filings.toolsWillis Towers Watson 10-Q 2025-03-31
Filed 2025-04-24. 8 sections, 180K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2025
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to ___________
Commission File Number: 001-16503
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
| Ireland (Jurisdiction of incorporation or organization) | 98-0352587 (I.R.S. Employer Identification No.) | |
| c/o Willis Group Limited 51 Lime Street**,** London EC3M 7DQ**,** England (Address of principal executive offices) | (011) 44-20-3124-6000 (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Ordinary Shares, nominal value $0.000304635 per share | WTW | NASDAQ Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of ‘large accelerated filer’, ‘accelerated filer’, ‘smaller reporting company’, and ‘emerging growth company’ in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | | Accelerated filer | | Non-accelerated filer | | Smaller reporting company | ☐ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 21, 2025, there were outstanding 99,149,791 ordinary shares, nominal value $0.000304635 per share, of the registrant.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
INDEX TO FORM 10-Q
For the Three Months Ended March 31, 2025
Certain De****finitions
The following definitions apply throughout this quarterly report unless the context requires otherwise:
| ‘We’, ‘Us’, ‘Company’, ‘Willis Towers Watson’, ‘Our’, ‘Willis Towers Watson plc’ or ‘WTW’ | Willis Towers Watson Public Limited Company, a company organized under the laws of Ireland, and its subsidiaries | |
| ‘shares’ | The ordinary shares of Willis Towers Watson Public Limited Company, nominal value $0.000304635 per share | |
| ‘TRANZACT’ | TZ Holdings, Inc. and its subsidiaries, doing business as TRANZACT. The Company sold TRANZACT on December 31, 2024. | |
| ‘U.S.’ | United States | |
| ‘U.K.’ | United Kingdom | |
| ‘E.U.’ | European Union or European Union 27 (the number of member countries following the United Kingdom’s exit) | |
| ‘U.S. GAAP’ | United States Generally Accepted Accounting Principles | |
| ‘FASB’ | Financial Accounting Standards Board | |
| ‘ASC’ | Accounting Standards Codification | |
| ‘ASU’ | Accounting Standards Update | |
| ‘SEC’ | United States Securities and Exchange Commission | |
| ‘EBITDA’ | Earnings before Interest, Taxes, Depreciation and Amortization |
Disclaimer Regarding For****ward-looking Statements
We have included in this document ‘forward-looking statements’ within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, that address activities, events or developments that we expect or anticipate may occur in the future, including such things as: our outlook; the potential impact of natural or man-made disasters like health pandemics and other world health crises; future capital expenditures; ongoing working capital efforts; future share repurchases; financial results (including our revenue, costs or margins) and the impact of changes to tax laws on our financial results; existing and evolving business strategies including those related to acquisition and disposition; demand for our services and competitive strengths; strategic goals; the benefits of new initiatives; growth of our business and operations; the sustained health of our product, service, transaction, client, and talent assessment and management pipelines; our ability to successfully manage ongoing leadership, organizational and technology changes, including investments in improving systems and processes; our ability to implement and realize anticipated benefits of any cost-savings initiatives generated from our now-completed multi-year operational transformation program or other expense savings initiatives; our recognition of future impairment charges; and plans and references to future successes, including our future financial and operating results, short-term and long-term financial goals, plans, objectives, expectations and intentions, including with respect to free cash flow generation, adjusted net revenue, adjusted operating margin and adjusted earnings per share, are forward-looking statements. Also, when we use words such as ‘may’, ‘will’, ‘would’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘plan’, ‘continues’, ‘seek’, ‘target’, ‘goal’, ‘focus’, ‘probably’, or similar expressions, we are making forward-looking statements. Such statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. All forward-looking disclosure is speculative by its nature.
