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Willis Towers Watson Public Limited Company (WTW - Free Report) delivered first-quarter 2024 adjusted earnings of $3.29 per share, which beat the Zacks Consensus Estimate by 2.5%. The bottom line improved 15.8% year over year.
The insurer’s results reflect higher revenues and expanded operating margins at the Health, Wealth & Career and Risk & Broking segments, as well as improved adjusted operating income, offset by higher expenses.
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Willis Towers posted adjusted consolidated revenues of $2.3 billion, up 4% year over year on a reported basis. Revenues increased 5% on an organic basis and 4% on a constant currency basis. The top line missed the Zacks Consensus Estimate by 0.8%.
The total costs of providing services increased 5.2% year over year to $2 billion due to higher salaries and benefits, operating expenses, transaction and transformation expenses and restructuring costs. The figure matched our estimate.
Adjusted operating income was $483 million, up 16% year over year. Adjusted operating margin expanded 200 basis points (bps) to 20.6%.
Adjusted EBITDA was $568 million, up 13% year over year. Adjusted EBITDA margin was 24.3%, which expanded 190 bps.
Quarterly Segment Update
Health, Wealth & Career: Total revenues of $1.3 billion increased 4% year over year (3% increase on a constant currency and 4% increase on an organic basis). Organic revenue growth in Health was driven by the continued expansion of the Global Benefits Management client portfolio in International and Europe. Our estimate was pegged at $1.4 billion.
Wealth businesses generated organic revenue growth from higher levels of Retirement work in North America and Europe.
Organic growth in Benefits Delivery & Outsourcing was driven by higher volumes and placements of Medicare Advantage and life policies in the Individual Marketplace.
Career had organic revenue growth from increased project work in Employee Experience and Work & Rewards.
The operating margin was 25.1%, which increased 110 bps from the prior-year quarter, primarily from Transformation savings.
Risk & Broking: Total revenues of $978 million increased 8% year over year (8% increase in constant currency and on an organic basis). Our estimate for the same was pegged at $958.2 million.
Organic revenue growth in Corporate Risk & Broking was primarily driven by strong client retention across all geographies and higher levels of new business activity.
Insurance Consulting and Technology (ICT) had flat organic revenue growth for the quarter, primarily due to the timing of consulting and technology revenues between quarters.
The operating margin increased 90 bps from the prior-year quarter to 20.8%, due to interest income, Transformation savings and revenue growth in CRB. It was partially offset by the impact of book-of-business activity, foreign exchange and ICT's flat revenue growth.
Financial Update
Cash and cash equivalents of $1.89 billion at quarter end increased 33% from the 2023-end level. Long-term debt increased 16.2% to $5.3 billion at quarter-end from the end of 2023. Shareholders’ equity decreased 0.3% from the level on Dec 31, 2023, to $9.5 billion as of Mar 31, 2024.
Cash flow from operations was $24 million, which decreased 82% year over year. Free cash outflow was $9 million against an inflow of $92 million in the year-ago quarter.
WTW bought back shares worth $101 million in the quarter.
2024 Guidance
Willis Towers expects to deliver revenues of $9.9 billion and mid-single-digit organic revenue growth.
The insurer projects to deliver an adjusted operating margin of 22.5-23.5%.
Willis Towers expects to deliver adjusted diluted earnings per share of $15.40-$17.
WTW expects approximately $88 million in non-cash pension income. It expects a foreign currency headwind on adjusted earnings per share of approximately 5 cents.
The insurer projects to deliver approximately $425 million of cumulative run-rate savings from the Transformation program by the end of 2024, with total program costs of $1.125 billion.
Chubb Limited (CB - Free Report) reported first-quarter 2024 core operating income of $5.41 per share, which outpaced the Zacks Consensus Estimate by 2.3%. The bottom line increased 22.7% year over year. Net premiums written improved 14.1% year over year to $12.2 billion in the quarter. Our estimate for the same was pegged at $11.4 billion, while the Zacks Consensus Estimate was pinned at $13 billion.
