filings.toolsItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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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, the implementation of a broad range of U.S. policy changes, 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), recent U.S. legislation creates additional uncertainty, in particular the ‘Act to provide for reconciliation pursuant to title II of H. Con. Res. 14,’ the direct and indirect effects of which are difficult to predict at this time, but are generally expected to include accounting and tax impacts. Other indirect impacts from changes in tariffs or from legislative or regulatory developments, 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 June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||
| ($ in millions, except per share data) | ||||||||||||||||||||||||||||||||
| Revenue | $ | 2,261 | 100 | % | $ | 2,265 | 100 | % | $ | 4,484 | 100 | % | $ | 4,606 | 100 | % | ||||||||||||||||
| Costs of providing services | ||||||||||||||||||||||||||||||||
| Salaries and benefits | 1,449 | 64 | % | 1,397 | 62 | % | 2,773 | 62 | % | 2,739 | 59 | % | ||||||||||||||||||||
| Other operating expenses | 336 | 15 | % | 439 | 19 | % | 701 | 16 | % | 896 | 19 | % | ||||||||||||||||||||
| Depreciation | 57 | 3 | % | 57 | 3 | % | 111 | 2 | % | 116 | 3 | % | ||||||||||||||||||||
| Amortization | 49 | 2 | % | 60 | 3 | % | 97 | 2 | % | 120 | 3 | % | ||||||||||||||||||||
| Restructuring costs | — | — | % | 3 | — | % | — | — | % | 21 | — | % | ||||||||||||||||||||
| Transaction and transformation | 2 | — | % | 97 | 4 | % | 2 | — | % | 222 | 5 | % | ||||||||||||||||||||
| Total costs of providing services | 1,893 | 2,053 | 3,684 | 4,114 | ||||||||||||||||||||||||||||
| Income from operations | 368 | 16 | % | 212 | 9 | % | 800 | 18 | % | 492 | 11 | % | ||||||||||||||||||||
| Interest expense | (64 | ) | (3 | )% | (68 | ) | (3 | )% | (129 | ) | (3 | )% | (132 | ) | (3 | )% | ||||||||||||||||
| Other income/(loss), net | 9 | — | % | 23 | 1 | % | (55 | ) | (1 | )% | 49 | 1 | % | |||||||||||||||||||
| INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 313 | 14 | % | 167 | 7 | % | 616 | 14 | % | 409 | 9 | % | ||||||||||||||||||||
| Benefit from/(provision for) income taxes | 21 | 1 | % | (26 | ) | (1 | )% | (44 | ) | (1 | )% | (74 | ) | (2 | )% | |||||||||||||||||
| Interest in earnings of associates, net of tax | (2 | ) | — | % | 1 | — | % | (1 | ) | — | % | 1 | — | % | ||||||||||||||||||
| Income attributable to non-controlling interests | (1 | ) | — | % | (1 | ) | — | % | (5 | ) | — | % | (5 | ) | — | % | ||||||||||||||||
| NET INCOME ATTRIBUTABLE TO WTW | $ | 331 | 15 | % | $ | 141 | 6 | % | $ | 566 | 13 | % | $ | 331 | 7 | % | ||||||||||||||||
| Diluted earnings per share | $ | 3.32 | $ | 1.36 | $ | 5.64 | $ | 3.20 |
Consolidated Revenue
Revenue for both the three months ended June 30, 2025 and 2024 was $2.3 billion, a decrease of $4 million on an as-reported basis. Adjusting for the impacts of foreign currency and acquisitions and disposals, our organic revenue growth was 5% for the three months ended June 30, 2025. Revenue for the six months ended June 30, 2025 was $4.5 billion, compared to $4.6 billion for the six months ended June 30, 2024, a decrease of $122 million, or 3%, on an as-reported basis. Adjusting for the impacts of foreign currency and acquisitions and disposals, our organic revenue growth was 5% for the six months ended June 30, 2025.The decreases in as-reported revenue were due primarily to the sale of our TRANZACT business on December 31, 2024. The increase in organic revenue was driven by strong performances in both segments. For additional information, please see the section entitled ‘Segment Revenue and Segment Operating Income’ elsewhere within this Item 2 of this Quarterly Report on Form 10-Q.
Our revenue can be materially impacted by changes in currency conversions, which can fluctuate significantly over the course of a calendar year. For the three months ended June 30, 2025, currency translation increased our consolidated revenue by $30 million. The primary currencies driving this change were the Pound Sterling and Euro. For the six months ended June 30, 2025, currency translation decreased our consolidated revenue by $6 million. The primary currency driving this change was the Mexican Peso.
The following table details our top five markets based on the percentage of consolidated revenue (in U.S. dollars) from the countries where work was performed for the six months ended June 30, 2025. These figures do not represent the currency of the related revenue, which is presented in the next table.
| Geographic Region | % of Revenue | |||
| United States | 44 | % | ||
| United Kingdom | 21 | % | ||
| France | 6 | % | ||
| Germany | 3 | % | ||
| Canada | 2 | % |
The table below details the approximate percentage of our revenue and expenses by transactional currency for the six months ended June 30, 2025.
| Transactional Currency | Revenue | Expenses (i) | ||||||
| U.S. dollars | 52 | % | 47 | % | ||||
| Pounds sterling | 13 | % | 20 | % | ||||
| Euro | 18 | % | 14 | % | ||||
| Other currencies | 17 | % | 19 | % |
(i)
These percentages exclude certain expenses for significant items which will not be settled in cash, or which we believe to be items that are not core to our current or future operations. These items include amortization of intangible assets.
The following tables set forth the total revenue for the three and six months ended June 30, 2025 and 2024, and the components of the change in total revenue for the three and six months ended June 30, 2025, as compared to the prior-year periods. The components of the revenue change may not add due to rounding.
| Components of Revenue Change | ||||||||||||||||||
| As | Less: | Constant | Less: | |||||||||||||||
| Three Months Ended June 30, | Reported | Currency | Currency | Acquisitions/ | Organic | |||||||||||||
| 2025 | 2024 | Change | Impact | Change | Divestitures | Change (i) | ||||||||||||
| ($ in millions) | ||||||||||||||||||
| Revenue | $ | 2,261 | $ | 2,265 | —% | 1% | (1)% | (6)% | 5% |
| Components of Revenue Change | ||||||||||||||||||
| As | Less: | Constant | Less: | |||||||||||||||
| Six Months Ended June 30, | Reported | Currency | Currency | Acquisitions/ | Organic | |||||||||||||
| 2025 | 2024 | Change | Impact | Change | Divestitures | Change (i) | ||||||||||||
| ($ in millions) | ||||||||||||||||||
| Revenue | $ | 4,484 | $ | 4,606 | (3)% | —% | (3)% | (7)% | 5% |
(i)
Interest income did not contribute to organic change for the three and six months ended June 30, 2025.
Definitions of Constant Currency Change and Organic Change are included under the section entitled ‘Non-GAAP Financial Measures’ elsewhere within Item 2 of this Form 10-Q.
Segment Revenue and Segment Operating Income
The segment descriptions below should be read in conjunction with the full descriptions of our businesses contained in Part I, Item 1. ‘Business’, within our Annual Report on Form 10-K, filed with the SEC on February 25, 2025.
