Willis Towers Watson Plc Q1 FY2025 earnings call

• Delivered 5% organic growth, 100 basis points of adjusted operating margin expansion, and $3.13 of adjusted EPS in Q1. - Strengths in risk and broking include specialization strategy enabling tailored counsel, e.g., Tariff Guard endorsement for natural resources companies. - In HWC, recurring revenue streams provide stability, with wins like securing global benefits management work for a global appliance manufacturer. - Focus on efficiency through technology, e.g., Liberty Specialty Markets using Neuron digital trading platform. - M&A activity with purchase of Global Commercial Credit, a specialist broker in trade credit and political risk insurance.

Health, wealth, and career (HWC) revenue grew 3% year over year. Health business grew 6%, with strong client retention and new business wins, including double-digit increases outside North America. Wealth revenue grew 2%, driven by modest growth in retirement and high single-digit growth in investments. Career had 1% organic revenue growth, tempered by postponed projects due to economic uncertainty. BD and O grew 1%, benefiting from increased project and core administration work in Europe. Risk and broking (R&B) had 7% organic revenue growth in Q1, with corporate risk and broking growing 8% or 9% excluding certain factors, and strong new business generation in specialty lines across regions. HWC operating margin was 26.7% in Q4, up 160 basis points year over year. R&B operating margin was 22% for the quarter, up 120 basis points year over year.

• Expect mid-single-digit organic revenue growth for HWC full year. - Anticipate mid to high single-digit growth for R&B full year. - Continue to expect 100 basis points of average annual adjusted operating margin expansion in R&B over the next three years. - Plan to allocate approximately $1.5 billion to share repurchases in 2025 subject to market conditions.

• Macroeconomic volatility and geopolitical uncertainty creating headwinds in certain HWC businesses, e.g., North America career businesses. - Potential impact on investments business from capital market conditions, though fees are not entirely tied to assets under management. - Foreign currency, lower interest income, and absence of gain on sale activity acting as headwinds to R&B operating margin.

Q: Give additional color on mid single digit growth expectation for HWC and R&B given economic challenges?

A: Carl Hess and Andrew Krasner discussed HWC's resilient businesses with recurring work and strong demand for offerings, while Carl Hess and Lucy Clark highlighted R&B's specialization strategy and ability to help clients manage risks, supporting mid to high single-digit growth expectations.

Q: Thoughts on M&A and macro environment impact on Willis?

A: Carl Hess talked about M&A focus on fitting culturally, improving business mix, etc., and Willis is well-positioned to weather macroeconomic uncertainty with a history of thriving under various market conditions.

Q: Carrier competition and implications for Willis' businesses?

A: Lucy Clark discussed improving pricing in most lines, with Willis well-positioned due to its business mix of commission and fee, and property and casualty exposure.

Q: Size of transactional business and share buyback?

A: Lucy Clark declined to comment on M&A business size, and Andrew Krasner mentioned focus on $1.5 billion share buyback commitment subject to market conditions.

Q: Impact of project activity timing on segments and visibility?

A: Carl Hess and Julie Gebauer discussed project activity in BD and O and wealth, with expectations of growth acceleration and confidence in capturing project work despite initial delays.