Core Insights - Insurance buyers are in a strong position to optimize cost and coverage as the market transitions into 2026, according to the Energy Market Review Update by Willis [1] Upstream Energy Market - The upstream energy market has experienced a record year of low loss activity, attributed to improved risk management and asset quality, leading to continued profitability for insurers [2] - Market softening has accelerated since the previous review in April, with insurers prioritizing retention of well-managed risks and rewarding long-term relationships [2] Downstream Energy Market - Downstream insurers have faced approximately US$3.5 billion in losses this cycle, with claims equaling market premiums, particularly in the US refining sector [3] - Companies with clean loss histories benefit from favorable renewal terms, while those with loss activity may encounter more conservative market conditions, although rate reductions of 10-15% and up to 20-50% in competitive tenders are available [3] Market Trends for 2026 - Insurers reported strong financial results at the end of Q3, with oversupply in capacity and a growth-oriented appetite simplifying complex placement structures, allowing for premium savings for clients [4] - Energy companies renewing in Q4 2025 and looking into 2026 are positioned to negotiate better conditions alongside pricing [4] Specific Market Challenges - Upstream construction faces long-tail risks, but underwriters are more accommodating to these risks where operational relationships exist [6] - Subsea construction capacity remains restricted, creating a micro-hard market, with some insurers considering small amounts of subsea construction to boost premium income [6] - The liability market is transitioning from hard to softening conditions due to healthy capacity and positive loss ratios, contrasting with the US casualty market, which is affected by social inflation and new legislation [6]

Core Insights - The Philippines has launched its first parametric insurance solution aimed at protecting the livelihoods of 14,200 small-scale fishers, marking a significant step in climate risk management [1][3][4] Government and Partnerships - The initiative is a collaboration between the Bureau of Fisheries and Aquatic Resources (BFAR), the Philippine Crop Insurance Corporation (PCIC), global conservation organization Rare, and Willis, a WTW business [1][2] - Funding for the project comes from the Ocean Risk and Resilience Action Alliance (ORRAA), supported by the Governments of Canada and the UK [2][12] Insurance Details - The parametric insurance is designed to mitigate income losses due to adverse weather conditions, providing up to US$100 per policy cycle to offset income loss from dangerous weather [4][5] - The insurance utilizes a weather index based on wind speed, sea state, and rainfall to determine payout eligibility, ensuring timely compensation for lost fishing days [4][6] Impact on Fishers - The program aims to reduce financial pressure on fishing households and promote sustainable fishing practices, thereby enhancing the resilience of coastal communities [5][6] - BFAR will act as the policyholder, demonstrating government support for innovative climate risk solutions [4][6] Future Prospects - If successful, the pilot program could evolve into a nationally scalable tool for protecting coastal livelihoods, complementing existing insurance coverage [6]

Core Insights - Global health insurance costs are projected to rise by 10.3% in 2026, following increases of 10% in 2025 and 9.5% in 2024, indicating a persistent trend of healthcare inflation [1][9] Regional Analysis - Asia Pacific is expected to experience the highest cost increase at 14.0%, while Latin America anticipates a rise from 10.5% in 2025 to 11.9% in 2026 [2] - The Middle East and Africa will see an increase of 11.3%, while North America and Europe will experience slight decreases in medical inflation, with North America projected at 9.2% and Europe at 8.2% [3][9] Insurer Perspectives - Over half (55%) of insurers expect elevated cost trends to persist for more than three years, driven by high medical costs and regional pressures [4] - New medical technologies are cited as the primary driver of medical inflation by 74% of insurers, followed by the decline of public health systems (52%) and advancements in pharmaceuticals (49%) [5] Disease Impact - Cancer is identified as the leading condition driving medical costs globally, with 57% of insurers noting it as the fastest growing and most expensive diagnosis [6] - Cardiovascular conditions (50%) and behavioral health issues (37%) are also significant contributors to rising medical claims costs [7] Strategic Management Recommendations - Multinational employers are advised to strategically manage healthcare inflation by investing in employee education on health benefits, raising awareness of prevention programs, optimizing mental health coverage, and introducing flexible benefits [8]