Segment revenue excludes amounts that were directly incurred on behalf of our clients and reimbursed by them (reimbursed expenses); however, these amounts are included in consolidated revenue, as required by applicable accounting standards and SEC rules. Segment operating income excludes certain costs, including (i) amortization of intangibles; (ii) restructuring costs; and (iii) certain transaction and transformation expenses, and includes certain expense amounts which may be determined on both a direct and allocated basis. See Note 5 – Segment Information within Part I, Item 1 ‘Financial Statements’ of this Quarterly Report on Form 10-Q for more information about how our segment revenue and segment operating income are calculated and for a reconciliation to our GAAP results.
The Company experiences seasonal fluctuations in its revenue. Revenue is typically higher during the Company’s first and fourth quarters due primarily to the timing of broking-related activities.
For each table presented below, the components of the revenue change may not add due to rounding.
Health, Wealth & Career
The Health, Wealth & Career (‘HWC’) segment provides an array of advice, broking, solutions and technology for employee benefit plans, institutional investors, compensation and career programs, and the employee experience overall. Our portfolio of services supports the interrelated challenges that the management teams of our clients face across human resources and finance.
HWC is the larger of the two segments of the Company. Addressing four key areas, Health, Wealth, Career and Benefits Delivery & Outsourcing, the segment is focused on addressing our clients’ people and risk needs to help them succeed in a global marketplace.
The following table sets forth HWC revenue for the three months ended June 30, 2025 and 2024, and the components of the change in revenue for the three months ended June 30, 2025 from the three months ended June 30, 2024.
| Components of Revenue Change | ||||||||||||||||||
| As | Less: | Constant | Less: | |||||||||||||||
| Three Months Ended June 30, | Reported | Currency | Currency | Acquisitions/ | Organic | |||||||||||||
| 2025 | 2024 | Change | Impact | Change | Divestitures | Change | ||||||||||||
| ($ in millions) | ||||||||||||||||||
| Segment revenue excluding interest income | $ | 1,173 | $ | 1,251 | (6)% | 1% | (7)% | (12)% | 4% | |||||||||
| Interest income | 7 | 9 | ||||||||||||||||
| Total segment revenue | $ | 1,180 | $ | 1,260 | (6)% | 1% | (8)% | (12)% | 4% | |||||||||
| Segment operating income | $ | 280 | $ | 276 |
HWC segment revenue for the three months ended June 30, 2025 and 2024 was $1.2 billion and $1.3 billion, respectively. Health delivered organic revenue growth driven by double-digit increases outside North America and solid performance in North America. Wealth generated organic revenue growth from higher levels of Retirement work globally alongside growth in our Investments business from new business wins and product launches. Career had modest revenue growth as healthy demand for advisory project work outside North America was offset by North America client postponement decisions made earlier in the year. Benefits Delivery & Outsourcing revenue was materially flat, as increased project and core administration work within Europe was tempered by lower commission revenue in the Individual Marketplace business compared to the prior year.
HWC segment operating income for the three months ended June 30, 2025 and 2024 was $280 million and $276 million, respectively. HWC segment operating income increased primarily from operating efficiencies, which were partially offset by the prior-year sale of TRANZACT.
The following table sets forth HWC segment revenue for the six months ended June 30, 2025 and 2024 and the components of the change in revenue for the six months ended June 30, 2025 from the six months ended June 30, 2024.
| Components of Revenue Change | ||||||||||||||||||
| As | Less: | Constant | Less: | |||||||||||||||
| Six Months Ended June 30, | Reported | Currency | Currency | Acquisitions/ | Organic | |||||||||||||
| 2025 | 2024 | Change | Impact | Change | Divestitures | Change | ||||||||||||
| ($ in millions) | ||||||||||||||||||
| Segment revenue excluding interest income | $ | 2,331 | $ | 2,578 | (10)% | —% | (10)% | (13)% | 3% | |||||||||
| Interest income | 14 | 18 | ||||||||||||||||
| Total segment revenue | $ | 2,345 | $ | 2,596 | (10)% | —% | (10)% | (13)% | 3% | |||||||||
| Segment operating income | $ | 591 | $ | 612 |
HWC segment revenue for the six months ended June 30, 2025 and 2024 was $2.3 billion and $2.6 billion, respectively. Health delivered organic revenue growth in all regions, led by double-digit increases across International which benefited from strong new business and geographic expansion coupled with the ongoing appeal of our Global Benefits Management solution. Wealth generated organic revenue growth from higher levels of Retirement work in Europe and International, alongside growth in our Investments business from new products and client wins. Career had modest revenue growth as increased advisory work outside of North America was tempered by some postponements amid economic uncertainty. Benefits Delivery & Outsourcing revenue was materially flat, as increased project and core administration work in Europe was offset by lower revenue in North America.
HWC segment operating income for the six months ended June 30, 2025 and 2024 was $591 million and $612 million, respectively. HWC segment operating income decreased primarily due to the prior-year sale of TRANZACT, partially offset by increases attributable to operating efficiencies.
Risk & Broking
The Risk & Broking (‘R&B’) segment provides a broad range of risk advice, insurance brokerage and consulting services to clients worldwide ranging from small businesses to multinational corporations. The segment comprises two primary businesses - Corporate Risk & Broking and Insurance Consulting and Technology.
The following table sets forth R&B revenue for the three months ended June 30, 2025 and 2024, and the components of the change in revenue for the three months ended June 30, 2025 from the three months ended June 30, 2024.
| Components of Revenue Change | ||||||||||||||||||
| As | Less: | Constant | Less: | |||||||||||||||
| Three Months Ended June 30, | Reported | Currency | Currency | Acquisitions/ | Organic | |||||||||||||
| 2025 | 2024 | Change | Impact | Change | Divestitures | Change | ||||||||||||
| ($ in millions) | ||||||||||||||||||
| Segment revenue excluding interest income | $ | 1,024 | $ | 950 | 8% | 1% | 6% | —% | 6% | |||||||||
| Interest income | 23 | 29 | ||||||||||||||||
| Total segment revenue | $ | 1,047 | $ | 979 | 7% | 1% | 6% | —% | 6% | |||||||||
| Segment operating income | $ | 222 | $ | 202 |
R&B segment revenue for the three months ended June 30, 2025 and 2024 was $1.0 billion and $979 million, respectively. Corporate Risk & Broking had organic revenue growth driven by higher levels of new business activity and strong client retention globally. Insurance Consulting and Technology revenue was flat for the quarter as clients managed spend more cautiously amid ongoing economic uncertainty.
R&B segment operating income for the three months ended June 30, 2025 and 2024 was $222 million and $202 million, respectively. R&B segment operating income increased due primarily to operating leverage driven by strong organic revenue growth and Transformation program savings, which were partially offset by headwinds from decreased interest income and foreign currency fluctuations.
