Core Insights - Willis Towers Watson (WTW) has launched a new digital insurance platform called Gemini, aimed at addressing rising risk complexities and unpredictable market conditions, providing clients with more reliable outcomes [1][10] Group 1: Gemini Platform Features - Gemini enhances reliability and efficiency in insurance programs, supported by A+ rated Lloyd's syndicates, and offers built-in price advantages for significant savings [2] - The platform is capable of managing a wide range of risks, including complex ones, and facilitates quicker placements through automatic alignment with lead terms [2] - Claims processes are improved by matching lead settlements, which reduces disputes and delays, fostering long-term stability during annual renewals [3] Group 2: Financial Implications - The introduction of Gemini is expected to boost WTW's financial performance by driving revenue growth through new client acquisition and improved retention [4] - Digital automation within Gemini may streamline quoting, binding, and claims processes, leading to cost reductions and improved profit margins [4] - The scalable nature of the platform could create opportunities for additional services and cross-selling, thereby strengthening WTW's market position and client trust [4] Group 3: Market Performance - WTW shares have increased by 4.4% year-to-date, contrasting with a 13.7% decline in the industry [7] - The current valuation of WTW shares is at a price to forward 12-month earnings ratio of 17.86, lower than the industry average of 20.76 [11] - The Zacks Consensus Estimate for WTW's 2025 earnings indicates a slight decline of 0.7% year-over-year, followed by a projected increase of 13.5% in the subsequent year [13]

Group 1 - LifeSight has been appointed by Emerson as its full master trust provider, covering all active, deferred, and drawdown members [1][2] - The partnership began with LifeSight providing Drawdown solutions in 2020, and the full transition was completed by April 2025, with LifeSight going live for Emerson members on February 1, 2025 [2] - The addition of Emerson's membership increases LifeSight's total to 430,000 members and over £24 billion in assets under management [4] Group 2 - Emerson emphasized the importance of technology and member engagement, with LifeSight's mobile app significantly enhancing member interaction with retirement savings [3] - Phil Lamb, Pensions Manager at Emerson, highlighted LifeSight's investment strategy, member communication, and technology as key factors in their selection process [4] - LifeSight offers a comprehensive solution for defined contribution pension schemes, addressing the complexities and costs faced by employers [6][7]

Company Expansion - Willis, a WTW business, announced a significant expansion of its Japanese Corporate Risk & Broking team, enhancing its ability to meet rising demand in Japan through deepened industry expertise and analytics [1] - The company has hired 22 new professionals across various business areas, significantly expanding its client-facing teams [2][3] Market Insights - The Japanese general insurance market is projected to grow from JPY 11.7 trillion (US$ 81.1 billion) in 2024 to JPY 12.7 trillion (US$ 93.9 billion) by 2028, at a compound annual growth rate of 2.2% [2] - Growth drivers include commercial lines, digital transformation, risk advisory services, and increased demand for protection against climate change, natural catastrophes, cyber threats, and supply chain disruptions [2] Specialty Lines and Talent Acquisition - Recent hires include professionals in Risk & Analytics, Facultative Reinsurance, Marine specialty line, Business Development, Large Account, and Claims, reflecting the company's commitment to supporting clients with large and complex risks [3] - The new talent includes individuals from leading companies such as Marsh, Aon, Tokio Marine, Mitsui Sumitomo, Marubeni, and Moody's RMS [3]

Core Insights - Willis, a WTW business, has launched Gemini, a digital facility aimed at providing sustainable capacity to clients' insurance portfolios, addressing risk complexity and market volatility [1][2] - Gemini offers a 2.5% discount on lead pricing and is supported by Lloyd's syndicates, enhancing client confidence in challenging conditions [2][5] - The service will be available exclusively to Willis clients for risks starting from September 1, 2025 [3] Features of Gemini - Gemini provides substantial capacity for any in-scope risk, regardless of complexity, ensuring competitive pricing and guaranteed discounts for clients [5] - The platform allows for auto-approval of up to 12.5% of whole placements following lead quotes, facilitating quick deployment of capacity [2][5] - Claims management is simplified by following lead claims settlements, reducing complexity for clients [5]

