WTW posts higher revenue, mulls return to reinsurance

Willis Towers Watson PLC on Thursday reported third-quarter revenue of $2.17 billion, an 11% increase over the same period last year and up 9% on an organic basis, helped by strong growth in its risk and broking business.

Net income fell by 28% to $139 million, as higher revenue was offset by higher costs related to its transformation program and restructuring. The brokerage incurred $120 million of restructuring/transformation-related charges in the quarter.

WTW’s top executives said on an earnings call with analysts that a move back into the reinsurance broking business might be in the cards.

“Reinsurance is a natural fit with retail broking businesses and many of our peers operate these businesses,” CEO Carl Hess said on the call.

“We did so successfully as well and, with our noncompete with AJG soon expiring, we are able to add reinsurance to the universe of capital allocations that we consider.”

WTW sold its reinsurance business to Arthur J. Gallagher & Co. in late 2021.

WTW Chief Financial Officer Andrew Krasner said: “It’s something that if we decide to act upon, we would expect to do so in a very thoughtful manner.”

WTW’s “solid result” in the third quarter reflects the strength of its global client model and the impact of its investments in talent and technology, including the growing productivity of new hires, Mr. Hess said.

Its risk and broking operation reported $855 million in revenue for the quarter, a 12% increase from the prior-year period and up 10% on an organic basis.

Corporate risk and broking generated solid organic revenue growth driven by strong new business, improved client retention and rate increases, WTW said in its earnings statement.

WTW continued to see a strong return on its investment in specialty lines globally, Mr. Krasner said.

“The strongest growth came from our facultative, financial solutions, natural resources, surety and construction lines of business,” he said.

Europe saw double-digit growth in a number of countries, led by WTW’s P&C retail and direct business as well as construction, aerospace and financial solutions.

International also contributed to strong organic growth, led by Latin America, Mr. Krasner said.

North America benefited from stronger business and increased client retention across most lines of business, despite headwinds in its mergers and acquisitions business and from the impact of book of business activity, he said.

Its insurance consulting and technology business saw 9% organic revenue growth driven by software sales and increased project revenue.

Its health, wealth and career segment reported $1.28 billion in revenue for the quarter, up 10% overall and 9% on an organic basis.

WTW expects to deliver mid-single-digit organic revenue growth for all of 2023.