There are important risks, uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including the following:
our ability to successfully establish, execute and achieve our global business strategy as it evolves;
our ability to fully realize the anticipated benefits of our growth strategy, including inorganic growth through acquisitions;
our ability to achieve our short-term and long-term financial goals, such as with respect to our cash flow generation, and the timing with respect to such achievement;
the risks related to changes in general economic conditions, business and political conditions, changes in the financial markets, inflation, credit availability, increased interest rates, changes in trade policies, increased tariffs and retaliatory actions;
the risks to our short-term and long-term financial goals from any of the risks or uncertainties set forth herein;
the risks relating to the adverse impacts of macroeconomic trends, including those relating to changes in trade policies and tariffs, as well as political events, war, such as the Russia-Ukraine and Israel-Hamas wars, and other international disputes, terrorism, natural disasters, public health issues and other business interruptions on the global economy and capital markets, such as uncertainty in the global markets, inflation, changes in interest rates and recessionary trends, changes in spending by government agencies and contractors, which could have a material adverse effect on our business, financial condition, results of operations and long-term goals;
our ability to successfully hedge against fluctuations in foreign currency rates;
the risks relating to the adverse impacts of natural or man-made disasters such as health pandemics and other world health crises on the demand for our products and services, our cash flows and our business operations;
material interruptions to or loss of our information processing capabilities, or failure to effectively maintain and upgrade our information technology resources and systems and related risks of cybersecurity breaches or incidents;
our ability to comply with complex and evolving regulations related to data privacy, cybersecurity and artificial intelligence;
the risks relating to the transitional arrangements in effect subsequent to our now-completed sale of TRANZACT;
significant competition that we face and the potential for loss of market share and/or profitability;
the impact of seasonality and differences in timing of renewals and non-recurring revenue increases from disposals and book-of-business sales;
the insufficiency of client data protection, potential breaches of information systems or insufficient safeguards against cybersecurity breaches or incidents;
the risk of increased liability or new legal claims arising from our new and existing products and services, and expectations, intentions and outcomes relating to outstanding litigation;
the risk of substantial negative outcomes on existing or potential future litigation or investigation matters;
changes in the regulatory environment in which we operate, including, among other risks, the impacts of pending competition law and regulatory investigations;
various claims, government inquiries or investigations or the potential for regulatory action;
our ability to make divestitures or acquisitions, including our ability to integrate or manage acquired businesses or carve-out businesses to be disposed, as well as our ability to identify and successfully execute on opportunities for strategic collaboration;
our ability to integrate direct-to-consumer sales and marketing solutions with our existing offerings and solutions;
our ability to successfully manage ongoing organizational changes, including as a result of our recently-completed multi-year operational transformation program, investments in improving systems and processes, and in connection with our acquisition and divestiture activities;
disasters or business continuity problems;
our ability to successfully enhance our billing, collection and other working capital efforts, and thereby increase our free cash flow;
our ability to properly identify and manage conflicts of interest;
reputational damage, including from association with third parties;
reliance on third-party service providers and suppliers;
risks relating to changes in our management structures and in senior leadership;
the loss of key employees or a large number of employees and rehiring rates;
our ability to maintain our corporate culture;
doing business internationally, including the impact of global trade policies and retaliatory considerations as well as foreign currency exchange rates;
compliance with extensive government regulation;
the risk of sanctions imposed by governments, or changes to associated sanction regulations (such as sanctions imposed on Russia) and related counter-sanctions;
our ability to effectively apply technology, data and analytics changes for internal operations, maintaining industry standards and meeting client preferences;
changes and developments in the insurance industry or the U.S. healthcare system, including those related to Medicare, and any other changes and developments in legal, regulatory, economic, business or operational conditions that could impact our businesses;
the inability to protect our intellectual property rights, or the potential infringement upon the intellectual property rights of others;
fluctuations in our pension assets and liabilities and related changes in pension income, including as a result of, related to, or derived from movements in the interest rate environment, investment returns, inflation, or changes in other assumptions that are used to estimate our benefit obligations and their effect on adjusted earnings per share;
our capital structure, including indebtedness amounts, the limitations imposed by the covenants in the documents governing such indebtedness and the maintenance of the financial and disclosure controls and procedures of each;
our ability to obtain financing on favorable terms or at all;
adverse changes in our credit ratings;
the impact of recent or potential changes to U.S. or foreign laws, and the enactment of additional, or the revision of existing, state, federal, and/or foreign laws and regulations, recent judicial decisions and development of case law, other regulations and any policy changes and legislative actions, including those that may impose additional excise taxes or impact our effective tax rate;
U.S. federal income tax consequences to U.S. persons owning at least 10% of our shares;
changes in accounting principles, estimates or assumptions;
our recognition of future impairment charges;
risks relating to or arising from environmental, social and governance (‘ESG’) practices;
fluctuation in revenue against our relatively fixed or higher-than-expected expenses;
the risk that investment levels increase;
the laws of Ireland being different from the laws of the U.S. and potentially affording less protections to the holders of our securities; and
our holding company structure potentially preventing us from being able to receive dividends or other distributions in needed amounts from our subsidiaries.
