Willis Towers Watson Public Limited Company (WTW) Q4 2025 Earnings Call Transcript | AlphaStreet

Willis Towers Watson Public Limited Company (NASDAQ: WTW) Q4 2025 Earnings Call dated Feb. 03, 2026

Company Individuals:

Carl Aaron Hess — Chief Government Officer

Andrew Krasner — Chief Monetary Officer

Lucy Clarke — President of Threat & Broking

Analysts:

Elise Greenspan — Analyst

David Motomeden — Analyst

Robert Co — Analyst

Mark Hughes — Analyst

Andrew Anderson — Analyst

Brian Meredith — Analyst

Brian Meredith — Analyst

Yaron Kinar — Analyst

Katie Sakis — Analyst

Meyer Shields — Analyst

Presentation:

operator

Good Morning. Welcome to the WTW Earnings Convention Call. Please confer with wtwco.com for the press launch and supplemental data that had been issued earlier as we speak. At the moment’s name is being recorded and shall be out there for the subsequent three months on WTW’s web site. Among the feedback in as we speak’s name might represent ahead trying statements inside the that means of the Non-public Securities Reform act of 1995. These ahead trying statements are topic to dangers and uncertainties. Precise outcomes might differ materially from these mentioned as we speak and the Company undertakes no obligation to replace these statements until required by legislation. For a extra detailed dialogue of those and different danger components, buyers ought to evaluate the Ahead Wanting Statements part of the earnings Press launch issued this morning in addition to within the Most up-to-date kind 10K and different subsequent WTW SEC filings.

Throughout the name, sure non GAAP monetary measures could also be mentioned to offer direct comparability with prior durations. All commentary concerning the Company’s income development outcomes shall be on a non GAAP natural foundation until particularly acknowledged in any other case. For reconciliations of the non GAAP measures in addition to different data concerning these measures, please confer with the newest earnings launch and different supplies within the Investor Relations part of the Company’s web site. I’ll now flip the decision over to Carl Hess, WTW’s chief govt officer. Please go forward.

Carl Aaron Hess — Chief Government Officer

Good morning everybody. Thanks for becoming a member of us for WTW’s fourth quarter and full 12 months earnings name. Becoming a member of me as we speak is Andrew Krasner, our Chief Monetary Officer, Julie Gabauer, our President of Well being, wealth and Profession, and Lucy Clark, our President of Threat and Broking, are additionally becoming a member of us for our Q and A session. We closed the 12 months with one other robust quarter pushed by our centered technique and its regular execution by all our WTW colleagues all year long. Our strategic efforts to speed up efficiency, improve effectivity and optimize our portfolio has strengthened our enterprise, enabling us to attain our monetary goals for 2025 and positioning us for continued success in 2026.

Our strategic investments in expertise and innovation in 2025 have accelerated efficiency in danger and broking. Our specialization technique continues to gas new enterprise momentum in well being, wealth and profession. Our deal with sensible connections and modern recurring options has translated into regular development and throughout all the enterprise. Our digital platforms and superior information and analytics proceed to distinguish WTW we do. Our enterprise supply group and our relentless deal with proper work, proper place, proper instruments and proper house proceed to boost our effectivity and assist us modernize how we function and drive additional margin enlargement. And eventually, in 2025, we strengthened our enterprise portfolio beginning the 12 months with out Transact and ending it with acquisition bulletins together with Newfront, Cushion and Flowstone Companions.

These transactions reveal our dedication to optimizing WTW’s portfolio for development and profitability in a disciplined and considerate approach. Let me share extra particulars about our robust monetary efficiency within the fourth quarter we generated 6% natural development, 80 foundation factors of adjusted working margin enlargement and adjusted EPS of $8.12. As a reminder, Transact contributed $0.80 to adjusted EPS in Q4 of 2024. Excluding this contribution, adjusted ETFs elevated 13% 12 months over 12 months. For the total 12 months we had natural development of 5% according to our mid single digit goal. We expanded adjusted working margin by 130 foundation factors 12 months over 12 months to 25.2% and delivered adjusted diluted earnings per share of $17.08 within the fourth quarter.

Well being, wealth and profession natural development accelerated from earlier within the 12 months to six% and the section delivered 30 foundation factors of working margin enlargement excluding Transact. In danger and broking, we generated 7% natural development within the quarter and expanded adjusted working margin by 120 foundation factors. The 8% natural development in our company danger and broking enterprise marks the twelfth consecutive quarter that the enterprise has recorded excessive single digit development excluding the impacts of e book of enterprise exercise and curiosity revenue regardless of a tougher pricing setting. I’m significantly happy with the robust leads to our CRB North America enterprise which grew by excessive single digits pushed by elevated MA exercise and new enterprise throughout a number of specialty traces together with building and surety.

As evidenced by our fourth quarter efficiency and new enterprise wins, we noticed engaging returns on our investments in expertise and innovation in 2025 and we’ll proceed to prioritize funding alternatives that additional speed up our efficiency. A superb instance of that is our robust and rising presence within the digital infrastructure house the place we’re proud to assist 5 of the ten largest information heart builders globally. We just lately added a type of 5 in a aggressive RFP course of for his or her Grasp Builders danger placement. The consumer selected us for the breadth and depth of our experience in building, power, expertise and different specialties in addition to our world capabilities and connectivity.

As that wind reveals, our specialization technique underpins our skill to assist purchasers throughout the total information heart lifecycle. From planning to operation, we’ve a observe file of supporting the most important builders with our trade main analytics. This, together with our deep material experience throughout cyber contracts, environmental and property dangers permits us to ship complete danger administration options for each facet of information heart improvement operation. Our building specialty enterprise is seeing robust leads to CRB North America. Lately, WTW was chosen because the business insurance coverage dealer for 2 main US financial institution headquarter renovation tasks collectively valued at nicely over $1 billion.