Core Insights - US companies are increasingly adopting pay transparency despite regulatory complexities introduced by recent executive orders and EU directives [1][2] - The 2025 Pay Transparency Survey by WTW indicates that 82% of US companies are communicating or planning to communicate individual pay ranges to employees, and 79% are doing the same for external candidates [2] Regulatory and Cultural Drivers - The shift towards pay transparency is driven by growing regulatory requirements (72%), company values and culture (44%), and employee expectations (41%) [2] - One-third (32%) of organizations have publicly shared a narrative on pay equity, with 20% doing so for pay transparency [3] Current Practices and Challenges - Less than half of employers share how individual base pay is determined, and even fewer convey how pay ranges are designed and managed [4] - Organizations anticipate that sharing pay ranges will lead to more questions about compensation from both managers (70%) and employees (68%) [5] Education and Metrics - Currently, organizations are more likely to educate senior leaders and managers on pay than employees, but they plan to increase employee education in the future [5] - Just over half (56%) of companies use metrics to measure the impact of pay transparency, with the adjusted gender pay gap being the most prevalent metric [6] Technology Adoption - Despite interest in pay transparency, most employers are not utilizing AI technology to support their pay programs, with only 15% planning to use AI for communication of pay information [7] - Barriers to AI adoption include data privacy concerns, compliance risks, and integration challenges with HR systems [7] Global Approach and Communication - Organizations are planning a global approach to pay program communication, necessitating a clear and consistent disclosure strategy [8] - Building employee trust and educating stakeholders are critical components of effective communication regarding pay transparency [8] Survey Details - The 2025 Pay Transparency Survey was conducted in June 2025, with 388 respondents from the US and 1,915 globally [9]

Carbo most recently served as Individual Annuity Chief Financial Actuary at Corebridge Financial. In this role, he led annuity assumption governance, experience studies, forecasting, reinsurance analysis, and oversight responsibilities of valuation and pricing. Prior to this, Carbo was Senior Principal at Oliver Wyman, where he provided consulting services to (re)insurance companies focusing on annuities, M&A-related projects and Bermuda reporting. He is also a fellow of the Society of Actuaries and member ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The company's Q2 2025 revenue was flat at $2.26 billion, while net income significantly increased to $331 million Condensed Consolidated Statements of Comprehensive Income (Q2 & Six Months) | Indicator | Q2 2025 (in millions) | Q2 2024 (in millions) | 6 Months 2025 (in millions) | 6 Months 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $2,261 | $2,265 | $4,484 | $4,606 | | **Income from operations** | $368 | $212 | $800 | $492 | | **Net Income Attributable to WTW** | $331 | $141 | $566 | $331 | | **Diluted EPS** | $3.32 | $1.36 | $5.64 | $3.20 | Condensed Consolidated Balance Sheets | Account | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | **Total current assets** | $15,605 | $15,105 | | **Total assets** | $28,478 | $27,681 | | **Total current liabilities** | $13,871 | $12,598 | | **Total liabilities** | $20,298 | $19,664 | | **Total WTW shareholders' equity** | $8,100 | $7,940 | Condensed Consolidated Statements of Cash Flows (Six Months) | Cash Flow Activity | 6 Months 2025 (in millions) | 6 Months 2024 (in millions) | | :--- | :--- | :--- | | **Net cash from operating activities** | $326 | $431 | | **Net cash from/(used in) investing activities** | $612 | $(158) | | **Net cash (used in)/from financing activities** | $(800) | $364 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reports 5% organic revenue growth for H1 2025, with improved profitability from lower operating expenses [Executive Overview and Market Conditions](index=37&type=section&id=Executive%20Overview%20and%20Market%20Conditions) The company's performance is influenced by economic conditions and a softening insurance market cycle - The insurance market is currently experiencing a **'softening' period**, which can put downward pressure on commission revenue[123](index=123&type=chunk) - The company faces risks from uncertain macroeconomic conditions, including **inflation, interest rate changes, and geopolitical conflicts**[127](index=127&type=chunk) [Consolidated Results of Operations](index=39&type=section&id=Consolidated%20Results%20of%20Operations) Q2 revenue was flat while net income rose 135%, driven by an 