Net investment income was $1.4 billion, up 25.7% year over year. The Zacks Consensus Estimate was pegged at $1.3 billion, while our estimate for the same was $1.4 billion. Property and casualty (P&C) underwriting income was $1.4 billion, up 16.7% year over year. Global P&C underwriting income, excluding Agriculture, was $1.3 billion, up 10.9%.
RLI Corp. (RLI - Free Report) reported first-quarter 2024 operating earnings of $1.89 per share, beating the Zacks Consensus Estimate as well as the year-ago number by 16%. Operating revenues for the reported quarter were $394 million, up 17.6% year over year, driven by 17% higher net premiums earned and 21.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.1%.
Gross premiums written increased 13% year over year to $468 million. This uptick can be attributed to the solid performance of the Casualty (up 12.6%), Property (up 13.5%) and Surety segments (up 12.1%). Our estimate was $511 million. Underwriting income of $77.7 million increased 16%. Combined ratio deteriorated 60 bps year over year to 78.5. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 77.7.
Brown & Brown, Inc.’s (BRO - Free Report) first-quarter 2024 adjusted earnings of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 18.7% year over year. Total revenues of $1.25 billion beat the Zacks Consensus Estimate by 3.8%. The top line improved 12.7% year over year. The upside can be primarily attributed to commission and fees, which grew 11.6% year over year to $1.2 million. The Zacks Consensus Estimate for commission and fees was pegged at $1.1 billion.
Organic revenues improved 8.6% to $1.15 billion in the quarter under review. Investment income more than doubled year over year to $18 million. The Zacks Consensus Estimate for the metric was pegged at $17.3 million. Adjusted EBITDAC was $466 million, up 17.1% year over year. EBITDAC margin increased to 37% year over year from 35.7%. Total expenses increased 8.7% to $894 million.
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Willis Towers (WTW) Q1 Earnings Beat, Revenues Rise Y/Y
Willis Towers Watson Public Limited Company (WTW - Free Report) delivered first-quarter 2024 adjusted earnings of $3.29 per share, which beat the Zacks Consensus Estimate by 2.5%. The bottom line improved 15.8% year over year.
The insurer’s results reflect higher revenues and expanded operating margins at the Health, Wealth & Career and Risk & Broking segments, as well as improved adjusted operating income, offset by higher expenses.
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Willis Towers Watson Public Limited Company price-consensus-eps-surprise-chart | Willis Towers Watson Public Limited Company Quote
Operational Update
Willis Towers posted adjusted consolidated revenues of $2.3 billion, up 4% year over year on a reported basis. Revenues increased 5% on an organic basis and 4% on a constant currency basis. The top line missed the Zacks Consensus Estimate by 0.8%.
The total costs of providing services increased 5.2% year over year to $2 billion due to higher salaries and benefits, operating expenses, transaction and transformation expenses and restructuring costs. The figure matched our estimate.
Adjusted operating income was $483 million, up 16% year over year. Adjusted operating margin expanded 200 basis points (bps) to 20.6%.
Adjusted EBITDA was $568 million, up 13% year over year. Adjusted EBITDA margin was 24.3%, which expanded 190 bps.
Quarterly Segment Update
Health, Wealth & Career: Total revenues of $1.3 billion increased 4% year over year (3% increase on a constant currency and 4% increase on an organic basis). Organic revenue growth in Health was driven by the continued expansion of the Global Benefits Management client portfolio in International and Europe. Our estimate was pegged at $1.4 billion.
Wealth businesses generated organic revenue growth from higher levels of Retirement work in North America and Europe.
Organic growth in Benefits Delivery & Outsourcing was driven by higher volumes and placements of Medicare Advantage and life policies in the Individual Marketplace.
Career had organic revenue growth from increased project work in Employee Experience and Work & Rewards.
The operating margin was 25.1%, which increased 110 bps from the prior-year quarter, primarily from Transformation savings.
