Insurance broker WTW has posted 9% organic revenue growth for the third quarter of 2023, as total revenues increased by 11% to $2.17 billion.
WTW saw net income decline by 28%, to $139 million from $192 million, while income from operations rose by 3% to $159 million from $154 million.
The Risk & Broking business segment had revenue of $855 million, an increase of 12% from $765 million in the prior-year third quarter, but an increase of 10% on an organic basis.
Corporate Risk & Broking generated solid organic revenue growth driven by strong new business, improved client retention and rate increases. Insurance Consulting and Technology had organic revenue growth from software sales and increased project revenue.
Operating margins in the R&B segment increased 200 basis points from the prior-year third quarter to 15.7%, which WTW says was primarily due to transformation savings, expense management and higher operating leverage driven by strong organic revenue growth and investments in talent
Turning to the Health, Wealth & Career segment, revenue was $1.28 billion, representing an increase of 10% from Q3 last year, or an increase of 9% on an organic basis.
The main driver of organic growth was Benefits Delivery & Outsourcing, which saw new clients and increased compliance and other project activity in Outsourcing and growth from higher volumes and placements of Life and Medicare Advantage in Individual Marketplace.
Operating margins in the HWC segment increased 350 basis points from the prior-year third quarter to 23.8%, primarily due to Transformation savings and higher operating leverage, with revenue outpacing expense growth, and some timing between quarters.
For 2023, WTW’s targets include mid-single digit organic revenue growth, adjusted operating margin expansion, $160 million of incremental run-rate savings from the Transformation Program, and approximately $112 million in non-cash pension income.
However, there will be a foreign currency headwind on adjusted earnings per share of about $0.07, up from previously announced $0.05. The full-year 2023 free cash flow margin is expected to be around 12%.
“Our strong revenue growth in the third quarter reflects the value of our global model and the increasing impact of our ongoing investments in talent and technology,” said Carl Hess, WTW’s chief executive officer.
“We continued to execute against our strategy and posted solid margins through growth, simplification, and transformation, as well as greater cost discipline,” he added.
“Looking ahead, the continued strong demand for our differentiated services, the traction of our transformation program and expense control initiatives and the resilience of our business give us confidence in our ability to deliver on our commitments for the year and to drive profitable growth,” Hess concluded.
Cash flows from operating activities were $823 million for the nine months ended September 30, 2023, compared to $437 million for the prior year.
The free cash flow for the nine months ended September 30, 2023 and 2022 was $707 million and $337 million, respectively, an improvement of $370 million. During the quarter ended September 30, 2023, the Company conducted a share repurchase of $350 million in WTW shares.
