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2017 brokerage revenue: $8.12 billion
Percent increase (decrease): 4.3%
Todd Jones says he doesn’t hear the word “legacy” as often as he once did.
Mr. Jones, global head of corporate risk and broking at Willis Towers Watson P.L.C., said he believes the brokerage is moving on from the January 2016 completion of the $18 billion deal that united London-based brokerage Willis Group Holdings P.L.C. and New York-based consulting firm Towers Watson & Co.
“I reflect on my time in 2016 and 2017,” he said, “and we spent a lot of time using the word legacy — ‘legacy Willis this’ or ‘legacy Towers Watson that,’ and I hear that reference a lot less nowadays than I did then, which I think is a sign of we’re no longer thinking about the orientation of where we came and we’re thinking about the company that we are today.”
Mr. Jones acknowledged that 2016 was a challenging year as the two companies integrated. But he said 2017 turned out to be a “very good year.”
“In 2017, I think we were quite happy with the momentum in the business that we saw,” he said, “and some of it was the result of the new company that we had become, but also some of it was getting back to the basics and the discipline it takes to run a growing enterprise.”
Willis Towers Watson reported $8.12 billion in brokerage revenue in 2017, a 4.3% increase from the prior year, and it remains No. 3 in Business Insurance’s 2018 ranking of the world’s largest insurance brokers.
“Some of the questions about loss of business and loss of employees having a major impact on the company’s ability to grow its top line disappeared,” said Elyse Greenspan, New York-based senior equity research analyst for Wells Fargo Securities L.L.C. “Obviously, 2018 is the year where you see the last of the integration in terms of charges and, as a broker, the biggest focus is the growth in their cash flow.”
“Willis Towers Watson is making steady progress on integrating the two legacy firms,” said Bruce Ballentine, lead analyst at Moody’s Investor Services Inc. in New York. “The combined firm has achieved its targeted post-merger expense savings and is starting to see revenue benefits.”
The brokerage “can now turn its attention to growth,” he added.
Mr. Jones said he believes the positive momentum from 2017 has continued into the first quarter of 2018, when Willis Towers Watson reported revenue of $2.29 billion, off 1% from $2.32 billion in the year-ago quarter but up 10% to $2.58 billion on an underlying basis, factoring in accounting changes.
Last year saw a changing of the financial guard at Willis Towers Watson as former PricewaterhouseCoopers executive Michael J. Burwell succeeded Roger Millay as chief financial officer when Mr. Millay retired.
Mr. Jones said the brokerage valued Mr. Millay’s “enormous contributions to the company, but at the same time we’re really thrilled to have Mike in the role, kind of picking up that mantel and being a real strategic partner in our finance organization.”
However, the hiring hit a speed bump when Aon P.L.C. sued Willis Towers Watson, alleging Mr. Burwell knew about Aon’s trade secrets while working as a consultant for the firm. The dispute was resolved with a confidential settlement agreement.
Additionally, in March, Alexis Faber, global head of financial lines, was named to the newly created position of chief operating officer within its corporate risk and broking segment.
Mr. Jones said the firm is seeing growth everywhere it operates.
“We’re seeing growth in our international business,” he said. “We’re seeing growth in Western Europe. We’re seeing growth in our North American franchise. Now certainly, as we report, there are businesses within those businesses that may not be experiencing the same growth as in other markets, but as a portfolio of businesses we’re seeing growth all over the world.”
Mr. Ballentine said the brokerage is in a good line of business.
“The insurance brokerage business continues to demonstrate value for insurance buyers and carriers,” he said. “Brokers offer advice and solutions regarding property risks, liability risks and employee benefits, which are important and increasingly complex problems.”
Mr. Jones believes now is a good time to be in the risk business.
“I think times like these, when you have a really dynamic changing marketplace, is the time to become closer to clients,” he said, “to provide them much greater insight and transparency on how we see the world so they can make better informed buying decisions and be far more strategic within their own organizations, rather than simply being the insurance purchasing arm.”
The commercial insurance market saw some rate increases over the past year, which provided a slight tail wind for brokerages, but the brokers that saw the largest revenue increases mostly relied on acquisitions to drive their growth.