These excessive profile wins underscore our workforce’s robust experience in technical proficiency in building and our unified and extremely analytical method to serving to remedy our purchasers challenges. I additionally wish to point out a big win throughout each R and B and HWC from a number one Nordic industrial firm supporting insurance coverage advantages and pension packages the corporate had beforehand dealt with in home. This success displays our skill to make sensible connections throughout segments and leverage {our relationships} and experience to plan options that purchasers can not obtain on their very own. In hwc, our dedication to sensible connections, technical depth and product innovation continues to drive development throughout our companies.

For instance, our well being and advantages and retirement groups linked to unseat the incumbent of a UK headquartered world engineering firm to win a complete advantages challenge to make sure aggressive and value efficient protection for personal medical insurance coverage and different worker advantages and pensions. In one other instance, a number one monetary companies firm with staff in all of the EU member states selected us to organize them for the EU Pay Transparency Directive. Our subtle pay fairness evaluation that comes with the worth of advantages, our confirmed profession framework and our communication and alter administration method had been the differentiators that helped us safe the enterprise.

Lastly, our new merchandise and options like LifeSight proceed to realize market share. In a notable instance, a Fortune 50 expertise firm selected LifeSight as its grasp belief pension program within the UK because of their confidence in our funding proposition and our differentiated member expertise. This appointment added 400 billion sterling of belongings below administration to Lifecycle. As you see in our fourth quarter and full 12 months outcomes, we delivered margin enlargement. Together with our development, WEDO continues to be a significant driver of our rising profitability. Specifically, WEDO enabled AI and automation are central to enhancing our effectivity throughout the corporate, sustaining operational self-discipline and creating lasting value financial savings.

These capabilities are already embedded in our enterprise working mannequin and world supply facilities, enabling groups to unravel actual enterprise challenges, speed up precedence initiatives and unlock new sources of worth. Constructing on this momentum, we’re advancing smarter, extra environment friendly options that improve consumer service, together with partnerships with main agentic AI innovators to discover excessive affect use instances. Our method is targeted on options that complement human experience, enhance productiveness and simplify operations, all whereas sustaining sturdy governance and alignment with WTW requirements. WEDU was a vital driver of our working margin enlargement in 2025 and we count on to see continued advantages as we scale automation, increase our supply facilities and additional embed these capabilities throughout wtw.

Lastly, I’d like to focus on our progress in optimizing our portfolio. We’ve shared our inorganic priorities, bettering our enterprise combine, increasing our attain throughout the worth chain and enhancing our development margin and free money move profile. We superior these priorities in 2025, which was highlighted by our latest acquisition bulletins and the divestiture of Transact. Going ahead, we’ll proceed to judge potential alternatives to optimize our portfolio as we introduced final week. We closed the Newfront acquisition on January twenty seventh and the enterprise is now working as a part of WTW. Newfront brings a contemporary expertise enabled method to center market broking, combining deep specialty experience with a proprietary digital and AI pushed platform.

Their method aligns carefully with our deal with specialization, innovation and effectivity and we’re proud to welcome the brand new entrance workforce to WTW. Throughout 2026, we’ll be laser centered on seamlessly built-in Newfront’s workforce and expertise into WTW, retaining and empowering expertise, bringing our assets, scale and world footprint to newfront purchasers and mixing our extremely complementary expertise and capabilities to ship an built-in finish to finish expertise platform that can drive development, improve effectivity and higher serve our purchasers. Spike Lipkin, Newfront’s CEO and co Founder, shall be centered on integration, consumer improvement, expertise acquisition and expertise. We’re taking a deliberate and considerate method to make sure we preserve continuity for NewFront purchasers and decrease disruption.

We’ve established a devoted Integration Administration workplace to supervise the transition and to hold out a disciplined and phased method to integration. We proceed to see significant alternatives to generate synergies over the subsequent three years. I additionally wish to spotlight different transactions that can additional optimize our portfolio and reinforce our capabilities in excessive development markets. Throughout the fourth quarter we introduced the acquisition of Cushion, a leading edge UK fintech pensions and financial savings supplier which can strengthen our place within the quick rising UK outlined contribution grasp belief market. Cushion’s modern expertise led options complement LifeSight and improve our Grasp Belief choices.

We count on to finish the acquisition of Cushion within the first half of 2026. We additionally agreed to accumulate Flowstone Companions, a non-public fairness secondary specialist that can increase entry to non-public markets for particular person and institutional buyers. We count on to finish the Flowstone acquisition later this quarter. Taken collectively, these transactions mirror a disciplined and deliberate method to portfolio optimization aligned with the strategic priorities and monetary framework we laid out at our 2024 Investor Day. As I take a look at the 12 months forward, I really feel assured in our place and our constructive outlook for 2026. This outlook aligns with our long run steerage of mid single digit natural development, adjusted working margin enlargement and free money move margin enlargement and is supported by the identical core tailwinds that contributed to our success in 2025.

Now we have robust momentum out there, we proceed to make regular progress executing our technique, and the political and regulatory setting worldwide stays extremely dynamic, driving purchasers to hunt our recommendation and options to guard and strengthen their companies. Whereas we stay constructive about present macroeconomic and market situations, in fact we’re carefully monitoring potential headwinds to our enterprise within the 12 months forward in order that we will reply appropriately. That mentioned, given our aggressive benefits and momentum throughout the enterprise, I’m assured in our skill to ship on our targets. With that, I’ll cross it to Andrew for a extra detailed dialogue of the financials and 2026 outlook.

Andrew Krasner — Chief Monetary Officer

Thanks Carl Good morning and thanks everybody for becoming a member of us as we speak. Within the fourth quarter we delivered stable natural income development of 6% and expanded adjusted working margin by 80 foundation factors 12 months over 12 months to 36.9% or 30 foundation factors of 12 months over 12 months enchancment. When excluding Transact, adjusted diluted earnings per share had been $8.12 which is a rise of 13% over the prior 12 months. When excluding Transact for the total 12 months, our robust outcomes had been according to our long run monetary framework. We delivered natural income development of 5%. Adjusted working margin expanded 130 foundation factors to 25.2% reflecting 80 foundation factors of 12 months over 12 months enchancment.

