Willis Towers Watson revenue inches up in fourth quarterReprints
Willis Towers Watson P.L.C. on Thursday reported slightly higher revenues in the fourth quarter of 2016 as the company continues to integrate its operations following the January 2016 merger of Willis Group Holdings P.L.C. and Tower Watson & Co.
The London-based brokerage and consulting firm reported fourth-quarter revenues of $1.93 billion, a 0.3% increase compared over the same period in 2015 on a pro forma basis.
“While the 2016 revenue performance may not fully reflect our integration and sales efforts, the commitment I see from our colleagues throughout the organization and the steps we’ve taken to build the framework for long-term success, gives me great confidence in achieving our merger objectives,” John Haley, Willis Towers Watson’s chief executive officer, said during the earnings conference call. “We still have a lot of hard work ahead of us, but the momentum continues to build.”
Net income for the fourth quarter was $34 million, down 48.5% compared with pro forma profit for the same period in 2015.
The company initially projected $20 million in merger-related cost savings in 2016, but achieved nearly $40 million in savings, Mr. Haley said during the call. However, the company’s restructuring efforts hit about 450 positions across all segments, which cost about $50 million, he said.
Full-year revenues rose 6.4% to $7.85 billion in 2016 and full-year net income declined 51.2% to $312 million comparted with pro forma 2015.
In the individual business divisions, the corporate risk and broking segment reported commissions and fees of $695 million in the fourth quarter, a 2.4% increase on a pro forma basis compared with the same period in 2015, driven by the December 2015 acquisition of French insurance broker Gras Savoye, according to the earnings report.
Great Britain led organic growth in the segment due to strong growth in construction, retail and aerospace, with Western Europe also experiencing strong organic growth, while North America organic growth declined due to a lower new business pipeline, the earnings report stated.
The human capital and benefits segment reported commissions and fees of $751 million in the fourth quarter, a 3.7% proforma decrease compared with the 2015 fourth quarter, amid a drop in retirement revenues that was partially offset by an increase in North American pension administration fees, according to the earnings report. The segment experienced the biggest impact of the business restructuring, with more than 325 positions eliminated, Mr. Haley said.
“This restructuring was intended to create better alignment with client expectations and market demand and also to improve our leverage model,” he said. “However, given the size of this initiative in the HCB segment, we experienced more business disruption in this segment than in any of the others.”
The investment, risk and reinsurance segment experienced a 9.4% decrease in commissions and fees to $260 million in the fourth quarter due to a decline in reinsurance and portfolio underwriting services, according to the earnings report.