The following table sets forth R&B segment revenue for the six months ended June 30, 2025 and 2024 and the components of the change in revenue for the six months ended June 30, 2025 from the six months ended June 30, 2024.
| Components of Revenue Change | ||||||||||||||||||
| As | Less: | Constant | Less: | |||||||||||||||
| Six Months Ended June 30, | Reported | Currency | Currency | Acquisitions/ | Organic | |||||||||||||
| 2025 | 2024 | Change | Impact | Change | Divestitures | Change | ||||||||||||
| ($ in millions) | ||||||||||||||||||
| Segment revenue excluding interest income | $ | 2,029 | $ | 1,900 | 7% | —% | 7% | —% | 7% | |||||||||
| Interest income | 45 | 57 | ||||||||||||||||
| Total segment revenue | $ | 2,074 | $ | 1,957 | 6% | —% | 6% | —% | 6% | |||||||||
| Segment operating income | $ | 448 | $ | 405 |
R&B segment revenue for the six months ended June 30, 2025 and 2024 was $2.1 billion and $2.0 billion, respectively. Corporate Risk & Broking had organic revenue growth primarily driven by the success of our global lines, with higher levels of new business activity and strong client retention across all regions. Insurance Consulting and Technology had organic revenue growth driven by the Consulting and Technology practices.
R&B segment operating income for the six months ended June 30, 2025 and 2024 was $448 million and $405 million, respectively. R&B segment operating income increased due primarily to operating leverage driven by strong organic revenue growth and transformation savings which were partially offset by headwinds from decreased interest income and foreign currency fluctuations.
Costs of Providing Services
Total costs of providing services for the three months ended June 30, 2025 were $1.9 billion, compared to $2.1 billion for the three months ended June 30, 2024, a decrease of $160 million, or 8%. Total costs of providing services for the six months ended June 30, 2025 were $3.7 billion, compared to $4.1 billion for the six months ended June 30, 2024, a decrease of $430 million, or 10%. See the following discussion for further details.
Salaries and Benefits
Salaries and benefits for both the three months ended June 30, 2025 and 2024 were $1.4 billion, an increase of $52 million or 4%. The increase in the current year is primarily due to higher salary expense, driven by increased colleague headcount and cost-of-living compensation adjustments, and higher benefit and share-based compensation costs for the period, partially offset by lower incentive costs in the current-year period. Salaries and benefits, as a percentage of revenue, represented 64% and 62% for the three months ended June 30, 2025 and 2024, respectively.
Salaries and benefits for the six months ended June 30, 2025 were $2.8 billion, compared to $2.7 billion for the six months ended June 30, 2024, an increase of $34 million or 1%. The increase in the current year is primarily due to higher salary expense, driven by increased colleague headcount and cost-of-living compensation adjustments, and higher share-based compensation costs in the current year, partially offset by lower incentive costs in the current year. Salaries and benefits, as a percentage of revenue, represented 62% and 59% for the six months ended June 30, 2025 and 2024, respectively.
Other Operating Expenses
Other operating expenses for the three months ended June 30, 2025 were $336 million, compared to $439 million for the three months ended June 30, 2024, a decrease of $103 million or 23%. The decrease was primarily due to lower marketing expenses attributable to the sale of our TRANZACT business on December 31, 2024, decreased costs associated with professional liability claims and lower non-income-related tax expense for the current-year period as compared to the prior-year period.
Other operating expenses for the six months ended June 30, 2025 were $701 million, compared to $896 million for the six months ended June 30, 2024, a decrease of $195 million or 22%. The decrease was primarily due to lower marketing expenses attributable to the sale of our TRANZACT business on December 31, 2024, decreased local office expenses and lower costs associated with professional liability claims, partially offset by higher travel and entertainment costs for the current year as compared to the prior year.
Depreciation
Depreciation for both the three months ended June 30, 2025 and 2024 was $57 million. Depreciation for the six months ended June 30, 2025 was $111 million, compared to $116 million for the six months ended June 30, 2024, a decrease of $5 million or 4%. The
year-over-year decrease was primarily due to a lower depreciable base of assets resulting from disposals associated with the Company’s Transformation program that concluded in the fourth quarter of 2024 and a lower dollar value of assets placed in service during the past few years.
Amortization
Amortization for the three months ended June 30, 2025 was $49 million, compared to $60 million for the three months ended June 30, 2024, a decrease of $11 million or 18%. Amortization for the six months ended June 30, 2025 was $97 million, compared to $120 million for the six months ended June 30, 2024, a decrease of $23 million or 19%. These decreases were due in part to the disposal of intangible assets associated with the sale of our TRANZACT business. Our intangible amortization is generally more heavily weighted to the initial years of the useful lives of the related intangibles, and therefore amortization related to intangible assets has decreased and will continue to decrease over time.
Restructuring Costs
Restructuring costs for the three and six months ended June 30, 2024 were $3 million and $21 million, respectively, and primarily related to the real estate rationalization component of our completed Transformation program.
Transaction and Transformation
Transaction and transformation costs for the three months ended June 30, 2025 were $2 million, compared to $97 million for the three months ended June 30, 2024, a decrease of $95 million. Transaction and transformation costs for the six months ended June 30, 2025 were $2 million, compared to $222 million for the six months ended June 30, 2024, a decrease of $220 million. Transaction and transformation costs in the current year were comprised of transaction-related costs, and costs incurred in the prior year primarily included consulting and compensation costs related to our completed Transformation program.
Income from Operations
Income from operations for the three months ended June 30, 2025 was $368 million, compared to $212 million for the three months ended June 30, 2024, an increase of $156 million. This increase resulted primarily from lower marketing expenses, decreased costs associated with professional liability claims and lower transformation and transaction costs due to the completion of our Transformation program during the fourth quarter of 2024, partially offset by higher salary expense and increased benefit and share-based compensation costs for the current-year period.
Income from operations for the six months ended June 30, 2025 was $800 million, compared to $492 million for the six months ended June 30, 2024, an increase of $308 million. This increase resulted primarily from lower transformation and transaction costs due to the completion of our Transformation program during the fourth quarter of 2024, and lower marketing expenses, decreased local office expenses and lower costs associated with professional liability claims in the current year, partially offset by lower revenue due to the prior-year sale of our TRANZACT business.
Interest Expense
Interest expense for the three months ended June 30, 2025 was $64 million, compared to $68 million for the three months ended June 30, 2024, a decrease of $4 million, or 6%. Interest expense for the six months ended June 30, 2025 was $129 million as compared to $132 million for the six months ended June 30, 2024, a decrease of $3 million or 2%. These decreases were primarily due to a lower average level of indebtedness in the current year.
Other Income/(Loss), Net
Other income/(loss), net for the three months ended June 30, 2025 was income of $9 million, compared to income of $23 million for the three months ended June 30, 2024, a decrease of $14 million. The decrease was due primarily to lower pension income, which was attributable to a significant pension settlement in the current year, and unfavorable favorable foreign currency movement in the current-year period.
Other income/(loss), net for the six months ended June 20, 2025 was a loss of $55 million, compared to income of $49 million for the six months ended June 30, 2024, a decrease of $104 million. The decrease was due primarily to lower pension income, which was attributable to a significant pension settlement in the current year, and unfavorable foreign currency movement in the current year, partially offset by a gain on disposal pertaining to favorable disposal-price adjustments associated with the prior-year sale of our TRANZACT business.