Core Insights - The total assets under management (AUM) of the world's 500 largest asset managers reached USD 139.9 trillion at the end of 2024, marking a 9.4% increase from the previous year [1][2] Group 1: Industry Recovery and Growth - The asset management industry is experiencing a recovery, with total AUM surpassing the previous record set in 2021 [2] - North America led the growth with a 13% year-on-year increase, accounting for USD 88.2 trillion, or 63% of total AUM among the top 500 firms [2] - Japan's asset managers saw a decline, with AUM falling by 9.5% in 2024, indicating regional disparities in economic performance [3] Group 2: Investment Strategies - There is a significant shift towards passive investment strategies, which now represent 39.0% of total AUM, a 6.1% increase from the previous year [4] - Actively managed assets decreased to 61%, down 3.6% year-on-year [4] Group 3: Market Concentration - The top 20 asset managers control 47% of total AUM, up from 45.5% in 2023, with combined assets rising to USD 65.8 trillion [5] - Among the top 20, 15 firms are based in the U.S., representing 83.9% of this segment, with BlackRock, Vanguard, and Fidelity Investments as the top three [5] Group 4: Emerging Trends - Private-market specialists are experiencing rapid AUM growth, with Brookfield's AUM increasing from USD 240 billion in 2017 to USD 1,061 billion in 2024, reflecting a 20% annualized increase [6] - The Middle East is becoming a strategic hub for asset managers due to regulatory reforms and thematic opportunities in Shariah-compliant investing, ESG, and digital assets [7] Group 5: Technological Adoption - 47% of firms are investing in Artificial Intelligence (AI) for strategic and operational improvements, although 78% allocate less than 10% of their tech budgets to AI [8] - 61% of firms expect AI spending to grow over the next five years, while 64% express concerns about AI-related cyber risks [8] Group 6: Industry Perspective - The asset management industry is undergoing a transformation influenced by the rise of passive strategies, private markets, and AI, reshaping its foundations [9] - The growth in North America and concentration among top managers signal both opportunities and responsibilities for the industry [10]

Core Insights - Willis has appointed Louie Clarke as the Global Head of Claims Strategy & Execution, emphasizing the company's commitment to enhancing its claims services and solutions for clients globally [1][3]. Company Overview - WTW provides data-driven, insight-led solutions in the areas of people, risk, and capital, serving clients in 140 countries and markets [4]. - The company aims to help organizations sharpen their strategy, enhance resilience, motivate their workforce, and maximize performance [4]. Leadership and Strategy - Clarke will be part of the Global Claims Leadership Team and will report to Neil Harrison, the Global Head of Claims [2]. - The appointment reflects Willis' strategy to differentiate through specialization, outcomes, and service standards, while attracting top talent to enhance client services [3]. Previous Experience - Before joining WTW, Clarke held claims leadership roles at Aon, bringing valuable experience to his new position [3].

Core Insights - WTW's Chief Operating Officer, Alexis Faber, has been recognized as a Women to Watch Iconic Leader by Business Insurance, highlighting her significant impact on the commercial insurance industry over the past two decades [1][4] - The award celebrates Faber's leadership journey and emphasizes the importance of inclusion and mentorship in the industry [2][4] Company Overview - WTW is a leading global advisory, broking, and solutions company that provides data-driven insights in the areas of people, risk, and capital, serving clients in 140 countries [3] - The company focuses on enhancing organizational resilience, motivating the workforce, and maximizing performance through strategic partnerships with clients [3] Industry Recognition - The Business Insurance Women to Watch Awards is the only program that honors leading women across various sectors of the commercial insurance industry, with past winners often advancing to senior executive roles [4] - In 2025, 10 past winners were recognized as Iconic Leaders, reflecting their contributions to shaping the commercial insurance landscape [4]