The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For more information, please see Part I, Item 1A in our Annual Report on Form 10-K, and our subsequent filings with the SEC. Copies are available online at http://www.sec.gov or www.wtwco.com.
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report on Form 10-Q, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved.
Our forward-looking statements speak only as of the date made and we will not update these forward-looking statements unless the securities laws require us to do so. With regard to these risks, uncertainties and assumptions, the forward-looking events discussed in this document may not occur, and we caution you against unduly relying on these forward-looking statements.
PART I. FINANCI****AL INFORMATION
Item 1. FINANCIAL STATEMENTS (UNAUDITED)
WILLIS TOWE****RS WATSON PUBLIC LIMITED COMPANY
Condensed Consolidated Statem****ents of Comprehensive Income
(In millions of U.S. dollars, except per share data)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | 2,223 | $ | 2,341 | ||||
| Costs of providing services | ||||||||
| Salaries and benefits | 1,324 | 1,342 | ||||||
| Other operating expenses | 365 | 457 | ||||||
| Depreciation | 54 | 59 | ||||||
| Amortization | 48 | 60 | ||||||
| Restructuring costs | — | 18 | ||||||
| Transaction and transformation | — | 125 | ||||||
| Total costs of providing services | 1,791 | 2,061 | ||||||
| Income from operations | 432 | 280 | ||||||
| Interest expense | (65 | ) | (64 | ) | ||||
| Other (loss)/income, net | (64 | ) | 26 | |||||
| INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 303 | 242 | ||||||
| Provision for income taxes | (65 | ) | (48 | ) | ||||
| INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES | 238 | 194 | ||||||
| Interests in earnings of associates, net of tax | 1 | — | ||||||
| NET INCOME | 239 | 194 | ||||||
| Income attributable to non-controlling interests | (4 | ) | (4 | ) | ||||
| NET INCOME ATTRIBUTABLE TO WTW | $ | 235 | $ | 190 | ||||
| EARNINGS PER SHARE | ||||||||
| Basic earnings per share | $ | 2.34 | $ | 1.84 | ||||
| Diluted earnings per share | $ | 2.33 | $ | 1.83 | ||||
| Comprehensive income before non-controlling interests | $ | 462 | $ | 145 | ||||
| Comprehensive income attributable to non-controlling interests | (4 | ) | (4 | ) | ||||
| Comprehensive income attributable to WTW | $ | 458 | $ | 141 |
See accompanying notes to the condensed consolidated financial statements
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
Condensed Consolida****ted Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)
| March 31, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 1,507 | $ | 1,890 | ||||
| Fiduciary assets | 10,293 | 9,504 | ||||||
| Accounts receivable, net | 2,366 | 2,494 | ||||||
| Prepaid and other current assets | 1,295 | 1,217 | ||||||
| Total current assets | 15,461 | 15,105 | ||||||
| Fixed assets, net | 667 | 661 | ||||||
| Goodwill | 8,841 | 8,799 | ||||||
| Other intangible assets, net | 1,255 | 1,295 | ||||||
| Right-of-use assets | 487 | 485 | ||||||
| Pension benefits assets | 550 | 530 | ||||||
| Other non-current assets | 803 | 806 | ||||||
| Total non-current assets | 12,603 | 12,576 | ||||||
| TOTAL ASSETS | $ | 28,064 | $ | 27,681 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Fiduciary liabilities | $ | 10,293 | $ | 9,504 | ||||
| Deferred revenue and accrued expenses | 1,499 | 2,211 | ||||||
| Current debt | 549 | — | ||||||
| Current lease liabilities | 120 | 118 | ||||||
| Other current liabilities | 923 | 765 | ||||||
| Total current liabilities | 13,384 | 12,598 | ||||||
| Long-term debt | 4,761 | 5,309 | ||||||
| Liability for pension benefits | 552 | 615 | ||||||
| Provision for liabilities | 359 | 341 | ||||||
| Long-term lease liabilities | 498 | 502 | ||||||
| Other non-current liabilities | 296 | 299 | ||||||
| Total non-current liabilities | 6,466 | 7,066 | ||||||
| TOTAL LIABILITIES | 19,850 | 19,664 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY (i) | ||||||||
| Additional paid-in capital | 11,017 | 10,989 | ||||||
| Retained earnings | 51 | 109 | ||||||
| Accumulated other comprehensive loss, net of tax | (2,935 | ) | (3,158 | ) | ||||
| Total WTW shareholders’ equity | 8,133 | 7,940 | ||||||
| Non-controlling interests | 81 | 77 | ||||||
| Total equity | 8,214 | 8,017 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 28,064 | $ | 27,681 |
(i)
Equity includes (a) Ordinary shares $0.000304635 nominal value; Authorized 1,510,003,775; Issued 99,210,847 (2025) and 99,805,780 (2024); Outstanding 99,210,847 (2025) and 99,805,780 (2024) and (b) Preference shares, $0.000115 nominal value; Authorized 1,000,000,000 and Issued none in 2025 and 2024.