Excluding Transact, adjusted diluted earnings per share had been $17.08 up 13% over the prior 12 months. When excluding transact. Our fourth quarter outcomes mirror the advantages of our investments in expertise and expertise in addition to the dedication and diligence of our colleagues. Our technique continues to resonate regardless of ongoing macro uncertainty and we stay centered on executing our strategic goals and creating long run shareholder worth. Turning to our section outcomes, Well being wealth and profession income grew 6% in comparison with the fourth quarter of final 12 months. For the total 12 months, HWC income grew 4% according to our outlook of mid single digit natural development.

Our well being enterprise achieved stable development of 4% this quarter. This was on prime of the 18% development price achieved within the prior 12 months quarter. Excluding e book of enterprise settlement exercise and curiosity revenue, headwinds development was 6% for the quarter and seven% for the total 12 months, primarily pushed by double digit will increase in worldwide and powerful efficiency in Europe. Ends in worldwide had been pushed by new enterprise acquisition, profitable renewals, well being care inflation and market enlargement. In Europe, the energy of recent enterprise and renewals generated development. In North America, development was offset by a e book of enterprise sale within the prior 12 months fourth quarter we proceed to count on robust demand throughout the worldwide enterprise pushed by well being care inflation and employers continued deal with managing prices whereas sustaining aggressive worker advantages.

Consequently, we count on well being to ship excessive single digit development in 2026. Wealth had robust development of 5% within the fourth quarter, primarily from elevated ranges of retirement work. Globally, demand for our core outlined profit work, together with new consumer appointments and assist for regulatory adjustments and information tasks remained robust. We additionally noticed development from challenge work to assist pension surplus utilization and workforce administration. New options in Europe, together with an modern pension danger switch resolution in Germany and early retirement companies in Spain additionally contributed to development. Our investments enterprise grew because of new merchandise alongside enhanced capital market situations and consumer wins.

With good momentum within the wealth enterprise, we count on development on the excessive finish of the low single digit vary in 2026. Profession development was 10% within the fourth quarter, primarily pushed by sturdy demand for broad based mostly advisory companies, compensation benchmarking, survey work and the affect of a change in survey supply patterns which we highlighted on the Q3 name. This dynamic shifted some income from final quarter into this quarter. As well as, a e book of enterprise sale contributed to careers income development this quarter. For 2026, we count on mid single digit development for profession based mostly on our continued deal with product and expertise choices, recurring companies and elevated demand for a variety of advisory companies together with these associated to implementation of the EU Pay Transparency Directive.

Advantages supply and outsourcing or BDO, grew 5% versus final 12 months’s fourth quarter primarily pushed by elevated fee income in our particular person market enterprise. As we had indicated on our prior calls, this was anticipated as BDO generates virtually half its income in the course of the fourth quarter primarily because of the timing of commissions and onboarding of recent purchasers. International outsourcing additionally grew income this quarter from core administration engagements and expanded challenge work. Whereas we count on BDO to attain mid single digit development over the long run, we’re projecting low single digit development in 2026 as we take in the affect of adjustments within the Medicare market.

In step with the income sample I discussed, development shall be concentrated within the fourth quarter and charges within the first three quarters might fluctuate significantly. HWC’s working margin within the fourth quarter was 44.3%, a rise of 240 foundation factors in comparison with the prior 12 months or a rise of 30 foundation factors excluding the affect of the transact divestiture. For the total 12 months, HWC’s working margin grew 230 foundation factors or 60 foundation factors excluding the affect of the transact divestiture in comparison with the prior 12 months. This consequence demonstrates our skill to persistently ship incremental margin enlargement no matter cyclical macro situations and helps our expectation of continued margin enlargement in HWC in 2020.

Transferring to danger and Broking the robust income development of seven% within the fourth quarter displays the continued momentum within the enterprise. Our specialization technique and investments in expertise, information and expertise proceed to drive sustainable development for the total 12 months. R and B income grew 6% excluding the affect of e book of enterprise settlement exercise and curiosity revenue development was 7% for the total 12 months. Company danger and broking grew 8% for the quarter. For the total 12 months, CRB income grew 7% excluding the affect of e book of enterprise settlement exercise and curiosity revenue development was 8% for the total 12 months.

This was on prime of the 9% development price CRB achieved within the prior 12 months. CRB’s development this quarter was primarily pushed by our world specialization technique which continued to assist new enterprise wins and consumer renewals regardless of tougher price setting. We recorded important new enterprise exercise throughout all areas this quarter with notable contributions from building, surety, marine and credit score danger options. As anticipated, we proceed to see a difficult development setting with charges softening throughout numerous traces. Nonetheless, our specialization technique is resonating out there and we’re happy by the outcomes. We proceed to count on mid to excessive single digit development in CRB for 2026.

In our insurance coverage, consulting and expertise enterprise, income declined 1% versus final 12 months’s fourth quarter when ICT delivered 11% development. Full 12 months development was 1% in comparison with 4% final 12 months. Our mixed method of consulting and expertise continues so as to add worth. Nevertheless, the tendencies we’ve highlighted within the final three quarters nonetheless stick with continued weak spot as anticipated within the consulting setting and purchasers remaining cautious about making massive multi 12 months expertise implementation selections. We proceed to shift the stability of our enterprise from consulting to expertise over time. We’re inspired by our pipeline on the expertise gross sales aspect and don’t count on to see a significant pickup in consulting exercise within the quick time period.

For 2026, we proceed to count on low to mid single digit development within the enterprise. Turning again to R&B’s outcomes. General, we’re happy with our momentum getting into 2026 which provides us confidence in our skill to ship mid to excessive single digit development for the total 12 months. R&B’s working margin was 34.7% for the fourth quarter, a 120 foundation level enchancment over the prior 12 months. This was primarily pushed by working leverage from robust natural income development coupled with continued expense self-discipline. International trade charges had been a tailwind of 10 foundation factors to working margin within the fourth quarter because of the weakening US greenback for the total 12 months 2025.

