WTW releases quarterly earnings report
WTW releases quarterly earnings report | Insurance Business New Zealand
Insurance News
WTW releases quarterly earnings report
Several factors behind impacted margins pinpointed
Insurance News
By
Terry Gangcuangco
WTW has published its financial results for the quarter ended June 30, 2023.
Here’s how the global brokerage performed in the second quarter:
Metric
Q2 2023
Q2 2022
Revenue
US$2.16 billion
US$2.03 billion
Income from operations
US$142 million
US$137 million
Adjusted operating income
US$315 million
US$314 million
Net income
US$96 million
US$114 million
Adjusted net income
US$219 million
US$260 million
Of the group’s segment operating income, US$145 million came from the risk & broking (R&B) segment; US$222 million from health, wealth & career (HWC). The HWC segment saw a higher operating income in the period, while R&B posted a 14% decline.
WTW noted in a release: “Operating margins in the R&B segment decreased 360 basis points from the prior-year second quarter to 16.1%, primarily due to the run-rate impact of investments in talent who are continuing to ramp up in revenue production, higher travel and expense-related items due to the increased volume of client-based travel, and headwinds from the impact of book-of-business settlement revenue in the prior year.”
Meanwhile WTW expects to deliver adjusted operating margin expansion for the full year, as well as mid-single digit organic revenue growth. Additionally, the company is increasing its 2024 target of total annualised run-rate savings to US$380 million, as a result of the continued success of WTW’s transformation plan.
Chief executive Carl Hess commented: “As our strong organic revenue growth demonstrates, our strategic initiatives continue to gain traction in the marketplace, highlighting the value of our investments in talent and technology. However, headwinds from prior-year book sales, inflationary conditions, and the costs of our investments negatively impacted our margins and earnings this quarter.
“We have reduced our 2024 adjusted operating margin and adjusted EPS (earnings per share) targets to account for these short-term trends, as well as our ongoing strategic investments and the unfavourable pension income dynamics we have previously noted. We believe we are well-positioned to resume steady growth in margins, earnings, and free cash flow from current levels.”
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