Willis Towers Watson enjoys solid organic growth in 'difficult' 2020

Reinsurance led the revenue growth at broker Willis Towers Watson in 2020, driven by new business generation and favorable renewal factors. Organically, the overall recorded growth was 2 percent, but its profits declined in both the fourth quarter and full-year on merger execution and integration costs, and provisions for significant litigation.

WTW stated that COVID-19 had a negative impact on its revenue growth but did not have a material impact on the overall 2020 results. The company, however, expects the pandemic to negatively impact its revenue and operating results in 2021.

The company's total revenue increased by 3 percent, while its organic revenue growth overall was 2 percent for both the quarter and the year.

For the year ended December 31, 2020, its revenue was $9.35 billion, up from $9.04 billion for the same period in 2019. For Q4 2020, it was $2.76 billion, compared with $2.69 billion for the same period in the prior year.

However, its profits declined by 5 percent in 2020 and 13 percent in the fourth quarter. This was due to the transaction and integration expenses mostly related to the pending business combination with Aon and provisions for significant litigation.

Net profit was $996 million for the full-year, down from $1.04 billion for the prior year. For Q4 2020, the net profit came in at $476 million, down from $544 million for the same period in 2019.

The broker's investment, risk & reinsurance (IRR) segment had revenue of $292 million, a decrease of 7 percent (1 percent increase on organic basis) from $314 million in the prior-year fourth quarter. On an organic basis, reinsurance led the segment’s revenue growth, driven by new business wins and favorable renewal factors.

The growth was partially offset by declines in other businesses with pressure on discretionary work having negatively impacted both Insurance Consulting and Technology and Investments.

WTW's wholesale revenue declined as a result of headwinds across certain coverage lines coupled with a strategic shift in its operating model.

The corporate risk & broking (CRB) segment posted revenue of $888 million, an increase of 1 percent (1 percent decrease on organic basis) from $877 million in the prior-year fourth quarter. On an organic basis, North America led the segment with new business generation alongside strong renewals.

John Haley, Willis Towers Watson’s chief executive officer, said: “Our performance in the fourth quarter provided a strong finish to a good year in a difficult environment. We produced solid margins, almost doubled free cash flow, and delivered remarkable adjusted EPS growth.

“The results reflect the strong dedication and adaptability of our colleagues and their commitment to the values that underpin our Company. I couldn’t be prouder of Willis Towers Watson’s accomplishments to date and I look forward to our continued momentum in 2021 as we move toward our planned combination with Aon.”

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