Andrew Krasner: Yes. There’s nothing meaningful in there that’s contributing to the growth from that. And mostly it’s been driven by new business retention rates, very little impact from rate.
Michael Zaremski: Okay. Yes, you guys have been clear about the reinvestment in talent hire. Okay, got it. Lastly, on interest income, and I don’t think we have the fiduciary asset levels yet, but it looks like the yield implied is kind of high. Is there anything unusual in there? Or is that the run rate or anything we should be thinking about seasonality wise?
Andrew Krasner: No, I think it’s a good run rate. The asset levels, obviously vary by quarter. But on an annual basis, I think the yield should be fairly consistent.
Operator: Thank you. One moment for our next question. Our next question comes from Mark Marcon with Baird. Please go ahead.
Mark Marcon: Hey, good morning. Clearly, really strong progress in terms of the margin expansion and clearly, there’s successful efforts with regards to efficiency and utilization. But I’m also trying to understand the impact of pricing. What are you seeing from a – and obviously, it varies by segment. But broadly speaking, to what extent has pricing been a positive catalyst for the margin expansion? And to what extent – if that is the case, to what extent is that sustainable?
Carl Hess: So, within R&B, as we alluded to earlier, rate has been a nonfactor in our business, and I just don’t view sort of – as Andrew said, right, it’s – our results have been driven by great retention and great new business. And we think with our strategy of specialization, those are sustainable. And we – and continued focus, you need to continue to do. With respect to HWC, I guess I put these two things, right? One is we continue to try and to drive differentiated solutions in the marketplace that enable us to charge a fair value for the great work we do. We remain very engaged with our client base to ensure that our already high retention rates stay there. And we think that we have been very successful at delivering value, significant multiple of fees we charge and our clients very much value that as a trusted adviser with relationships that in some cases, stretch back multiple decades.
Mark Marcon: Terrific. And then for my follow-up, just on BDO, you did mention that there was one large client that ended up in-sourcing some of the retirement programs. Wondering, do you have a perspective in terms of why that was? And is this kind of a one-off? Or is this anything to be concerned about on a go-forward basis?
Carl Hess: So, we very much view that as a one-off. This is a client that had a pronounced bent toward – technology bent towards self-service. And we were a bit of an outlier in their portfolio of advisers. So, while we would have preferred a different decision, we understand that decision. If anything, though, we see the market going the other way is that clients continue to deal with the complexity of what it takes to administer these programs and companies such as us can offer a more turnkey solution they could ever develop on their own.
Operator: Thank you. One moment for our next question. The Next question comes from Meyer Shields with KBW. Please go ahead.
Meyer Shields: Good morning. Carl, you distinguished between sort of the rebuilding that was necessary after 2020, 2021 and more recent hiring. When you talk about the hires that have come on in the first stage of that, are they fully productive in line with the longer-term legacy Willis Towers Watson employees? Or is there still more room to go over time?
Carl Hess: Yes. So, I mean, we are very pleased with the progress these groups of hires have made and they are contributing to our success. But we think there is still more room to go, especially for the more recent vintages, right? This effort began in early ‘22 and continued through ‘23. The people we hired in ‘23 still don’t have from [indiscernible]. And we’ve always said six to 18 months become fully productive.
Meyer Shields: Okay. Perfect. And then if I could just go back to the timing issue in health. Does that timing impact the expenses as well?
Andrew Krasner: We expect the expenses to be relatively even throughout the year in that regard, and it’s really just the pacing of the revenue for project work that we expect to pick up throughout the rest of the year to get to that mid- to high-single-digit growth rate.
Carl Hess: I mean that business is a combination of commissions, which is outside the U.S. is largely how we collect things. And then in the U.S., we have a very successful large market consulting business that’s fee-based. So, we’re typically collecting fees as we earn them, but we keep the people on throughout the year.
Operator: Thank you. One moment for our next question. Our next question comes from David Motemaden with Evercore ISI. Please go ahead.
David Motemaden: Hi, thanks. Good morning. I just had a question for Andrew. So, I heard you on the moderated TRANZACT growth later in the year given the projected growth by the carriers in Medicare Advantage. Just wanted to know if that changes your view at all on the free cash flow trajectory. Does that pull forward sort of the timing in terms of how you think about getting to that 16%. Or just how that lower growth in the TRANZACT business might help or aid free cash flow throughout this year?
Andrew Krasner: Yes, it’s a good question. Naturally, slower growth within that business, which is a net consumer of cash will foster a quicker move up the curve there on getting to breakeven and if positive on free cash flow. So that would definitely be a tailwind there if it did play out that way based on what we’re hearing from some of the carriers at the moment in their expected growth rates.