See accompanying notes to the condensed consolidated financial statements
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
Condensed Consolidated S****tatements of Cash Flows
(In millions of U.S. dollars)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS (USED IN)/FROM OPERATING ACTIVITIES | ||||||||
| NET INCOME | $ | 239 | $ | 194 | ||||
| Adjustments to reconcile net income to total net cash from operating activities: | ||||||||
| Depreciation | 54 | 59 | ||||||
| Amortization | 48 | 60 | ||||||
| Non-cash restructuring charges | — | 11 | ||||||
| Non-cash lease expense | 25 | 27 | ||||||
| Net periodic cost/(benefit) of defined benefit pension plans | 88 | (4 | ) | |||||
| Provision for doubtful receivables from clients | 5 | 8 | ||||||
| Benefit from deferred income taxes | (23 | ) | (9 | ) | ||||
| Share-based compensation | 37 | 24 | ||||||
| Gain on disposal of operations | (14 | ) | — | |||||
| Non-cash foreign exchange loss/(gain) | 9 | (1 | ) | |||||
| Other, net | 9 | 8 | ||||||
| Changes in operating assets and liabilities, net of effects from purchase of subsidiaries: | ||||||||
| Accounts receivable | 162 | 113 | ||||||
| Other assets | 1 | (53 | ) | |||||
| Other liabilities | (691 | ) | (426 | ) | ||||
| Provisions | 16 | 13 | ||||||
| Net cash (used in)/from operating activities | (35 | ) | 24 | |||||
| CASH FLOWS USED IN INVESTING ACTIVITIES | ||||||||
| Additions to fixed assets and software | (51 | ) | (60 | ) | ||||
| Acquisitions of operations, net of cash acquired | (1 | ) | (15 | ) | ||||
| (Purchase)/sale of investments | (32 | ) | 1 | |||||
| Net cash used in investing activities | (84 | ) | (74 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Senior notes issued | — | 746 | ||||||
| Debt issuance costs | — | (7 | ) | |||||
| Repayments of debt | (1 | ) | (1 | ) | ||||
| Repurchase of shares | (200 | ) | (101 | ) | ||||
| Net proceeds from fiduciary funds held for clients | 315 | 1,011 | ||||||
| Cash paid for employee taxes on withholding shares | (2 | ) | (5 | ) | ||||
| Dividends paid | (88 | ) | (86 | ) | ||||
| Acquisitions of and dividends paid to non-controlling interests | — | (1 | ) | |||||
| Net cash from financing activities | 24 | 1,556 | ||||||
| (DECREASE)/INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (i) | (95 | ) | 1,506 | |||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 80 | (47 | ) | |||||
| CASH, CASH EQU |
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion includes forward-looking statements. See ‘Disclaimer Regarding Forward-looking Statements’ for certain cautionary information regarding forward-looking statements and a list of factors that could cause actual results to differ materially from those predicted in those statements.
This discussion includes references to non-GAAP financial measures as defined in the rules of the SEC. We present such non-GAAP financial measures, specifically, adjusted, constant currency and organic non-GAAP financial measures, as we believe such information is of interest to the investment community because it provides additional meaningful methods of evaluating certain aspects of the Company’s operating performance from period to period on a basis that may not be otherwise apparent under U.S. GAAP, and these provide a measure against which our businesses may be assessed in the future.
