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Willis Towers (WLTW) Beats on Q2 Earnings, Revises View

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Willis Towers Watson plc reported second-quarter 2016 adjusted net income of $1.66 per share, beating the Zacks Consensus Estimate of $1.59. Earnings declined 1.2% year over year.
 

 

 

Including restructuring costs and integration expenses, net income came in at 51 cents, down 49% year over year.

Operational Updates

Adjusted revenues improved 9% (11% constant currency growth, 5% organic growth), year over year to $1.98 billion. Revenues missed the Zacks Consensus Estimate of $2 billion.

On a year-over-year basis, commissions, fees increased 7% to $1.9 billion

Adjusted operating income decreased 20% year over year to $136 million.

Adjusted EBITDA was $406 million, or 20.6% of adjusted revenues, higher than $401 million, or 22.1% of revenues in the year-ago quarter.

Quarterly Segment Update

Human Capital & Benefits: Commissions and fees of $760 million declined 1% year over year (3% on constant currency basis and flat on an organic basis). Total revenues of $765 million increased 1.3%. Operating margin was 15%.

Corporate Risk & Broking: Commissions and fees of $623 million improved 7% (9% constant currency growth and 1% organic increase). Total revenues of $629 million improved 7.5% year over year. Operating margin was 19% in the quarter.    

Investment, Risk & Reinsurance: Commissions and fees of $355 million improved 5% (7% constant currency growth but 5% organic decline). Total revenues of $155 million increased 17.7% over the prior-year quarter.  Operating margin was 25%.

Exchange Solutions: Commission and fees of $154 million improved 47% (47% constant currency growth but 43% organic decrease). Total revenues of $155 million were up 46% year over year. Operating margin was 20%.

Share Repurchase

The company has bought back $100 million worth shares year to date and envisions repurchasing $200 million in the remainder of the year.

2016 Guidance

Willis Towers Watson projects adjusted earnings per share between $7.60 and $7.80, down from $7.70 and $7.95. Reported earnings per share are expected between $2.48 and $2.68.

Constant currency revenue growth is expected 10% while reported revenue growth is estimated at 7%.

Zacks Rank

Willis Towers presently carries a Zacks Rank #3 (Hold).
 

WILLIS TWRS WAT Price, Consensus and EPS Surprise

WILLIS TWRS WAT Price, Consensus and EPS Surprise | WILLIS TWRS WAT Quote

Performance of Other Insurance Brokers

The bottom line at Marsh & McLennan Companies, Inc. (MMC - Free Report) was in line with the Zacks Consensus Estimate while Brown & Brown Inc. (BRO - Free Report) beat the same. Aon plc (AON - Free Report) missed out expectation in the second quarter.

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