Benefit from/(provision for) Income Taxes
Benefit from income taxes for the three months ended June 30, 2025 was $21 million, compared to a provision for income taxes of $26 million for the three months ended June 30, 2024, a decrease of $47 million. The effective tax rate was (6.8)% for the three months ended June 30, 2025, and 15.6% for the three months ended June 30, 2024. Provision for income taxes for the six months ended June 30, 2025 was $44 million, compared to $74 million for the six months ended June 20, 2024, a decrease of $30 million. The effective tax rate was 7.1% for the six months ended June 30, 2025 and 18.1% for the six months ended June 30, 2024. These effective tax rates are calculated using extended values from our condensed consolidated statements of comprehensive income and are therefore more precise tax rates than can be calculated from rounded values. The current-year quarter’s effective tax rate is lower primarily due to favorable discrete tax items, which include an adjustment to the tax provision associated with the earnout received from the sale of our Willis Re business, changes in measurement for existing uncertain tax positions and an excess tax benefit on share-based compensation.
Net Income Attributable to WTW
Net income attributable to WTW for the three months ended June 30, 2025 was $331 million, compared to $141 million for the three months ended June 30, 2024, an increase of $190 million, or 135%. This increase resulted primarily from lower marketing expenses, decreased transformation and transaction costs due to the completion of our Transformation program during the fourth quarter of 2024, and lower income tax expense, partially offset by higher salary expense and increased benefit and share-based compensation costs for the current-year period.
Net income attributable to WTW for the six months ended June 30, 2025 was $566 million, compared to $331 million for the six months ended June 30, 2024, an increase of $235 million, or 71%. This increase resulted primarily from lower transformation and transaction costs due to the completion of our Transformation program during the fourth quarter of 2024, and lower marketing expenses, decreased local office expenses and lower income tax expense in the current year, partially offset by lower revenue due to the prior-year sale of our TRANZACT business and pension settlement costs in the current year.
Liquidity and Capital Resources
Executive Summary
Our principal sources of liquidity are funds generated by operating activities, available cash and cash equivalents and amounts available under our revolving credit facility and any new debt offerings.
There has been significant volatility in financial markets, including occasional declines in equity markets, inflation and changes in interest rates and reduced liquidity on a global basis and we expect this volatility could continue, all of which may impact our access to liquidity.
Based on our current balance sheet and cash flows, current market conditions and information available to us at this time, we believe that WTW has access to sufficient liquidity to meet our cash needs, including debt repayment, for the next twelve months. Including our cash generated from operations, our liquidity also includes all of the borrowing capacity available to draw against our $1.5 billion revolving credit facility. The use of these funds includes investments in the business for growth, scheduled debt repayments, share repurchases, dividend payments and general corporate purposes. Additionally, under our minority ownership interest in a joint venture with Bain Capital, in connection with which we re-entered the reinsurance broking space during the fourth quarter of 2024, we have an option to acquire a controlling interest in the joint venture in the future. Given the initial funding needs of a start-up venture, we expect to make certain capital contributions from time to time resulting in a reduction to earnings until such time as the joint venture generates sufficient revenue to be profitable.
During the six months ended June 30, 2025, we repurchased $700 million of our outstanding shares and have authorization to repurchase an additional $742 million under our share repurchase program (as further described below under ‘Share Repurchase Program’). We consider many factors, including market and economic conditions, applicable legal requirements and other business considerations, when considering whether to repurchase shares. Our Share Repurchase Program has no termination date and may be suspended or discontinued at any time.
Events that could change the historical cash flow dynamics discussed above include significant changes in operating results, potential future acquisitions or divestitures, material changes in geographic sources of cash, unexpected adverse impacts from litigation or tax or regulatory matters, or future pension funding during periods of severe downturn in the capital markets.
Undistributed Earnings of Foreign Subsidiaries
The Company recognizes deferred tax balances related to the undistributed earnings of subsidiaries when it expects that it will recover those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of the investments.
We continue to have certain subsidiaries whose earnings have not been deemed permanently reinvested and for which we have been accruing estimates of the tax effects of such repatriation. Excluding these certain subsidiaries, we continue to assert that the historical cumulative earnings for the remainder of our subsidiaries have been reinvested indefinitely and therefore do not provide deferred taxes on these amounts. If future events, including material changes in estimates of cash, working capital, long-term investment requirements or additional legislation, necessitate that these earnings be distributed, an additional provision for income and foreign withholding taxes, net of credits, may be necessary. Other potential sources of cash may be through the settlement of intercompany loans or return of capital distributions in a tax-efficient manner.
Cash and Cash Equivalents
Our cash and cash equivalents at June 30, 2025 totaled $2.0 billion, compared to $1.9 billion at December 31, 2024. The increase in cash from December 31, 2024 to June 30, 2025 was due primarily to the $750 million earnout related to the 2021 divestiture of Willis Re, $326 million of net cash from operations and $62 million associated with the settlement of a note receivable related to the sale of our Max Matthiessen subsidiary in 2020, partially offset by $700 million of share repurchases, $179 million of dividend payments and $109 million of capital expenditures and capitalized software additions.
Additionally, we had all of the borrowing capacity available to draw against our $1.5 billion revolving credit facility at both June 20, 2025 and December 31, 2024.
Included within cash and cash equivalents at June 30, 2025 and December 31, 2024 are amounts held for regulatory capital adequacy requirements, including $106 million and $104 million, respectively, within our regulated U.K. entities.
Summarized Condensed Consolidated Cash Flows
The following table presents the summarized condensed consolidated cash flow information for the six months ended June 30, 2025 and 2024:
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| (in millions) | ||||||||
| Net cash from/(used in): | ||||||||
| Operating activities | $ | 326 | $ | 431 | ||||
| Investing activities | 612 | (158 | ) | |||||
| Financing activities | (800 | ) | 364 | |||||
| INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (i) | 138 | 637 | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 207 | (53 | ) | |||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD (i) | 4,998 | 3,792 | ||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (i) | $ | 5,343 | $ | 4,376 |
(i)
The amounts of cash, cash equivalents and restricted cash, their respective classification on the condensed consolidated balance sheets, as well as their respective portions of the increase or decrease in cash, cash equivalents and restricted cash for each of the periods presented, have been included in Note 19 — Supplemental Disclosures of Cash Flow Information within Part I, Item 1 ‘Financial Statements’ within this Quarterly Report on Form 10-Q.
Cash Flows From Operating Activities
Cash flows from operating activities were $326 million for the six months ended June 30, 2025, compared to cash flows from operating activities of $431 million for the six months ended June 30, 2024. The $326 million of net cash from operating activities for the six months ended June 30, 2025 included net income of $571 million and $388 million of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $633 million. This decrease in cash flows from operations as compared to the prior year was primarily driven by increased compensation and cash tax payments as well as the absence of cash inflows from TRANZACT following its sale on December 31, 2024, partly offset by lower Transformation program spending and operational improvements.
The $431 million of net cash from operating activities for the six months ended June 30, 2024 included net income of $336 million and $335 million of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $240 million.
Cash Flows From/(Used In) Investing Activities
Cash flows from investing activities for the six months ended June 30, 2025 were $612 million as compared to cash flows used in investing activities of $158 million for the six months ended June 30, 2024. The cash flows from investing activities in the current
year consisted primarily of net proceeds from sales of operations resulting from divestitures that occurred in prior years. These inflows were partially offset by capital expenditures, including software additions, and our net purchases of held-to-maturity and available-for-sale securities. The cash flows used in investing activities in the prior year consisted primarily of capital expenditures, including software additions.