See ‘Non-GAAP Financial Measures’ below for further discussion of our adjusted, constant currency and organic non-GAAP financial measures.
Executive Overview
Market Conditions
Typically, our business benefits from regulatory change, political risk or economic uncertainty. Insurance broking generally tracks the economy, but demand for both insurance broking and consulting services usually remains steady during times of uncertainty. We have some businesses, such as our health and benefits and administration businesses, which can be counter cyclical during the early period of a significant economic change.
Within our insurance and brokerage business, due to the cyclical nature of the insurance market and the impact of other market conditions on insurance premiums, commission revenue may vary widely between accounting periods. A period of low or declining premium rates, generally known as a ‘soft’ or ‘softening’ market, generally leads to downward pressure on commission revenue and can have a material adverse impact on our revenue and operating margin. A ‘hard’ or ‘firming’ market, during which premium rates rise, generally has a favorable impact on our revenue and operating margin. Rates, however, vary by geography, industry and client segment. As a result, and due to the global and diverse nature of our business, we view rates in the aggregate. Overall, we are currently seeing a softening market.
Market conditions in the broking industry in which we operate are generally defined by factors such as the strength of the economies in the various geographic regions in which we serve around the world, insurance rate movements, and insurance and reinsurance buying patterns of our clients.
The markets for our consulting, technology and solutions, and marketplace services are affected by economic, regulatory and legislative changes, technological developments, and increased competition from established and new competitors. We believe that the primary factors in selecting a human resources or risk management consulting company include reputation, the ability to provide measurable increases to shareholder value and return on investment, global scale, quality of service and the ability to tailor services to clients’ unique needs. In that regard, we are focused on developing and implementing technology, data and analytic solutions for both internal operations and for maintaining industry standards and meeting client preferences. We have made such investments from time to time and may decide, based on perceived business needs, to make investments in the future that may be different from past practice or what we currently anticipate.
With regard to the market for exchanges, we believe that clients base their decisions on a variety of factors that include the ability of the provider to deliver measurable cost savings for clients, a strong reputation for efficient execution and an innovative service delivery model and platform. Part of the employer-sponsored insurance market has matured and become more fragmented while other segments remain in the entry phase. As these market segments continue to evolve, we may experience growth in intervals, with periods of accelerated expansion balanced by periods of modest growth. In recent years, growth in the market for exchanges has slowed, and this trend may continue.
Risks and Uncertainties of the Economic Environment
U.S. and global markets are continuing to experience uncertainty, volatility and disruption as a result of uncertain macroeconomic conditions including tariff actions and uncertainties relating to global trade, fluctuations in currency exchange rates, volatility in debt and equity markets, uncertainty around interest rates, softening consumer confidence and labor markets, recent government and policy changes in the U.S., and the ongoing Russia-Ukraine and Middle East conflicts, among other geopolitical tensions. Although the length and impact of these situations are highly unpredictable, the ongoing uncertainty and volatility of the global economy and capital markets, which has resulted in persistent inflation and fluctuating interest rates in many of the markets in which we operate, could accelerate recessionary pressures and continue to lead to further market disruptions. Further, in addition to the direct impact of the
dynamic tariff environment on our business (which we do not expect to be significant, so long as retaliatory actions do not extend to services), other indirect impacts such as changes in consumer sentiment, trade relations, economic activity, willingness to do business with U.S.-listed firms, inflationary pressures and employee distraction, could negatively affect our business, operations and financial condition.
These general economic conditions, including inflation, stagflation, political volatility, costs of labor, cost of capital, interest rates, bank stability, credit availability and tax rates, affect not only the cost of and access to liquidity, but also our costs to run and invest in our business, including our operating and general and administrative expenses, and we have no control or limited ability to control such factors. These general economic conditions impact revenue from customers, as well as income from funds we hold on behalf of customers and pension-related income. While parts of our business could benefit from uncertainty or regulatory change, we may see increased caution in spending on services we provide that are more discretionary in nature or where there are alternatives, such as self-insurance. Other parts of our business, such as M&A-related services, may be adversely impacted when there is lower economic activity or transaction volumes.
