Willis reports ‘modest but definite’ price increases during second quarter

The second quarter of this year has seen a “modest but definite improvement” in global insurance and reinsurance pricing for carriers, according to Willis Towers Watson (WTW) as it reported quarterly results. The broker said trends identified in its last Insurance Marketplace Realities update had continued. This means that commercial insurance buyers face upward pressure on pricing for most lines of business and will continue to do so for the remainder of 2019. WTW said carriers are finally following through on their words with action, after a prolonged soft market. As a result, supply-side pressure is contributing to more “challenging” market conditions for commercial risk and insurance managers across the world. Mr Hayley told analysts that rates are still going down in workers comp and international liability, but said there is some pricing uplift in most other lines, according to results service Seeking Alpha. Given the firming environment, Mr Hayley said Willis is working hard to get the best deal for clients. This might be in the form of moving business to other insurers or buying “a little less insurance”, he added. The brief comments on the state of the market were made as WTW reported a healthy set of results for the second quarter and first half of 2019. Revenue was $2.05bn for Q2, an increase of 3% or 6% organic growth. Revenue was $4.36bn in the first half , an increase of 2% or 5% organic growth. Net profit attributable to WTW for the second quarter was $138m, an increase of 138% from $58m in the prior-year second quarter. For the first half of this year, net profit was $425m, a 56% increase from $273m in the same period last year. WTW also announced that it has completed its acquisition of TRANZACT, a direct-to-consumer healthcare organisation that links individuals to US insurance carriers. TRANZACT will operate as part of the group’s Benefits Delivery and Administration (BDA) business, which focuses on the development and delivery of administrative solutions for employers, employees and retirees. The company will continue to use the TRANZACT brand. “We are pleased with our financial results for the second quarter and first half of fiscal 2019. For the second quarter, we delivered 6% organic revenue growth, and each of our business segments demonstrated healthy growth in revenue and operating income margin, contributing to a double-digit increase in adjusted operating income growth for the overall company,” said John Haley, WTW’s chief executive officer. "We are also excited to announce the successful completion of the TRANZACT acquisition, which will rapidly accelerate Willis Towers Watson’s direct-to-consumer US healthcare strategy and significantly strengthen Willis Towers Watson’s growth profile in the healthcare space. This acquisition, coupled with our highly differentiated capabilities and disciplined management of the business, leaves us confident in our ability to continue to drive sustainable, profitable growth and deliver value for our clients and shareholders,” continued Mr Haley. Marsh revealed during its second-quarter results call that average global commercial insurance prices rose nearly 6% in Q2. This is the biggest increase the firm’s Global Insurance Market Index has recorded since it began tracking in 2012, and marks the seventh consecutive quarter of rising prices. Marsh saw underlying revenue grow 4% in the second quarter, despite being flat in EMEA, but Guy Carpenter’s stalled by 3% as new business slowed following the JLT acquisition.

Willis reports ‘modest but definite’ price increases during second quarter

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