Willis Towers Watson PLC Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gregory Peters - Raymond James - Analyst : Great. Good morning, everyone. So for the first question, I'm going to focusing on the Risk & Broking organic revenue results. I appreciate the color, both you made, both you, Carl and Andrew made specifically on the new business. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 1:00PM, WTW.OQ - Q3 2025 Willis Towers Watson PLC Earnings Call And I guess what I'm getting at is how much of the third quarter result reflected sort of unusual wins that won't recur or come at it a different way. You mentioned project-based placements. Were those unusual relative to other quarters? And maybe you can just build on that by line of business?

Question: Gregory Peters - Raymond James - Analyst : Thanks for that answers. I'm going to follow up just because it's important. I know part of your expectation going forward is to expand your margins in Risk & Broking each year and both Andrew and Lucy now have reviewed that it's becoming more difficult to get to the higher end of your organic revenue results in Risk & Broking. Should we be worried that if we go from mid-single digit to high single digit, just to mid-single digit, that there might be some pressure on your ability to generate that 100 basis points of margin improvement in the next two years?

Question: Elyse Greenspan - Wells Fargo Securities LLC - Analyst : Hi, thanks. Good morning. My first question was on free cash flow. If you can just provide more expectations for the year and the fourth quarter. I think in your prepared remarks, you commented about how the favorable second half began to play out this quarter. I just was hoping to get more comments there.

Question: Elyse Greenspan - Wells Fargo Securities LLC - Analyst : Thanks. And then my second question, I was just hoping you guys could provide what the insurance pricing headwind was in the third quarter? And also, was that similar to the second quarter or worse?

Question: Robert Cox - Goldman Sachs Group Inc - Analyst : Hey, thanks. Good morning. First question on HWC margins. I think if we exclude the impact of TRANZACT, the margins improved 100 basis points, as you all mentioned. If we do that in the first half of 2025, I think the margins contracted. So I was just curious sort of what changed in the quarter and how you guys are thinking about margin expansion, excluding TRANZACT in the fourth quarter and beyond? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 1:00PM, WTW.OQ - Q3 2025 Willis Towers Watson PLC Earnings Call

Question: Robert Cox - Goldman Sachs Group Inc - Analyst : Great. Thank you. And then I just want to follow up on the BD&O business. It sounds like the guidance is being maintained for mid-single-digit organic growth for the full year. Just looking at what you guys have done year-to-date, it looks like you might need something like high single digits organic in the fourth quarter. Could you tell us what gives you confidence on the improvement there?

Question: Michael Zaremski - BMO Capital Markets - Analyst : Thanks. Good morning. Looking at the interest income levels, very healthy, better than expected. Is that the run rate or any one-timers we should be considering? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 1:00PM, WTW.OQ - Q3 2025 Willis Towers Watson PLC Earnings Call

Question: Michael Zaremski - BMO Capital Markets - Analyst : Okay. So we'll -- I guess I'll take it as a kind of use it as directionally at the run rate. A follow-up to Greg Peter's question earlier and just not trying to split hairs and we love when you give extra color. But in the R&B segment, when you mentioned the project based placements in specialty, which is great color. It just leads to the question, is project-based mean like more non-recurring or onetime that we should kind of be considering in our run rate on a go forward? So just wanted to try to ask that one last time to make sure we're not new wording.

Question: Paul Newsome - Piper Sandler & Co. - Analyst : Good morning. Thanks for the color. I was hoping you could talk a little bit about the war for talent. We see a lot of headlines, particularly on the property casualty side of the house about books getting hired back and forth. And where do you think Willis fits within that? And do you think we're seeing a heightened level of poaching back and forth?

Question: Paul Newsome - Piper Sandler & Co. - Analyst : So do you think you're getting kind of more than a fair share at this point? Or do you think you've sort of reached a point where you're kind of at your steady state of continued growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 1:00PM, WTW.OQ - Q3 2025 Willis Towers Watson PLC Earnings Call

Question: David Motemaden - Evercore ISI - Analyst : Hi, thanks. Good morning. I had a question just on some of the R&B commentary just around the path to achieving the high single-digit growth, just getting more challenging, given the current pricing environment. And I'm not so much focused on fourth quarter, but just thinking bigger picture about the mid-single-digit to high single-digit growth targets you guys had laid out at your Investor Day about a year ago within R&B. Just given the current environment and the direction of travel, I guess, how are you thinking about that target? Is it still that mid-single to high single, mid-single, is low single digit on the table? Just interested in your thoughts on that.

Question: David Motemaden - Evercore ISI - Analyst : Got it. Okay. Thank you. And then just following up, just seeing an economy that looks like capital spending and spending is still solid, but then employment growth, which Carl, you mentioned that's slowed a bit. And I hear you loud and clear that HWC is vastly recurring in nature, if I think about their revenues. But could you just help me think about just general employment levels and how that might impact some of the contracts that you have, particularly in BD&O even if it is recurring. Are there different bands there that can tweak up and down based on your client employment levels? Or could you just help me think through the sensitivity of your businesses to that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 1:00PM, WTW.OQ - Q3 2025 Willis Towers Watson PLC Earnings Call

Question: Mark Hughes - Truist Securities Inc - Analyst : Yeah. Thank you very much. Good morning. In the Health business, I talked about the strong pipeline. How much of that do you think is you're taking share versus there's just a lot of movement, a lot of folks looking for solutions given health care inflation.

Question: Mark Hughes - Truist Securities Inc - Analyst : Very good. And then on the -- in the retirement business, what is the prospects for continued project work if interest rates are going to be declining here? Presumably, most pension funds are pretty -- doing pretty well. But what is -- how does 2026 shape up relative to 2025 on that front?

Question: Mark Marcon - Robert W. Baird & Co Inc - Analyst : Hey, good morning. Thanks for taking my questions. One for Julie and one for Lucy. Julie, just with regards to the health insurance pressures that employers are facing. Typically, when we go through these time periods, how long do you see elevated levels of continued requirements for help from your clients? It seems to me like it would be a multiyear process to try to optimize benefit plans and things of that nature. But I'm wondering what your perspective is on that. And then for Lucy, obviously, we all know that we're going into a softer cycle, how would you characterize this softer cycle relative to others? And to what extent does that impact your ability to gain new clients from competitors? Thank you.

Question: Meyer Shields - Keefe Bruyette & Woods Inc - Analyst : Great. Thanks. Two quick ones, hopefully. And I apologize if this has been covered before. But given the fact that he's done $1.3 billion of repurchases year-to-date and fourth quarter is the strongest free cash flow quarter. Why is $1.5 billion the right number for 2025 [repurchase], shouldn't it be higher?

Question: Meyer Shields - Keefe Bruyette & Woods Inc - Analyst : Okay. That's fair. Second question, with the survey-related results or revenues that are being deferred to the fourth quarter, were the associated expenses still booked in the third quarter?