Core Insights - Willis Towers Watson (WTW) reported third-quarter 2025 adjusted earnings of $3.07 per share, exceeding the Zacks Consensus Estimate by 2.3% and reflecting an 11% year-over-year increase [1][9] - The company's third-quarter results were bolstered by strong revenue from the Risk & Broking segment, improved operating margins, increased adjusted operating income, and reduced expenses, although this was partially offset by lower revenues in the Health, Wealth & Career segment [1] Financial Performance - WTW's adjusted consolidated revenues for Q3 2025 were $2.3 billion, unchanged year-over-year on a reported basis, with a 5% increase on an organic basis but a 1% decline on a constant currency basis, beating the Zacks Consensus Estimate by 0.5% [2] - Total costs of providing services decreased by 38.7% year-over-year to $1.8 billion, attributed to lower operating expenses, depreciation, and amortization, with adjusted operating income rising 13% year-over-year to $467 million [3] - Adjusted EBITDA was $515 million, an 8% increase year-over-year, with the adjusted EBITDA margin expanding 160 basis points to 22.5% [4] Segment Performance - In the Health, Wealth & Career segment, total revenues were $1.2 billion, down 5% year-over-year, although it showed a 6% increase on a constant currency basis and a 4% increase on an organic basis, surpassing estimates [5] - The Risk & Broking segment reported total revenues of $1 billion, a 7% year-over-year increase, with organic growth driven by new business and project-based placements [7][8] Operational Metrics - The operating margin for the Health, Wealth & Career segment expanded by 390 basis points to 28.6%, primarily due to the sale of TRANZACT [7] - Cash and cash equivalents as of September 30, 2025, were $1.9 billion, a slight increase of 0.2% year-over-year, while long-term debt decreased by 10.3% to $4.7 billion [11] - Cash flow from operations for the first nine months of 2025 was $1 billion, a 10% increase from the prior year, with free cash flow rising 15.7% to $838 million [12] Future Outlook - WTW anticipates cash outflows in 2025 related to the Transformation program, which concluded in 2024, and expects share repurchases of $1.5 billion, contingent on market conditions [13] - The company projects a foreign currency tailwind on adjusted diluted earnings per share of approximately $0.15 in Q4 2025 and about $0.10 for the full year [14]

Core Insights - Shares of Willis Towers Watson Public Limited Company (WTW) have increased nearly 9% over the past year, although they have retracted about 10% from their peak due to concerns regarding slowing employment trends and decreasing insurance inflation [1] Company Performance - The stock has shown solid performance in the last year with a nearly 9% gain [1] - Recent pullback of approximately 10% from its highs indicates market concerns [1] Market Concerns - There are worries about slowing employment trends which may impact the company's future performance [1] - Declining insurance inflation is also a factor contributing to the stock's recent pullback [1]

