UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to ___________
Commission File Number: 001-16503
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
Ireland
(Jurisdiction of
incorporation or organization)
98-0352587
(I.R.S. Employer
Identification No.)
c/o Willis Group Limited
51 Lime Street, London EC3M 7DQ, England
(Address of principal executive offices)
(011) 44-20-3124-6000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Ordinary Shares, nominal value $0.000304635 per share
WTW
NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of ‘large accelerated filer’, ‘accelerated filer’, ‘smaller reporting company’, and ‘emerging growth company’ in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 21, 2025, there were outstanding 99,149,791 ordinary shares, nominal value $0.000304635 per share, of the registrant.
INDEX TO FORM 10-Q
For the Three Months Ended March 31, 2025
Page
Certain Definitions
3
Disclaimer Regarding Forward-looking Statements
4
PART I. FINANCIAL INFORMATION
7
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2025 and 2024
Condensed Consolidated Balance Sheets - March 31, 2025 and December 31, 2024
8
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2025 and 2024
9
Condensed Consolidated Statements of Changes in Equity - Three Months Ended March 31, 2025 and 2024
10
Notes to the Condensed Consolidated Financial Statements
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
27
Item 3. Quantitative and Qualitative Disclosures About Market Risk
44
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
46
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
47
Item 6. Exhibits
48
Signatures
49
2
The following definitions apply throughout this quarterly report unless the context requires otherwise:
‘We’, ‘Us’, ‘Company’, ‘Willis Towers Watson’, ‘Our’, ‘Willis Towers Watson plc’ or ‘WTW’
Willis Towers Watson Public Limited Company, a company organized under the laws of Ireland, and its subsidiaries
‘shares’
The ordinary shares of Willis Towers Watson Public Limited Company, nominal value $0.000304635 per share
‘TRANZACT’
TZ Holdings, Inc. and its subsidiaries, doing business as TRANZACT. The Company sold TRANZACT on December 31, 2024.
‘U.S.’
United States
‘U.K.’
United Kingdom
‘E.U.’
European Union or European Union 27 (the number of member countries following the United Kingdom’s exit)
‘U.S. GAAP’
United States Generally Accepted Accounting Principles
‘FASB’
Financial Accounting Standards Board
‘ASC’
Accounting Standards Codification
‘ASU’
Accounting Standards Update
‘SEC’
United States Securities and Exchange Commission
‘EBITDA’
Earnings before Interest, Taxes, Depreciation and Amortization
We have included in this document ‘forward-looking statements’ within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, that address activities, events or developments that we expect or anticipate may occur in the future, including such things as: our outlook; the potential impact of natural or man-made disasters like health pandemics and other world health crises; future capital expenditures; ongoing working capital efforts; future share repurchases; financial results (including our revenue, costs or margins) and the impact of changes to tax laws on our financial results; existing and evolving business strategies including those related to acquisition and disposition; demand for our services and competitive strengths; strategic goals; the benefits of new initiatives; growth of our business and operations; the sustained health of our product, service, transaction, client, and talent assessment and management pipelines; our ability to successfully manage ongoing leadership, organizational and technology changes, including investments in improving systems and processes; our ability to implement and realize anticipated benefits of any cost-savings initiatives generated from our now-completed multi-year operational transformation program or other expense savings initiatives; our recognition of future impairment charges; and plans and references to future successes, including our future financial and operating results, short-term and long-term financial goals, plans, objectives, expectations and intentions, including with respect to free cash flow generation, adjusted net revenue, adjusted operating margin and adjusted earnings per share, are forward-looking statements. Also, when we use words such as ‘may’, ‘will’, ‘would’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘plan’, ‘continues’, ‘seek’, ‘target’, ‘goal’, ‘focus’, ‘probably’, or similar expressions, we are making forward-looking statements. Such statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. All forward-looking disclosure is speculative by its nature.
There are important risks, uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including the following:
5
The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For more information, please see Part I, Item 1A in our Annual Report on Form 10-K, and our subsequent filings with the SEC. Copies are available online at http://www.sec.gov or www.wtwco.com.
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report on Form 10-Q, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved.
Our forward-looking statements speak only as of the date made and we will not update these forward-looking statements unless the securities laws require us to do so. With regard to these risks, uncertainties and assumptions, the forward-looking events discussed in this document may not occur, and we caution you against unduly relying on these forward-looking statements.
6
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Statements of Comprehensive Income
(In millions of U.S. dollars, except per share data)
(Unaudited)
Three Months Ended March 31,
2025
2024
Revenue
$
2,223
2,341
Costs of providing services
Salaries and benefits
1,324
1,342
Other operating expenses
365
457
Depreciation
54
59
Amortization
60
Restructuring costs
—
18
Transaction and transformation
125
Total costs of providing services
1,791
2,061
Income from operations
432
280
Interest expense
(65
)
(64
Other (loss)/income, net
26
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
303
242
Provision for income taxes
(48
INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES
238
194
Interests in earnings of associates, net of tax
1
NET INCOME
239
Income attributable to non-controlling interests
(4
NET INCOME ATTRIBUTABLE TO WTW
235
190
EARNINGS PER SHARE
Basic earnings per share
2.34
1.84
Diluted earnings per share
2.33
1.83
Comprehensive income before non-controlling interests
462
145
Comprehensive income attributable to non-controlling interests
Comprehensive income attributable to WTW
458
141
See accompanying notes to the condensed consolidated financial statements
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
March 31, 2025
December 31, 2024
ASSETS
Cash and cash equivalents
1,507
1,890
Fiduciary assets
10,293
9,504
Accounts receivable, net
2,366
2,494
Prepaid and other current assets
1,295
1,217
Total current assets
15,461
15,105
Fixed assets, net
667
661
Goodwill
8,841
8,799
Other intangible assets, net
1,255
Right-of-use assets
487
485
Pension benefits assets
550
530
Other non-current assets
803
806
Total non-current assets
12,603
12,576
TOTAL ASSETS
28,064
27,681
LIABILITIES AND EQUITY
Fiduciary liabilities
Deferred revenue and accrued expenses
1,499
2,211
Current debt
549
Current lease liabilities
120
118
Other current liabilities
923
765
Total current liabilities
13,384
12,598
Long-term debt
4,761
5,309
Liability for pension benefits
552
615
Provision for liabilities
359
341
Long-term lease liabilities
498
502
Other non-current liabilities
296
299
Total non-current liabilities
6,466
7,066
TOTAL LIABILITIES
19,850
19,664
COMMITMENTS AND CONTINGENCIES
EQUITY (i)
Additional paid-in capital
11,017
10,989
Retained earnings
51
109
Accumulated other comprehensive loss, net of tax
(2,935
(3,158
Total WTW shareholders’ equity
8,133
7,940
Non-controlling interests
81
77
Total equity
8,214
8,017
TOTAL LIABILITIES AND EQUITY
Condensed Consolidated Statements of Cash Flows
(In millions of U.S. dollars)
CASH FLOWS (USED IN)/FROM OPERATING ACTIVITIES
Adjustments to reconcile net income to total net cash from operating activities:
Non-cash restructuring charges
Non-cash lease expense
25
Net periodic cost/(benefit) of defined benefit pension plans
88
Provision for doubtful receivables from clients
Benefit from deferred income taxes
(23
(9
Share-based compensation
37
24
Gain on disposal of operations
(14
Non-cash foreign exchange loss/(gain)
(1
Other, net
Changes in operating assets and liabilities, net of effects from purchase of subsidiaries:
Accounts receivable
162
113
Other assets
(53
Other liabilities
(691
(426
Provisions
16
13
Net cash (used in)/from operating activities
(35
CASH FLOWS USED IN INVESTING ACTIVITIES
Additions to fixed assets and software
(51
(60
Acquisitions of operations, net of cash acquired
(15
(Purchase)/sale of investments
(32
Net cash used in investing activities
(84
(74
CASH FLOWS FROM FINANCING ACTIVITIES
Senior notes issued
746
Debt issuance costs
(7
Repayments of debt
Repurchase of shares
(200
(101
Net proceeds from fiduciary funds held for clients
315
1,011
Cash paid for employee taxes on withholding shares
(2
(5
Dividends paid
(88
(86
Acquisitions of and dividends paid to non-controlling interests
Net cash from financing activities
1,556
(DECREASE)/INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (i)
(95
1,506
Effect of exchange rate changes on cash, cash equivalents and restricted cash
80
(47
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD (i)
4,998
3,792
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (i)
4,983
5,251
Condensed Consolidated Statements of Changes in Equity
(In millions of U.S. dollars and number of shares in thousands)
Shares outstanding
AOCL (i)
Balance as of December 31, 2023
102,538
10,910
1,466
(2,856
9,520
73
9,593
Shares repurchased
(374
Net income
Dividends declared ($0.88 per share)
(91
Dividends attributable to non-controlling interests
Other comprehensive loss
(49
Issuance of shares under employee stock compensation plans
Share-based compensation and net settlements
Additional non-controlling interests (ii)
Foreign currency translation
Balance as of March 31, 2024
102,213
10,930
1,464
(2,905
9,489
79
9,568
Balance as of December 31, 2024
99,806
(607
Dividends declared ($0.92 per share)
(93
Other comprehensive income
223
12
33
Balance as of March 31, 2025
99,211
(Tabular amounts in millions of U.S. dollars, except per share data)
Note 1 — Nature of Operations
Willis Towers Watson Public Limited Company is a leading global advisory, broking and solutions company that provides data-driven, insight-led solutions in the areas of people, risk and capital. The Company has approximately 49,000 colleagues serving more than 140 countries and markets.
We design and deliver solutions that manage risk, optimize benefits, cultivate talent and expand the power of capital to protect and strengthen institutions and individuals.
Our risk control services include strategic risk consulting (including providing actuarial analysis), a variety of due diligence services, the provision of practical on-site risk control services (such as health and safety or property loss control consulting), and analytical and advisory services (such as hazard modeling and climate risk quantification). We also assist our clients with managing incidents or crises when they occur. These services include contingency planning, security audits and product tampering plans.
We help our clients enhance their business performance by delivering consulting services, technology and solutions that help them anticipate, identify and capitalize on emerging opportunities in human capital management, as well as offer investment advice to help them develop disciplined and efficient strategies to meet their investment goals.
