Willis Towers Watson Public Limited Company WTW delivered first-quarter 2025 adjusted earnings of $3.13 per share, which missed the Zacks Consensus Estimate by 2.1%. The bottom line remained flat year over year.
The insurer’s results reflect higher revenues and expanded operating margins at the Risk & Broking segment, as well as lower expenses. It was offset by lower revenues at the Health, Wealth & Career segment and reduced adjusted operating income. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Willis Towers’ Operational Update
Willis Towers posted adjusted consolidated revenues of $2.2 billion, down 5% year over year on a reported basis, due to the sale of TRANZACT. Revenues increased 5% on an organic basis and decreased 4% on a constant currency basis. The top line missed the Zacks Consensus Estimate by 3.9%.
The total costs of providing services decreased 13% year over year to $1.8 billion due to lower salaries and benefits, other operating expenses, depreciation, amortization, restructuring costs, transaction and transformation. The figure was lower than our estimate of $2 billion.
Adjusted operating income was $480 million, down 1% year over year. Adjusted operating margin expanded 100 basis points (bps) to 21.6%.
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Willis Towers Watson Public Limited Company price-consensus-eps-surprise-chart | Willis Towers Watson Public Limited Company Quote
Adjusted EBITDA was $532 million, down 3% year over year. Adjusted EBITDA margin was 23.9%, which expanded 60 bps.
Quarterly Segment Update of Willis Towers
Health, Wealth & Career: Total revenues of $1.1 billion fell 13% year over year (12% decrease on a constant currency and 3% decline on an organic basis). Our estimate was pegged at $1.2 billion.
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 the Investments business due to the success of the 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 revenues grew primarily from increased project and core administration work.
The operating margin was 26.7%, which increased 160 bps from the prior-year quarter, primarily due to the sale of TRANZACT and savings from the Transformation program.
Risk & Broking: Total revenues of $1.03 billion rose 5% year over year (7% increase in constant currency and on an organic basis). The figure matched our estimate.
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, driven by the Consulting and Technology practices.
The operating margin increased 120 bps from the prior-year quarter to 22%, primarily due to operating leverage driven by strong organic revenue growth and savings from the Transformation program. It was partially offset by headwinds from decreased interest income and foreign currency fluctuations.
Financial Update of Willis Towers
Cash and cash equivalents of $1.5 billion at the quarter end decreased 20.2% from the 2024-end level. Long-term debt decreased 10.3% to $4.7 billion at quarter-end from the end of 2024. Shareholders’ equity increased 2.4% from the level on Dec. 31, 2024, to $8.1 billion as of March 31, 2025.
Cash flow from operations was $35 million, which increased 45.8% year over year.
Free cash outflow was $86 million compared with the outflow of $36 million in the year-ago quarter. Free cash flow decreased $50 million, primarily due to the absence of cash collections related to TRANZACT, which WTW sold on Dec. 31, 2024, and increased compensation payments in the current-year quarter as compared to the prior-year quarter.
WTW bought back shares worth $200 million in the quarter.
WTW Provides 2025 Guidance
Willis Towers expects cash outflows from the payment of accrued costs related to the Transformation program, which concluded in 2024.
The insurer projects share repurchases of $1.5 billion, subject to market conditions and potential capital allocation to organic and inorganic investment opportunities.
Willis Towers expects a foreign currency impact on adjusted diluted earnings per share to be neutral in 2025 at current rates.
WTW expects 100 basis points of average annual margin expansion over the next 3 years in R&B and incremental annual margin expansion at HWC and enterprise levels.
WTW Zacks Rank
WTW currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Marsh & McLennan Companies, Inc. MMC reported first-quarter 2025 adjusted earnings per share of $3.06, which surpassed the Zacks Consensus Estimate by 1.3%. The bottom line advanced 5% year over year. Consolidated revenues of $7.1 billion improved 9% year over year. The figure rose 4% on an underlying basis. However, the top line missed the consensus mark by 0.1%. Total operating expenses escalated 11.2% year over year to $5.1 billion, higher than our model estimate of $4.8 billion.
Expenses of the Risk and Insurance Services segment escalated 16.3% year over year, while the Consulting segment’s expenses increased 4.3% year over year. Marsh & McLennan’s adjusted operating income improved 8% year over year to $2.2 billion but fell slightly short of our estimate of $2.3 billion.
Chubb Limited CB reported first-quarter 2025 core operating income of $5.68 per share, which outpaced the Zacks Consensus Estimate by 12.8%. However, the bottom line decreased 30.1% year over year. Net premiums written improved 3.5% year over year to $12.6 billion in the quarter. Our estimate was $13.2 billion, while the Zacks Consensus Estimate was pegged at $13 billion.
Net investment income was $1.5 billion, up 12.2% year over year. The Zacks Consensus Estimate and our estimate for the same were both pegged at $1.6 billion. Property and casualty (P&C) underwriting income was $441 million, down 68.5% year over year. Global P&C underwriting income, excluding Agriculture, was $387 million, down 71.2%. Chubb Limited incurred pre-tax net catastrophe losses of $1.64 billion, wider than the year-ago quarter’s loss of $435 million. The losses include $1.47 billion from the California wildfires.
Selective Insurance Group, Inc. SIGI reported first-quarter 2025 operating income of $1.76 per share, which missed the Zacks Consensus Estimate by 6.8%. The bottom line increased 32.3% from the year-ago quarter. Total revenues of $1.3 billion increased 10% from the year-ago quarter’s figure. The top line missed the Zacks Consensus Estimate by 0.9%.
On a year-over-year basis, net premiums written (NPW) increased 7% to $1.2 billion. Average renewal pure price expanded 220 basis points year over year to 10.3%. The figure matched our estimate. Net investment income increased 12% year over year to $95.6 million. After-tax net underwriting income was $36.1 million, which more than doubled year over year. Net catastrophe losses of $43.4 million were narrower than the year-ago loss of $55.2 million.
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