Revenue Performance - Revenue for the three months ended September 30, 2025, was $2.288 billion, a decrease of $1 million compared to the same period in 2024, with organic revenue growth of 5%[141] - For the nine months ended September 30, 2025, revenue was $6.772 billion, down $123 million or 2% from $6.895 billion in 2024, with organic revenue growth also at 5%[141] - HWC segment revenue for the three months ended September 30, 2025 was $1.261 billion, a decrease of 5% compared to $1.328 billion in 2024, with organic revenue growth of 4%[154] - R&B segment revenue for the three months ended September 30, 2025 was $1.007 billion, a 7% increase from $940 million in 2024, with organic revenue growth of 6%[161] - HWC segment revenue for the nine months ended September 30, 2025 was $3.606 billion, an 8% decrease from $3.924 billion in 2024, with organic revenue growth of 4%[157] - R&B segment revenue for the nine months ended September 30, 2025 was $3.081 billion, a 6% increase from $2.897 billion in 2024, with organic revenue growth of 6%[164] - The company reported a constant currency revenue change of 5% for the three months ended September 30, 2025, compared to the same period in 2024[228] - For the nine months ended September 30, 2025, reported revenue decreased by $123 million, or 2%, while organic revenue grew by 5%[232] Income and Profitability - Income from operations for the three months ended September 30, 2025, was $418 million, compared to a loss of $766 million in the same period of 2024[140] - Net income attributable to WTW for the three months ended September 30, 2025, was $304 million, a decrease of 73% from $1.134 billion in 2024[140] - Income from operations for the nine months ended September 30, 2025 was $1.2 billion, an increase of $1.5 billion compared to a loss of $274 million for the same period in 2024[177] - Net income attributable to WTW for the nine months ended September 30, 2025 was $870 million, an increase of $2.2 billion compared to a net loss of $1.3 billion for the same period in 2024[183] - Adjusted operating income for the three months ended September 30, 2025, increased to $467 million from $414 million for the same period in 2024[236] - Adjusted EBITDA for the three months ended September 30, 2025, was $515 million, compared to $479 million for the same period in 2024[240] - Adjusted diluted earnings per share for the three months ended September 30, 2025, increased to $3.07 from $2.77 in the prior year[243] - The net income margin for the three months ended September 30, 2025, was 13.4%, compared to a loss margin of (73.0)% in the prior year[239] Costs and Expenses - Total costs of providing services for the three months ended September 30, 2025, were $1.870 billion, compared to $3.055 billion in 2024, reflecting a significant reduction in impairment costs[140] - Salaries and benefits for the three months ended September 30, 2025 were $1.4 billion, an increase of 1% from $1.383 billion in 2024, representing 62% of revenue[167] - Other operating expenses for the three months ended September 30, 2025 decreased to $352 million from $419 million in 2024, a reduction of 16%[169] - Total costs of providing services for the three months ended September 30, 2025 were $1.9 billion, a decrease of 39% from $3.1 billion in 2024[166] Cash Flow and Financing - Cash flows from operating activities were $1.0 billion for the nine months ended September 30, 2025, compared to $913 million for the same period in 2024[195] - Cash flows from investing activities for the nine months ended September 30, 2025 were $530 million, compared to cash flows used in investing activities of $230 million for the same period in 2024[197] - Cash flows used in financing activities for the nine months ended September 30, 2025 were $1.3 billion, including share repurchases of $1.3 billion and dividend payments of $269 million[199] - The company repurchased $1.3 billion of outstanding shares during the nine months ended September 30, 2025, with authorization to repurchase an additional $1.6 billion[187] - Total cash dividends paid during the nine months ended September 30, 2025, amounted to $269 million, with a quarterly cash dividend of $0.92 per share approved in August 2025[211] - Free cash flow for the nine months ended September 30, 2025, increased to $838 million from $724 million in 2024, driven by operating margin expansion[255] Debt and Capitalization - Total debt as of September 30, 2025 was $5.313 billion, with long-term debt of $4.763 billion and current debt of $550 million[201] - The capitalization ratio at September 30, 2025 was 40.7%, compared to 40.1% at December 31, 2024[201] - The board of directors approved a total increase of $2.5 billion to the existing share repurchase program, bringing the total authorization to $11.7 billion since April 20, 2016[208] - As of September 30, 2025, approximately $1.6 billion remained on the current repurchase authority, with a maximum of 4,752,506 shares eligible for repurchase at a closing price of $345.45[209] Economic Environment and Market Conditions - The company experienced a softening market, which generally leads to downward pressure on commission revenue and can adversely impact revenue and operating margins[130] - The ongoing economic environment includes uncertainties such as inflation, interest rate fluctuations, and geopolitical tensions, which could negatively affect business operations and financial conditions[135] Taxation - The effective tax rate for the nine months ended September 30, 2025 was 12.0%, compared to 15.6% for the same period in 2024[181] - The U.S. GAAP tax rate for Q3 2025 was 19.7%, up from 16.1% in Q3 2024, while the nine-month rates were 12.0% and 15.6% respectively[252] - Adjusted income tax rates for Q3 2025 were 22.4%, compared to 19.7% in Q3 2024, reflecting a higher rate due to geographical profit distribution[253] - The adjusted income taxes for the nine months ended September 30, 2025, were $247 million, compared to $235 million in 2024[250] Strategic Focus - The company is focused on developing technology, data, and analytic solutions to enhance service quality and meet client needs amid increased competition[132] - The company experienced lower marketing expenses and decreased office and technology expenses, contributing to improved adjusted operating income[236] Non-GAAP Measures - Non-GAAP measures are used to provide a clearer picture of the company's core operating results, including adjusted operating income and free cash flow[221]

