WTW unveils Q2 2022 earnings report

Company hit by a 39% slide in net income

WTW unveils Q2 2022 earnings report

Insurance News

By Gia Snape

WTW, formerly known as Willis Towers Watson, has posted 3% organic revenue growth for the second quarter of 2022, though total revenues slid 3% year-on-year to $2.03 billion. The insurance broking giant unveiled its Q2 earnings report on Thursday.

WTW’s net income, at $114 million, declined 39% from $186 million in the same period last year. Income from operations was $137 million in Q2, 19% lower compared to Q2 of the prior year.

WTW had set a target of more than $10 billion in revenues by end-2024, by delivering growth in the mid-single digit range or greater. In its earnings call, WTW said that despite difficult economic conditions, the company sees plenty of opportunities to provide value and services to its clients.

"We continued to build momentum and execute on our strategic priorities in the second quarter, delivering results that were in line with our expectations,” Carl Hess, chief executive officer of WTW, said in a statement.

“We are tackling our transformation with urgency and are raising our target for run-rate savings from $30 million to over $80 million in 2022 and expect to achieve in excess of $300 million by the end of 2024. We also continued to return capital to shareholders, repurchasing $471 million of WTW shares this quarter.”

Health, wealth and career

WTW’s HWC segment posted $1.16 billion in revenue for the second quarter of 2022, a 2% decrease from the same period last year. The health business led organic growth, with gains recorded in connection to book-of-business settlements.

WTW said further contributors to growth in this segment were additional consulting work in North America and the continued expansion of WTW’s local portfolios, as well as global benefits management appointments outside North America.

Benefits delivery and outsourcing revenue also increased, led by WTW’s individual marketplace business with growth in Medicare Advantage sales. Career likewise posted strong growth driven by increased project activity, but wealth revenue declined due to headwinds in performance fees received in the prior year.

Operating margins in the HWC segment increased 10 basis points year-on-year to 18.7%, reflecting improved operating leverage, WTW said.

Risk and broking

WTW’s R&B segment recorded revenue of $852 million, down 4% from $885 million in the Q2 of the prior year. Operating income also shrank 18% to $168 million in Q2 2022, versus $204 million in the same period last year.

Insurance consulting and technology grew on an organic basis due to new software sales and increased advisory work. Corporate risk and broking generated revenue growth across all regions, primarily driven by WTW’s global lines of business, notably from new business in aerospace, natural resources and FINEX.

WTW said its book-of-business settlement activity was largely in line with last year and “did not meaningfully affect” corporate risk and broking’s organic growth rate.

Operating margins in the R&B segment was at 19.7%, down 340 basis points year-on-year, mainly due to “ongoing investments in talent,” WTW reported.

“Looking forward, the progress we have made investing in new solutions and talent positions us well to accelerate our growth in the second half of 2022, and we expect our business to remain resilient in this unsettled economic environment,” Hess said.

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