As an insurance broker, we act as an intermediary between our clients and insurance carriers by advising on their risk management requirements, helping them to determine the best means of managing risk and negotiating and placing insurance with insurance carriers through our global distribution network.
We operate a private Medicare marketplace in the U.S. through which, along with our active employee marketplace, we help our clients move to a more sustainable economic model by capping and controlling the costs associated with healthcare benefits.
We are not an insurance company, and therefore we do not underwrite insurable risks for our own account. We help sharpen strategies, enhance organizational resilience, motivate workforces and maximize performance to uncover opportunities for sustainable success.
Note 2 — Basis of Presentation and Recent Accounting Pronouncements
Basis of Presentation
The accompanying unaudited quarterly condensed consolidated financial statements of WTW and our subsidiaries are presented in accordance with the rules and regulations of the SEC for quarterly reports on Form 10-Q and therefore certain footnote disclosures have been condensed or omitted from these financial statements as they are not required for interim reporting under U.S. GAAP. In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial statements and results for the interim periods. Certain prior-period amounts have been reclassified to conform to the current-period presentation. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements should be read together with the Company’s Annual Report on Form 10-K, filed with the SEC on February 25, 2025, and may be accessed via EDGAR on the SEC’s web site at www.sec.gov.
The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results that can be expected for the entire year. The Company experiences seasonal fluctuations of its revenue. Revenue is typically higher during the Company’s first and fourth quarters due primarily to the timing of broking-related activities. The results reflect certain estimates and assumptions made by management, including those estimates used in calculating acquisition consideration and fair value of tangible and intangible assets and acquisition-related liabilities, professional liability claims, estimated bonuses, valuation of billed and unbilled receivables, and anticipated tax liabilities that affect the amounts reported in the condensed consolidated financial statements and related notes.
Recent Accounting Pronouncements
Not Yet Adopted
In March 2024, the SEC adopted final rules on the enhancement and standardization of climate-related disclosures for investors (the ‘SEC Climate Rules’). The SEC Climate Rules would require disclosure of certain climate-related information, including in the notes to the Company’s financial statements, in registration statements and annual reports on Form 10-K. Following a number of legal challenges, the SEC voluntarily stayed the SEC Climate Rules pending the completion of judicial review of such consolidated
petitions to avoid regulatory uncertainty for companies subject to the SEC Climate Rules. Although the litigation remains pending, in March 2025, the SEC voted to end its defense of the SEC Climate Rules. The Company is monitoring the outcome of the litigation.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expense, which is intended to provide transparency about the components of expenses included in the income statement. This ASU requires public companies to disclose additional information about certain expenses in the notes to the financial statements on a quarterly and annual basis, including purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion for each income statement line item that contains those expenses. The ASU requires a new tabular disclosure format that centralizes expense information and additional qualitative disclosure. The guidance does not change the existing income statement presentation. The annual requirements for this ASU become effective with the Company's 2027 Form 10-K, and for its interim periods beginning on January 1, 2028. Early adoption is permitted. The guidance is to be applied prospectively, with the option for retrospective application. The Company currently does not plan to early-adopt this ASU and is assessing the expected impact on its condensed consolidated financial statements.
Adopted
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information within the income tax rate reconciliation and income taxes paid disclosures. It also includes certain other amendments intended to improve the effectiveness of income tax disclosures. Specifically, this ASU requires a tabular income tax rate reconciliation using both percentages and amounts disaggregated into specific categories with certain reconciling items at or above 5% of the statutory tax, further disaggregated by its nature and/or jurisdiction. Additionally, income taxes paid will be required to be presented by federal, state, local and foreign jurisdictions, including amounts paid to individual jurisdictions representing 5% or more of the total income taxes paid. This ASU became effective for the Company on January 1, 2025, at which time it was adopted. The Company will include the required disclosures within its 2025 Annual Report on Form 10-K.
Other Legislation
Pillar Two
On October 8, 2021, the Organisation for Economic Co-operation and Development (‘OECD’) announced an international agreement with more than 140 countries to implement a two-pillar solution to address tax challenges arising from the digitalization of the economy. The agreement introduced rules that would result in the reallocation of certain taxing rights over multinational companies from their home countries to the markets where they have business activities and earn profits, regardless of physical presence (‘Pillar One’) and introduced a global corporate minimum tax of 15% for certain large multinational companies starting in 2024 (‘Pillar Two’). On December 20, 2021, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting released the Model Global Anti-Base Erosion (‘GloBE’) rules (the ‘OECD Model Rules’) under Pillar Two. On December 12, 2022, E.U. member states reached an agreement to implement Pillar Two and this agreement requires E.U. member states to enact domestic legislation to put Pillar Two into effect. In 2023, many E.U. countries enacted the necessary legislation (based on the OECD Model Rules) to implement Pillar Two in 2024. Ireland, in particular, enacted Pillar Two legislation by signing Finance (No. 2) Bill 2023 into law in December 2023. Other countries and territories have indicated they will introduce Pillar Two legislation beginning in 2025. The Pillar Two minimum tax is treated as a period cost beginning in 2024 and does not have a material impact on the Company's financial results of operations for the periods presented. The Company continues to monitor evolving tax legislation as well as additional guidance to enacted legislation in the jurisdictions in which we operate.
Note 3 — Acquisitions and Divestitures
The Company had no material acquisitions or divestitures, but had disposal price and other adjustments to the prior-year sale of TRANZACT resulting in a gain of $14 million for the three months ended March 31, 2025.
Note 4 — Revenue
Disaggregation of Revenue
The Company reports revenue by segment in Note 5 — Segment Information. The following table presents revenue by service offering and segment, as well as a reconciliation to total revenue for the three months ended March 31, 2025 and 2024. Along with reimbursable expenses and other, total revenue by service offering represents our revenue from customer contracts.
HWC
R&B
Corporate (i)
Total
Broking
146
335
790
742
936
1,077
Consulting
679
662
119
104
798
767
Outsourced administration
268
266
21
30
289
Other
63
64
71
136
135
Total revenue by service offering
1,156
1,327
1,003
947
2,159
2,275
Reimbursable expenses and other (i)
17
20
Total revenue from customer contracts
1,173
1,344
1,006
950
2,180
2,295
Interest and other income
31
43
Total revenue
1,182
1,353
1,030
981
Interest and other income is included in segment revenue and total revenue, however it has been presented separately in the above table because it does not arise directly from contracts with customers. The significant components of interest and other income are as follows for the periods presented above:
Corporate
Book-of-business settlements
Interest income
22
28
39
Other income
Total interest and other income
The following table presents revenue from service offerings by the geography where our work was performed for the three months ended March 31, 2025 and 2024. The reconciliation to total revenue on our condensed consolidated statements of comprehensive income and to segment revenue is shown in the table above.
North America
645
840
326
306
971
1,146
Europe
391
372
538
511
929
884
International
115
139
130
259
245
Total revenue by geography
Contract Balances
The Company reports accounts receivable, net on the condensed consolidated balance sheets, which includes billed and unbilled receivables and current contract assets. In addition to accounts receivable, net, the Company had the following non-current contract assets and deferred revenue balances at March 31, 2025 and December 31, 2024:
Billed receivables, net of allowance for doubtful accounts of $34 million and $36 million
1,606
1,604
Unbilled receivables
569
Current contract assets
222
321
Non-current accounts receivable, net
Deferred revenue
774
732
During the three months ended March 31, 2025, revenue of approximately $346 million was recognized that was reflected as deferred revenue at December 31, 2024.
During the three months ended March 31, 2025, the Company recognized no revenue related to performance obligations satisfied in a prior period.
Performance Obligations
The Company has contracts for which performance obligations have not been satisfied as of March 31, 2025 or have been partially satisfied as of this date. The following table shows the expected timing for the satisfaction of the remaining performance obligations. This table does not include contract renewals or variable consideration, which was excluded from the transaction prices in accordance with the guidance on constraining estimates of variable consideration.
In addition, in accordance with ASC 606, Revenue From Contracts With Customers (‘ASC 606’), the Company has elected not to disclose the remaining performance obligations when one or both of the following circumstances apply:
Remainder of 2025
2026
2027 onward
Revenue expected to be recognized on contracts as of March 31, 2025
508
605
1,575
Since most of the Company’s contracts are cancellable with less than one year’s notice and have no substantive penalty for cancellation, the majority of the Company’s remaining performance obligations as of March 31, 2025 have been excluded from the table above.
Note 5 — Segment Information
WTW has two reportable operating segments or business areas:
WTW’s chief operating decision maker (‘CODM’) is its chief executive officer. We determined that the operational data used by the CODM is at the segment level. Management bases strategic goals and decisions for these segments on the data presented below which is used to assess the adequacy of strategic decisions and the methods of achieving these strategies and related financial results. Management evaluates the performance of its segments and allocates resources to them based on net segment operating income performance and prospects on a pre-tax basis.
Under the segment structure and for internal and segment reporting, WTW segment revenue includes commissions and fees, interest and other income. U.S. GAAP revenue also includes amounts that were directly incurred on behalf of our clients and reimbursed by them (reimbursable expenses), which are not included in segment revenue. There is no significant segment revenue derived from transactions between the segments.
Following the adoption of ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (‘ASC 2023-07’), the Company has not presented any individual significant expense categories due to the following factors:
Segment operating income excludes certain costs, including (i) amortization of intangibles; (ii) restructuring costs; (iii) certain transaction and transformation expenses; and (iv) to the extent that the actual expense based upon which allocations are made differs from the forecast/budget amount, a reconciling item will be created between internally-allocated expenses and the actual expenses that we report for U.S. GAAP purposes. Although not reviewed individually by the CODM, amounts included in segment expenses may be determined on both a direct and allocated basis and are related to salaries and benefits, depreciation, corporate overhead charges
14
and other operating expenses, including for occupancy, colleague travel costs, legal, marketing, technology, professional fees and professional liability costs.
The Company experiences seasonal fluctuations of its revenue. Revenue is typically higher during the Company’s first and fourth quarters due primarily to the timing of broking-related activities.
The following table presents segment revenue, segment expenses and segment operating income for our reportable segments for the three months ended March 31, 2025 and 2024.