If our costs grow significantly in excess of our ability to raise revenue, whether as a result of the foregoing global economic factors or otherwise, our margins and results of operations may be materially and adversely impacted and we may not be able to achieve our strategic and financial objectives.
See Part I, Item 1A ‘Risk Factors’ in our Annual Report on Form 10-K, filed with the SEC on February 25, 2025, for a discussion of risks that may affect, among other things, our growth relative to expectation and our ability to achieve our objectives.
Financial Statement Overview
The table below sets forth our summarized condensed consolidated statements of comprehensive income and data as a percentage of revenue for the periods indicated.
| Three Months Ended March 31, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| ($ in millions, except per share data) | ||||||||||||||||
| Revenue | $ | 2,223 | 100 | % | $ | 2,341 | 100 | % | ||||||||
| Costs of providing services | ||||||||||||||||
| Salaries and benefits |
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have considered changes in our exposure to market risks during the three months ended March 31, 2025 and have determined that there have been no material changes to our exposure to market risks from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 25, 2025. However, we have provided the following information to supplement or update our disclosures on our Form 10-K.
The Company has a global investment policy which is designed to ensure that we maintain diversification of our cash investments throughout the world in order to minimize the risk of loss due to a counterparty failure.
Interest Income on Fiduciary Funds
As described in our Annual Report on Form 10-K, we are exposed to interest rate risk. Specifically, as a result of our operating activities, we receive cash for premiums and claims which we deposit in high-quality bank term deposit and money market funds, on which we earn interest, where permitted. We also hold funds for clients of our benefits accounts businesses. For the benefit funds not invested, cash and cash equivalents are held, on which we earn interest, until the funds are directed by plan participants to either be invested in mutual funds or paid out on their behalf. This interest earned is included in our condensed consolidated financial statements as interest income. These funds are regulated in terms of access and the instruments in which they may be invested, most of which are short-term in maturity. Short-term rates in major currencies began to decrease over the second half of 2024 from end-of-2023 levels. This followed some steep central bank rate increases in 2023. Our increased interest income in 2024 reflected a combination of relatively high-average interest rates over the course of 2024 and some increases in our invested cash balances. Through the first quarter of 2025, although at levels below the same period in 2024, short-term rates have remained largely stable. Significant economic uncertainty prevails at this time, and the timing and magnitude of future central bank rate changes are uncertain. As to be expected, interest income in the future will be a function of the short-term rates we are able to obtain by currency and the cash balances available to invest. Interest income was $39 million and $43 million for the three months ended March 31, 2025 and 2024, respectively. At March 31, 2025, we held $2.9 billion of fiduciary funds invested in interest-bearing accounts. If short-term interest rates increased or decreased by 25 basis points, interest earned on these invested fiduciary funds, and therefore our interest income recognized, would increase or decrease by approximately $7 million on an annualized basis.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of March 31, 2025, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (‘CEO’) and the Chief Financial Officer (‘CFO’), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the ‘Exchange Act’). Based upon that evaluation, our management, including the CEO and CFO, concluded that the our disclosure controls and procedures are effective in providing reasonable assurance that the information required to be included in the periodic reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (2) accumulated and communicated to our management, including the CEO and the CFO, as appropriate, to allow for timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) under the Exchange Act during the quarter ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Management, including the CEO and CFO, does not expect that our disclosure controls and procedures will necessarily prevent all errors and all fraud. However, management does expect that the control system provides reasonable assurance that its objectives will be met. A control system, no matter how well designed and operated, cannot provide absolute assurance that the control system’s objectives will be met. In addition, the design of such internal controls must take into account the costs of designing and maintaining such a control system. Certain inherent limitations exist in control systems to make absolute assurances difficult, including the realities that judgments in decision-making can be faulty, that breakdowns can occur because of a simple error or mistake, and that individuals can circumvent controls. The design of any control system is based in part upon existing business conditions and risk assessments. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in business conditions or deterioration in the degree of compliance with policies or procedures. As a result, they may require change or revision. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and may not be detected. Nevertheless, the disclosure controls and procedures are designed to provide
reasonable assurance of achieving their stated objectives, and the CEO and CFO have concluded that the disclosure controls and procedures are effective at a reasonable assurance level.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are a party to various lawsuits, arbitrations or mediations that arise in the ordinary course of business. The disclosure called for by Part II, Item 1 regarding our legal proceedings is incorporated by reference herein from Part I, Item 1 Note 14 — Commitments and Contingencies - Legal Proceedings of the notes to the condensed consolidated financial statements in this Form 10-Q for the quarter ended March 31, 2025.
