That’s going to come as a result of the maturing of the business and the portfolio, as well as continuing to improve the product mix. I do think it’s important to note that even when TRANZACT turns positive from a cash flow perspective, it will still be a drag on the enterprise free cash flow margin as it’s not going to be converting right at the same rate as the rest of the business. So, it will take some time for that headwind to subside. And then in the other direction, as we talked about, we do have some temporary headwinds from cash investments within the business for product development and technology to support future growth and efficiencies. But at the end of the day, we are committed to making annual progress on the free cash flow margin as we drive towards that 16% plus.
Operator: Thank you. One moment for our next question. Our next question comes from Rob Cox with Goldman Sachs. Please go ahead.
Rob Cox: Hey, just had a first question on talent. I was just hoping you guys could give us an update. And so, the talent base in terms of hiring trends, attrition trends, and perhaps you could comment on some of the staff reductions that were reported in media articles over the quarter.
Carl Hess: Sure, Rob. Thanks, and good morning. So, as we mentioned, right, we have replenished our talent base. And so, our investments going forward are more focused on strategic and opportunistic hiring. And we think they put us in a position to achieve sustainable, profitable growth. We’re not just hiring to fill our bench. We’re hiring to take advantage of specific opportunities to create value. Lucy Clark would be a great example, one of those strategic hires we are looking forward to. We’re welcoming her next, later this year. In addition, we’ve had some notable strategic hires to support our industry verticals and Verita. With respect to attrition, it has come down within levels that are in our normal range and quite manageable for us as a business.
We are very much view ourselves, so as a flagship for talent and retaining our current talent base is just as important as attracting new talent. And it’s no accident, I thank our colleagues on each and every one of these calls. With respect to recent press reports, I would point out that we had always contemplated as part of the transformation program, the relocation of work at various parts of what we do. And so, I view this as not really news, it’s just reporting.
Rob Cox: Great. Thanks. And just a follow-up, I think there were some updated rules from CMS regarding Medicare Advantage broker compensation. Have you been able to assess if there’s an expected impact TRANZACT from any of those changes?
Carl Hess: So, the final CMS rules for ‘25 that address marketing of Medicare Advantage plans in the U.S., was released in early April, right. So, not all that long ago. The good news of the final rule was less onerous than the proposed rule in a number of ways. And while there’s still some uncertainties about how all of its provisions are going to be implemented, it’s not causing us to change our outlook for the year. We’ve been actively engaged with the carriers in the space. They have reiterated the important role that we play in the distribution of Medicare insurance solutions and the valuable services we provide beneficiaries. Now, I guess, I just close that by saying managing regulatory changes is a regular part of our business. And I think we’ve been quite successful navigating these sort of changes in the past. We will continue to do so in the future.
Operator: Thank you. One moment for our next question. Our next question comes from Mike Ward with Citi. Please go ahead.
Mike Ward: Thanks, guys. Good morning. Just on the allocated expense items, just wondering if you have any expectations for the rest of the year and does that kind of depend on interest rate levels?
Carl Hess: So, the unallocated debt for the full year, we expect to be relatively consistent with 2023 on a 12-month basis. What you’re seeing there right now is the outcome of driving down expenses at the corporate level, focused on enhancing the margin profile of the company going forward. Some examples of that include things like refining our corporate support model for the businesses, as well as managing discretionary spend. So, that’s really where it manifests itself in the unallocated net this quarter. And again, for the full year should be relatively consistent with last year.
Mike Ward: Okay, thank you. And then maybe, on global specialties, I was hoping you could expand on the kind of growth outlook and maybe, which lines you’re expecting faster or slower growth. Thanks.
Andrew Krasner: So, we’re – we continue to be delighted with the performance of our specialization strategy. And for the quarter, our global lines of business once again, grew more than doubled the rest of the portfolio. So, we think it is working a treat. Some of these lines are facing more challenging conditions than others. Our FINEX business for instance has the headwind of reduced M&A activity, which lowers the amount of work we do in transactional liability, as well as the sharp decline in rates we’ve had over a recently large number of quarters, but continues actually to still make quite good growth in despite these. We see in things like construction and natural resources are unique analytic proposition, actually hoping quite a bit. But in general, we’re seeing strong growth across the portfolio, where we have headwinds and tailwinds from rate and other conditions sort of working its way through.
Operator: Thank you. One moment for our next question. Our next question comes from Andrew Kligerman with TD Cowen. Please go ahead.
Andrew Kligerman: Hey. Good morning. I’d like to follow up on Rob’s earlier question about the staffing. Should I take it that, Carl, when you say strategic hires and then couple that, you mentioned the – what we had read about 120 to 130 staff members were reduced. That was just kind of the normal course of business. So, as I net that out, should we be thinking that WTW does not plan to grow, they just want to selectively hire and reduce where it’s impactful? Is that – in terms of staffing, is that the right way to think about it?
Carl Hess: Let me unpick that a bit, Andrew. So, as I said, one of the big focuses for us coming to ‘22 and ‘23 was rebuilding our talent base, where the events of 2021 had not been helpful. That rebuild job is over, right. Now, that doesn’t mean we’re done hiring, because we’re always going to be in the market for great talent. But we’re no longer just having to rebuild. It’s a build, right, if I could differentiate it that way, with respect to non-front office operations, the effect of the transformation program is twofold, right. One is, we do have some where are we doing the work of things going on, those won’t necessarily cause a reduction in headcount, right. Because we actually might just be doing the work from a different location and that wouldn’t view the headcount as much as the cost of what we do as being the driver for decisions in that regard.