Segment revenue excluding interest income
1,158
1,005
2,163
2,277
29
Total segment revenue
1,165
1,336
1,027
978
2,192
2,314
Other segment expense
823
969
791
763
1,614
1,732
41
Total segment expense
854
1,000
801
775
1,655
1,775
Segment operating income
311
336
226
203
537
539
The following table presents reconciliations of the information reported by segment to the Company’s condensed consolidated statements of comprehensive income amounts reported for the three months ended March 31, 2025 and 2024.
Revenue:
Reimbursable expenses and other
Total segment operating income
Restructuring costs (i)
(18
Transaction and transformation (ii)
(125
Unallocated, net (iii)
(57
(56
Income from operations before income taxes and interest in earnings of associates
The Company does not currently provide asset information by reportable segment as it does not routinely evaluate the total asset position by segment.
15
Below are our revenue (on the basis of where the work was performed) and tangible long-lived assets for Ireland, our country of domicile, countries with significant concentrations and all other foreign countries as of and for the periods ended as indicated:
Long-Lived Assets (i)
Three months ended March 31,
March 31,
December 31,
35
932
1,101
294
307
451
424
500
490
Rest of World
805
781
352
Total Foreign Countries
2,188
2,306
1,138
1,154
Note 6 — Restructuring Costs
In the fourth quarter of 2024, the Company concluded a three-year ‘Transformation program’ designed to enhance operations, optimize technology and align its real estate footprint to its new ways of working. The program incurred cumulative costs of $1.115 billion and capital expenditures of $130 million, resulting in a total investment of $1.245 billion. Although the Transformation program concluded in 2024, we expect additional cash outflows in 2025 from the settlement of accrued costs.
The main categories of charges were in the following four areas:
Certain costs under the Transformation program were accounted for under ASC 420, Exit or Disposal Cost Obligation, and are included as restructuring costs in the condensed consolidated statements of comprehensive income. Restructuring costs were $18 million for the three months ended March 31, 2024. Other costs incurred under the Transformation program are included in transaction and transformation and were $119 million for the three months ended March 31, 2024.
A rollforward of the liability associated with cash-based charges related to restructuring costs associated with the Transformation program, including costs paid and payable following the Transformation program’s conclusion on December 31, 2024, is as follows:
Real estate rationalization
Technology modernization
Process optimization
Balance at December 31, 2024
Cash payments
(3
Balance at March 31, 2025
Note 7 — Income Taxes
Provision for income taxes for the three months ended March 31, 2025 was $65 million compared to $48 million for the three months ended March 31, 2024. The effective tax rate was 21.5% for the three months ended March 31, 2025 and 19.9% for the three months ended March 31, 2024. These effective tax rates are calculated using extended values from our condensed consolidated statements of comprehensive income and are therefore more precise tax rates than can be calculated from rounded values. The current-year quarter’s
effective tax rate is higher primarily due to a change in the distribution of geographical income as well as net unfavorable discrete tax items.
The Company recognizes deferred tax balances related to the undistributed earnings of subsidiaries when it expects that it will recover those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of the investments. Historically, the Company has not provided taxes on cumulative earnings of its subsidiaries that have been reinvested indefinitely. As a result of its plans to restructure or distribute accumulated earnings of certain foreign operations, the Company has recorded an estimate of non-U.S. withholding and state income taxes. However, the Company asserts that the historical cumulative earnings of its other subsidiaries are reinvested indefinitely and therefore does not provide deferred tax liabilities on these amounts.
The Company records valuation allowances against net deferred tax assets based on whether it is more likely than not that the deferred tax assets will be realized. We have liabilities for uncertain tax positions under ASC 740, Income Taxes of $82 million, excluding interest and penalties. The Company believes the outcomes that are reasonably possible within the next 12 months may result in a reduction in the liability for uncertain tax positions of approximately $1 million to $6 million, excluding interest and penalties.
Note 8 — Goodwill and Other Intangible Assets
The components of goodwill are outlined below for the three months ended March 31, 2025:
Balance at December 31, 2024:
Goodwill, gross
7,276
2,796
10,072
Accumulated impairment losses
(911
(362
(1,273
Goodwill, net - December 31, 2024
6,365
2,434
Foreign exchange
42
Balance at March 31, 2025:
7,291
2,823
10,114
Goodwill, net - March 31, 2025
6,380
2,461
Other Intangible Assets
The following table reflects changes in the net carrying amounts of the components of finite-lived intangible assets for the three months ended March 31, 2025:
Client relationships
Software
Trademark and trade name
Intangible assets, gross
3,135
730
1,036
4,901
Accumulated amortization
(2,497
(727
(382
(3,606
Intangible assets, net - December 31, 2024
638
654
Intangible assets acquired
(37
(11
3,168
738
1,038
4,944
(2,559
(735
(395
(3,689
Intangible assets, net - March 31, 2025
609
643
The weighted-average remaining life of amortizable intangible assets at March 31, 2025 was 11.2 years.
The table below reflects the future estimated amortization expense for amortizable intangible assets for the remainder of 2025 and for subsequent years:
138
166
2027
150
2028
134
2029
114
Thereafter
553
Note 9 — Derivative Financial Instruments
We are exposed to certain foreign currency risks. Where possible, we identify exposures in our business that can be offset internally. Where no natural offset is identified, we may choose to enter into various derivative transactions. These instruments have the effect of reducing our exposure to unfavorable changes in foreign currency rates. The Company’s board of directors reviews and approves policies for managing this risk as summarized below. Additional information regarding our derivative financial instruments can be found in Note 11 — Fair Value Measurements and Note 17 — Accumulated Other Comprehensive Loss.
Foreign Currency Risk
Certain non-U.S. subsidiaries receive revenue and incur expenses in currencies other than their functional currency, and as a result, the foreign subsidiary’s functional currency revenue and/or expenses will fluctuate as the currency rates change. Additionally, the forecast Pounds sterling expenses of our London brokerage market operations may exceed their Pounds sterling revenue, and the entity with such operations may also hold significant foreign currency asset or liability positions in the condensed consolidated balance sheets. To reduce such variability, we use foreign exchange contracts to hedge against this currency risk.
These derivatives were designated as hedging instruments and at March 31, 2025 and December 31, 2024 had total notional amounts of $162 million and $176 million, respectively, with a net fair value asset of $2 million and a net fair value liability of $2 million, respectively.
At March 31, 2025, the Company estimates, based on current exchange rates, there will be $1 million of net derivative gains on forward exchange rates reclassified from accumulated other comprehensive loss into earnings within the next twelve months as the forecast transactions affect earnings. At March 31, 2025, our longest outstanding maturity was 1.7 years.
The effects of the material derivative instruments that are designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three months ended March 31, 2025 and 2024 are below. Amounts pertaining to the ineffective portion of hedging instruments and those excluded from effectiveness testing were immaterial for the three months ended March 31, 2025 and 2024.
Gain recognized in OCI (effective element)
Forward exchange contracts
Location of gain/(loss) reclassified from Accumulated OCL into income (effective element)
Gain/(loss) reclassified from Accumulated OCL into income (effective element)
The Company engages in intercompany borrowing and lending between subsidiaries, primarily through its in-house banking operations which give rise to foreign exchange exposures. The Company mitigates these risks through the use of short-term foreign currency forward and swap transactions that offset the underlying exposure created when the borrower and lender have different functional currencies. These derivatives are not generally designated as hedging instruments, and at March 31, 2025 and December 31, 2024, we had notional amounts $821 million and $1.2 billion, respectively, with net fair value liabilities of $1 million and $3 million, respectively. Such derivatives typically mature within three months.
The effects of derivatives that have not been designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three months ended March 31, 2025 and 2024 are as follows (see Note 16 — Other (Loss)/Income, Net
for the net foreign currency impact on the Company’s condensed consolidated statements of comprehensive income which includes the results of the offset of underlying exposures):
Gain recognized in income
Derivatives not designated as hedging instruments:
Location of gainrecognized in income
Note 10 — Debt
Current debt consists of the following:
4.400% senior notes due 2026
Long-term debt consists of the following:
Revolving $1.5 billion credit facility
4.650% senior notes due 2027
747
4.500% senior notes due 2028
598
2.950% senior notes due 2029
725
5.350% senior notes due 2033
6.125% senior notes due 2043
272
5.050% senior notes due 2048
396
3.875% senior notes due 2049
543
5.900% senior notes due 2054
At March 31, 2025 and December 31, 2024, we were in compliance with all financial covenants.
Note 11 — Fair Value Measurements
The Company has categorized its assets and liabilities that are measured at fair value on a recurring and non-recurring basis into a three-level fair value hierarchy, based on the reliability of the inputs used to determine fair value as follows:
The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments:
19
The following tables present our assets and liabilities measured at fair value on a recurring basis at March 31, 2025 and December 31, 2024:
Fair Value Measurements on a Recurring Basis atMarch 31, 2025
Balance Sheet Location
Level 1
Level 2
Level 3
Assets:
Available-for-sale securities:
Mutual funds/exchange traded funds (i)
Prepaid and other current assets and Other non-current assets
Commingled funds (i) (ii)
Hedge funds (i) (iii)
Short-term investment (held to maturity):
Certificates of deposit/term deposit (iv)
Derivatives:
Derivative financial instruments (v)
Liabilities:
Contingent consideration:
Contingent consideration (vi) (vii)
Other current liabilities and Other non-current liabilities
40
Fair Value Measurements on a Recurring Basis atDecember 31, 2024
108
337
Contingent consideration (vi)
The following table summarizes the change in fair value of the Level 3 liabilities:
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Obligations assumed
Payments
Realized and unrealized losses (i)
There were no significant transfers to or from Level 3 in the three months ended March 31, 2025
Non-recurring Fair Value Measurement
The Company has assets that may be required to be recorded at fair value on a non-recurring basis. These assets are evaluated when certain triggering events occur (including the planned disposal of a business or a decrease in estimated future cash flows) that indicate their carrying amounts may not be recoverable.
Fair Value Information about Financial Instruments Not Measured at Fair Value
The following tables present our assets and liabilities not measured at fair value on a recurring basis at March 31, 2025 and December 31, 2024:
Carrying Value
Fair Value
Note receivable
78
75
74
70
548
4,540
5,052
The carrying value of our revolving credit facility approximates its fair value. The fair values above, which exclude accrued interest, are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or ability to dispose of the financial instruments. The fair values of our respective senior notes and short-term note receivable are considered Level 2 financial instruments as they are corroborated by observable market data.