Risk & Broking: Total revenues of $978 million increased 8% year over year (8% increase in constant currency and on an organic basis). Our estimate for the same was pegged at $958.2 million.
Organic revenue growth in Corporate Risk & Broking was primarily driven by strong client retention across all geographies and higher levels of new business activity.
Insurance Consulting and Technology (ICT) had flat organic revenue growth for the quarter, primarily due to the timing of consulting and technology revenues between quarters.
The operating margin increased 90 bps from the prior-year quarter to 20.8%, due to interest income, Transformation savings and revenue growth in CRB. It was partially offset by the impact of book-of-business activity, foreign exchange and ICT's flat revenue growth.
Financial Update
Cash and cash equivalents of $1.89 billion at quarter end increased 33% from the 2023-end level. Long-term debt increased 16.2% to $5.3 billion at quarter-end from the end of 2023. Shareholders’ equity decreased 0.3% from the level on Dec 31, 2023, to $9.5 billion as of Mar 31, 2024.
Cash flow from operations was $24 million, which decreased 82% year over year. Free cash outflow was $9 million against an inflow of $92 million in the year-ago quarter.
WTW bought back shares worth $101 million in the quarter.
2024 Guidance
Willis Towers expects to deliver revenues of $9.9 billion and mid-single-digit organic revenue growth.
The insurer projects to deliver an adjusted operating margin of 22.5-23.5%.
Willis Towers expects to deliver adjusted diluted earnings per share of $15.40-$17.
WTW expects approximately $88 million in non-cash pension income. It expects a foreign currency headwind on adjusted earnings per share of approximately 5 cents.
The insurer projects to deliver approximately $425 million of cumulative run-rate savings from the Transformation program by the end of 2024, with total program costs of $1.125 billion.
Zacks Rank
WTW currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Chubb Limited (CB - Free Report) reported first-quarter 2024 core operating income of $5.41 per share, which outpaced the Zacks Consensus Estimate by 2.3%. The bottom line increased 22.7% year over year. Net premiums written improved 14.1% year over year to $12.2 billion in the quarter. Our estimate for the same was pegged at $11.4 billion, while the Zacks Consensus Estimate was pinned at $13 billion.
Net investment income was $1.4 billion, up 25.7% year over year. The Zacks Consensus Estimate was pegged at $1.3 billion, while our estimate for the same was $1.4 billion. Property and casualty (P&C) underwriting income was $1.4 billion, up 16.7% year over year. Global P&C underwriting income, excluding Agriculture, was $1.3 billion, up 10.9%.
RLI Corp. (RLI - Free Report) reported first-quarter 2024 operating earnings of $1.89 per share, beating the Zacks Consensus Estimate as well as the year-ago number by 16%. Operating revenues for the reported quarter were $394 million, up 17.6% year over year, driven by 17% higher net premiums earned and 21.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.1%.
Gross premiums written increased 13% year over year to $468 million. This uptick can be attributed to the solid performance of the Casualty (up 12.6%), Property (up 13.5%) and Surety segments (up 12.1%). Our estimate was $511 million. Underwriting income of $77.7 million increased 16%. Combined ratio deteriorated 60 bps year over year to 78.5. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 77.7.
Brown & Brown, Inc.’s (BRO - Free Report) first-quarter 2024 adjusted earnings of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 18.7% year over year. Total revenues of $1.25 billion beat the Zacks Consensus Estimate by 3.8%. The top line improved 12.7% year over year. The upside can be primarily attributed to commission and fees, which grew 11.6% year over year to $1.2 million. The Zacks Consensus Estimate for commission and fees was pegged at $1.1 billion.
Organic revenues improved 8.6% to $1.15 billion in the quarter under review. Investment income more than doubled year over year to $18 million. The Zacks Consensus Estimate for the metric was pegged at $17.3 million. Adjusted EBITDAC was $466 million, up 17.1% year over year. EBITDAC margin increased to 37% year over year from 35.7%. Total expenses increased 8.7% to $894 million.