Cash Flows (Used In)/From Financing Activities
Cash flows used in financing activities for the six months ended June 30, 2025 were $800 million. The significant financing activities included share repurchases of $700 million and dividend payments of $179 million, partially offset by net proceeds from fiduciary funds held for clients of $141 million.
Cash flows from financing activities for the six months ended June 30, 2024 were $364 million. The significant financing activities included net proceeds from fiduciary funds held for clients of $783 million and $85 million of net proceeds from the issuance of debt, partially offset by share repurchases of $301 million and dividend payments of $176 million.
Indebtedness
Total debt, total equity, and the capitalization ratios at June 30, 2025 and December 31, 2024 were as follows:
| June 30, 2025 | December 31, 2024 | |||||||
| ($ in millions) | ||||||||
| Long-term debt | $ | 4,762 | $ | 5,309 | ||||
| Current debt | 549 | — | ||||||
| Total debt | $ | 5,311 | $ | 5,309 | ||||
| Total WTW shareholders’ equity | $ | 8,100 | $ | 7,940 | ||||
| Capitalization ratio | 39.6 | % | 40.1 | % |
At June 30, 2025, our mandatory debt repayments over the next twelve months include $550 million outstanding on our 4.400% senior notes, which will mature during the first quarter of 2026. For more information regarding our current and long-term debt, please see ‘Supplemental Guarantor Financial Information’ elsewhere within this Item 2 of this Quarterly Report on Form 10-Q.
At June 30, 2025 and December 31, 2024, we were in compliance with all financial covenants.
Fiduciary Funds
As an intermediary, we hold funds, generally in a fiduciary capacity, for the account of third parties, typically as the result of premiums received from clients that are in transit to insurers and claims due to clients that are in transit from insurers. We also hold funds for clients of our benefits account businesses, some of which are invested in open-ended mutual funds as directed by the participant. These fiduciary funds are included in fiduciary assets on our condensed consolidated balance sheets. We present the equal and corresponding fiduciary liabilities related to these fiduciary funds representing amounts or claims due to our clients or premiums due on their behalf to insurers on our condensed consolidated balance sheets.
Fiduciary funds are generally required to be kept in regulated bank accounts subject to guidelines which emphasize capital preservation and liquidity; such funds are not available to service the Company’s debt or for other corporate purposes. Notwithstanding the legal relationships with clients and insurers, the Company is entitled to retain investment income earned on certain of these fiduciary funds in accordance with industry custom and practice and, in some cases, as supported by agreements with insureds.
At June 30, 2025 and December 31, 2024, we had fiduciary funds of $3.8 billion and $3.4 billion, respectively.
Share Repurchase Program
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 our 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.
At June 30, 2025, approximately $742 million remained on the current repurchase authority. The maximum number of shares that could be repurchased based on the closing price of our ordinary shares on June 30, 2025 of $306.50 was 2,420,076.
During the three and six months ended June 30, 2025, the Company had the following share repurchase activity:
| Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | ||||
| Shares repurchased | 1,614,427 | 2,221,648 | |||
| Average price per share | $309.71 | $315.08 | |||
| Aggregate repurchase cost (excluding broker costs) | $500 million | $700 million |
Capital Commitments
The Company’s capital expenditures for fixed assets, capitalized software and software for internal use were $109 million during the six months ended June 30, 2025. The Company estimates that there will be additional such expenditures in the range of $115 million - $140 million during the remainder of 2025. We currently expect cash from operations to adequately provide for these cash needs. There have been no material changes to our capital commitments since December 31, 2024.
Dividends
Total cash dividends of $179 million were paid during the six months ended June 30, 2025. In May 2025, the board of directors approved a quarterly cash dividend of $0.92 per share ($3.68 per share annualized rate), which was paid on July 15, 2025 to shareholders of record as of June 30, 2025.
Supplemental Guarantor Financial Information
As of June 30, 2025, WTW has issued the following debt securities (the ‘notes’):
a)
Willis North America Inc. (‘Willis North America’) has approximately $4.5 billion senior notes outstanding, of which $1.0 billion were issued on September 10, 2018, $1.0 billion were issued on September 10, 2019, $275 million were issued on May 29, 2020, $750 million were issued on May 19, 2022, $750 million were issued on May 17, 2023 and $750 million were issued on March 5, 2024; and
b)
Trinity Acquisition plc has approximately $825 million senior notes outstanding, of which $275 million were issued on August 15, 2013 and $550 million were issued on March 22, 2016, and a $1.5 billion revolving credit facility, on which no balance was outstanding at June 30, 2025.
The following table presents a summary of the entities that issue each note and those wholly-owned subsidiaries of the Company that guarantee each respective note on a joint and several basis as of June 30, 2025. These subsidiaries are all consolidated by Willis Towers Watson plc (the ‘parent company’) and together with the parent company comprise the ‘Obligor group’. On December 16, 2024, TA I Limited, Willis Towers Watson UK Holdings Limited and Willis Netherlands Holdings B.V. ceased to be guarantors of our notes and are no longer part of the Obligor group, following the transfer of their respective properties and assets to other existing guarantors within the Obligor group. Further, Willis Towers Watson UK Holdings Limited was released from its guarantees under our credit agreement. TA I Limited and Willis Netherlands Holdings B.V. will be released from their guarantees under our credit agreement when they are fully liquidated.
| Entity | Trinity Acquisition plc Notes | Willis North America Inc. Notes | ||
| Willis Towers Watson plc | Guarantor | Guarantor | ||
| Trinity Acquisition plc | Issuer | Guarantor | ||
| Willis North America Inc. | Guarantor | Issuer | ||
| Willis Investment UK Holdings Limited | Guarantor | Guarantor | ||
| Willis Group Limited | Guarantor | Guarantor | ||
| Willis Towers Watson Sub Holdings Unlimited Company | Guarantor | Guarantor |
The notes issued by Willis North America and Trinity Acquisition plc:
rank equally with all of the issuer’s existing and future unsubordinated and unsecured debt;
rank equally with the issuer’s guarantee of all of the existing senior debt of the Company and the other guarantors, including any debt under the Revolving Credit Facility;
are senior in right of payment to all of the issuer’s future subordinated debt; and
are effectively subordinated to all of the issuer’s secured debt to the extent of the value of the assets securing such debt.
All other subsidiaries of the parent company are non-guarantor subsidiaries (‘the non-guarantor subsidiaries’).
Each member of the Obligor group has only a stockholder’s claim on the assets of the non-guarantor subsidiaries. This stockholder’s claim is junior to the claims that creditors have against those non-guarantor subsidiaries. Holders of the notes will only be creditors of the Obligor group and not creditors of the non-guarantor subsidiaries. As a result, all of the existing and future liabilities of the non-guarantor subsidiaries, including any claims of trade creditors and preferred stockholders, will be structurally senior to the notes. As of and for the periods ended June 30, 2025 and December 31, 2024, the non-guarantor subsidiaries represented substantially all of the total assets and accounted for substantially all of the total revenue of the Company prior to consolidating adjustments. The non-guarantor subsidiaries have other liabilities, including contingent liabilities that may be significant. Each indenture does not contain any limitations on the amount of additional debt that the Obligor group and the non-guarantor subsidiaries may incur. The amounts of this debt could be substantial, and this debt may be debt of the non-guarantor subsidiaries, in which case this debt would be effectively senior in right of payment to the notes.