Note 12 — Retirement Benefits
Defined Benefit Plans
WTW sponsors both qualified and non-qualified defined benefit pension plans throughout the world. The majority of our plan assets and obligations are in the U.S. and the U.K. We have also included disclosures related to defined benefit plans in certain other countries, including Canada, France, Germany, Switzerland and Ireland. Together, these disclosed funded and unfunded plans represent 98% of WTW’s pension obligations and are disclosed herein.
Components of Net Periodic Benefit (Income)/Cost for Defined Benefit Pension Plans
The following table sets forth the components of net periodic benefit (income)/cost for the Company’s defined benefit pension plans for the three months ended March 31, 2025 and 2024:
U.S.
U.K.
Service cost
Interest cost
36
Expected return on plan assets
(55
(42
(10
(76
(39
Settlements
82
Amortization of net loss
Amortization of prior service credit
Net periodic benefit cost/(income)
Employer Contributions to Defined Benefit Pension Plans
The Company did not make any contributions to its U.S. plans during the three months ended March 31, 2025 and currently does not anticipate making contributions over the remainder of the fiscal year. The Company made contributions of less than $1 million to its U.K. plans for the three months ended March 31, 2025 and anticipates making additional contributions of $2 million for the remainder of the fiscal year. The Company made contributions of $5 million to its other plans for the three months ended March 31, 2025 and anticipates making additional contributions of $1 million for the remainder of the fiscal year.
Annuity Purchase
In February 2025, the Company’s Willis Towers Watson Pension Plan for U.S. Employees, a qualified pension plan (‘the Plan’), purchased a nonparticipating single premium group annuity contract from a third-party insurance company and irrevocably transferred to that insurance company approximately $423 million of the Plan’s defined benefit pension obligations and related plan assets, thereby reducing the pension obligations and assets of the Plan by this same amount. The group annuity contract was purchased using assets of the Plan and no additional funding contribution was required by the Company. As a result of this transaction, WTW recognized a one-time, non-cash pre-tax pension settlement charge of $82 million in the first quarter of 2025, attributable to the accelerated recognition of accumulated actuarial losses of the Plan.
Defined Contribution Plans
The Company had defined contribution plan expense of $40 million and $43 million during the three months ended March 31, 2025 and 2024, respectively.
Note 13 — Leases
The following table presents lease costs recorded on our condensed consolidated statements of comprehensive income for the three months ended March 31, 2025 and 2024:
Finance lease cost:
Amortization of right-of-use assets
Operating lease cost
Variable lease cost
Sublease income
(6
Total lease cost, net
52
The total lease cost is recognized in different locations in our condensed consolidated statements of comprehensive income. Amortization of the finance lease ROU assets is included in depreciation, while the interest cost component of these finance leases is included in interest expense. All other costs are included in other operating expenses, with the exception of $15 million incurred during the three months ended March 31, 2024 that were included in restructuring costs (see Note 6 — Restructuring Costs) that primarily related to the acceleration of amortization of certain abandoned ROU assets and the payment of early termination fees.
Note 14 — Commitments and Contingencies
Indemnification Agreements
WTW has various agreements with third parties pursuant to which it may be obligated to indemnify the other party to the agreement with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business and in connection with the purchase and sale of certain businesses, including the sale of the TRANZACT business. It is not possible to predict the maximum potential amount of future payments that may become due under these indemnification agreements because of the conditional nature of the Company’s obligations, the limited history of prior indemnification claims, and the unique facts of each particular agreement and each indemnification provision therein (even where such indemnification provisions are subject to a maximum liability limit). However, as of March 31, 2025, we have not incurred a material loss with respect to the indemnification of such third parties. In addition, as of March 31, 2025, we do not believe that any potential liability that may arise from such indemnity obligations is probable or will be material.
Legal Proceedings
In the ordinary course of business, the Company is subject to various actual and potential claims, lawsuits and other proceedings. Some of the claims, lawsuits and other proceedings seek damages in amounts which could, if assessed, be significant. The Company also receives subpoenas in the ordinary course of business and, from time to time, receives requests for information in connection with governmental investigations.
Errors and omissions claims, lawsuits and other proceedings arising in the ordinary course of business are covered in part by professional indemnity or other appropriate insurance. The terms of this insurance vary by policy year. Regarding self-insured risks, the Company has established provisions which are believed to be adequate in light of current information and legal advice, or, in certain cases, where a range of loss exists, the Company accrues the minimum amount in the range if no amount within the range is a better estimate than any other amount. The Company adjusts such provisions from time to time according to developments. See Note 15 — Supplementary Information for Certain Balance Sheet Accounts for the amounts accrued at March 31, 2025 and December 31, 2024 in the condensed consolidated balance sheets.
On the basis of current information, the Company does not expect that the actual claims, lawsuits and other proceedings to which it is subject, or potential claims, lawsuits and other proceedings relating to matters of which it is aware, will ultimately have a material adverse effect on its financial condition, results of operations or liquidity. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation and disputes with insurance companies, it is possible that an adverse outcome or settlement in certain matters could, from time to time, have a material adverse effect on the Company’s results of operations or cash flows in a particular quarterly or annual period.
The Company provides for contingent liabilities based on ASC 450, Contingencies, when it is determined that a liability, inclusive of defense costs, is probable and reasonably estimable. The contingent liabilities recorded are primarily developed actuarially. Litigation is subject to many factors which are difficult to predict so there can be no assurance that in the event of a material unfavorable result in one or more claims, we will not incur material costs.
Note 15 — Supplementary Information for Certain Balance Sheet Accounts
Additional details of specific balance sheet accounts are detailed below.
Deferred revenue and accrued expenses consist of the following:
Accounts payable, accrued liabilities and deferred revenue
1,007
1,053
Accrued discretionary and incentive compensation
220
835
Accrued vacation
167
154
Accrued 401(k) contributions
Other employee-related liabilities
84
106
Total deferred revenue and accrued expenses
23
Other current liabilities consist of the following:
Dividends payable
112
107
Income taxes payable
128
105
Interest payable
61
Deferred compensation plan liabilities
Contingent and deferred consideration on acquisitions
Accrued retirement benefits
Payroll and other benefits-related liabilities
305
Other taxes payable
99
98
Derivatives
Third-party commissions
121
97
Total other current liabilities
Provision for liabilities consists of the following:
Claims, lawsuits and other proceedings
297
284
Other provisions
62
57
Total provision for liabilities
Note 16 — Other (Loss)/Income, Net
Other (loss)/income, net consists of the following:
Net periodic pension and postretirement benefit credits (i)
(75
Foreign exchange (loss)/gain (ii)
Note 17 — Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss, net of non-controlling interests, and net of tax are provided in the following table for the three months ended March 31, 2025 and 2024. This table excludes amounts attributable to non-controlling interests, which are not material for further disclosure.
Foreign currencytranslation
Derivative instruments (i)
Defined pension andpost-retirementbenefit costs
Balance at December 31, 2024 and 2023, respectively
(1,020
(816
(2,145
(2,051
Other comprehensive income/(loss) before reclassifications
(63
92
204
Loss reclassified from accumulated other comprehensive loss (net of income tax benefit of $6 and $5, respectively)
Net current-period other comprehensive income/(loss)
111
Balance at March 31, 2025 and 2024, respectively
(879
(2,034
(2,037
Note 18 — Earnings Per Share
Basic and diluted earnings per share are calculated by dividing net income attributable to WTW by the average number of ordinary shares outstanding during each period. The computation of diluted earnings per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue shares were exercised or converted into shares or resulted in the issuance of shares that then shared in the net income of the Company.
At March 31, 2025 and 2024, there were 0.7 million and 0.5 million restricted performance-based stock units outstanding, respectively, and 0.3 million and 0.4 million restricted time-based stock units outstanding, respectively. The Company had no time-based share options or performance-based share options outstanding at March 31, 2025 and 2024.
Basic and diluted earnings per share are as follows:
Net income attributable to WTW
Basic average number of shares outstanding
100
103
Dilutive effect of potentially issuable shares
Diluted average number of shares outstanding
101
(0.01
There were no anti-dilutive restricted stock units or anti-dilutive options for the three months ended March 31, 2025 and 2024.
Note 19 — Supplemental Disclosures of Cash Flow Information
Supplemental disclosures regarding cash flow information are as follows:
Supplemental disclosures of cash flow information:
1,893
Fiduciary funds (included in fiduciary assets)
3,476
3,358
Total cash, cash equivalents and restricted cash
(Decrease)/increase in cash, cash equivalents and other restricted cash
(411
Increase in fiduciary funds
316
1,019
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion includes forward-looking statements. See ‘Disclaimer Regarding Forward-looking Statements’ for certain cautionary information regarding forward-looking statements and a list of factors that could cause actual results to differ materially from those predicted in those statements.
This discussion includes references to non-GAAP financial measures as defined in the rules of the SEC. We present such non-GAAP financial measures, specifically, adjusted, constant currency and organic non-GAAP financial measures, as we believe such information is of interest to the investment community because it provides additional meaningful methods of evaluating certain aspects of the Company’s operating performance from period to period on a basis that may not be otherwise apparent under U.S. GAAP, and these provide a measure against which our businesses may be assessed in the future.
See ‘Non-GAAP Financial Measures’ below for further discussion of our adjusted, constant currency and organic non-GAAP financial measures.
Executive Overview
Market Conditions
Typically, our business benefits from regulatory change, political risk or economic uncertainty. Insurance broking generally tracks the economy, but demand for both insurance broking and consulting services usually remains steady during times of uncertainty. We have some businesses, such as our health and benefits and administration businesses, which can be counter cyclical during the early period of a significant economic change.
Within our insurance and brokerage business, due to the cyclical nature of the insurance market and the impact of other market conditions on insurance premiums, commission revenue may vary widely between accounting periods. A period of low or declining premium rates, generally known as a ‘soft’ or ‘softening’ market, generally leads to downward pressure on commission revenue and can have a material adverse impact on our revenue and operating margin. A ‘hard’ or ‘firming’ market, during which premium rates rise, generally has a favorable impact on our revenue and operating margin. Rates, however, vary by geography, industry and client segment. As a result, and due to the global and diverse nature of our business, we view rates in the aggregate. Overall, we are currently seeing a softening market.
Market conditions in the broking industry in which we operate are generally defined by factors such as the strength of the economies in the various geographic regions in which we serve around the world, insurance rate movements, and insurance and reinsurance buying patterns of our clients.
