, same sort of thing.
What we're seeing is many cycles within the lines of coverage, based on what really needs to happen to those lines.
I think that's a level of discipline that the industry has enjoyed for five years that I'd never seen before.
I think it's more of the same of that, <UNK>, yes.
Those three companies have issues that they're dealing with, but by and large, they're trading on the street, they're doing very well.
Thanks, <UNK>.
Good morning, <UNK>.
No, I'd say pricing is relatively stable.
Look, at any account, you could go into any of our offices and go to a sales meeting, and you're going to hear a story of somebody getting a 25% decrease.
Someone's going to be shocked by it and what have you.
But when you look at our book of business across the entire platform, and you see that really rate and environment and rate and exposures cost us 0.5 point, that's no soft market.
It's not ---+ you can have an account that gets knocked down big time, but by and large, when you look across the entire platform it's a pretty stable situation, with the exception of the property business, and to some degree transportation.
It's strong, we're good.
Casualty lines ---+ with the exception of energy and natural resources, our wholesale business is very strong, as is our MGA business.
Thanks, <UNK>.
First question, yes it was.
Because we had a stronger first quarter, that caused us to recognize a little bit more.
When you have more organic growth, you have more earnings, and therefore you recognize a little more tax credit.
That's the first one.
Longer term, I think even though we talk about the end of this program to generate credits being expiring in 2021, our plan is to hit the end of 2021 with a long glide path of having a balance sheet with a substantial amount of credits in it that can continue to reduce our tax rate well into the 2020s.
Even though the generation phase may be over in 2021, the actual utilization of credit should go on.
I think right now we have about $375 million that's in our balance sheet right now.
We're using about $100 million a year.
I'd like to have a five or six, seven-year balance sheet by the time we hit that point.
Now, what do we have as opportunities after the fact.
Listen, we thought at the end of Section 29, which was the precursor to Section 45 credits that we were done.
There's something else that the government does in order to foster tax credits.
The government really understands that better energy is a good policy, and therefore they want to incent commercial enterprises to go out and develop new technologies to better the environment.
I think there could be another program after 2021, but we've got five years to work on that.
In terms of our cash generation, look at this as well into the 2020s.
We've done it only for the last 20 years, so I think there's something else out there.
Exactly the opposite of that, <UNK>.
This is a great opportunity for <UNK> Bassett.
The market place has been an unbundled market place for large accounts for the last 20 years.
Liberty has unbundled at times, as well.
This is just more opportunity for GB to showcase their wares in terms of being able to convince clients that using <UNK> Bassett will lower their claim cost.
We're pleased that Liberty's coming that direction.
We have a lot of carriers that are recognizing their claim outcomes are better with <UNK> Bassett, because <UNK> Bassett can customize the claim delivery to the customer, not necessarily to the way the carrier wants to.
To be able to customize the delivery of the service that we provide will deliver better claim outcomes.
The carriers recognize it.
We do it for a lot of carriers.
We're really good.
When we're paying about $10 billion a year of claims, primarily in the workers' comp or general liability space, we are experts in that business.
Our outcomes are better.
This is another acknowledgment by a carrier that there are some things that we might be able to do better than them.
I think this is a terrific opportunity for us, as these carriers recognize that we can do things for them.
Yes.
Thanks, <UNK>.
90% of the claim goes out in the claim cost.
Only 10% goes out in the adjusting cost.
If you can reduce the 90% by a little bit, you can sure have the pay for a lot of the 10%.
Donna, any other questions.
Yes, we did hit on this before, <UNK>, but I'll be glad to do it again.
We're very pleased with the progress we've made in the UK, especially on our retail side.
Our specialty business is second to none there.
Our London broking business is really top of the game.
Retail, you will recall is an acquisition of three players that we put together over the last couple years.
It's going extremely well.
We had about 3% organic growth in the quarter on our retail business.
It's all re-branded from Giles and Oval and Heath to <UNK>.
Organic growth is on the up-tick, and we see really good things happening there.
Yes, in terms of the Compass, the revenues on that are less than $5 million, so it's not a big deal.
That was a network of relationships that were provided to the UK retail space that came from either Giles or Oval, I can't remember exactly which one.
But truthfully, our guys don't need a network now because they're a part of <UNK> and they can trade within <UNK>.
They can get the resources and the capabilities that they need.
Compass really is an opportunity for smaller retail brokers, and it doesn't really work inside of <UNK>.
We're selling that off as a no, nevermind, to be honest.
Right.
Thanks, Chuck.
Working backwards, when it comes to the Willis-Miller deal, the fact is RPS trades primarily with other than the large brokers, so it doesn't really have much of an impact to RPS.
I would say there's nothing there.
When it comes to the head count, I think because we're seasonally smallest in our acquisitions in the first quarter you see the decrease in head count more so.
I think that when you look at going forward, you'll probably see increases in head count as our acquisitions are coming on.
But underlying, yes we are controlling our head count through attrition, through becoming more productive.
If we didn't have the roll-in of acquisitions, you would probably see a decreasing head count just from natural attrition.
This is ---+ we're naturally getting better every day.
Well, we bought some in the quarter to offset the shares that we used in tax-free re-org, so it's out there.
Thanks, <UNK>.
All right, Donna, I think that's it.
Yes, Donna.
Thank you very much everyone for joining us this morning.
We really appreciate it.
We're excited about the results for the quarter, and look forward to a strong 2016.
Have a great day.