We achieved 100 foundation factors of working margin enchancment in R and B or 120 foundation factors excluding the affect of international forex. We stay dedicated to delivering 100 foundation factors of common annual adjusted working margin enlargement over the subsequent two years. As Carl highlighted earlier, the investments we’ve made in our expertise and our WEDO capabilities proceed to create worth and supply a powerful platform for us to ship ongoing working leverage and efficiencies throughout the enterprise. Lastly, let me present some extra coloration on our enterprise degree outcomes. Adjusted working margin for the fourth quarter was 36.9%, an 80 foundation level enchancment over the prior 12 months reflecting robust margin enlargement within the segments.

This consequence features a 50 foundation level tailwind from the transact divestiture. As we enter the primary quarter of the total 12 months, all our companies will proceed working with self-discipline and rigor, giving us confidence in our skill to proceed to increase margins. International trade was a tailwind to adjusted EPS of $0.18 for the quarter Based mostly on our present outlook and at present spot charges, we count on international trade to be a tailwind of roughly $0.30 to adjusted EPS for 2026. The affect is primarily anticipated to happen within the first quarter because of the seasonality of our euro denominated income.

Our U.S. gAAP tax price for the quarter was 20.8% versus 26% within the prior 12 months. Our adjusted tax price for the quarter was 20.8% in comparison with 21.1% for the fourth quarter of 2024. For 2026, we count on the total 12 months adjusted tax price to to be comparatively per 2025. We generated free money move of $1.5 billion for the 12 months ending December 31, 2025, a rise of $279 million from the prior 12 months, bringing our free money move margin to fifteen.9% in comparison with 12.8% within the prior 12 months. This was pushed primarily by decreased transformation program money prices and working margin enlargement.

We count on to proceed increasing our free money move margin in 2026 from working margin enlargement and the absence of transformation program money prices with partial offsets from transaction and integration expense associated to our just lately introduced acquisitions. Throughout the quarter, we returned $439 million to our shareholders by way of share repurchases of $350 million and dividends of $89 million. For the total 12 months, we returned $2 billion in capital to shareholders. We proceed to view share repurchases as considered one of our major strategies of capital return and a lovely use of capital to effectively ship worth to WTW shareholders. Wanting forward we count on to allocate at the least $1 billion to share repurchases in 2026 topic to market situations and potential capital allocation to natural and inorganic funding alternatives.

We’re assured our balanced and disciplined capital allocation method will generate long run shareholder worth. We’ll proceed to be selective as we spend money on expertise and in our platform to make sure we’re driving sustainable development and margin enlargement as a part of our funding program. We are going to proceed to make investments in our reinsurance JV because it scales its newly launched business operations. We count on this to be a headwind of about $0.30 to adjusted EPS this 12 months. In closing, we’re happy by our robust efficiency in 2025. We’re more and more seeing the execution of our technique, yielding tangible outcomes and producing robust momentum as we enter 2026.

With that, let’s open it up for Q and A.

Questions and Solutions:

operator

To ask a query, please press star 11 in your phone and wait in your identify to be introduced. To withdraw your query, please press star 11 once more. Within the curiosity of time, we ask that you just please restrict your self to 1 query and one comply with up. Please stand by whereas we compile the Q and A roster. Our first query comes from Elise Greenspan with Wells Fargo. Your line is open.

Elise Greenspan

Hello, thanks. Good morning. I hoped to spend extra time on the drivers of natural development inside R and B within the quarter and simply to get extra sense of the income development by line and geography. And particularly I’m searching for a broad based mostly reply, but in addition simply particularly some coloration on North America which I consider went from one thing round 1% within the Q3 to excessive single digits within the fourth quarter.

Carl Aaron Hess

Yeah, certain. Good morning women. It’s Carl and thanks for the query. Let me start with that broad based mostly reply after which let Lucy zoom in. R and b delivered robust 7% natural development within the quarter. That’s on prime of a 7% within the prior 12 months and that displays continued momentum we see within the enterprise. CRB delivered 8% natural income development and eight% when excluding each e book of enterprise exercise and curiosity revenue this quarter. Our specialization technique, our investments in expertise, information and expertise proceed to drive sustainable development. Lucy?

Lucy Clarke

Yeah, certain. Thanks Carl. Thanks Elise. Yeah, we had been actually proud of one other good quarter total in crb, we generated important new enterprise in each world market. Notable contributions from building and charity, credit score, marine and pure assets. In CRB North America particularly, such as you talked about, we had been actually proud of the excessive single digit natural development and I might name out development in a number of specialty traces there together with M and A. And simply if we take a look at the total 12 months, I Do wish to say how proud all of us are of the 2025 efficiency with 6% natural development or 7% excluding e book of Enterprise and curiosity revenue which displays the continuing success of our specialization technique and particularly the dedication of our individuals, significantly CRB.

Good 12 months with full development of seven% or 8% excluding each e book of Enterprise exercise and curiosity revenue. And for the total 12 months I might name out important contributions from dnf. In order that’s our specialty Property Casualty and Truth workforce, Building, Insurance coverage, Credit score and Pure Sources. We’re actually proud of the efficiency within the quarter, the efficiency within the full 12 months and the momentum we’ve coming into this 12 months. Our specialization technique continues to resonate, positioning us to assist purchasers handle persistent commerce and geopolitical volatility whereas disciplined funding in income producing expertise continues to assist sustainable natural development.

We’re nicely positioned for the present setting and are assured we will proceed to ship mid to excessive single digit natural development in R and D throughout 2020, fortunately.

Elise Greenspan

Thanks. And I suppose you recognize I’m going to maintain my comply with up, you recognize, sticking with the subject of natural and possibly Lucy, the place you ended proper the mid to excessive single digit information for R and B and 26 final quarter you guys, you recognize, sounded a bit of bit extra cautious saying if you recognize, the aggressive pricing setting continued, it would take the excessive, may make the excessive single digit more durable. However then, you recognize, it feels like your pricing commentary this quarter is similar as final quarter however you recognize, some new development alternatives, be it, you recognize, on the specialty aspect with M and A et cetera, is offsetting that which lets you hold the steerage for 26 of mid to excessive single digits.

