WTW announces rise in organic revenue to $1,97bn in Q3 2021

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Global insurance and reinsurance broker, Willis Towers Watson (WTW), has announced a 4 percent or 7 percent on an organic basis rise in revenue to $1.97 billion for the third quarter of 2021, as net income improved year-on-year by a huge 646% to $903 million.

willis towers watsonFor the first nine months of the year, WTW’s revenue and organic revenue increased by 6 percent to $6.3 billion, while net income jumped by 250 percent when compared with the prior year period, to $1.8 billion.

At the same time, income from operations for Q3 and 9M 2021 totalled $1.1 billion and $1.5 billion respectively, representing year-on-year growth for both periods.

The broker notes that all GAAP profitability metrics include the benefit of the $1 billion it received from rival Aon following the termination of their proposed combination.

Within its Investment, Risk & Reinsurance (IRR) segment, revenue fell by 22 percent in Q3 to $172 million. WTW explains that the IRR revenue excludes the reinsurance line of business which has been reported as discontinued, following the agreement to sell the treaty operations of Willis Re to Gallagher.

However, on an organic basis revenue was up 10 percent at the IRR division, attributable to advisory-related fees that resulted in growth in both the firm’s Insurance Consulting and Technology business, and Investment business.

For the quarter, the IRR unit had an operating margin of 12.9 percent as compared to 9.3 percent for the same period in 2020.

The Corporate Risk & Broking (CRB) division saw its revenue increase by 7 percent in Q3 to $697 million, and by 6 percent on an organic basis, led by new business across M&A, FINEX, Construction and Aerospace in North America.

The CRB segment has reported an operating margin of 16.3 percent for Q3 2021, compared with 12.5 percent for the prior year period.

In Human Capital & Benefits (HCB), revenue improved by 7 percent, or 6 percent on an organic basis to $852 million. WTW attributes the organic expansion to growth in Talent and Rewards as a result of strong market demand for rewards advisory work alongside talent and compensation products.

For the third quarter of 2021, the HCB segment had an operating margin of 28.4 percent, compared with 26.3 percent a year earlier.

Revenue growth was also evident in the Benefits Delivery & Administration (BDA) segment, which saw revenue increase by 7 percent to $242 million. The BDA segment had an operating margin of -7.9 percent, as compared to -5.3 percent for the prior-year third quarter.

Commenting on the pandemic, WTW explains that while COVID-19 had a negative impact on revenue growth, particularly in businesses that are discretionary by nature, through 2020 and Q1 2021, it has seen greater demand for these services in both Q2 and Q3, which served to boost revenue growth.

Promisingly, WTW expects this trend to persist for the remainder of the year with some variability owing to further disruptions to the supply chain, workforce availability, vaccination rates and further social-distancing orders in jurisdictions where it operates.

For the full year 2021, WTW expects to achieve organic revenue growth of roughly 6percent, and an adjusted operating margin of between 19.5 percent and 20 percent on a continuing operations basis.

John Haley, WTW’s Chief Executive Officer (CEO), commented: “I am proud of the Company’s financial results for the third quarter and year to date. Our third quarter results are highlighted by solid revenue growth, continued margin expansion, and strong adjusted EPS growth.

“During the third quarter, Willis Towers Watson continued to evolve our leadership, structure and portfolio of businesses. We introduced our new Global Leadership Team (GLT) and our grow, simplify, and transform strategy.

We have significant core strengths which we believe will help guide our strategy that is designed to generate value for all our stakeholders, external and internal, going forward.”

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