The notes are obligations exclusively of the Obligor group. Substantially all of the Obligor group’s operations are conducted through its non-guarantor subsidiaries. Therefore, the Obligor group’s ability to service its debt, including the notes, is dependent upon the net cash flows of its non-guarantor subsidiaries and their ability to distribute those net cash flows as dividends, loans or other payments to the Obligor group. Certain laws restrict the ability of these non-guarantor subsidiaries to pay dividends and make loans and advances to the Obligor group. In addition, such non-guarantor subsidiaries may enter into contractual arrangements that limit their ability to pay dividends and make loans and advances to the Obligor group.
Intercompany balances and transactions between members of the Obligor group have been eliminated. All intercompany balances and transactions between the Obligor group and the non-guarantor subsidiaries have been presented in the disclosures below on a net presentation basis, rather than a gross basis, as this better reflects the nature of the intercompany positions and presents the funding or funded position that is to be received or owed. The intercompany balances and transactions between the Obligor group and non-guarantor subsidiaries, presented below, relate to a number of items including loan funding for acquisitions and other purposes, transfers of surplus cash between subsidiary companies, funding provided for working capital purposes, settlement of expense accounts, transactions related to share-based payment arrangements and share issuances, intercompany royalty and related arrangements, intercompany dividends and intercompany interest. At June 30, 2025 and December 31, 2024, the intercompany balances of the Obligor group with non-guarantor subsidiaries were net receivables of $500 million and $1.0 billion, respectively, and net payables of $15.1 billion at both periods.
No balances or transactions of non-guarantor subsidiaries are presented in the disclosures other than the intercompany items noted above.
Presented below is certain summarized financial information for the Obligor group.
| ` | As of June 30, 2025 | As of December 31, 2024 | ||||||
| (in millions) | ||||||||
| Total current assets | $ | 398 | $ | 290 | ||||
| Total non-current assets | 574 | 1,050 | ||||||
| Total current liabilities | 6,735 | 6,254 | ||||||
| Total non-current liabilities | 13,916 | 14,442 |
| Six months ended June 30, 2025 | ||||
| (in millions) | ||||
| Revenue | $ | 1,384 | ||
| Income from operations | 1,276 | |||
| Income from operations before income taxes (i) | 737 | |||
| Net income | 926 | |||
| Net income attributable to WTW | 926 |
(i)
Includes intercompany expense, net of the Obligor group from non-guarantor subsidiaries of $285 million for the six months ended June 30, 2025.
Non-GAAP Financial Measures
In order to assist readers of our condensed consolidated financial statements in understanding the core operating results that WTW’s management uses to evaluate the business and for financial planning purposes, we present the following non-GAAP measures and their most directly comparable U.S. GAAP measure:
| Most Directly Comparable U.S. GAAP Measure | Non-GAAP Measure | |
| As reported change | Constant currency change | |
| As reported change | Organic change | |
| Income from operations/margin | Adjusted operating income/margin | |
| Net income/margin | Adjusted EBITDA/margin | |
| Net income attributable to WTW | Adjusted net income | |
| Diluted earnings per share | Adjusted diluted earnings per share | |
| Income from operations before income taxes and interest in earnings of associates | Adjusted income before taxes | |
| Provision for income taxes/U.S. GAAP tax rate | Adjusted income taxes/tax rate | |
| Net cash from operating activities | Free cash flow |
The Company believes that these measures are relevant and provide pertinent information widely used by analysts, investors and other interested parties in our industry to provide a baseline for evaluating and comparing our operating performance, and in the case of free cash flow, our liquidity results.
Within the measures referred to as ‘adjusted’, we adjust for significant items which will not be settled in cash, or which we believe to be items that are not core to our current or future operations. Some of these items may not be applicable for the current quarter, however they may be part of our full-year results. Additionally, we have historically adjusted for certain items which are not described below, but for which we may adjust in a future period when applicable. Items applicable to the quarter or full-year results, or the comparable periods, include the following:
Restructuring costs and transaction and transformation – Management believes it is appropriate to adjust for restructuring costs and transaction and transformation when they relate to a specific significant program with a defined set of activities and costs that are not expected to continue beyond a defined period of time, or significant acquisition-related transaction expenses. We believe the adjustment is necessary to present how the Company is performing, both now and in the future when the incurrence of these costs will have concluded.
Provisions for specified litigation matters – We will include provisions for litigation matters which we believe are not representative of our core business operations. Among other things, we determine this by reference to the amount of the loss (net of insurance and other recovery receivables) and by reference to whether the matter relates to an unusual and complex scenario that is not expected to be repeated as part of our ongoing, ordinary business. These amounts are presented net of insurance and other recovery receivables. See the footnotes to the reconciliation tables below for more specificity on the litigation matter excluded from adjusted results.
Gains and losses on disposals of operations – Adjustment to remove the gains or losses resulting from disposed operations that have not been classified as discontinued operations.
Net periodic pension and postretirement benefits – Adjustment to remove the recognition of net periodic pension and postretirement benefits (including pension settlements), other than service costs. We have included this adjustment as applicable in our prior-period disclosures in order to conform to the current-period presentation.
Tax effect of significant adjustments – Relates to the incremental tax expense or benefit resulting from significant or unusual events including significant statutory tax rate changes enacted in material jurisdictions in which we operate, internal reorganizations of ownership of certain businesses that reduced the investment held by our U.S.-controlled subsidiaries and the recovery of certain refunds or payment of taxes related to businesses in which we no longer participate.
These non-GAAP measures are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP measures should be considered in addition to, and not as a substitute for, the information contained within our condensed consolidated financial statements.
Constant Currency Change and Organic Change
We evaluate our revenue on an as reported (U.S. GAAP), constant currency and organic basis. We believe presenting constant currency and organic information provides valuable supplemental information regarding our comparable results, consistent with how we evaluate our performance internally.
Constant currency change - Represents the year-over-year change in revenue excluding the impact of foreign currency fluctuations. To calculate this impact, the prior-year local currency results are first translated using the current-year monthly average exchange rates. The change is calculated by comparing the prior-year revenue, translated at the current-year monthly average exchange rates, to the current-year as-reported revenue, for the same period. We believe constant currency measures provide useful information to investors because they provide transparency to performance by excluding the effects that foreign currency exchange rate fluctuations have on period-over-period comparability given volatility in foreign currency exchange markets.
Organic change - Excludes the impact of fluctuations in foreign currency exchange rates as described above and the period-over-period impact of acquisitions and divestitures on current-year revenue. We believe that excluding transaction-related items from our U.S. GAAP financial measures provides useful supplemental information to our investors, and it is important in illustrating what our core operating results would have been had we not included these transaction-related items, since the nature, size and number of these transaction-related items can vary from period to period.
