Global brokerage firm WTW has reported 5% organic revenue growth for the fourth quarter of 2022 to $2.72 billion, although net income for the period fell by 75%, year-on-year, to $593 million.
For the full year 2022, WTW achieved 4% organic revenue growth to $8.866 billion, as net income for the year declined by 74% to $1.024 billion when compared with 2021.
Effective January 1st, 2023, the insurance broker realigned to provide its services and solutions across two business segments: Health, Wealth & Career (HWC) and Risk & Broking (R&B), and three geographies: Europe, International, and North America.
The new HWC segment includes businesses previously aligned under the Human Capital and Benefits segment, the Benefits Delivery and Administration segment, and the Investment business.
R&B includes businesses previously aligned under the Corporate Risk and Broking segment, as well as the Insurance Consulting and Technology business.
Starting with the company’s HWC division, in Q4 2022, total revenue increased by 5% on an organic basis to $1.72 billion, as operating income rose 4% to $672 million, leading to an operating margin of 39%, compared with 38.2% a year earlier. WTW says that organic growth was led by Benefits Delivery & Outsourcing, driven by Medicare Advantage sales.
For the full year, HWC’s revenue totalled $5.287 billion, reflecting organic growth of 3%.
In R&B, organic revenue growth of 5% resulted in a figure of $952 million for the quarter, while operating income fell by 7%, year-on-year, to $269 million, with an operating margin of 28.3% compared with 30.1% a year earlier.
WTW explains that on an organic basis, Corporate Risk & Broking generated organic revenue growth across all geographies, primarily driven by the global lines of business, most notably in Construction and Aerospace. At the same time, Corporate Risk & Broking’s organic revenue growth rate was pressured by headwinds from book-of-business settlement revenue in the comparable period.
For the full year 2022, R&B’s revenue hit $3.46 billion, reflecting organic growth of 3% for the period.
Based on current market conditions, WTW expects to deliver mid-single digit organic revenue growth in 2023, as well as the delivery of adjusted operating margin expansion.
The company also expects to deliver approximately $100 million of incremental run-rate savings from the Transformation Program in 2023, as well as approximately $112 million in non-cash pension income for the year, and a foreign currency headwind on adjusted earnings per share of approximately $0.01 for the full year 2023 at today’s rates.
In Q4 2022, WTW realized $49 million of incremental annualized Transformation Program savings, taking the total to $149 million in cumulative savings since the program’s inception, and exceeding both the original $30 million target for 2022 as well as the most recent forecast of $110 million for 2022.
Carl Hess, WTW’s Chief Executive Officer (CEO), commented: “The fourth quarter was a solid finish to a strong year for WTW. For the fourth quarter, revenue and operating margins increased over prior year. In addition, for the full year, we delivered results that were in line with our expectations, including healthy organic revenue growth and adjusted operating margin expansion. These reflected the benefits of our hiring efforts, investments in technology, initiatives to simplify our company and the successful execution of our transformation efforts.
“In a complex operating environment, our focus, agility and resilience allowed us to deliver on our commitments, including a substantial return of capital to our shareholders.
“We enter 2023 with momentum and remain focused on executing on our Grow, Simplify and Transform strategic priorities, accelerating cash flow conversion and achieving our long-term goals.”
