Top insurance brokers, No. 4: Willis Towers Watson PLC

2024 brokerage revenue: $9.74B
Percent increase: 4.7%

Willis Towers Watson PLC’s organic growth improved again in 2024, driven by solid growth in its risk and broking business as its specialization strategy continued to pay off.

The brokerage sold Tranzact, its direct-to-consumer insurance distribution business, to private-equity investors and confirmed its return to the treaty reinsurance broking market through a joint venture with Bain Capital LP.

The $632.4 million sale of Tranzact, which closed in January this year, allowed the company to reinvest some of the proceeds into higher-growth areas of its portfolio, said Carl Hess, CEO of WTW. “Our highest priority for that is our broking businesses,” he said.

The brokerage’s specialization strategy has been a key driver of growth over the past several years, Mr. Hess said.

“The specialized parts of our business — what we call our global lines of business — are growing far faster than the rest of the book, typically growing 150% to 200% as fast as the remaining book,” he said.

The brokerage continues to see strong growth in aviation, aerospace, natural resources and construction, Mr. Hess said. “In financial lines, we continue to grow, but rates have been no help,” he said.

WTW’s 2024 brokerage revenue of $9.74 billion marked a 4.7% increase over the prior year. The company retained its position at No. 4 in Business Insurance’s ranking of the world’s largest brokers.

The brokerage reported 5% organic growth last year, with 8% organic growth in its risk and broking business. That followed organic revenue growth of 8% in 2023, with 10% growth in risk and broking. In this year’s first quarter, WTW reported 5% organic growth, with 7% organic growth in risk and broking.

Growth has improved within WTW’s risk and broking segment, particularly in its core retail brokerage business, said Elyse Greenspan, managing director, equity research, insurance, at Wells Fargo Securities LLC in New York.

“The bigger issue for them has been their overall organic, to a certain extent, over the last couple of quarters, has just been impacted by a slowdown within health, wealth and career, especially within the career business,” Ms. Greenspan said.

Excluding Tranzact, WTW’s business mix shifted, with benefits, HR and investment consulting accounting for 55% of revenue in 2024 and risk and broking 45%, based on the company’s 2025 first-quarter earnings report.

“That dial should continue to shift to broking over time, through a combination of organic broking outgrowing consulting, as well as M&A,” Mr. Hess said.

Over the past five years, brokers Arthur J. Gallagher & Co., Brown & Brown Inc. and, to a lesser extent, Marsh & McLennan Cos. Inc., have focused their capital allocation on acquisitions, said C. Gregory Peters, managing director-equity research, at St. Petersburg, Florida-based Raymond James & Associates Inc.

“Willis Towers Watson has been a laggard there. They’ve publicly stated that they want to participate in inorganic opportunities on a selective basis, and I think longer-term they aspire to have a revenue mix that’s more 50/50 risk and broking versus health, wealth and career,” he said.

WTW did not make any major acquisitions in 2024 but earlier this year bought two trade credit insurance brokerages, which “fit really nicely into the specialization strategy,” Mr. Hess said.

“It’s not lost on us that while we’ve done a pretty good job of returning to growth over the last few years — our growth numbers look quite good compared to others — others’ total growth rates outstrip us because of acquisitions,” Mr. Hess said.

The middle market is one area of opportunity for M&A. “The U.S. mid-market is a place where a lot of the economic growth of America takes place and as we look for where our growth might take place in the future, it’s certainly something we’re considering,” he said.

Willis holds a minority stake in the reinsurance joint venture with Bain Capital but over time has the right to take on full ownership, Mr. Hess said. It may take several years before the startup becomes a “significant contributor,” he said. The brokerage sold its reinsurance business to Gallagher in 2021.

Among executive changes, Pat Donnelly, former president of Marsh Specialty and global placement, recently joined Willis as head of risk and broking North America, replacing Michael Chang, who left in December. Mr. Donnelly reports to Lucy Clarke, president of risk and broking.