Willis Towers Watson reports higher revenue, loss on merger costs

Willis Towers Watson P.L.C. reported third-quarter revenue of $1.78 billion on Friday, up 2% from a year ago on a pro forma basis, but also posted a $32 million loss, compared with pro forma earnings of $209 million a year ago, as the insurance brokerage faces merger and restructuring costs.

The former Willis Group Holdings P.L.C. and Towers Watson & Co. completed their merger on January 4. CEO John Haley acknowledged some issues concerning merger expenses during a conference call with analysts.

“I think you always have a little bit of loss whenever you go through some big changes like this, in the merger that we did,” Mr. Haley said.  “I think as we put the organization together, we probably made it a little bit too complex, too.”

Mr. Haley added that executives were “making sure to streamline the organization and spend more time with clients and less time internally.”

Over the past two weeks, several former Willis senior executives have left, or announced their intention to leave, the firm, including Dominic Casserley, who is the merged firm’s deputy CEO and was the CEO of Willis. Mr. Casserley will leave on Dec. 31 when his employment agreement expires.

Among its major business units, its corporate risk and broking segment reported a 5% increase in commissions and fees in the third quarter to $546 million.

Its investment, risk and reinsurance segment reported a 9% decrease in commissions and fees to $292 million.

Regarding reinsurance, Mr. Haley said the firm has experienced some of the biggest headwinds in North America, though Willis Towers Watson has so far exceeded its new business targets this year.

“What hurt us,” he said, “is that some existing clients are buying less reinsurance … partly because mergers have cut the market in total, and then we’ve had a couple of clients that have restructured some of the reinsurance programs, which have led to revenues being shifted to different years.”