However are you able to simply increase on that a bit of bit extra? Thanks.

Lucy Clarke

Yeah, certain. After all we do count on pricing to proceed to enhance our purchasers. That may very well be a consider our skill to achieve excessive single digits. However such as you talked about, our development is pushed by excessive retention charges, new enterprise, the affect of all of these hiring investments and the success of the specialty technique. Carl talked a bit of bit in regards to the alternative in digital infrastructure together with the construct out of information facilities which is an enormous alternative for us. However I feel actually that focus on specialty permits us to deal with various alternatives. And I might name out electrification, which is considered one of our, considered one of our massive methods and we’ve highlighted that the place there’s an actual want for world specialty capabilities is the place we will actually carry out and we’ve been investing meaningfully in our capabilities throughout the facility sector.

It is a important space of development for us. We’ve already demonstrated our dedication by combining a few of our specialist capabilities and asserting single unified proposition protecting each building and operational wants. As our purchasers more and more require coordinated assist throughout improvement, building, financing, operations and resilience, that is already having an affect. We just lately accomplished one of many largest insurance coverage placements up to now for a major electrification initiative that was testomony to the collaboration of our groups throughout Australia, Spain and London. The workforce was in a position to safe complete protection below exceptionally demanding market situations, reinforcing our repute for excellent consumer service and huge scale infrastructure tasks.

And only one instance of the chance we see forward. So, yeah, completely. We count on pricing to proceed to enhance for purchasers, however we expect the chance outweighs that. Thanks.

operator

Thanks. Our subsequent query comes from David Motomeden with Evercore isi. Your line is open.

David Motomeden

Hey, thanks. Good morning. I needed to stay with the RMB natural development outlook and possibly really simply zooming in a bit of bit on this quarter, simply seeing should you guys might dimension the advantage of a few of these tailwinds that you just known as out, together with the digital infrastructure and M and A exercise, after which possibly should you guys have a tough sense in your market share inside the digital infrastructure market.

Carl Aaron Hess

Yeah, I imply, David, thanks for the query. Once more, we’re seeing the enterprise firing out a number of cylinders, together with a few of these you allow. However as we identified throughout our response to Elise. Proper. We’re seeing good development throughout the portfolio, together with North America. So this isn’t only a information heart story. Whereas we’re very proud of our profile in that sector and another locations that Lucy’s been speaking about, we expect that the hiring technique and the specialization technique typically is what’s been paying off. So I feel we look ahead to seeing that momentum persevering with within the 2026.

David Motomeden

Bought it, thanks. After which possibly only a query for Andrew. You recognize, on the 80 foundation factors of margin enchancment in 2025 excluding transact, simply questioning should you might stroll us by among the places and takes that you consider heading into 2026. I suppose not just for margin, but in addition as we take into consideration for adjusted eps, as a result of I feel there are just a few places and takes there too.

Carl Aaron Hess

Yeah, why don’t I simply begin with the margin at a excessive degree that was primarily pushed by robust margin enlargement inside the segments coupled with prudent expense administration throughout the enterprise, actually enabling us to drive larger working leverage. As a result of Carl talked about in his ready remarks, we do proceed to be a major contributor to that margin enlargement as we leverage generative analytical applied sciences to drive efficiencies and issues of that nature. As we glance forward because it pertains to margin. We’ve Talked in regards to the 100 foundation factors inside broking the incremental margin or HWC translating into margin enlargement on the enterprise degree.

When it comes to the type of places and takes associated to eps. First we count on to ship mid single digit natural development on the enterprise degree. Mid single digit natural development at HwC mid to excessive inside R and B plus we’ll have the income from new entrance in phrases the working margin is per what I simply mentioned between the segments contributions. Then curiosity expense, you recognize that’s going to extend in comparison with 2025 because of the latest financing actions which primarily relate to the brand new entrance acquisition. With that extra debt, we count on annual curiosity expense to be roughly 320 million in 2026.

The tax price for 2026 needs to be comparatively per 2025. That’s about 21.1%. The Willis Re three way partnership is projected to be a headwind of about 30 cents. Its outcomes seem within the curiosity in earnings of associates line. We count on no important affect from the opposite exercise recorded on this line. Share repurchases of affiliate or larger will issue into that. And naturally you recognize, we’ll have some international trade tailwinds there. Roughly 30% on adjusted EPS in 2026. Most of that coming in Q1. So once we look by all of that and put all that collectively, we.

Andrew Krasner

Anticipate some wholesome 12 months over 12 months EPS for 2020.

operator

Thanks. Our subsequent query comes from Robert Cox with Goldman Sachs. Your line is open.

Robert Co

Hey, thanks. You recognize you guys talked about expertise or hiring has been, you recognize, a contributor to the success this 12 months. I’m curious, if we take a look at 2026, how do you count on expertise advantages to materialize in natural development versus 2025? After which additionally how do you count on the extent of expertise funding in 2026 to pattern in comparison with 2025?

Carl Aaron Hess

Yeah, thanks for the query, Rob. We stay centered on executing our technique and meaning making certain we’ve the correct expertise throughout our companies. It’s key in supporting that. So to date we’ve been actually happy by the engaging returns on our prior expertise investments. So we’re going to proceed to search for alternatives to speculate strategically in expertise alongside our investments in innovation. Expertise has remained a key driver of our skill to drive sustainable and worthwhile development and create worth for the enterprise. Lucy, care so as to add any coloration on what you may see from our expertise investments within the section?

Lucy Clarke

Yeah, certain. Thanks Carl. Yeah, Rob, I imply, as you recognize, our enterprise is actually all in regards to the individuals and this focus for us has been an actual key driver of our natural development and significantly new enterprise over the previous couple of years. These strategic hires that we’ve made proceed to carry out at or above expectations and naturally they’re now vital embedded members of our present workforce. We’re planning to proceed to enhance our present expertise by making strategic hires within the areas the place we expect they’ll be most impactful inside each geography and specialty confirmed to be a profitable technique for us.

