WTW reports strong earnings

Willis Towers Watson has reported strong 4Q19 and FY19 earnings as total revenue rose 13% on 4Q18, to $US2.69bn ($A4bn), and 6% on FY18, to $US9.04bn.

Operating income was $US687m, or 25.5% of 4Q19 revenue – up 570bp. For FY19, operating income was $US1.33bn or 14.7% of FY19 revenue, up 520bp on FY18.

WTW CEO John Haley said: “For the year, WTW generated 5% organic revenue growth, which was broad-based across all our businesses, and 6% growth overall.

“In addition to our continued progress on the operational front, we successfully (bought) TRANZACT, which helped strengthen WTW’s overall growth profile significantly as total revenue increased 13% for the qtr.

TRANZACT was acquired on July 30, 2019, and operated as part of the benefits delivery & administration (BDA) operations. TRANZACT generated revenue of $US195m in 4Q18. The BDA segment had an operating margin of 52.4% up from 61.4%.

Haley said WTW would “remain focused” on executing its strategy in 2020 and confident in its “ability to continue delivering significant value for our clients, colleagues and shareholders”.

WTW reported net 4Q19 income attributable to WTW of $US544m – up 44%. FY19 net income was $US1.07bn – up 49.7%. Operating income margin improved by 570bp to 25.5% for the quarter and 520bp for the year.

Corporate risk & broking (CRB) revenue was up 7% to $US877m for the qtr, struck on “solid growth” across all markets.

North America continued to lead CRB, driven by new business generation. WTW said international, western Europe and the UK also contributed “meaningful growth”, fuelled by strong renewal book portfolio management and “new business wins”. Operating margin was up 90bp on 4Q18, to 30.3% .

Investment, risk & reinsurance (IRR) operations recorded revenue of $US314m, up 12% on 4Q18. WTW said all business lines of business contributed to organic growth.

Reinsurance and wholesale growth was driven by net new business growth and “favorable renewal factors” while insurance consulting and technology revenue grew from strong technology sales.

Max Matthiessen revenue increased because of overall growth in net commissions. Revenue growth in the investment businesses “was a result of client wins in the delegated business”. IRR recorded a 9.1% operating margin compared to 1.9% in 4Q18.

BDA recorded revenue of $US595m for the qtr – up 53%. WTW said BDA’s organic growth continued to be led by its expanded client base and increased demand for mid-market and large-market project work.