Willis Towers Watson (WTW) has outlined a bold plan to deliver more than $10bn in revenues and a 25% margin expansion by 2024, as it unveiled a $300m cost-saving programme and $4bn in share buybacks.
As first reported in our sister publication Business Insurance, incoming president and CEO Carl Hess told analysts WTW will achieve the $300m cost savings by shoring up its operations centres and shared services capability, revamping its real estate portfolio, and modernising technology.
WTW is now at “an inflection point”, said current CEO John Haley, who is retiring at year-end, during the brokerage’s investor day presentation on Thursday.
“We have gone through the aborted Aon merger. We now have to regroup,” Mr Haley said.
WTW will look for places in its portfolio that offer greatest potential to achieve its $10bn-plus revenue target, Mr Hess said. “We will exploit the portfolio effect by leveraging places our businesses intersect that enable us to differentiate and enjoy premium pricing and/or take market share,” he said.
The $300m cost cutting is already underway and is projected to contribute 300 basis points of margin improvement toward the fiscal year 2024 target, WTW’s senior leaders said.
The broker is in the market for inorganic opportunities that fill gaps or take advantage of the scale in its portfolio, but will set a high bar for purchases, Mr Hess said.
Mr Hess said WTW’s broking business in North America is “underweight”, adding: “We are going to look for opportunities to grow in both the large and mid-market where it makes sense.”
WTW announced a reorganisation of its global leadership ranks across two business segments and three geographic regions just over a week ago. And Mr Hess said recruiting talent is a “huge priority” across the board. The recent appointment of Andrew Krasner as chief financial officer is “one of literally hundreds of people who have rejoined us this year”, he added.
Numerous staff members left WTW after the proposed merger with Aon was announced in March last year.
WTW corporate risk and broking business has already hired back 100 staff since the Aon deal was called off, said Adam Garrard, head of risk and broking, during the presentation. He expects client retention to return to pre-deal announcement levels and new business to exceed pre-deal levels.
Corporate risk and broking’s voluntary attrition rate during the last 12 months was 13.4%, up from 11% in 2020, and is most pronounced in North America, Mr Garrard continued. Its client retention rate in the first half of 2021 dipped to 92%, from 94% in the prior year.
A downtick in attrition and uptick in recruitment during the fourth quarter of this year and first quarter of 2022 is expected, Mr Garrard said. A “well-funded bonus ball” is in place to reward employees who stayed the course, he said.
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