Item 1A. RISK FACTORS
There are no material changes from risk factors as previously disclosed in our Annual Report on Form 10-K, filed with the SEC on February 25, 2025. We urge you to read the risk factors contained therein.
ITEM 2. UNREGISTERED SALES OF EQUI****TY SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2025, no shares were issued by the Company without registration under the Securities Act of 1933, as amended.
(c) Issuer Purchases of Equity Securities
The Company is authorized to repurchase shares, by way of redemption or otherwise, and will consider whether to do so from time to time, based on many factors, including market conditions. There are no expiration dates for these repurchase plans or programs.
On November 20, 2024, the board of directors approved a $1.0 billion increase to the existing share repurchase program. This increase brought the total approved authorization, since the announcement of the program on April 20, 2016, to $10.2 billion.
The following table presents specified information about the Company’s repurchases of its shares in the first quarter of 2025 and the Company’s remaining repurchase authority.
| Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs | ||||||||||||
| January 1, 2025 through January 31, 2025 | 27,610 | $ | 317.23 | 27,610 | 4,253,979 | |||||||||||
| February 1, 2025 through February 28, 2025 | 239,746 | $ | 325.92 | 239,746 | 4,014,233 | |||||||||||
| March 1, 2025 through March 31, 2025 | 339,865 | $ | 332.79 | 339,865 | 3,674,368 | |||||||||||
| 607,221 | $ | 329.37 | 607,221 |
At March 31, 2025 the maximum number of shares that may yet be purchased under the existing share repurchase plan is 3,674,368, with approximately $1.2 billion remaining on the current open-ended repurchase authority granted by the board. An estimate of the maximum number of shares under the existing authorities was determined using the closing price of our ordinary shares on March 31, 2025 of $337.95.
ITEM 3. DEFAULTS UPO****N SENIOR SECURITIES
None.
ITEM 4. MINE SAF****ETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the quarter ended March 31, 2025, the following directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified, or terminated ‘Rule 10b5-1 trading arrangements’ (as defined in Regulation S-K, Item 408) intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act:
| Director or Officer Name | Director or Officer Title | Plan Adopted, Modified, or Terminated | Securities Covered by Plan | Amount of Securities Eligible for Sale Under the Plan | Plan Termination Date* | |||||
| Andrew Krasner | Chief Financial Officer | Adopted on March 3, 2025 | Ordinary Shares | 1,600 | March 4, 2026 | |||||
| Carl Hess | Chief Executive Officer | Adopted on February 6, 2025 | Ordinary Shares | 10,000 | July 31, 2025 | |||||
| Alexis Faber | Chief Operating Officer | Adopted on February 6, 2025 | Ordinary Shares underlying vested Restricted Stock Units (‘RSUs’) | 10% of those vested RSUs† granted by WTW on April 1, 2022, 2023, and 2024 | December 31, 2025 |
- Subject to early termination for certain specified events set forth in the plan.
† Excluding any Ordinary Shares withheld by the Company to satisfy its income tax withholding obligations in connection with the net settlement of equity awards.
Item 6. EXHIBITS
EXHIBIT INDEX
** Furnished herewith. Any exhibits furnished herewith (including the certification furnished in Exhibit 32.1) are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed ‘filed’ for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the ‘Exchange Act’), or otherwise subject to the liability of that section. Such information shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
† Management contract or compensatory plan or arrangement.
SIGNAT****URES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Willis Towers Watson Public Limited Company | ||||
| (Registrant) | ||||
| /s/ Carl A. Hess | April 24, 2025 | |||
| Name: | Carl A. Hess | Date | ||
| Title: | Chief Executive Officer | |||
| /s/ Andrew J. Krasner | April 24, 2025 | |||
| Name: | Andrew J. Krasner | Date | ||
| Title: | Chief Financial Officer | |||
| /s/ Joseph S. Kurpis | April 24, 2025 | |||
| Name: | Joseph S. Kurpis | Date | ||
| Title: | Principal Accounting Officer and Controller |