Financial Data and Key Metrics Changes - In Q3 2025, the company achieved 5% organic growth, with adjusted EPS of $3.07, reflecting an 11% year-over-year increase [4][15] - Adjusted operating margin expanded by 230 basis points year-over-year to 20% [15][26] - Free cash flow for the nine months ending September 30, 2025, was $838 million, an increase of $114 million from the prior year [28] Business Line Data and Key Metrics Changes - Health, Wealth & Career (HWC) revenue grew 4% year-over-year, with 5% growth when excluding book of business settlement activity and interest income [16][20] - The Health segment achieved 7% growth, or 8% excluding certain impacts, driven by strong performance in International and North America [17] - Risk and Broking (R&B) reported 6% organic growth, marking the 11th consecutive quarter of high single-digit growth when excluding specific impacts [8][21] Market Data and Key Metrics Changes - The company noted headwinds from declining rates in certain segments of the commercial insurance market across various geographies [6][22] - Pricing pressure was particularly noted in property insurance, with most lines showing softening except for North American Casualty, where pricing continues to rise [42][81] Company Strategy and Development Direction - The company continues to focus on its specialization strategy, investments in talent, data, and technology to drive sustainable growth [21][60] - The strategy aims to enhance efficiency and optimize the portfolio, which has been effective despite macroeconomic volatility [5][29] - The company is committed to delivering 100 basis points of average annual adjusted operating margin expansion over the next three years [24][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid-single-digit organic growth and margin expansion for 2025, despite challenges in the current pricing environment [29][60] - The company anticipates strong demand across its global business driven by healthcare inflation and employers' focus on managing costs [17][68] Other Important Information - The divestiture of TRANZACT is expected to create a headwind to adjusted diluted earnings per share of $1.14 for the full year 2025 [15] - The company returned $690 million to shareholders via share repurchases and dividends during the quarter [28] Q&A Session Summary Question: Insights on Risk and Broking organic revenue results - Management noted that the 6% growth in Risk and Broking was supported by strong new business across global markets and specialty lines, with project-based placements contributing to growth [31][34] Question: Concerns about margin expansion in Risk and Broking - Management reaffirmed commitment to achieving 100 basis points of margin improvement annually, driven by technology investments and process improvements [36][37] Question: Expectations for free cash flow in the fourth quarter - Management indicated confidence in delivering free cash flow margin expansion, supported by reduced transformation costs and the divestiture of TRANZACT [39][40] Question: Impact of insurance pricing headwinds - Management acknowledged ongoing pricing pressure, particularly in property insurance, but maintained expectations for mid to high single-digit organic revenue growth in Risk and Broking [42][43] Question: HWC margins and future outlook - Management highlighted consistent margin improvement in HWC, driven by disciplined resource management and process optimization [45][46] Question: Prospects for BD&O growth - Management expressed confidence in BD&O growth due to the timing of revenue generation, particularly during the Medicare enrollment period [48][49] Question: Talent acquisition and retention - Management emphasized the company's ability to attract and retain top talent, which is crucial for driving organic growth [54][56]