The markets for our consulting, technology and solutions, and marketplace services are affected by economic, regulatory and legislative changes, technological developments, and increased competition from established and new competitors. We believe that the primary factors in selecting a human resources or risk management consulting company include reputation, the ability to provide measurable increases to shareholder value and return on investment, global scale, quality of service and the ability to tailor services to clients’ unique needs. In that regard, we are focused on developing and implementing technology, data and analytic solutions for both internal operations and for maintaining industry standards and meeting client preferences. We have made such investments from time to time and may decide, based on perceived business needs, to make investments in the future that may be different from past practice or what we currently anticipate.
With regard to the market for exchanges, we believe that clients base their decisions on a variety of factors that include the ability of the provider to deliver measurable cost savings for clients, a strong reputation for efficient execution and an innovative service delivery model and platform. Part of the employer-sponsored insurance market has matured and become more fragmented while other segments remain in the entry phase. As these market segments continue to evolve, we may experience growth in intervals, with periods of accelerated expansion balanced by periods of modest growth. In recent years, growth in the market for exchanges has slowed, and this trend may continue.
Risks and Uncertainties of the Economic Environment
U.S. and global markets are continuing to experience uncertainty, volatility and disruption as a result of uncertain macroeconomic conditions including tariff actions and uncertainties relating to global trade, fluctuations in currency exchange rates, volatility in debt and equity markets, uncertainty around interest rates, softening consumer confidence and labor markets, recent government and policy changes in the U.S., and the ongoing Russia-Ukraine and Middle East conflicts, among other geopolitical tensions. Although the length and impact of these situations are highly unpredictable, the ongoing uncertainty and volatility of the global economy and capital markets, which has resulted in persistent inflation and fluctuating interest rates in many of the markets in which we operate, could accelerate recessionary pressures and continue to lead to further market disruptions. Further, in addition to the direct impact of the
dynamic tariff environment on our business (which we do not expect to be significant, so long as retaliatory actions do not extend to services), other indirect impacts such as changes in consumer sentiment, trade relations, economic activity, willingness to do business with U.S.-listed firms, inflationary pressures and employee distraction, could negatively affect our business, operations and financial condition.
These general economic conditions, including inflation, stagflation, political volatility, costs of labor, cost of capital, interest rates, bank stability, credit availability and tax rates, affect not only the cost of and access to liquidity, but also our costs to run and invest in our business, including our operating and general and administrative expenses, and we have no control or limited ability to control such factors. These general economic conditions impact revenue from customers, as well as income from funds we hold on behalf of customers and pension-related income. While parts of our business could benefit from uncertainty or regulatory change, we may see increased caution in spending on services we provide that are more discretionary in nature or where there are alternatives, such as self-insurance. Other parts of our business, such as M&A-related services, may be adversely impacted when there is lower economic activity or transaction volumes.
If our costs grow significantly in excess of our ability to raise revenue, whether as a result of the foregoing global economic factors or otherwise, our margins and results of operations may be materially and adversely impacted and we may not be able to achieve our strategic and financial objectives.
See Part I, Item 1A ‘Risk Factors’ in our Annual Report on Form 10-K, filed with the SEC on February 25, 2025, for a discussion of risks that may affect, among other things, our growth relative to expectation and our ability to achieve our objectives.
Financial Statement Overview
The table below sets forth our summarized condensed consolidated statements of comprehensive income and data as a percentage of revenue for the periods indicated.
($ in millions, except per share data)
%
)%
Interest in earnings of associates, net of tax
Consolidated Revenue
Revenue for the three months ended March 31, 2025 was $2.2 billion, compared to $2.3 billion for the three months ended March 31, 2024, a decrease of $118 million, or 5%, on an as-reported basis. Adjusting for the impacts of foreign currency and acquisitions and disposals, our organic revenue growth was 5% for the three months ended March 31, 2025. The decrease in as-reported revenue was due primarily to the sale of our TRANZACT business on December 31, 2024. The increase in organic revenue was driven by strong performances in both segments. For additional information, please see the section entitled ‘Segment Revenue and Segment Operating Income’ elsewhere within this Item 2 of this Quarterly Report on Form 10-Q.
Our revenue can be materially impacted by changes in currency conversions, which can fluctuate significantly over the course of a calendar year. For the three months ended March 31, 2025, currency translation decreased our consolidated revenue by $36 million. The primary currency driving this change was the Euro.
The following table details our top five markets based on the percentage of consolidated revenue (in U.S. dollars) from the countries where work was performed for the three months ended March 31, 2025. These figures do not represent the currency of the related revenue, which is presented in the next table.
Geographic Region
% of Revenue
France
Germany
Canada
The table below details the approximate percentage of our revenue and expenses by transactional currency for the three months ended March 31, 2025.
Transactional Currency
Expenses (i)
U.S. dollars
Pounds sterling
Euro
Other currencies
The following table sets forth the total revenue for the three months ended March 31, 2025 and 2024, and the components of the change in total revenue for the three months ended March 31, 2025, as compared to the prior-year period. The components of the revenue change may not add due to rounding.
Components of Revenue Change
As
Less:
Constant
Reported
Currency
Acquisitions/
Organic
Change
Impact
Divestitures
Change (i)
($ in millions)
(5)%
(1)%
(4)%
(8)%
5%
Definitions of Constant Currency Change and Organic Change are included under the section entitled ‘Non-GAAP Financial Measures’ elsewhere within Item 2 of this Form 10-Q.
Segment Revenue and Segment Operating Income
The segment descriptions below should be read in conjunction with the full descriptions of our businesses contained in Part I, Item 1. ‘Business’, within our Annual Report on Form 10-K, filed with the SEC on February 25, 2025.
Segment revenue excludes amounts that were directly incurred on behalf of our clients and reimbursed by them (reimbursed expenses); however, these amounts are included in consolidated revenue, as required by applicable accounting standards and SEC rules. Segment operating income excludes certain costs, including (i) amortization of intangibles; (ii) restructuring costs; and (iii) certain transaction and transformation expenses, and includes certain expense amounts which may be determined on both a direct and allocated basis. See Note 5 – Segment Information within Part I, Item 1 ‘Financial Statements’ of this Quarterly Report on Form 10-Q
for more information about how our segment revenue and segment operating income are calculated and for a reconciliation to our GAAP results.
The Company experiences seasonal fluctuations in its revenue. Revenue is typically higher during the Company’s first and fourth quarters due primarily to the timing of broking-related activities.
For each table presented below, the components of the revenue change may not add due to rounding.
Health, Wealth & Career
The Health, Wealth & Career (‘HWC’) segment provides an array of advice, broking, solutions and technology for employee benefit plans, institutional investors, compensation and career programs, and the employee experience overall. Our portfolio of services supports the interrelated challenges that the management teams of our clients face across human resources and finance.
HWC is the larger of the two segments of the Company. Addressing four key areas, Health, Wealth, Career and Benefits Delivery & Outsourcing, the segment is focused on addressing our clients’ people and risk needs to help them succeed in a global marketplace.
The following table sets forth HWC revenue for the three months ended March 31, 2025 and 2024, and the components of the change in revenue for the three months ended March 31, 2025 from the three months ended March 31, 2024.
(13)%
(12)%
(14)%
3%
HWC segment revenue for the three months ended March 31, 2025 and 2024 was $1.2 billion and $1.3 billion, respectively. Health delivered organic revenue growth in all regions driven by solid client retention, new business and geographic expansion. Wealth generated organic revenue growth from higher levels of Retirement work in Europe and International, alongside growth in our Investments business due to the success of our LifeSight solution and capital market improvements. Career had modest revenue growth as increased advisory work was tempered by some postponements amid economic uncertainty. Benefits Delivery & Outsourcing revenue grew primarily from increased project and core administration work.
HWC segment operating income for the three months ended March 31, 2025 and 2024 was $311 million and $336 million, respectively. HWC segment operating income decreased due to the sale of TRANZACT. Excluding the impact of this sale, operating income improved primarily from transformation savings.
Risk & Broking
The Risk & Broking (‘R&B’) segment provides a broad range of risk advice, insurance brokerage and consulting services to clients worldwide ranging from small businesses to multinational corporations. The segment comprises two primary businesses - Corporate Risk & Broking and Insurance Consulting and Technology.
The following table sets forth R&B revenue for the three months ended March 31, 2025 and 2024, and the components of the change in revenue for the three months ended March 31, 2025 from the three months ended March 31, 2024.
6%
(2)%
8%
—%
7%
R&B segment revenue for the three months ended March 31, 2025 and 2024 was $1.0 billion and $978 million, respectively. Corporate Risk & Broking had organic revenue growth driven by higher levels of new business activity and strong client retention globally. Insurance Consulting and Technology had organic revenue growth for the quarter driven by the Consulting and Technology practices.
R&B segment operating income for the three months ended March 31, 2025 and 2024 was $226 million and $203 million, respectively. R&B segment operating income increased due primarily to operating leverage driven by strong organic revenue growth and transformation savings which were partially offset by headwinds from decreased interest income and foreign currency fluctuations.
Costs of Providing Services
Total costs of providing services for the three months ended March 31, 2025 were $1.8 billion, compared to $2.1 billion for the three months ended March 31, 2024, a decrease of $270 million, or 13%. See the following discussion for further details.
Salaries and Benefits
Salaries and benefits for both the three months ended March 31, 2025 and 2024 were $1.3 billion, a decrease of $18 million. The decrease in the current year is primarily due to lower incentive and benefit costs for the period, partially offset by higher share-based compensation costs in the current-year period.
Salaries and benefits, as a percentage of revenue, represented 60% and 57% for the three months ended March 31, 2025 and 2024, respectively.
Other Operating Expenses
Other operating expenses for the three months ended March 31, 2025 were $365 million, compared to $457 million for the three months ended March 31, 2024, a decrease of $92 million. The decrease was primarily due to lower marketing expenses attributable to the sale of our TRANZACT business on December 31, 2024, and decreased local office expenses, partially offset by higher non-income-related tax expense for the current year as compared to the prior year.
Depreciation for the three months ended March 31, 2025 was $54 million, compared to $59 million for the three months ended March 31, 2024, a decrease of $5 million, or 8%. The year-over-year decrease was primarily due to a lower depreciable base of assets resulting from disposals associated with the Company’s Transformation program that concluded in the fourth quarter of 2024 and a lower dollar value of assets placed in service during the past few years.
