‘Both business opportunities and risk’ increasing: Willis CEO

Willis Towers Watson reported flat revenue for the second quarter Thursday, but organic revenue grew 5%, driven by solid growth in its risk and broking business.

The brokerage is seeing a moderate headwind from softening rates, but demand for its consulting and risk services continues to grow in the uncertain macroeconomic environment, top executives said.

The company continues to expect mid-single-digit organic revenue growth for the year.

Willis reported revenue of $2.26 billion in the quarter, down slightly from the same period last year, due to the sale of Tranzact, a direct-to-consumer health care business.

Second-quarter net income more than doubled to $332 million, from $142 million in the same period last year, Willis said in its earnings release.

“The pace of innovation and continued challenges in global trade and inflationary and geopolitical issues are elevating both business opportunities and risk,” CEO Carl Hess said on an earnings call with analysts.

Willis’ risk and broking segment reported second-quarter revenue of $1.05 billion, up 7% from the prior-year period and up 6% on an organic basis.

Corporate risk and broking generated 6% organic revenue growth and 7% overall growth driven by higher levels of new business activity and strong client retention globally, Willis said.

CRB’s top-line performance marked its 10th consecutive quarter of high-single-digit growth, excluding the effects of gains on sales, transactional activity and interest income, Mr. Hess said.

The brokerage’s specialization strategy and technical expertise are driving growth, he said.

Its construction specialty business is seeing strong results from sizable placements for data centers, an area forecast to see significant growth, he said.

CRB’s growth was broad-based across all regions, driven by sustained client retention in the mid-90s and strong business generation around the world, said Chief Financial Officer Andrew Krasner.

“The strong growth we have in our specialty businesses continues to outpace the rest of CRB, growing at double digits for the quarter,” Lucy Clarke, president of risk and broking, said on the call.

Rates are softening across most lines, which Willis anticipated after years of market hardening, Ms. Clarke said. “This was expected. We planned for it,” she said.

Rate has been a “moderate headwind,” but “we do not rely on pricing to drive our organic growth,” Ms. Clarke said.

Revenue in Willis’ insurance consulting and technology business was flat for the quarter as clients managed spending more cautiously amid ongoing economic uncertainty.

The health, wealth and career segment recorded revenue of $1.18 billion, down 6% from the year-earlier period, due to the sale of Tranzact, but up 4% on an organic basis.

“We’re seeing demand remain strong for our global benefits management, for pensions, for outsourcing where we won many notable new appointments,” Mr. Hess said.