8% reduction in service costs Consolidated Revenue Change vs. Prior Year | Period | As Reported Change | Constant Currency Impact | Acquisitions/Divestitures Impact | Organic Change | | :--- | :--- | :--- | :--- | :--- | | **Q2 2025** | 0% | 1% | (6)% | 5% | | **6 Months 2025** | (3)% | 0% | (7)% | 5% | - Total costs of providing services **decreased by $160 million (8%) in Q2** and **$430 million (10%) in the first six months of 2025**, primarily due to lower transformation and marketing expenses[159](index=159&type=chunk)[162](index=162&type=chunk)[168](index=168&type=chunk) - Net income attributable to WTW **increased 135% in Q2 2025** and **71% in the first six months**, driven by lower operating costs[175](index=175&type=chunk)[176](index=176&type=chunk) [Segment Analysis](index=41&type=section&id=Segment%20Analysis) Both Risk & Broking and Health, Wealth & Career segments delivered strong organic growth in H1 2025 Health, Wealth & Career (HWC) Revenue Change (Q2 2025) | Metric | Value | | :--- | :--- | | As Reported Change | (6)% | | Organic Change | 4% | Risk & Broking (R&B) Revenue Change (Q2 2025) | Metric | Value | | :--- | :--- | | As Reported Change | 7% | | Organic Change | 6% | - R&B's operating income increased due to **operating leverage from strong organic growth** and savings from the completed Transformation program[155](index=155&type=chunk)[158](index=158&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $2.0 billion in cash and continued capital returns via share repurchases - Cash flow from operating activities **decreased to $326 million** for the first six months of 2025, compared to $431 million in the prior-year period[187](index=187&type=chunk) - The company **repurchased $700 million of its shares** and paid **$179 million in dividends** during the first six months of 2025[180](index=180&type=chunk)[191](index=191&type=chunk)[202](index=202&type=chunk) - As of June 30, 2025, the company had **$2.0 billion in cash** and full borrowing capacity under its **$1.5 billion revolving credit facility**[179](index=179&type=chunk)[184](index=184&type=chunk) [Non-GAAP Financial Measures](index=54&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted operating income margin expanded to 18.5% in Q2 2025, reflecting improved core operating performance Adjusted Operating Income and Margin | Period | Adjusted Operating Income (in millions) | Adjusted Operating Income Margin | | :--- | :--- | :--- | | **Q2 2025** | $419 | 18.5% | | **Q2 2024** | $385 | 17.0% | | **6 Months 2025** | $899 | 20.0% | | **6 Months 2024** | $868 | 18.8% | Adjusted Diluted Earnings Per Share | Period | Adjusted Diluted EPS | | :--- | :--- | | **Q2 2025** | $2.86 | | **Q2 2024** | $2.39 | | **6 Months 2025** | $5.99 | | **6 Months 2024** | $5.53 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk from interest rate fluctuations on fiduciary funds remains materially unchanged - A **25 basis point change** in short-term interest rates would result in an approximate **$7 million change** in annualized interest income from invested fiduciary funds[251](index=251&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures are effective as of June 30, 2025 - Management concluded that the company's disclosure controls and procedures are **effective in providing reasonable assurance** that required information is recorded and reported in a timely manner[252](index=252&type=chunk) - **No changes in internal control** over financial reporting occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[253](index=253&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal proceedings are not expected to have a material adverse effect on the company's financial condition - The company is subject to various claims and lawsuits in the ordinary course of business but does not expect them to have a **material adverse effect** on its financial condition[104](index=104&type=chunk)[106](index=106&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K have been reported - **No material changes** from risk factors as previously disclosed in the Annual Report on Form 10-K, filed with the SEC on February 25, 2025[257](index=257&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased approximately $500 million of its ordinary shares during the second quarter of 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 540,279 | $314.14 | | May 2025 | 807,216 | $308.99 | | June 2025 | 266,932 | $302.90 | | **Total Q2** | **1,614,427** | **$309.71** | - As of June 30, 2025, approximately **$742 million remained** on the current open-ended repurchase authority[261](index=261&type=chunk) [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during Q2 2025 - **No directors or officers** adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the second quarter of 2025[264](index=264&type=chunk)

