Andrew Kligerman: Hey. Good morning. So that R&B growth was an exceptional number at 12%. So I’m kind of curious going forward, looking at new hires, Carl, I think you said that you’d be strategic and opportunistic. How should we think about new hires next year in terms of — is it going to be flat, up a little down a little? And then just on the strategic client engagement that you just touched on again, I’m still not quite clear on how that helps the he specialty groups. I mean, does it does it slow them down, because now you’ve got new people involved in the process or — just want to make sure that — or understand how that’s going to help boost the specialty as opposed to make it a little more complicated?
Carl Hess: Sure. Thanks Andrew for the question. Questions maybe I should say. First of all, with respect to talent acquisition plans, you’re correct. I said we’re focusing on strategic and opportunistic hiring. We’ve done I think — Adam Garrard has done a fabulous job over the last couple years. He’s a team of building back this business to full strength. But we’re always going to be on the crawl for talent, right? We can find people who are attracted to our proposition who can add value and revenue — we’re going to be in that talent base. With regard to…
Andrew Kligerman: The bias would be slightly up in new hires then — said how I should take the strategies the opportunistic approach.
Carl Hess: I think that — I would anticipate that we are going to continue to be lookout for talent of the way we have, right, over the last several quarters, right? We don’t hire just for the sake of hiring.
Andrew Kligerman: Right.
Carl Hess: With regard to our strategic client engagement, I think I look at it this way. We’re trying to deliver best-in-class service to our client base and that involves making sure we understand their risks better than anybody else and that is a specialization and then it’s fulfilling their needs, right? There’s client engagement which is equally important. So I view this as — and not a but.
Andrew Krasner: And one of the primary focuses of the strategic client engagement concept is really going to be a focus on the industry verticals, but in particular, think about Fortune 1000 type clients where risk profiles may be more expensive and more complex than other organizations.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Yaron Kinar with Jeffries. Your line is open.
Yaron Kinar: Thank you. Good morning, everybody. I guess my first question actually goes back to Elyse’s question earlier in the call. When we see guidance and we see some of the underlying pieces move a bit namely where we’re seeing higher expectation of cost-saves from restructuring, and at the same time we see the EPS and margin guidance essentially remain unchanged. I just want to make sure and again going back to Elyse’s question, is there a degree of conservatism in there or are you seeing some offsets potentially that are keeping you at kind of the unchanged EPS guidance?
Andrew Krasner: Yeah. I think it’s probably a little bit of both there. We are want to make sure that we are focused on delivering on our commitments for 2024. And we talked about some of the puts and takes that we expect to play through 2024 as well.
Yaron Kinar: Okay. And can you maybe elaborate a little bit on kind of what the variables would be that would get you to the upper end versus the lower end of that guidance? What the main variables that you foresee today are?
Andrew Krasner: If I think the biggest drive there is going to be organic growth, right, that will drive incremental operating leverage above maybe what our current expectations might be. So, I think that would be the biggest — the biggest factor there.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Mark Marcon with Baird. Your line is open.
Mark Marcon: Good morning. Thanks for taking my questions. Two questions. First, on the specialty lines, you said you’re basically generating 2x the growth of the general lines. So to what extent or how long do you think you can keep up that higher level of growth on the specialty lines? In other words, are they still relatively new in the market and this is truly differentiated and this can enable you to continue to gain a lot of share? Or did we have a boost because of the talent additions and things will settle out? So, how should we think about that from a longer term perspective?
Carl Hess: So part of this is strategic, right? In that we are focusing on these businesses that’s where we are continue to invest and we see a return there. We’ve been a specialist broker for nearly 200 years right? So, I would hurt you that it’s not likely to play itself out over the next couple. We’ve been doing this very successful, a very long time. The differentiator for us remember is that we’re actually organizing the business around this as opposed to on the side of someone’s desk and that enables us to focus on delivering enhanced value to superior analytics and client engagement that we think has a very attractive proposition. We don’t see that abating.
Mark Marcon: Great. And then can you just talk a little bit about the pension and retirement business? How much of a boost could we end up getting with the change in rates and the ability to derisk? And then to what extent does the — are you getting any additional engagements just in terms of the news that IBM made with regards to their shift in policy?
Carl Hess: So, I mean, we do see the macroeconomic environment and where the funded position of pension plans are as stimulating demand for buy-ins and buyouts as we’ve talked about that not just necessarily transacting on them with the analysis that goes into them and the preparation so that that we do think that is helpful for us and our clients going into 2024. We…
Andrew Krasner: And some of that will be episodic, right, as clients take on derisking transactions. So it’s not going to be any one pattern throughout the year.
Carl Hess: Yeah. And with respect to the client you were alluding to who is — I guess reopened their defined benefit plan. This is the same where we all come. There’s interest out there at least examining this on behalf of other plan sponsors who may be similarly situated. And we’re well poised and well positioned to help clients with that evaluation.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Maya Shields with Keefe, Bruyette & Woods. Your line is open.
Mark Shields: Great. Thanks. Two quick questions. First, Carl, you talk about having 12 verticals and I was hoping to sort of outline how much of the Fortune 1000 that 12 verticals represent.
Carl Hess: So, I don’t think that maps quite right. For instance, one of our industry verticals focuses around alternative capital which you have private equity, right? So this is necessarily a public equity strategy, nor is it confined to the large market, right? We see — the industry verticals stretch down to smaller organizations as well. So the answer is there’s significant coverage across corporate America with our industry verticals. Some of them are quite broad and some of them are quite focused on areas where we think we can deliver particular value, say hospitality.
Mark Shields: Okay. No, fair enough. Second and I’m not really sure how to ask this question, but you talked about how Adams brought back the staffing to full levels. Did we see full productivity from that group overall in either the fourth quarter of 2023 — over the course of 2023 year, is still some momentum for the this newest cadre to expand productivity or expand margin?
Carl Hess: Very much the latter. We do see. While we’re very happy with the progress both our existing colleagues and our newer colleagues have made. We do see increased productivity as being part of the picture for our last cohorts of hires. Yes.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Josh Shanker with Bank of America. Your line is open.
Joshua Shanker: Yeah. Thank you very much for putting me again. I just want to back a question Greg was asking at the beginning about the difference in the growth rates of the various segments. In aggregate, the growth seems pretty orderly, but by segments there seems to be a lot of volatility. Should we expect in the coming quarters that the segment organic growth rate will be volatile? That’s the right way to think about how your business operates? Or should we expect there to be a general run rate where there’s a trend from the previous quarter that might influence the next quarter?
