Willis Towers Watson Public Limited Company WTW delivered third-quarter 2024 adjusted earnings of $2.93 per share, which beat the Zacks Consensus Estimate by 9.3%.  The bottom line increased 30.8% year over year.

The insurer’s third-quarter results benefited from strong revenue contributions from the Health, Wealth & Career and Risk & Broking segments, as well as an expanded margin, partly offset by elevated expenses. Quarterly results also reflected the success of the Transformation program.

Shares gained 1.5% in the pre-market trading session to reflect the outperformance.

Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise

Willis Towers Watson Public Limited Company price-consensus-eps-surprise-chart | Willis Towers Watson Public Limited Company Quote

Operational Update

Willis Towers posted adjusted consolidated revenues of $2.3 billion, up 5.5% year over year on a reported basis. Revenues increased 6% on both organic basis and constant currency basis. The top line beat the Zacks Consensus Estimate by 0.4%.

The total costs of providing services increased 52.2% year over year to $3.1 billion due to impairments, higher salaries and benefits, and other operating expenses. Our estimate was $2.1 billion. 

Adjusted operating income was $414 million, which increased 18% year over year. Our estimate was $380.6 million. Margin expanded 190 basis points (bps) to 18.1%. Our estimate was 16.7%.

Adjusted EBITDA was $501 million, up 15% year over year. Our estimate was $470 million. Adjusted EBITDA margin expanded 180 bps to 20.6%. Our estimate was 20.7%.

Quarterly Segment Update

Health, Wealth & Career: Total revenues of $1.3 billion increased 4% year over year (4% increase on a constant currency and 3% increase on organic basis). The figure matched the Zacks Consensus Estimate as well as our estimate. 

Organic revenue growth in Health was driven by strong client retention, new local appointments and the continued expansion of Global Benefits Management client portfolio in International and Europe, along with increased brokerage income in North America. 

Wealth businesses’ organic revenue growth was driven by higher levels of Retirement work in Europe, an increase in the Investments business due to capital market improvements and growth in LifeSight solution.

Career recorded organic revenue growth from increased compensation survey sales and advisory services in Work & Rewards and product revenues in Employee Experience. 

Benefits Delivery & Outsourcing (BD&O) witnessed an organic revenue decline, attributable to moderating growth in Individual Marketplace and a stronger comparable in Outsourcing.

The operating margin was 24.7%, which expanded 90 bps from the prior-year quarter, primarily due to Transformation savings.

Risk & Broking: Total revenues of $940 million increased 10% year over year (10% increase in constant currency as well as on an organic basis) and beat our estimate of $906.3 million and the Zacks Consensus Estimate $936 million. 

Corporate Risk & Broking (CRB) recorded organic revenue growth, driven by higher levels of new business activity and strong client retention.

Insurance Consulting and Technology (ICT) witnessed organic revenue growth on strong software sales in Technology, partially offset by tempered demand for discretionary services in Consulting.

The operating margin increased 240 bps from the prior-year quarter to 18.1%, primarily due to operating leverage, driven by organic revenue growth and disciplined expense management, as well as Transformation savings.