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Willis Towers Watson sees little pandemic effect on results so far

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Haley

Willis Towers Watson PLC reported second-quarter revenue of $2.11 billion on Thursday, a 3% increase over the same period last year, as the COVID-19 outbreak had a limited effect on the broker’s business, the brokerage’s top executive said.

CEO John Haley, however, cautioned that the pandemic may more severely blunt future performance of the firm, which is being acquired by rival Aon PLC in a deal that is slated to close next year.

Willis Towers Watson’s organic growth, which excludes acquisitions and foreign exchange fluctuations, was flat for the 2020 second quarter.

Revenue in the firm’s corporate risk and broking business grew 1.6% over the same period last year to $701 million, with organic revenue rising 4%.

The firm’s investment, risk and reinsurance business reported $413 million in revenue for the second quarter, a 1% increase over the same period last year, and 2% organic growth.

Revenue in the human capital and benefits business fell 3.8% to $767 million and organic revenue fell 2%.

Revenue in the benefits delivery and administration unit grew 65.9% to $209 million on the inclusion of Tranzact revenue for the 2020 second quarter. Willis Towers Watson completed the acquisition of Fort Lee, New Jersey-based direct-to-consumer health care organization MG LLC, which does business as Tranzact, in the third quarter of 2019.

Organic revenue for the unit fell 3%, according to Willis Towers Watson’s earnings presentation.

The COVID-19 pandemic dented demand for some business advisory services, Mr. Haley said on a conference call with analysts.

The firm reported net income for the second quarter of $102 million, down 31.5% compared with the same period last year as an increased provision for income taxes hit the bottom line.

Mr. Haley said that while the COVID-19 outbreak had a limited effect on Willis’s second-quarter results, any future impact remains uncertain and could be more severe.

“As a general matter, the COVID-19 pandemic did not have a material adverse impact to our financial results for the second quarter. However, the pandemic did impact revenue growth, particularly in some discretionary lines, and we expect that the impact of COVID-19 on general economic activity could negatively impact our revenue and results for the remainder of 2020 and potentially even longer,” he said.

Aon’s planned purchase of Willis Towers Watson, which would potentially create the world’s largest brokerage, remains on track to close in the first half of 2021, subject to closing conditions, Mr. Haley said.