Amortization for the three months ended March 31, 2025 was $48 million, compared to $60 million for the three months ended March 31, 2024, a decrease of $12 million, or 20%. Our intangible amortization is generally more heavily weighted to the initial years of the useful lives of the related intangibles, and therefore amortization related to intangible assets has decreased and will continue to decrease over time.
Restructuring Costs
Restructuring costs for the three months ended March 31, 2024 were $18 million and primarily related to the real estate rationalization component of our now-completed Transformation program.
Transaction and Transformation
Transaction and transformation costs for the three months ended March 31, 2024 were $125 million and primarily included consulting and compensation costs related to our now-completed Transformation program.
Income from Operations
Income from operations for the three months ended March 31, 2025 was $432 million, compared to $280 million for the three months ended March 31, 2024, an increase of $152 million. This increase resulted primarily from lower transformation and transaction costs, and lower restructuring costs due to the completion of our Transformation program during the fourth quarter of 2024, and lower marketing expenses and decreased local office expenses in the current year, partially offset by lower revenue due to the prior-year sale of our TRANZACT business.
Interest Expense
Interest expense for the three months ended March 31, 2025 was $65 million, compared to $64 million for the three months ended March 31, 2024, an increase of $1 million, or 2%. This increase was primarily due to the higher interest rate-bearing senior notes issued by the Company during the last two years.
Other (Loss)/Income, Net
Other (loss)/income, net for the three months ended March 31, 2025 was a loss of $64 million, compared to income of $26 million for the three months ended March 31, 2024, a decrease of $90 million. The decrease was due primarily to lower pension income, which was attributable to a significant pension settlement in the current year, partially offset by a gain on disposal pertaining to favorable cost adjustments associated with the prior-year sale of our TRANZACT business.
Provision for Income Taxes
Provision for income taxes for the three months ended March 31, 2025 was $65 million, compared to $48 million for the three months ended March 31, 2024, an increase of $17 million. The effective tax rate was 21.5% for the three months ended March 31, 2025, and 19.9% for the three months ended March 31, 2024. These effective tax rates are calculated using extended values from our condensed consolidated statements of comprehensive income and are therefore more precise tax rates than can be calculated from rounded values. The current-year quarter’s effective tax rate is higher primarily due to a change in the distribution of geographical income as well as net unfavorable discrete tax items.
Net Income Attributable to WTW
Net income attributable to WTW for the three months ended March 31, 2025 was $235 million, compared to $190 million for the three months ended March 31, 2024, an increase of $45 million, or 24%. This increase resulted primarily from lower transformation and transaction costs, and lower restructuring costs due to the completion of our Transformation program during the fourth quarter of 2024, and lower marketing expenses and decreased local office expenses in the current year, partially offset by lower revenue due to the sale of our TRANZACT business on December 31, 2024, and lower pension income, which was attributable to a significant pension settlement in the current year.
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Liquidity and Capital Resources
Executive Summary
Our principal sources of liquidity are funds generated by operating activities, available cash and cash equivalents and amounts available under our revolving credit facility and any new debt offerings.
There has been significant volatility in financial markets, including occasional declines in equity markets, inflation and changes in interest rates and reduced liquidity on a global basis and we expect this volatility could continue, all of which may impact our access to liquidity.
Based on our current balance sheet and cash flows, current market conditions and information available to us at this time, we believe that WTW has access to sufficient liquidity to meet our cash needs for the next twelve months. Including our cash generated from operations, our liquidity also includes all of the borrowing capacity available to draw against our $1.5 billion revolving credit facility and the $750 million earnout related to the 2021 divestiture of Willis Re, which was received in April 2025. The use of these funds includes investments in the business for growth, scheduled debt repayments, share repurchases, dividend payments and general corporate purposes. Additionally, under our minority ownership interest in a joint venture with Bain Capital, in connection with which we re-entered the reinsurance broking space during the fourth quarter of 2024, we have an option to acquire a controlling interest in the joint venture in the future. Given the initial funding needs of a start-up venture, we expect to make certain capital contributions from time to time resulting in a headwind for earnings until such time as the joint venture generates sufficient revenue to be profitable.
During the first quarter of 2025, we repurchased $200 million of our outstanding shares and have authorization to repurchase an additional $1.2 billion under our share repurchase program (as further described below under ‘Share Repurchase Program’). We consider many factors, including market and economic conditions, applicable legal requirements and other business considerations, when considering whether to repurchase shares. Our Share Repurchase Program has no termination date and may be suspended or discontinued at any time.
Events that could change the historical cash flow dynamics discussed above include significant changes in operating results, the receipt of significant earnout payments related to past divestitures, potential future acquisitions or divestitures, material changes in geographic sources of cash, unexpected adverse impacts from litigation or tax or regulatory matters, or future pension funding during periods of severe downturn in the capital markets.
Undistributed Earnings of Foreign Subsidiaries
The Company recognizes deferred tax balances related to the undistributed earnings of subsidiaries when it expects that it will recover those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of the investments.
We continue to have certain subsidiaries whose earnings have not been deemed permanently reinvested and for which we have been accruing estimates of the tax effects of such repatriation. Excluding these certain subsidiaries, we continue to assert that the historical cumulative earnings for the remainder of our subsidiaries have been reinvested indefinitely and therefore do not provide deferred taxes on these amounts. If future events, including material changes in estimates of cash, working capital, long-term investment requirements or additional legislation, necessitate that these earnings be distributed, an additional provision for income and foreign withholding taxes, net of credits, may be necessary. Other potential sources of cash may be through the settlement of intercompany loans or return of capital distributions in a tax-efficient manner.
Cash and Cash Equivalents
Our cash and cash equivalents at March 31, 2025 totaled $1.5 billion, compared to $1.9 billion at December 31, 2024. While cash from operations decreased as bonus and incentive payments more than offset collections from receivables, the decrease in cash from December 31, 2024 to March 31, 2025 was due primarily to $200 million of share repurchases, $88 million of dividend payments and $51 million of capital expenditures and capitalized software additions.
Additionally, we had all of the borrowing capacity available to draw against our $1.5 billion revolving credit facility at both March 31, 2025 and December 31, 2024.
Included within cash and cash equivalents at March 31, 2025 and December 31, 2024 are amounts held for regulatory capital adequacy requirements, including $103 million and $104 million, respectively, within our regulated U.K. entities.
Summarized Condensed Consolidated Cash Flows
The following table presents the summarized condensed consolidated cash flow information for the three months ended March 31, 2025 and 2024:
(in millions)
Net cash (used in)/from:
Operating activities
Investing activities
Financing activities
Cash Flows (Used In)/From Operating Activities
Cash flows used in operating activities were $35 million for the three months ended March 31, 2025, compared to cash flows from operating activities of $24 million for the three months ended March 31, 2024. The $35 million of net cash used in operating activities for the three months ended March 31, 2025 included net income of $239 million and $238 million of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $512 million. This decrease in cash flows from operations as compared to the prior year was primarily driven by the absence of cash collections related to TRANZACT, which the Company sold on December 31, 2024, and increased compensation payments in the current-year quarter as compared to the prior-year quarter.
The $24 million of net cash from operating activities for the three months ended March 31, 2024 included net income of $194 million and $183 million of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $353 million.
Cash Flows Used In Investing Activities
Cash flows used in investing activities for the three months ended March 31, 2025 were $84 million as compared $74 million for the three months ended March 31, 2024. The cash flows used in investing activities in the current year consisted primarily of capital expenditures, including software additions, and purchases of investments. The cash flows used in investing activities in the prior year consisted primarily of capital expenditures, including software additions.
Cash Flows From Financing Activities
Cash flows from financing activities for the three months ended March 31, 2025 were $24 million. The significant financing activities included net proceeds from fiduciary funds held for clients of $315 million, partially offset by share repurchases of $200 million and dividend payments of $88 million.
Cash flows from financing activities for the three months ended March 31, 2024 were $1.6 billion. The significant financing activities included net proceeds from fiduciary funds held for clients of $1.0 billion and $739 million of net proceeds from the issuance of debt, partially offset by share repurchases of $101 million and dividend payments of $86 million.
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Indebtedness
Total debt, total equity, and the capitalization ratios at March 31, 2025 and December 31, 2024 were as follows:
Total debt
5,310
Capitalization ratio
39.5
40.1
At March 31, 2025, our mandatory debt repayments over the next twelve months include $550 million outstanding on our 4.400% senior notes, which will mature during the first quarter of 2026. For more information regarding our current and long-term debt, please see ‘Supplemental Guarantor Financial Information’ elsewhere within this Item 2 of this Quarterly Report on Form 10-Q.
Fiduciary Funds
As an intermediary, we hold funds, generally in a fiduciary capacity, for the account of third parties, typically as the result of premiums received from clients that are in transit to insurers and claims due to clients that are in transit from insurers. We also hold funds for clients of our benefits account businesses, some of which are invested in open-ended mutual funds as directed by the participant. These fiduciary funds are included in fiduciary assets on our condensed consolidated balance sheets. We present the equal and corresponding fiduciary liabilities related to these fiduciary funds representing amounts or claims due to our clients or premiums due on their behalf to insurers on our condensed consolidated balance sheets.
Fiduciary funds are generally required to be kept in regulated bank accounts subject to guidelines which emphasize capital preservation and liquidity; such funds are not available to service the Company’s debt or for other corporate purposes. Notwithstanding the legal relationships with clients and insurers, the Company is entitled to retain investment income earned on certain of these fiduciary funds in accordance with industry custom and practice and, in some cases, as supported by agreements with insureds.
At March 31, 2025 and December 31, 2024, we had fiduciary funds of $3.8 billion and $3.4 billion, respectively.
Share Repurchase Program
The Company is authorized to repurchase shares, by way of redemption or otherwise, and will consider whether to do so from time to time, based on many factors, including market conditions. There are no expiration dates for our repurchase plans or programs.
On November 20, 2024, the board of directors approved a $1.0 billion increase to the existing share repurchase program. This increase brought the total approved authorization, since the announcement of the program on April 20, 2016, to $10.2 billion.
At March 31, 2025, approximately $1.2 billion remained on the current repurchase authority. The maximum number of shares that could be repurchased based on the closing price of our ordinary shares on March 31, 2025 of $337.95 was 3,674,368.