And so we’re going to proceed to execute on that. Thanks.

David Motomeden

Thanks. And only a comply with up on the reinsurance enterprise. You recognize, I simply needed to ask if there’s any insights discovered from the progress on the reinsurance JV at 1:1. And you recognize, simply as a comply with as much as that, I’m simply curious if a totally operational reinsurance enterprise would make you incrementally aggressive in profitable a few of this digital infrastructure enterprise or at the least permit Willis to seize extra of the economics over time.

Carl Aaron Hess

Yeah, certain. It’s Andrew, why don’t I begin with the primary half? So we’re very proud of the trajectory of the construct out of Willis re. It’s going in line with plan and you recognize, the enterprise was in a position to take part within the 1:1 renewal cycle and we’re very proud of how that went from a enterprise and operational perspective. I’ll hand it over to Lucy to possibly handle the second a part of your query.

Lucy Clarke

Yeah, certain. I’m simply going to the touch on the digital infrastructure a part of the query. And when it comes to will the reinsurance enterprise be supportive? Positive. However I imply, we have already got a ton of labor in that section and actually utilizing the work that we’ve carried out with a few of our largest world homeowners and builders, plus lots of the prime information heart building firms, the fellows have simply introduced that they’ve developed an built-in world danger framework to reply to this sector’s danger profile, one that’s more and more systemic, interconnected and troublesome to deal with by conventional insurance coverage options by themselves.

Their framework is designed to deal with the total spectrum of danger going through information heart homeowners, operators and buyers throughout all the life cycle of the challenge. From improvement and building by regular state operations. The framework actually offers a holistic view of each present and rising dangers, together with these which can be systemic, troublesome to mannequin or nonetheless evolving. So we proceed to see excessive demand for our providing from new enterprise, in fact, but in addition from the robust pipelines which can be developed by our present purchasers.

operator

Thanks. Our subsequent query comes from Mark Hughes with Truist Securities. Your line is open.

Mark Hughes

Yeah, thanks very a lot. Good morning.

Carl Aaron Hess

In bdo you talked about adjustments in.

Andrew Krasner

Medicare influencing the natural development outlook Low.

Carl Aaron Hess

Single digits due to the adjustments.

Andrew Krasner

Is that only a one 12 months phenomenon?

Carl Aaron Hess

Do you suppose that’ll lengthen into 2027? Might you possibly simply give a bit of.

Andrew Krasner

Extra element on that?

Lucy Clarke

Yeah, certain. It’s Julie. Mark, I’ll take that up. You recognize, as we mentioned, BDNO grew 5% within the fourth quarter. And that was primarily because of elevated fee income in our particular person market enterprise, the Medicare enterprise, but in addition new purchasers and expanded work in advantages outsourcing. We additionally had a modest uplift from our Ichra resolution, which is a person market resolution for energetic staff. Development was considerably decrease than anticipated because of adjustments in Medicare, but in addition because of decrease headcount for some purchasers. For the total 12 months, development was 3%. That simply missed our mid single digit long run natural development vary for 2026.

We count on these headwinds to be modest, however we count on it to hold over only for the quick time period. Counterbalancing that we see robust and rising demand for our retiree market. We see a chance to realize share in what’s at present a dynamic outsourcing market. And that’s due to our robust monetary place and our main AI expertise. So total, as we mentioned, we’re anticipating BDO to develop low single digit in 2026. Past 26, we count on the challenges to dissipate and the momentum from the brand new Medicare market and if necessities to choose up and assist mid single digit development.

Andrew Krasner

Yeah, thanks for that, Julie. After which the brand new entrance acquisition, you.

Carl Aaron Hess

Talked about their AI capabilities.

Carl Aaron Hess

Something you’ll be able to name out when it comes to how they’re doing issues otherwise on.

Andrew Krasner

The expense aspect and the way you may have the ability to leverage that throughout your broader platform.

Carl Aaron Hess

Yeah, certain. I feel at a really excessive degree there’s two methods we take into consideration that. One, the expertise can improve the productiveness of individuals within the entrance workplace in order that they’re in a position to deal with on the correct actions. And the second piece is, you recognize, the power due to the expertise to get work move by on working leverage as a result of, you recognize, you might require much less individuals for volumes of enterprise, et cetera. In order that helps with, you recognize, course of and working efficiencies.

operator

Thanks. Our subsequent query comes from Andrew Anderson with Jefferies. Your line is open.

Andrew Anderson

Hey, good morning. Inside well being, you probably did 6% natural for the total 12 months and also you’re speaking about excessive single digit subsequent 12 months. Can we type of break aside how a lot you’re anticipating to return from well being care inflation versus new enterprise wins or bettering retention?

Carl Aaron Hess

Yeah, thanks. And proper, our well being enterprise continued to attain stable development. Whenever you e book settlement exercise, curiosity revenue 6% for the quarter 7% for the 12 months and that’s on prime of some robust comps, particularly for Q4. General, our technique sees significant outcomes. We see robust new enterprise and consumer renewals and we count on to see robust demand throughout the worldwide enterprise pushed by an present robust pipeline and supportive exterior tendencies, which Julie goes to elaborate a bit. We delivered excessive single digitized by Google underlying development at 25. We count on to do the identical for 2026.

Julie Yep.

Lucy Clarke

Simply to choose up in your level about new enterprise and powerful consumer retention, we grew our market share for world advantages administration. We had a really excessive win price within the center market with some just lately enhanced options for that market section. We expanded work for present purchasers with new specialty options and extra forecasting and analytical work. After which to construct on among the feedback in regards to the exterior setting, we’ve obtained excessive healthcare inflation principally in every single place around the globe and it’s projected to proceed. We’re projecting a world common of over 10% for 2026 and as I discussed on our name final quarter, we don’t count on that to drop shortly due to the excessive value of recent expertise, new pharmaceuticals, gene therapies, plus the truth that individuals are utilizing healthcare methods much more.

