Core Viewpoint - Willis Towers Watson (WTW) is experiencing a short-term bullish trend as its shares are trading above the 50-day simple moving average, indicating potential upward momentum in the stock price [1] Price Performance - WTW shares have increased by 4.4% year-to-date, contrasting with a 14.1% decline in the industry [2] - The Finance sector and the Zacks S&P 500 Composite have risen by 12.9% and 9.9%, respectively, during the same period [2] - WTW has a market capitalization of $31.8 billion, with an average trading volume of 0.6 million shares over the last three months [2] Valuation - WTW shares are currently trading at a price-to-forward 12-month earnings ratio of 17.84X, which is lower than the industry average of 20.63X, indicating a potential value opportunity [4] Earnings Projections - The Zacks Consensus Estimate for WTW's 2025 earnings per share is $16.81, with projected revenues of $9.6 billion [7] - Expected long-term earnings growth is pegged at 7.5%, with 2026 earnings per share estimated to rise by 5.4% from 2025 estimates [8] Analyst Sentiment - The Zacks Consensus Estimate for 2025 earnings has increased by 1.5% in the past 30 days, while the estimate for 2026 has risen by 0.6% [9] Target Price - The average price target for WTW, based on short-term projections from 19 analysts, is $364.79 per share, suggesting an 11.6% upside from the last closing price [10] Strategic Focus - WTW emphasizes operational streamlining, investments in emerging opportunities, and strong client-centric services to support long-term growth [12] - The company aims for mid-single-digit organic revenue growth, supplemented by selective acquisitions and consistent margin improvement [13][14] Margin Expansion Efforts - WTW is focused on enhancing operating margins through efficiency improvements, offshoring, automation, and AI adoption, targeting approximately 100 basis points of annual margin expansion in its Retirement & Benefits segment over the next three years [15] Challenges - Rising expenses have pressured margins, necessitating prudent cost management [16] - WTW's profitability metrics are weaker compared to peers, with a return on equity of 21.6% and return on invested capital of 6.3%, both below industry averages [17] Shareholder Value - WTW has increased its dividend six times over the past five years, resulting in a 5.7% growth in payouts [18] - The company plans to repurchase approximately $1.5 billion worth of shares in 2025, subject to market conditions [18]

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]

Core Insights - WTW has appointed Nicholas Carbo as Senior Director in its Insurance Consulting & Technology (ICT) business, enhancing its expertise in annuity product development and pricing [1][2] - The ICT team will also see the addition of Poojan Shah and Erika Dochney, who bring specialized skills in reinsurance, M&A transactions, and life insurance product pricing [3][4] Company Overview - WTW is a global advisory, broking, and solutions company that provides data-driven, insight-led solutions in the areas of people, risk, and capital [7] - The Insurance Consulting and Technology business aims to innovate and transform the insurance industry by delivering advisory services and advanced technology solutions [5][6] Team Expertise - Nicholas Carbo previously served as Individual Annuity Chief Financial Actuary at Corebridge Financial, focusing on annuity assumption governance and reinsurance analysis [2] - Poojan Shah joins from PwC, specializing in reinsurance structuring and regulatory compliance, while Erika Dochney has experience in mortality experience studies and product development [3][4]

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]