Core Viewpoint - Shares of Willis Towers Watson (NASDAQ: WTW) have increased by 12% over the past year, but remain approximately 8% below their 52-week high, indicating underperformance relative to the broader market in the insurance-related sector [1] Company Performance - The stock has shown solid performance with a 12% increase in the last year [1] - Despite this growth, the stock is still about 8% lower than its peak in the last 52 weeks [1] Market Context - The insurance-related sector has generally lagged behind the market, which may impact future performance of companies within this space [1]

Core Insights - Willis Towers Watson (WTW) reported second-quarter 2025 adjusted earnings of $2.86 per share, exceeding the Zacks Consensus Estimate by 8% and reflecting a 20% year-over-year increase [1][9] - The company's second-quarter results were bolstered by strong revenue from the Risk & Broking segment, improved EBITDA margin, and reduced expenses [1] Operational Update - WTW's adjusted consolidated revenues were $2.26 billion, flat year-over-year on a reported basis, but up 5% organically and 1% on a constant currency basis, beating the Zacks Consensus Estimate by 1.2% [2][9] - Total service costs decreased by 7.8% year-over-year to $1.9 billion, attributed to lower operating expenses, amortization, and transaction costs [2] Financial Performance - Adjusted operating income rose to $419 million, a 9% increase year-over-year, surpassing the estimate of $396.2 million, with a margin expansion of 150 basis points to 18.5% [3][9] - Adjusted EBITDA was $470 million, up 6% year-over-year, matching the estimate, with an EBITDA margin increase of 120 basis points to 20.8% [3][9] Segment Performance - Health, Wealth & Career segment revenues totaled $1.18 billion, down 6% year-over-year, impacted by the sale of TRANZACT, but organic growth was noted [4] - Wealth segment saw organic revenue growth driven by increased Retirement work globally and new business wins in Investments [5] - Career segment experienced modest revenue growth due to strong advisory demand outside North America, offset by client postponements in North America [6] - Risk & Broking segment revenues increased by 7% year-over-year to $1 billion, driven by new business activity and strong client retention [7][9] Financial Update - As of June 30, 2025, cash and cash equivalents were $1.9 billion, a 3.4% increase from the end of 2024, while long-term debt rose by 10.3% to $4.7 billion [10] - Shareholders' equity increased by 2% to $8.1 billion, and cash flow from operations was $326 million, down 24.3% from the prior year [10] - Free cash flow for the first half of 2025 decreased by 29% to $217 million, primarily due to increased compensation and cash tax payments [11] 2025 Outlook - WTW anticipates 100 basis points of average annual margin expansion over the next three years in Risk & Broking [12] - The company projects share repurchases of $1.5 billion, subject to market conditions and potential capital allocation opportunities [12] - A foreign currency tailwind on adjusted diluted earnings per share of approximately 5 cents is expected in 2025 at current rates [13]

Financial Data and Key Metrics Changes - The company reported 5% organic growth in Q2 2025, with adjusted EPS of $2.86, reflecting a 20% year-over-year increase [5][22] - Adjusted operating margin expanded by 150 basis points to 18.5%, with a 100 basis point improvement when excluding the impact of the TRANZACT divestiture [22][36] - Free cash flow for the first half of 2025 was $217 million, a decrease of $88 million from the prior year, primarily due to increased incentive costs and cash tax payments [39][63] Business Line Data and Key Metrics Changes - Health, Wealth, and Career (HWC) revenue grew by 4% year-over-year, with health business achieving 8% growth [23][25] - Wealth had a revenue growth of 3%, driven by the retirement business, while Career growth was 1% [27][29] - Risk and Broking (R&B) delivered 6% revenue growth, with corporate risk and broking growing 6% or 7% when excluding certain income [31][32] Market Data and Key Metrics Changes - The company noted strong demand for health care cost management solutions and pension derisking amidst rising global trade and inflation [8][9] - Growth in the Middle East was highlighted as a key opportunity, with significant client wins in the region [16][32] - The construction specialty business is experiencing strong results, particularly in data centers, which are forecasted for significant global growth [17] Company Strategy and Development Direction - The company is focused on accelerating performance, enhancing efficiency, and optimizing its portfolio, which are key drivers of its results [6][10] - A holistic approach to technology is being adopted to enhance growth and efficiency, including the rollout of a global broking platform and AI tools [11][12] - The inorganic growth strategy remains consistent, with a focus on enhancing broking and wealth presence in key markets [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver on 2025 guidance, including mid-single digit organic growth and adjusted operating margin expansion [20][41] - The macroeconomic environment remains dynamic, with clients increasingly seeking assistance in managing risks and costs [7][8] - There is optimism regarding the second half of the year, with expectations for strong demand in health and wealth sectors [26][30] Other Important Information - The company returned $591 million to shareholders through share repurchases and dividends, with plans for approximately $1.5 billion in share repurchases for 2025 [40] - The adjusted tax rate for the quarter was 18%, compared to 22.4% in the prior year, with expectations for consistency in the full year [38] Q&A Session Summary Question: HWC organic growth acceleration - Management indicated that HWC is expected to maintain mid-single digit organic revenue growth and margin expansion for the full year, driven by strong demand for global benefits management and outsourcing [43][44] Question: Risk and Broking growth contributions - Management confirmed that the 6% growth in R&B was attributed to the specialization strategy, talent investments, and strong client retention [55][56] Question: Free cash flow performance - Management explained that the decrease in free cash flow was due to increased compensation and cash tax payments, but expects improvement in the second half of the year [61][63] Question: Talent competition in insurance brokerage - Management acknowledged ongoing competition for talent but emphasized their strategic hiring approach to enhance capabilities [65][66] Question: Guidance on reinsurance joint venture costs - Management clarified that the revised cost estimate for the joint venture is based on better insights into expenses, with no expected changes at this time [70][72] Question: Drivers of margin expansion - Management highlighted operating leverage and efficiency improvements as key drivers for margin expansion, reaffirming their commitment to achieving 100 basis points of annual margin expansion over the next three years [73][78]