The constant currency and organic change results, and a reconciliation from the reported results for consolidated revenue are included in the ‘Consolidated Revenue’ section within this Form 10-Q. These measures are also reported by segment in the ‘Segment Revenue and Segment Operating Income’ section within this Form 10-Q.
Reconciliations of the as-reported change to the constant currency and organic changes for the three and six months ended June 30, 2025 from the three and six months ended June 30, 2024 are as follows. The components of revenue change may not add due to rounding.
| Components of Revenue Change | ||||||||||||||||||
| As | Less: | Constant | Less: | |||||||||||||||
| Three Months Ended June 30, | Reported | Currency | Currency | Acquisitions/ | Organic | |||||||||||||
| 2025 | 2024 | Change | Impact | Change | Divestitures | Change (i) | ||||||||||||
| ($ in millions) | ||||||||||||||||||
| Revenue | $ | 2,261 | $ | 2,265 | —% | 1% | (1)% | (6)% | 5% |
| Components of Revenue Change | ||||||||||||||||||
| As | Less: | Constant | Less: | |||||||||||||||
| Six Months Ended June 30, | Reported | Currency | Currency | Acquisitions/ | Organic | |||||||||||||
| 2025 | 2024 | Change | Impact | Change | Divestitures | Change (i) | ||||||||||||
| ($ in millions) | ||||||||||||||||||
| Revenue | $ | 4,484 | $ | 4,606 | (3)% | —% | (3)% | (7)% | 5% |
(i)
Interest income did not contribute to organic change for the three and six months ended June 30, 2025.
For the three months ended June 30, 2025, our as-reported revenue decreased by $4 million and our organic revenue grew by 5%. For the six months ended June 30, 2025, our as-reported revenue decreased by $122 million, or 3%, and our organic revenue grew by 5%. These decreases in as-reported revenue were due primarily to the sale of our TRANZACT business on December 31, 2024. The increases in organic revenue were driven by strong performances in both segments. For additional information, please see the section entitled ‘Segment Revenue and Segment Operating Income’ elsewhere within Item 2 of this Quarterly Report on Form 10-Q.
Adjusted Operating Income/Margin
We consider adjusted operating income/margin to be important financial measures, which are used internally to evaluate and assess our core operations and to benchmark our operating results against our competitors.
Adjusted operating income is defined as income from operations adjusted for amortization, restructuring costs, transaction and transformation and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted operating income margin is calculated by dividing adjusted operating income by revenue.
Reconciliations of income from operations to adjusted operating income for the three and six months ended June 30, 2025 and 2024 are as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| ($ in millions) | |||||||||||||||
| Income from operations | $ | 368 | $ | 212 | $ | 800 | $ | 492 | |||||||
| Adjusted for certain items: | |||||||||||||||
| Amortization | 49 | 60 | 97 | 120 | |||||||||||
| Restructuring costs | — | 3 | — | 21 | |||||||||||
| Transaction and transformation | 2 | 97 | 2 | 222 | |||||||||||
| Provision for specified litigation matter (i) | — | 13 | — | 13 | |||||||||||
| Adjusted operating income | $ | 419 | $ | 385 | $ | 899 | $ | 868 | |||||||
| Income from operations margin | 16.3 | % | 9.4 | % | 17.8 | % | 10.7 | % | |||||||
| Adjusted operating income margin | 18.5 | % | 17.0 | % | 20.0 | % | 18.8 | % |
(i)
Represents a provision related to potential litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.
Adjusted operating income increased for the three months ended June 30, 2025 to $419 million, from $385 million for the three months ended June 30, 2024 and increased for the six months ended June 30, 2025 to $899 million from $868 million for the six months ended June 30, 2024. These increases resulted primarily from lower marketing expenses and decreased local office expenses in the current-year periods, partially offset by lower revenue due to the prior-year sale of our TRANZACT business.
Adjusted EBITDA/Margin
We consider adjusted EBITDA/margin to be important financial measures, which are used internally to evaluate and assess our core operations, to benchmark our operating results against our competitors and to evaluate and measure our performance-based compensation plans.
Adjusted EBITDA is defined as net income adjusted for provision for income taxes, interest expense, depreciation and amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, net periodic pension and postretirement benefits, and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue.
Reconciliations of net income to adjusted EBITDA for the three and six months ended June 30, 2025 and 2024 are as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| ($ in millions) | ||||||||||||||||
| NET INCOME | $ | 332 | $ | 142 | $ | 571 | $ | 336 | ||||||||
| (Benefit from)/provision for income taxes | (21 | ) | 26 | 44 | 74 | |||||||||||
| Interest expense | 64 | 68 | 129 | 132 | ||||||||||||
| Depreciation | 57 | 57 | 111 | 116 | ||||||||||||
| Amortization | 49 | 60 | 97 | 120 | ||||||||||||
| Restructuring costs | — | 3 | — | 21 | ||||||||||||
| Transaction and transformation | 2 | 97 | 2 | 222 | ||||||||||||
| Provision for specified litigation matter (i) | — | 13 | — | 13 | ||||||||||||
| Net periodic pension and postretirement benefits | (13 | ) | (21 | ) | 62 | (43 | ) | |||||||||
| Gain on disposal of operations | — | — | (14 | ) | — | |||||||||||
| Adjusted EBITDA | $ | 470 | $ | 445 | $ | 1,002 | $ | 991 | ||||||||
| Net income margin | 14.7 | % | 6.3 | % | 12.7 | % | 7.3 | % | ||||||||
| Adjusted EBITDA margin | 20.8 | % | 19.6 | % | 22.3 | % | 21.5 | % |
(i)
Represents a provision related to potential litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.
Adjusted EBITDA for the three months ended June 30, 2025 was $470 million, compared to $445 million for the three months ended June 30, 2024, and was $1.0 billion for the six months ended June 30, 2025, compared to $991 million for the six months ended June 30, 2024. These increases resulted primarily from lower marketing expenses and decreased local office expenses in the current-year periods, partially offset by lower revenue due to the prior-year sale of our TRANZACT business and higher benefit and share-based compensation costs in the current-year periods.
Adjusted Net Income and Adjusted Diluted Earnings Per Share
Adjusted net income is defined as net income attributable to WTW adjusted for amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, net periodic pension and postretirement benefits, and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results and the related tax effect of those adjustments and the tax effects of internal reorganizations. This measure is used solely for the purpose of calculating adjusted diluted earnings per share.
Adjusted diluted earnings per share is defined as adjusted net income divided by the weighted-average number of ordinary shares, diluted. Adjusted diluted earnings per share is used to internally evaluate and assess our core operations and to benchmark our operating results against our competitors.
