WTW, a global brokerage firm, reported 5% organic revenue growth for the fourth quarter of 2022 to $2.72 billion, but net income fell 75% year on year to $593 million.
WTW achieved 4% organic revenue growth to $8.866 billion for the full year 2022, while net income fell 74% to $1.024 billion, compared to 2021.
The insurance broker realigned to provide its services and solutions across two business segments: Health, Wealth & Career (HWC) and Risk & Broking (R&B), as well as three geographies: Europe, International, and North America, as of January 1st, 2023.
Businesses previously associated with the Human Capital and Benefits segment, the Benefits Delivery and Administration segment, and the Investment business have been merged into the new HWC segment.
R&B includes businesses that were previously classified as Corporate Risk and Broking, as well as Insurance Consulting and Technology.
Starting with the company’s HWC division, total revenue increased 5% on an organic basis to $1.72 billion in Q4 2022, while operating income increased 4% to $672 million, resulting in an operating margin of 39%, up from 38.2% the previous year. According to WTW, organic growth was led by Benefits Delivery & Outsourcing, which was fueled by Medicare Advantage sales.
HWC’s revenue totaled $5.287 billion for the fiscal year, representing 3% organic growth.
In R&B, organic revenue increased by 5% to $952 million for the quarter, while operating income decreased by 7% year on year to $269 million, with an operating margin of 28.3% compared to 30.1% the previous year.
According to WTW, Corporate Risk & Broking generated organic revenue growth across all geographies, primarily driven by global lines of business, particularly in Construction and Aerospace. At the same time, Corporate Risk & Broking’s organic revenue growth rate was hampered in the comparable period by headwinds from book-of-business settlement revenue.
R&B’s revenue reached $3.46 billion in 2022, representing 3% organic growth for the year.
Based on current market conditions, WTW anticipates organic revenue growth in the mid-single digits in 2023, as well as adjusted operating margin expansion.
In addition, the company expects to deliver approximately $100 million in incremental run-rate savings from the Transformation Program in 2023, as well as approximately $112 million in non-cash pension income for the year and a foreign currency headwind on adjusted earnings per share of approximately $0.01 at today’s rates for the full year 2023.
WTW realized $49 million in incremental annualized Transformation Program savings in Q4 2022, bringing the total cumulative savings since the program’s inception to $149 million, exceeding both the original $30 million target for 2022 and the most recent forecast of $110 million for 2022.
“The fourth quarter was a solid finish to a strong year for WTW,” said Carl Hess, Chief Executive Officer (CEO). Revenue and operating margins increased year over year in the fourth quarter. Furthermore, we delivered results that were in line with our expectations for the full year, including healthy organic revenue growth and adjusted operating margin expansion. These reflected the benefits of our hiring efforts, technology investments, initiatives to simplify our business, and the successful execution of our transformation efforts.
“In a complex operating environment, our focus, agility and resilience allowed us to deliver on our commitments, including a substantial return of capital to our shareholders.
“We enter 2023 with momentum and remain focused on executing on our strategic priorities of Grow, Simplify, and Transform, accelerating cash flow conversion, and achieving our long-term goals.”