So meaning planning for managing these value will increase is a prime precedence for employers nearly in every single place and we’re very nicely positioned to assist with that given our core consulting and brokerage choices. We’ve additionally launched new options like an RX direct entry providing that helps employers cut back prescription drug prices with out shifting prices to their staff. So for 2026 we’re anticipating extra of what we noticed in 25 fee will increase, extra income with present purchasers, new consumer appointments, and that makes us assured in delivering excessive single digit development for 26.

David Motomeden

Thanks. After which simply on Profession, it’s bounced round a bit of bit and has been a bit of bit lighter. However how are you eager about the macro and the demand for challenge work within the first half of 26 towards some simpler first half? 25 comps for profession?

Carl Aaron Hess

Yeah, thanks. I imply profession’s 10% development this quarter was principally pushed by sturdy demand for broad tasks. That demand had been constructing all year long in addition to compensation benchmarking. Survey work development additionally mirrored the favorable affect of a change in survey supply patterns as we known as out on the third quarter name, in addition to a e book of enterprise sale. Excluding that e book of enterprise sale, careers development was nonetheless a powerful 8% within the quarter. In 2026 we count on our steady deal with our product and expertise choices, recurring companies and in demand advisory companies like an M and A to drive mid single digit development for profession.

Julie, are you able to dive into what you’re seeing a bit extra there?

Andrew Anderson

Yeah, certain. I first wish to begin out by stating that our profession companies grew each quarter of 2025 and that mid single digit development that we achieved for the 12 months is per what we’ve carried out for the final 5 years and that’s been throughout a spread of macroeconomic setting. And these outcomes are because of the focus that we’ve on this enterprise. It’s a deal with digital options, recurring income and challenge work that’s strategically vital to organizations. Our core work was stable. We had a internet enhance in compensation, committee appointments, embarked portal implementation and comp survey participation.

We did a number of work to assist with EU pay transparency necessities and M and A exercise. And these are the first components that drove our robust development. Although we did have that profit that Carl talked about from the change in survey supply timing and the e book of enterprise sale. Wanting ahead, we’re centered on all of those and different areas the place we see rising demand. Like there’s a number of curiosity proper now in work redesign associated to AI implementation. With all of this we’ve obtained robust pipelines throughout throughout our geographies and count on that mid single digit development once more in 26.

operator

Thanks. Our subsequent query comes from Brian Meredith with ubs. Your line is open.

Brian Meredith

Yeah, thanks. First query I suppose for Julie.

operator

Are you able to possibly speak a bit of bit.

Brian Meredith

About what the affect of any PRT work was within the fourth quarter and what your outlook is for 2026, significantly in mild of a few of these lawsuits which have been occurring on fiduciaries?

Lucy Clarke

Yeah, certain. Look, our wealth companies did nicely within the fourth quarter. General we from a pension danger switch perspective, we noticed a rise in exercise and within the US based mostly on revealed data, we positioned about 35% of the transaction. We’re additionally seeing a rise in de risking readiness work like information cleanup, additionally workforce administration tasks and work to assist adoption of recent laws. And we count on these tendencies to proceed for wealth total. And I simply may take the chance to say that within the outlined contribution space, which can be below the wealth space, we are actually reside with LifeSite Area Options in 12 nations.

We’re persevering with so as to add purchasers there and belongings below administration. Over 2025, our belongings below administration throughout our grasp belief preparations elevated from 36 billion initially of the 12 months to over 46 billion on the finish of the 12 months. And we’ve obtained one other 3 billion lined as much as be added within the coming quarters with purchasers that we’ve already contracted And Carl talked about in his opening remarks, we’ve introduced the acquisition of Cushion and that units us as much as develop much more within the GB market as a result of it’s good for the quick rising mid market the place we don’t but have an enormous presence.

Brian Meredith

Nice, thanks. A comply with up query. I’m simply curious.

operator

There’s been a number of discuss.

David Motomeden

The affect of AI on routine kind consulting companies. I do know you’ve talked about the advantages you’re seeing simply so far as productiveness and stuff.

operator

However I’m curious, do you anticipate any.

David Motomeden

Headwinds in any of your companies on account of AI?

Carl Aaron Hess

No, I feel we see AI as a chance for the group. Among the nicely publicized headlines round consulting habits I feel have been on the extra administration consulting kind actions. And should you look throughout what we do, a number of it’s pushed by regulatory necessities leads to recurring companies which can be extraordinarily sturdy within the demand for them. And we’ve taken steps over prior years to verify we focus exercise in our companies across the locations we see essentially the most long run demand rising. So I really feel like that is alternative for Solar Menace.

operator

Thanks. Our subsequent query comes from Yaron Kinar with Mizuho. Your line is open.

Yaron Kinar

Thanks. Good morning. First query, simply trying on the capital deployment information for 26 with a billion plus in repurchases anticipated, I feel that may recommend that the lion’s share of generated free money move in 26 shall be deployed in the direction of buybacks. And I’m simply curious as your ideas on M and A and why that may not be a larger precedence.

Carl Aaron Hess

Yeah, it’s. Andrew, I’ll begin after which possibly if Carl needs so as to add something. So. So we’ve been I feel very, very clear that the capital allocation method that we’re trying to take is balanced. So we’re concentrating on a billion {dollars} of share repurchases all year long. That would change, as we’ve famous, relying on inorganic alternatives that we’d resolve to pursue. Along with that we even have extra monetary flexibility proper on prime of simply free money move that we will deploy in natural alternatives. You recognize, from the place we sit, from the leverage perspective. Yeah, let me.