Reconciliations of net income attributable to WTW to adjusted diluted earnings per share for the three and six months ended June 30, 2025 and 2024 are as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| ($ in millions) | ||||||||||||||||
| NET INCOME ATTRIBUTABLE TO WTW | $ | 331 | $ | 141 | $ | 566 | $ | 331 | ||||||||
| Adjusted for certain items: | ||||||||||||||||
| Amortization | 49 | 60 | 97 | 120 | ||||||||||||
| Restructuring costs | — | 3 | — | 21 | ||||||||||||
| Transaction and transformation | 2 | 97 | 2 | 222 | ||||||||||||
| Provision for specified litigation matter (i) | — | 13 | — | 13 | ||||||||||||
| Net periodic pension and postretirement benefits | (13 | ) | (21 | ) | 62 | (43 | ) | |||||||||
| Gain on disposal of operations | — | — | (14 | ) | — | |||||||||||
| Tax effect on certain items listed above (ii) | (10 | ) | (39 | ) | (38 | ) | (85 | ) | ||||||||
| Tax effect of significant adjustments | (74 | ) | (7 | ) | (74 | ) | (7 | ) | ||||||||
| Adjusted net income | $ | 285 | $ | 247 | $ | 601 | $ | 572 | ||||||||
| Weighted-average ordinary shares — diluted | 100 | 103 | 100 | 104 | ||||||||||||
| Diluted earnings per share | $ | 3.32 | $ | 1.36 | $ | 5.64 | $ | 3.20 | ||||||||
| Adjusted for certain items (iii) : | ||||||||||||||||
| Amortization | 0.49 | 0.58 | 0.97 | 1.16 | ||||||||||||
| Restructuring costs | — | 0.03 | — | 0.20 | ||||||||||||
| Transaction and transformation | 0.02 | 0.94 | 0.02 | 2.14 | ||||||||||||
| Provision for specified litigation matter (i) | — | 0.13 | — | 0.13 | ||||||||||||
| Net periodic pension and postretirement benefits | (0.13 | ) | (0.20 | ) | 0.62 | (0.42 | ) | |||||||||
| Gain on disposal of operations | — | — | (0.14 | ) | — | |||||||||||
| Tax effect on certain items listed above (ii) | (0.10 | ) | (0.38 | ) | (0.38 | ) | (0.82 | ) | ||||||||
| Tax effect of significant adjustments | (0.74 | ) | (0.07 | ) | (0.74 | ) | (0.07 | ) | ||||||||
| Adjusted diluted earnings per share | $ | 2.86 | $ | 2.39 | $ | 5.99 | $ | 5.53 |
(i)
Represents a provision related to potential litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.
(ii)
The tax effect was calculated using an effective tax rate for each item.
(iii)
Per share values and totals may differ due to rounding.
Our adjusted diluted earnings per share increased for both the three and six months ended June 30, 2025 as compared to the prior year primarily due to a lower weighted-average outstanding share count due to our share repurchase activity over the last year, and lower marketing expenses and decreased local office expenses in the current-year periods, partially offset by lower revenue due to the prior-year sale of our TRANZACT business and higher benefit and share-based compensation costs in the current-year periods.
Adjusted Income Before Taxes and Adjusted Income Taxes/Tax Rate
Adjusted income before taxes is defined as income from operations before income taxes and interest in earnings of associates adjusted for amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, net periodic pension and postretirement benefits, and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted income before taxes is used solely for the purpose of calculating the adjusted income tax rate.
Adjusted income taxes/tax rate is defined as the provision for income taxes adjusted for taxes on certain items of amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, net periodic pension and postretirement benefits, the tax effects of significant adjustments and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results, divided by adjusted income before taxes. Adjusted income taxes is used solely for the purpose of calculating the adjusted income tax rate.
Management believes that the adjusted income tax rate presents a rate that is more closely aligned to the rate that we would incur if not for the reduction of pre-tax income for the adjusted items and the tax effects of significant adjustments, which are not core to our current and future operations.
Reconciliations of income from operations before income taxes and interest in earnings of associates to adjusted income before taxes and provision for income taxes to adjusted income taxes for the three and six months ended June 30, 2025 and 2024 are as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| ($ in millions) | ||||||||||||||||
| INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | $ | 313 | $ | 167 | $ | 616 | $ | 409 | ||||||||
| Adjusted for certain items: | ||||||||||||||||
| Amortization | 49 | 60 | 97 | 120 | ||||||||||||
| Restructuring costs | — | 3 | — | 21 | ||||||||||||
| Transaction and transformation | 2 | 97 | 2 | 222 | ||||||||||||
| Provision for specified litigation matter (i) | — | 13 | — | 13 | ||||||||||||
| Net periodic pension and postretirement benefits | (13 | ) | (21 | ) | 62 | (43 | ) | |||||||||
| Gain on disposal of operations | — | — | (14 | ) | — | |||||||||||
| Adjusted income before taxes | $ | 351 | $ | 319 | $ | 763 | $ | 742 | ||||||||
| (Benefit from)/provision for income taxes | $ | (21 | ) | $ | 26 | $ | 44 | $ | 74 | |||||||
| Tax effect on certain items listed above (ii) | 10 | 39 | 38 | 85 | ||||||||||||
| Tax effect of significant adjustments | 74 | 7 | 74 | 7 | ||||||||||||
| Adjusted income taxes | $ | 63 | $ | 72 | $ | 156 | $ | 166 | ||||||||
| U.S. GAAP tax rate | (6.8 | )% | 15.6 | % | 7.1 | % | 18.1 | % | ||||||||
| Adjusted income tax rate | 18.0 | % | 22.4 | % | 20.5 | % | 22.3 | % |
(i)
Represents a provision related to potential litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.
(ii)
The tax effect was calculated using an effective tax rate for each item.
Our U.S. GAAP tax rates were (6.8)% and 15.6% for the three months ended June 30, 2025 and 2024, respectively, and 7.1% and 18.1% for the six months ended June 30 2025 and 2024, respectively. The current-year quarter’s effective tax rate is lower primarily due to favorable discrete tax items, which include an adjustment to the tax provision associated with the earnout received from the sale of our Willis Re business, changes in measurement for existing uncertain tax positions and an excess tax benefit on share-based compensation.
Our adjusted income tax rates were 18.0% and 22.4% for the three months ended June 30, 2025 and 2024, respectively, and 20.5% and 22.3% for the six months ended June 30, 2025 and 2024, respectively. The current-year quarter’s adjusted tax rate is lower primarily due to favorable discrete tax items, changes in measurement for existing uncertain tax positions and an excess tax benefit on share-based compensation.
Free Cash Flow
Free cash flow is defined as cash flows from operating activities less cash used to purchase fixed assets and software. Free cash flow is a liquidity measure and is not meant to represent residual cash flow available for discretionary expenditures.
As a result of our change in presentation, free cash flow for the prior period has been adjusted to conform to the current period, which includes the deduction of our capitalized software costs.
Management believes that free cash flow presents the core operating performance and cash generating capabilities of our business operations.
Reconciliations of cash flows from operating activities to free cash flow for the six months ended June 30, 2025 and 2024 are as follows:
| Six Months Ended June 30 | ||||||||
| 2025 | 2024 | |||||||
| (in millions) | ||||||||
| Cash flows from operating activities | $ | 326 | $ | 431 | ||||
| Less: Additions to fixed assets and software | (109 | ) | (126 | ) | ||||
| Free cash flow | $ | 217 | $ | 305 |
The decrease in free cash flow during the current-year period was primarily driven by increased compensation and cash tax payments as well as the absence of cash inflows from TRANZACT following its sale on December 31, 2024, partly offset by lower Transformation program spending and operational improvements.
Critical Accounting Estimates
There were no material changes from the Critical Accounting Estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 25, 2025.
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