Re/insurance broker WTW has reported revenue of $2.24 billion for the first quarter of 2023, representing an increase of 4% compared with the $2.16 billion it reported for the same period in 2022.
On an organic basis, revenue increased by 8%, and WTW continues to target “mid-single digit” organic revenue growth in 2023, as well as the delivery of adjusted operating margin expansion.
The broker’s income from operations also rose 59% YoY to $285 million in Q1, and its net income rose from $125 million to $206 million, but decreased on an adjusted basis from $315 million to $306 million.
It posted a 13% increase in adjusted operating income to $418 million from $371 million in 2022.
Effective January 1, 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 HWC segment had revenue of $1.29 billion in Q1, an increase of 3% (6% increase constant currency and organic) from $1.24 billion in 2022. Operating income rose 20% to $309 million, leading to an operating margin of 24%, compared with 20.7% a year earlier. WTW says that organic growth was led by Health, driven by increased project activity in North America and the continued expansion of client portfolio in International.
While, R&B segment had revenue of $904 million in Q1, an increase of 1% (5% increase constant currency and 10% increase organic) from $891 million in the year ago. Operating income fell by 6%, year-on-year, to $180 million.
WTW explains that on an organic basis, Corporate Risk & Broking generated excellent organic revenue growth across all geographies, primarily driven by new business and increased retention in the global lines of business, most notably in Aerospace, Financial Solutions and Natural Resources.
Operating margins in the R&B segment decreased 170 basis points from the prior-year first quarter to 19.9%, primarily due to the divestiture of our Russian operations.
The company expects foreign currency headwind on adjusted earnings per share of approximately 0.05 for the full year 2023 at today’s rates, up from $0.01 previously forecasted. The rest of the 2023 outlook remains unchanged.
In Q1 2023, WTW realized $75 million of incremental annualized Transformation Program savings, taking the total to $224 million in cumulative savings since the program’s inception.
“The first quarter was a solid start to the year for WTW,” said Carl Hess, WTW’s CEO.
“Our investments in talent and technology, along with the momentum in our business, helped us achieve excellent revenue increases on both a reported and an organic basis. Our top-line revenue growth, together with our expense discipline, the successful execution of our transformation efforts and initiatives to simplify our company drove operating margin expansion over the prior year. We are proving ourselves to be resilient in a complex risk and economic environment,” Hess added.