During the three months ended March 31, 2025, the Company had the following share repurchase activity:
Three Months EndedMarch 31, 2025
607,221
Average price per share
$329.37
Aggregate repurchase cost (excluding broker costs)
$200 million
Capital Commitments
The Company’s capital expenditures for fixed assets, capitalized software and software for internal use were $51 million during the three months ended March 31, 2025. The Company estimates that there will be additional such expenditures in the range of $175
million - $200 million during the remainder of 2025. We currently expect cash from operations to adequately provide for these cash needs. There have been no material changes to our capital commitments since December 31, 2024.
Dividends
Total cash dividends of $88 million were paid during the three months ended March 31, 2025. In February 2025, the board of directors approved a quarterly cash dividend of $0.92 per share ($3.68 per share annualized rate), which was paid on April 15, 2025 to shareholders of record as of March 31, 2025.
Supplemental Guarantor Financial Information
As of March 31, 2025, WTW has issued the following debt securities (the ‘notes’):
The following table presents a summary of the entities that issue each note and those wholly-owned subsidiaries of the Company that guarantee each respective note on a joint and several basis as of March 31, 2025. These subsidiaries are all consolidated by Willis Towers Watson plc (the ‘parent company’) and together with the parent company comprise the ‘Obligor group’. On December 16, 2024, TA I Limited, Willis Towers Watson UK Holdings Limited and Willis Netherlands Holdings B.V. ceased to be guarantors of our notes and are no longer part of the Obligor group, following the transfer of their respective properties and assets to other existing guarantors within the Obligor group. Further, Willis Towers Watson UK Holdings Limited was released from its guarantees under our credit agreement. TA I Limited and Willis Netherlands Holdings B.V. will be released from their guarantees under our credit agreement when they are fully liquidated.
Entity
Trinity Acquisition plc Notes
Willis North America Inc. Notes
Willis Towers Watson plc
Guarantor
Trinity Acquisition plc
Issuer
Willis North America Inc.
Willis Investment UK Holdings Limited
Willis Group Limited
Willis Towers Watson Sub Holdings Unlimited Company
The notes issued by Willis North America and Trinity Acquisition plc:
All other subsidiaries of the parent company are non-guarantor subsidiaries (‘the non-guarantor subsidiaries’).
Each member of the Obligor group has only a stockholder’s claim on the assets of the non-guarantor subsidiaries. This stockholder’s claim is junior to the claims that creditors have against those non-guarantor subsidiaries. Holders of the notes will only be creditors of the Obligor group and not creditors of the non-guarantor subsidiaries. As a result, all of the existing and future liabilities of the non-guarantor subsidiaries, including any claims of trade creditors and preferred stockholders, will be structurally senior to the notes. As of and for the periods ended March 31, 2025 and December 31, 2024, the non-guarantor subsidiaries represented substantially all of the total assets and accounted for substantially all of the total revenue of the Company prior to consolidating adjustments. The non-guarantor subsidiaries have other liabilities, including contingent liabilities that may be significant. Each indenture does not contain any limitations on the amount of additional debt that the Obligor group and the non-guarantor subsidiaries may incur. The amounts of this debt could be substantial, and this debt may be debt of the non-guarantor subsidiaries, in which case this debt would be effectively senior in right of payment to the notes.
The notes are obligations exclusively of the Obligor group. Substantially all of the Obligor group’s operations are conducted through its non-guarantor subsidiaries. Therefore, the Obligor group’s ability to service its debt, including the notes, is dependent upon the net cash flows of its non-guarantor subsidiaries and their ability to distribute those net cash flows as dividends, loans or other payments to the Obligor group. Certain laws restrict the ability of these non-guarantor subsidiaries to pay dividends and make loans and advances to the Obligor group. In addition, such non-guarantor subsidiaries may enter into contractual arrangements that limit their ability to pay dividends and make loans and advances to the Obligor group.
Intercompany balances and transactions between members of the Obligor group have been eliminated. All intercompany balances and transactions between the Obligor group and the non-guarantor subsidiaries have been presented in the disclosures below on a net presentation basis, rather than a gross basis, as this better reflects the nature of the intercompany positions and presents the funding or funded position that is to be received or owed. The intercompany balances and transactions between the Obligor group and non-guarantor subsidiaries, presented below, relate to a number of items including loan funding for acquisitions and other purposes, transfers of surplus cash between subsidiary companies, funding provided for working capital purposes, settlement of expense accounts, transactions related to share-based payment arrangements and share issuances, intercompany royalty and related arrangements, intercompany dividends and intercompany interest. At March 31, 2025 and December 31, 2024, the intercompany balances of the Obligor group with non-guarantor subsidiaries were net receivables of $1.0 billion at both periods and net payables of $15.4 billion and $15.1 billion, respectively.
No balances or transactions of non-guarantor subsidiaries are presented in the disclosures other than the intercompany items noted above.
Presented below is certain summarized financial information for the Obligor group.
`
As of March 31, 2025
As of December 31, 2024
149
290
1,078
1,050
7,059
6,254
13,932
14,442
Three months endedMarch 31, 2025
344
287
Income from operations before income taxes (i)
Non-GAAP Financial Measures
In order to assist readers of our condensed consolidated financial statements in understanding the core operating results that WTW’s management uses to evaluate the business and for financial planning purposes, we present the following non-GAAP measures and their most directly comparable U.S. GAAP measure:
Most Directly Comparable U.S. GAAP Measure
Non-GAAP Measure
As reported change
Constant currency change
Organic change
Income from operations/margin
Adjusted operating income/margin
Net income/margin
Adjusted EBITDA/margin
Adjusted net income
Adjusted diluted earnings per share
Adjusted income before taxes
Provision for income taxes/U.S. GAAP tax rate
Adjusted income taxes/tax rate
Net cash from operating activities
Free cash flow
The Company believes that these measures are relevant and provide pertinent information widely used by analysts, investors and other interested parties in our industry to provide a baseline for evaluating and comparing our operating performance, and in the case of free cash flow, our liquidity results.
Within the measures referred to as ‘adjusted’, we adjust for significant items which will not be settled in cash, or which we believe to be items that are not core to our current or future operations. Some of these items may not be applicable for the current quarter, however they may be part of our full-year results. Additionally, we have historically adjusted for certain items which are not described below, but for which we may adjust in a future period when applicable. Items applicable to the quarter or full year results, or the comparable periods, include the following:
These non-GAAP measures are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP measures should be considered in addition to, and not as a substitute for, the information contained within our condensed consolidated financial statements.
Constant Currency Change and Organic Change
We evaluate our revenue on an as reported (U.S. GAAP), constant currency and organic basis. We believe presenting constant currency and organic information provides valuable supplemental information regarding our comparable results, consistent with how we evaluate our performance internally.
The constant currency and organic change results, and a reconciliation from the reported results for consolidated revenue are included in the ‘Consolidated Revenue’ section within this Form 10-Q. These measures are also reported by segment in the ‘Segment Revenue and Segment Operating Income’ section within this Form 10-Q.
A reconciliation of the as-reported change to the constant currency and organic changes for the three months ended March 31, 2025 from the three months ended March 31, 2024 is as follows. The components of revenue change may not add due to rounding.
38
For the three months ended March 31, 2025, our as-reported revenue decreased by 5% and our organic revenue grew by 5%. The decrease in as-reported revenue was due primarily to the sale of our TRANZACT business on December 31, 2024. The increase in organic revenue was driven by strong performances in both segments. For additional information, please see the section entitled ‘Segment Revenue and Segment Operating Income’ elsewhere within Item 2 of this Quarterly Report on Form 10-Q.
Adjusted Operating Income/Margin
We consider adjusted operating income/margin to be important financial measures, which are used internally to evaluate and assess our core operations and to benchmark our operating results against our competitors.
Adjusted operating income is defined as income from operations adjusted for amortization, restructuring costs, transaction and transformation and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted operating income margin is calculated by dividing adjusted operating income by revenue.
Reconciliations of income from operations to adjusted operating income for the three months ended March 31, 2025 and 2024 are as follows:
Adjusted for certain items:
Adjusted operating income
480
483
Income from operations margin
19.4
12.0
Adjusted operating income margin
21.6
20.6
Adjusted operating income decreased for the three months ended March 31, 2025 to $480 million, from $483 million for the three months ended March 31, 2024. This decrease resulted primarily from lower revenue due to the sale of our TRANZACT business on December 31, 2024, partially offset by lower marketing expenses and decreased local office expenses in the current year.
Adjusted EBITDA/Margin
We consider adjusted EBITDA/margin to be important financial measures, which are used internally to evaluate and assess our core operations, to benchmark our operating results against our competitors and to evaluate and measure our performance-based compensation plans.
Adjusted EBITDA is defined as net income adjusted for provision for income taxes, interest expense, depreciation and amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, net periodic pension and postretirement benefits, and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue.
Reconciliations of net income to adjusted EBITDA for the three months ended March 31, 2025 and 2024 are as follows:
65
Net periodic pension and postretirement benefits
(22
Adjusted EBITDA
532
546
Net income margin
10.8
8.3
Adjusted EBITDA margin
23.9
23.3
Adjusted EBITDA for the three months ended March 31, 2025 was $532 million, compared to $546 million for the three months ended March 31, 2024. This decrease resulted primarily from lower revenue due to the sale of our TRANZACT business on December 31, 2024, partially offset by lower marketing expenses and decreased local office expenses in the current year.
Adjusted Net Income and Adjusted Diluted Earnings Per Share
Adjusted net income is defined as net income attributable to WTW adjusted for amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, net periodic pension and postretirement benefits, and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results and the related tax effect of those adjustments and the tax effects of internal reorganizations. This measure is used solely for the purpose of calculating adjusted diluted earnings per share.
Adjusted diluted earnings per share is defined as adjusted net income divided by the weighted-average number of ordinary shares, diluted. Adjusted diluted earnings per share is used to internally evaluate and assess our core operations and to benchmark our operating results against our competitors.
