Willis Towers Watson PLC Thursday reported second-quarter organic revenue growth of 7%, as its top executive said the brokerage was doubling down on its specialization strategy and investment in talent.
The company also revised downward its adjusted operating margin and earnings per share targets for 2024, due to a sizeable decline in expected pension income that it had previously flagged. WTW revised its EPS outlook to a range of $15.40 to $17, compared with its previous target of $17.50 to $20.50.
Willis reported second-quarter revenue of $2.16 billion, up 6% from $2.03 billion in the prior-year period, and up 7% on an organic basis, which excludes the impact of currency exchange fluctuations.
Second-quarter net income totaled $96 million, down 16% from $114 million in the same period last year, according to the brokerage’s earnings statement released Thursday before the markets opened.
The solid organic revenue growth in the second quarter reflected “continued strong growth across our entire portfolio of businesses,” WTW CEO Carl Hess said Thursday on an earnings call with analysts.
However, headwinds from prior-year book sales, inflation and higher costs of strategic investment and hiring “limited our progress in driving margin expansion and earnings growth this quarter,” Mr. Hess said.
WTW’s risk and broking segment reported second-quarter revenue of $900 million, up 6% from $852 million in the prior-year period and also up 6% on an organic basis.
Corporate risk and broking generated solid organic revenue growth across all geographies, WTW said.
The growth was primarily driven by new business, continued improvement in client retention and strong contributions from specialty lines such as marine, financial solutions and large and complex property/casualty, CFO Andrew Krasner said.
“While rate increases continue to have a positive impact, they had a more moderate impact compared to the prior year,” Mr. Krasner said.
Interest income was up $9 million in the quarter due to higher rates, he said.
North America had a strong quarter due to new business and increased retention, while Europe also saw solid new business performance across most product lines, Mr. Krasner said.
International also contributed to organic growth, led by Latin America, he said.
Growth in WTW’s insurance consulting and technology business stemmed from software sales and increased project revenue.
The health, wealth and career segment reported revenue of $1.22 billion, up 5% from $1.16 billion in the year-earlier period, and also up 5% on an organic basis.
WTW has increased the total expected cost savings from its ongoing transformation program to $380 million of annualized savings through 2024, up from $360 million, Mr. Krasner said.
