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Willis Towers Watson boosts revenue, net income; merger costs 'material'

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Willis Towers Watson P.L.C. on Friday reported its first earnings since merging with Towers Watson & Co., saying its revenue rose 11.0% during the first quarter of this year.

Reporting on a pro forma basis for 2015 to reflect its merger early this year with Towers Watson, the insurance brokerage said it recorded $2.23 billion in revenue for the first quarter of 2016.

Net income increased 14.5% to $245 million, Willis Towers Watson said.

“We’ll continue to incur various merger and integration costs,” Chief Financial Officer Roger Millay said Friday during a conference call with analysts. “These costs will continue to be material as we work through the integration period, and we expect them to be approximately in the $150 million to the $175 million range. The level of spending will depend how quickly we move through some of the integration activities.”

Mr. Millay added: “We continue to expect organic revenue growth to be in the mid-single digits, but based on the first-quarter results, our expectations are a bit muted versus the beginning of the year.”

Segment results

Willis Towers Watson said the various segments of its business had mixed performance in the quarter.

• Willis’ international business had commissions and fees of $481 million, up 68% due in large part to last year’s acquisition of the rest of Gras Savoye & Cie.

• Willis’ North America business boosted its commissions and fees by 3% during the quarter, rising to $368 million, led by U.S. Northeast construction and financial institution business.

• Willis’ capital, wholesale and reinsurance business posted a quarterly gain of 12%, rising to $331 million, due in large part to last year’s investment in Miller Insurance Services L.L.P., Willis said.

• The Towers Watson benefits business recorded a 2% drop in revenue, which fell to $486 million.

• The Towers Watson exchange segment boosted revenue by 57% to $152 million.

• The Towers Watson risk and financial services segment’s revenue fell 8% to $144 million.

• Willis GB, which includes specialty, facultative and retail insurance businesses in Great Britain, saw a 2% drop in quarterly revenue to $139 million.

• The Towers Watson talent and rewards segment’s revenue dropped 11% to $124 million.