WTW moving focus as it smashes targets

Insurance brokerage and risk units outperform – company bolsters cost-savings targets

WTW moving focus as it smashes targets

Insurance News

By Josh Recamara

Willis Towers Watson Plc is shifting its focus to mergers and acquisitions (M&A) as part of its next growth phase, following the achievement of key earnings and revenue targets in 2024.

The company reported fourth-quarter adjusted earnings of US$8.13 per share, exceeding the US$8.03 average estimate from analysts surveyed by Bloomberg. For the full year, adjusted earnings reached US$16.93 per share, aligning with expectations and the firm’s internal targets.

WTW chief executive officer Carl Hess stated that, after three years of prioritizing core strategies over acquisitions, WTW is now seeking “additional capabilities outside the organization that could be value creative for our clients and our shareholders.”

Since Hess took over as CEO in January 2022, WTW’s stock has increased by 39%, outperforming an industry benchmark by approximately one percentage point.

While WTW remains open to larger deals, Hess indicated the company would only pursue acquisitions with a strong likelihood of completion. In 2021, WTW and Aon Plc abandoned a proposed merger after failing to gain regulatory approval.

WTW is focusing on smaller acquisitions that can be integrated into the firm’s existing operations and evaluating opportunities in the middle-market segment.

For the fourth quarter of 2024, WTW reported revenue of US$3.04 billion, a 4% increase from the prior year, in line with Wall Street estimates. Adjusted operating margin stood at 36.1%, above the estimated 35%.

Full-year revenue increased by 5% to US$9.9 billion, with organic revenue growth of 5% for both the quarter and the year.

Hess described WTW’s position entering 2025 as one of “considerable momentum,” following the completion of the company’s Grow, Simplify and Transform strategy. The firm now aims to accelerate performance, improve efficiency and optimize its portfolio to generate additional value for customers and shareholders.

Industry outlook and future targets

The company’s performance underscores good news for the industry as a whole - a broader trend of businesses bolstering their insurance coverage to mitigate financial risks. With extreme weather events, regulatory shifts, and geopolitical uncertainties on the rise, corporate demand for risk advisory services has intensified.

“WTW delivered a strong second quarter, generating significant EPS growth and margin expansion through robust organic growth, operating efficiency, and the continued execution of our transformation program,” said Carl Hess, CEO of WTW, in an earlier statement on the company’s long-term financial strategy.

Following its strong performance in 2024, WTW has revised its full-year expectations. The company now anticipates an adjusted operating margin between 23.0%-23.5% and adjusted diluted earnings per share ranging from US$16.00 to US$17.00. Additionally, WTW has raised its annual cost savings target to US$450 million.

WTW fourth quarter

Key Metrics

Q4-24

Q4-23

Y/Y Change

Revenue1

US$3,035

US$2,914

Reported 4% | CC 5% | Organic 5%

Income from Operations

US$901

US$779

16%

Operating Margin %

29.7%

26.7%

300 bps

Adjusted Operating Income

US$1,096

US$998

10%

Adjusted Operating Margin %

36.1%

34.2%

190 bps

Net Income

US$1,248

US$623

100%

Adjusted Net Income

US$827

US$775

7%

Diluted EPS

US$12.25

US$5.97

105%

Adjusted Diluted EPS

US$8.13

US$7.44

9%

 

 

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