Thanks Andrew. Let me speak a bit of bit about urge for food. You recognize, the shop has not closed. Our M and A technique has not modified. We’re persevering with to judge alternatives. We’re going to stay considerate and affected person in our method. And let me, let me drill a bit of bit down. Proper. We’re concerned with bolt on alternatives acquisitions that properly fed our specialty technique in crb. Within the wealth house we see the Market as being huge, it’s increasing. So we’re significantly concerned with wealth administration and outlined contribution capabilities in rising markets. And we’re going to proceed to judge bigger alternatives to boost our presence in choose geographies or market segments.

I imply, in the end we’ve main information expertise platforms bolstered by our acquisition of NewFront. And we’ve a singular tradition and people belongings ought to make sense for any enterprise that’s trying to be part of us. So to be a bit of extra particular, we’re aiming to extend our enterprise combine in broking and wealth by M and A. We see it as a key alternative increasing into excessive development, excessive margin areas of our core enterprise. Secondarily, we see alternatives to play throughout the insurance coverage worth chain just like the reinsurance JV with bait to speed up development. And third, a mixture with WTW must have a compelling monetary story, enhancing our margins and our free money move profile and making Andrew smile.

Yaron Kinar

Thanks, that’s useful. After which for my comply with up, simply needed to dig a bit of bit deeper into expertise. Simply given the headlines we’re seeing for the trade. Are you able to discuss retention charges that you just’re seeing in your personal workforce on the one hand after which possibly additionally contact on new hires? Are these choosing up or regular state? And possibly you possibly can additionally quantify the affect to natural development coming from new hires?

Carl Aaron Hess

Yeah, so with regard to retention, it stays towards the low finish of the vary we’re aiming for. So we’re very proud of our skill to maintain the important thing expertise within the group. We proceed to rent strategically with a deal with bringing in a inventive expertise. And particularly with our specialty traces and geographies and extra broadly, we proceed to spend money on the quickest rising of areas of enterprise which have essentially the most development potential. And so that’s serving to us notice important alternatives to speed up worthwhile development and improve advertising.

operator

Thanks. Our subsequent query comes from Katie Sakis with Autonomous Analysis. Your line is open.

Katie Sakis

Hello, thanks. A fast one from me. I used to be questioning should you guys might give us a bit of bit extra coloration on how a lot of the brand new enterprise that your specialty operations noticed within the quarter got here from recurring revenues versus like one time revenues. I feel final quarter you had talked about, you recognize, shifting into extra recurring new enterprise contributions in crb and I’m curious how that dynamic performed out this quarter after which extra broadly the way you guys expect that to proceed in 2026 and in the end assist, you recognize, the mid to excessive single digit natural development information.

Lucy Clarke

Yep.

Carl Aaron Hess

Sandra, why don’t I begin after which possibly Lucy can add some extra coloration however simply, you recognize, with regard to recurring versus non recurring. As we mentioned final quarter, the character of our work is at all times a mixture of recurring and one off work. One off challenge work was not a key driver of natural development within the fourth quarter. Possibly. Lucy, wish to touch upon another tendencies there?

Lucy Clarke

Yeah, I feel, you recognize, simply choosing up on Andrew’s remark. We known as it out final quarter as a result of we had a major quantity. There’s nothing to name out this quarter. All throughout our enterprise we’ve one off and recurring revenues. So nothing specific to name out this quarter.

operator

Katie.

Elise Greenspan

Bought it.

operator

Thanks.

operator

Thanks. And our closing query comes from Meyer Shields with Keith, Bruyet and Woods. Your line is open.

Katie Sakis

Nice, thanks. Two fast questions, hopefully. First, if we return to love the Medicare considerations, clearly we’ve seen a number of what I suppose we’d name unhealthy information just lately. I hoped you possibly can body type of the uncertainty within the low single digit forecast. Are there issues that you just nonetheless want to seek out out when it comes to which merchandise carry commissions, fee charges and so forth?

Lucy Clarke

Yeah, I’m going to start out with only a touch upon among the bulletins we’ve heard just lately, simply highlighting that the ultimate Medicare phrases that we find yourself residing with are sometimes extra favorable than the advance proposals which can be launched. So for instance, final 12 months when the ultimate enhance landed at 5% and the advance proposal was 2%, and I feel in all probability extra importantly, the extent of reimbursement doesn’t have a direct affect on our income. So total we count on the most recent proposal to be comparatively impartial. For us, the modest drag is from underlying adjustments in protection and value.

The rationale for the neutrality of the proposal is, initially, the vast majority of our present clients on our retiree market are coated by what we name Medicare complement insurance policies and people usually are not impacted by the latest announcement in any respect. Secondly, whereas there have been costs for Medicare Benefit insurance policies which can be more likely to go up due to that announcement, our market has dozens of choices for retirees to allow them to discover the correct coverage at a worth they will afford. And that switching of insurance policies is definitely useful to us when it comes to having the ability to place new insurance coverage.

After which we count on this place to drive important worth will increase for group Medicare plans. So employers which can be nonetheless providing the group plan will probably wish to think about a person market as what we expect is a extra inexpensive various that doesn’t simply shift prices to their retirees. And we count on this final level to be a constructive affect for us past 2026.

Meyer Shields

Okay, thanks. That was very useful.

Carl Aaron Hess

After which only a closing query, I suppose for Andrew.

David Motomeden

I hoped we might get type of annual revenues for Cushion and Flowstone for modeling functions. Yeah.

Carl Aaron Hess

So we count on these to rely on the 12 months, relying on when the time limits are. In order that’s one thing that we will share, I feel, on the subsequent replace, however in combination, you recognize, someplace round 300 for these.

operator

Thanks. This concludes the query and reply session. I might now like to show it again to Carl Hess for closing remarks.

Carl Aaron Hess

So thanks, everyone, for becoming a member of us this morning. I as soon as once more wish to lengthen my thanks appreciation to all our WTW colleagues globally. Their dedication and dedication made 25 so successful. I look ahead to their sustaining that momentum into 2026 with that very same deal with execution and self-discipline that’s guided us up to now. Within the meantime, have an excellent day, everybody.

operator

This concludes as we speak’s convention name. Thanks for collaborating. Chances are you’ll now disconnect.

Commercial