Reconciliations of net income attributable to WTW to adjusted diluted earnings per share for the three months ended March 31, 2025 and 2024 are as follows:
Tax effect on certain items listed above (i)
(28
(46
325
Weighted-average ordinary shares — diluted
Adjusted for certain items (ii) :
0.48
0.58
0.17
1.21
0.74
(0.21
(0.14
(0.28
(0.44
3.13
Our adjusted diluted earnings per share was comparable for the three months ended March 31, 2025 and 2024, primarily due to a lower weighted-average outstanding share count due to our share repurchase activity over the last year, and lower marketing expenses and decreased local office expenses in the current year, partially offset by lower revenue due to the sale of our TRANZACT business on December 31, 2024.
Adjusted Income Before Taxes and Adjusted Income Taxes/Tax Rate
Adjusted income before taxes is defined as income from operations before income taxes and interest in earnings of associates adjusted for amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, net periodic pension and postretirement benefits, and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted income before taxes is used solely for the purpose of calculating the adjusted income tax rate.
Adjusted income taxes/tax rate is defined as the provision for income taxes adjusted for taxes on certain items of amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, net periodic pension and postretirement benefits, the tax effects of significant adjustments and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results, divided by adjusted income before taxes. Adjusted income taxes is used solely for the purpose of calculating the adjusted income tax rate.
Management believes that the adjusted income tax rate presents a rate that is more closely aligned to the rate that we would incur if not for the reduction of pre-tax income for the adjusted items and the tax effects of significant adjustments, which are not core to our current and future operations.
Reconciliations of income from operations before income taxes and interest in earnings of associates to adjusted income before taxes and provision for income taxes to adjusted income taxes for the three months ended March 31, 2025 and 2024 are as follows:
412
423
Adjusted income taxes
93
94
U.S. GAAP tax rate
21.5
19.9
Adjusted income tax rate
22.7
22.3
Our U.S. GAAP tax rates were 21.5% and 19.9% for the three months ended March 31, 2025 and 2024, respectively. The current-year quarter’s effective tax rate is higher primarily due to a change in the distribution of geographical income as well as net unfavorable discrete tax items.
Our adjusted income tax rates were 22.7% and 22.3% for the three months ended March 31, 2025 and 2024, respectively. The current-year quarter’s adjusted tax rate is higher primarily due to a change in the distribution of geographical income as well as net unfavorable discrete tax items.
Free Cash Flow
Free cash flow is defined as cash flows from operating activities less cash used to purchase fixed assets and software. Free cash flow is a liquidity measure and is not meant to represent residual cash flow available for discretionary expenditures.
As a result of our change in presentation, free cash flow for the prior period has been adjusted to conform to the current period, which includes the deduction of our capitalized software costs.
Management believes that free cash flow presents the core operating performance and cash generating capabilities of our business operations.
Reconciliations of cash flows from operating activities to free cash flow for the three months ended March 31, 2025 and 2024 are as follows:
Cash flows (used in)/from operating activities
Less: Additions to fixed assets and software
(36
The decrease in free cash flow during the current-year period was primarily driven by the absence of cash collections related to TRANZACT, which the Company sold on December 31, 2024, and increased compensation payments in the current-year quarter as compared to the prior-year quarter.
Critical Accounting Estimates
There were no material changes from the Critical Accounting Estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 25, 2025.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have considered changes in our exposure to market risks during the three months ended March 31, 2025 and have determined that there have been no material changes to our exposure to market risks from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 25, 2025. However, we have provided the following information to supplement or update our disclosures on our Form 10-K.
The Company has a global investment policy which is designed to ensure that we maintain diversification of our cash investments throughout the world in order to minimize the risk of loss due to a counterparty failure.
Interest Income on Fiduciary Funds
As described in our Annual Report on Form 10-K, we are exposed to interest rate risk. Specifically, as a result of our operating activities, we receive cash for premiums and claims which we deposit in high-quality bank term deposit and money market funds, on which we earn interest, where permitted. We also hold funds for clients of our benefits accounts businesses. For the benefit funds not invested, cash and cash equivalents are held, on which we earn interest, until the funds are directed by plan participants to either be invested in mutual funds or paid out on their behalf. This interest earned is included in our condensed consolidated financial statements as interest income. These funds are regulated in terms of access and the instruments in which they may be invested, most of which are short-term in maturity. Short-term rates in major currencies began to decrease over the second half of 2024 from end-of-2023 levels. This followed some steep central bank rate increases in 2023. Our increased interest income in 2024 reflected a combination of relatively high-average interest rates over the course of 2024 and some increases in our invested cash balances. Through the first quarter of 2025, although at levels below the same period in 2024, short-term rates have remained largely stable. Significant economic uncertainty prevails at this time, and the timing and magnitude of future central bank rate changes are uncertain. As to be expected, interest income in the future will be a function of the short-term rates we are able to obtain by currency and the cash balances available to invest. Interest income was $39 million and $43 million for the three months ended March 31, 2025 and 2024, respectively. At March 31, 2025, we held $2.9 billion of fiduciary funds invested in interest-bearing accounts. If short-term interest rates increased or decreased by 25 basis points, interest earned on these invested fiduciary funds, and therefore our interest income recognized, would increase or decrease by approximately $7 million on an annualized basis.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of March 31, 2025, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (‘CEO’) and the Chief Financial Officer (‘CFO’), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the ‘Exchange Act’). Based upon that evaluation, our management, including the CEO and CFO, concluded that the our disclosure controls and procedures are effective in providing reasonable assurance that the information required to be included in the periodic reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (2) accumulated and communicated to our management, including the CEO and the CFO, as appropriate, to allow for timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) under the Exchange Act during the quarter ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Management, including the CEO and CFO, does not expect that our disclosure controls and procedures will necessarily prevent all errors and all fraud. However, management does expect that the control system provides reasonable assurance that its objectives will be met. A control system, no matter how well designed and operated, cannot provide absolute assurance that the control system’s objectives will be met. In addition, the design of such internal controls must take into account the costs of designing and maintaining such a control system. Certain inherent limitations exist in control systems to make absolute assurances difficult, including the realities that judgments in decision-making can be faulty, that breakdowns can occur because of a simple error or mistake, and that individuals can circumvent controls. The design of any control system is based in part upon existing business conditions and risk assessments. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in business conditions or deterioration in the degree of compliance with policies or procedures. As a result, they may require change or revision. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and may not be detected. Nevertheless, the disclosure controls and procedures are designed to provide
reasonable assurance of achieving their stated objectives, and the CEO and CFO have concluded that the disclosure controls and procedures are effective at a reasonable assurance level.
45
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are a party to various lawsuits, arbitrations or mediations that arise in the ordinary course of business. The disclosure called for by Part II, Item 1 regarding our legal proceedings is incorporated by reference herein from Part I, Item 1 Note 14 — Commitments and Contingencies - Legal Proceedings of the notes to the condensed consolidated financial statements in this Form 10-Q for the quarter ended March 31, 2025.
ITEM 1A. RISK FACTORS
There are no material changes from risk factors as previously disclosed in our Annual Report on Form 10-K, filed with the SEC on February 25, 2025. We urge you to read the risk factors contained therein.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2025, no shares were issued by the Company without registration under the Securities Act of 1933, as amended.
(c) Issuer Purchases of Equity Securities
The Company is authorized to repurchase shares, by way of redemption or otherwise, and will consider whether to do so from time to time, based on many factors, including market conditions. There are no expiration dates for these repurchase plans or programs.
The following table presents specified information about the Company’s repurchases of its shares in the first quarter of 2025 and the Company’s remaining repurchase authority.
Period
Total number of shares purchased
Average price paid per share
Total number of shares purchased as part of publicly announced plans or programs
Maximum number of shares that may yet be purchased under the plans or programs
January 1, 2025 through January 31, 2025
27,610
317.23
4,253,979
February 1, 2025 through February 28, 2025
239,746
325.92
4,014,233
March 1, 2025 through March 31, 2025
339,865
332.79
3,674,368
329.37
At March 31, 2025 the maximum number of shares that may yet be purchased under the existing share repurchase plan is 3,674,368, with approximately $1.2 billion remaining on the current open-ended repurchase authority granted by the board. An estimate of the maximum number of shares under the existing authorities was determined using the closing price of our ordinary shares on March 31, 2025 of $337.95.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the quarter ended March 31, 2025, the following directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified, or terminated ‘Rule 10b5-1 trading arrangements’ (as defined in Regulation S-K, Item 408) intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act:
Director orOfficer Name
Director or Officer Title
Plan Adopted, Modified, or Terminated
Securities Covered by Plan
Amount of SecuritiesEligible for Sale Under the Plan
Plan TerminationDate*
Andrew Krasner
Chief Financial Officer
Adopted on March 3, 2025
Ordinary Shares
1,600
March 4, 2026
Carl Hess
Chief Executive Officer
Adopted on February 6, 2025
10,000
July 31, 2025
Alexis Faber
Chief Operating Officer
Ordinary Shares underlying vested Restricted Stock Units (‘RSUs’)
10% of those vested RSUs† granted by WTW on April 1, 2022, 2023, and 2024
December 31, 2025
* Subject to early termination for certain specified events set forth in the plan.
† Excluding any Ordinary Shares withheld by the Company to satisfy its income tax withholding obligations in connection with the net settlement of equity awards.
ITEM 6. EXHIBITS
EXHIBIT INDEX
Incorporated by Reference
Exhibit
Number
Description of Exhibit
Schedule/
Form
Filing Date
Filed
Herewith
10.1†
Willis Towers Watson Public Limited Company 2012 Equity Incentive Plan (as amended and restated February 25, 2025).
X
22.1
List of Issuers and Guarantor Subsidiaries.
10-K
February 25,2025
31.1
Certification of the Registrant’s Chief Executive Officer, Carl A. Hess, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
31.2
Certification of the Registrant’s Chief Financial Officer, Andrew J. Krasner, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
32.1**
Certification of the Registrant’s Chief Executive Officer, Carl A. Hess, and Chief Financial Officer, Andrew J. Krasner, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
** Furnished herewith. Any exhibits furnished herewith (including the certification furnished in Exhibit 32.1) are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed ‘filed’ for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the ‘Exchange Act’), or otherwise subject to the liability of that section. Such information shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
† Management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Willis Towers Watson Public Limited Company
(Registrant)
/s/ Carl A. Hess
April 24, 2025
Name:
Carl A. Hess
Date
Title:
/s/ Andrew J. Krasner
Andrew J. Krasner
/s/ Joseph S. Kurpis
Joseph S. Kurpis
Principal Accounting Officer and Controller