WILLIS TOWERS WATSON PLC
For the period ended Sep 30, 2024. Filed Oct 31, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 31, 2024
WTW$328.86-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-25.
0000950170-24-086379
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0000950170-24-119420
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 212 previous paragraphs and 224 current paragraphs.
133 unchanged; 66 reworded; 24 added; 13 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 23 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
For the three and nine months ended September 30, 2024, Impairment and Other (loss)/income, net include goodwill-related impairment expense and loss on disposal, respectively, associated with the pending sale of our TRANZACT business (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q).
Current report
Impairment
Current report
Impairment for both the three and nine months ended September 30, 2024 was $1.0 billion. Impairment is attributable to the goodwill impairment associated with our Benefits, Delivery and Administration (‘BDA’) reporting unit related to the pending sale of our TRANZACT business (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q).
Current report
(Loss)/Income from Operations
Current report
Loss from operations for the three months ended September 30, 2024 was $766 million, compared to income from operations of $159 million for the three months ended September 30, 2023, a decrease of $925 million. This decrease resulted from the impairment expense associated with the pending sale of our TRANZACT business in the current-year period (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q), partially offset by higher revenue in the current-year period.
Current report
Other (Loss)/Income, Net
Current report
Other (loss)/income, net for the three months ended September 30, 2024 was a loss of $1.2 billion, compared to income of $66 million for the three months ended September 30, 2023, a decrease of $1.2 billion. Other (loss)/income, net for the nine months ended September 30, 2024 was a loss of $1.1 billion, compared to income of $126 million for the nine months ended September 30, 2023, a decrease of $1.2 billion. The decreases were due to a higher loss on disposal in the current-year periods, which are attributable to the pending sale of our TRANZACT business (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q).
Current report
Benefit from/(Provision for) Income Taxes
Current report
Net (Loss)/Income Attributable to WTW
Current report
Net loss attributable to WTW for the three months ended September 30, 2024 was $1.7 billion, compared to income of $136 million for the three months ended September 30, 2023, a decrease of $1.8 billion. This decrease resulted from the loss on disposal and impairment expense associated with the pending sale of our TRANZACT business in the current-year period (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q), partially offset by lower tax expense attributable to the losses associated with the pending sale and higher revenue in the current-year period.
Current report
Net loss attributable to WTW for the nine months ended September 30, 2024 was $1.3 billion, compared to income of $433 million for the nine months ended September 30, 2023, a decrease of $1.8 billion. This decrease resulted from the loss on disposal and impairment expense associated with the pending sale of our TRANZACT business, higher salary expense and increased incentive and benefit costs in the current year, partially offset by higher revenue and lower tax expense attributable to the losses associated with the pending sale in the current year.
Current report
The capitalization ratio increased from December 31, 2023 due primarily to the earnings loss in the current quarter driven by the recognition of impairment expense and loss on disposal associated with the pending sale of our TRANZACT business (see Note 3 — Acquisitions and Divestitures in Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q for further information).
Current report
Impairment – Adjustment to remove the non-cash goodwill impairment associated with our Benefits, Delivery and Administration (‘BDA’) reporting unit related to the pending sale of our TRANZACT business.
Current report
(i)
Current report
Our U.S. GAAP tax rates were 16.1% and 15.5% for the three months ended September 30, 2024 and 2023, respectively, and 15.6% and 18.3% for the nine months ended September 30, 2024 and 2023, respectively. The prior-year effective tax rate for the three months ended September 30, 2023 was lower due to the tax-exempt gain on a business disposal. The current-year effective tax rate for the nine months ended September 30, 2024 was lower due to deferred tax benefits recognized on the gross-up to carrying value of net assets to be disposed and a deferred tax benefit of $56 million, net of a $37 million valuation allowance, on the expected tax loss on disposal of TRANZACT (see Note 3 – Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q). The Company records valuation allowances against net deferred tax assets based on whether it is more likely than not that the deferred tax assets will be realized. During the three months ended September 30, 2024 the Company recorded a $37 million valuation allowance related to unrealized capital losses that are not more-likely-than-not to be realized.
Current report
Our adjusted income tax rates were 19.7% and 24.3% for the three months ended September 30, 2024 and 2023, respectively, and 21.6% and 22.6% for the nine months ended September 30, 2024 and 2023, respectively. The current-year periods’ adjusted tax rates are lower due to the geographical distribution of profit and additional interest received on a tax refund recognized in the three months ended September 30, 2024.
Current report
Goodwill and Intangible Assets — Impairment Review
Current report
In applying the acquisition method of accounting for business combinations, amounts assigned to identifiable assets and liabilities acquired were based on estimated fair values as of the date of acquisition, with the remainder recorded as goodwill. Intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible asset. Intangible assets with definite lives are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise. Intangible assets with indefinite lives are tested for impairment annually as of October 1, and whenever indicators of impairment arise. The fair value of the intangible assets is compared with their carrying value and an impairment loss would be recognized for the amount by which the carrying amount exceeds the fair value. Goodwill is tested for impairment annually as of October 1, and whenever indicators of impairment arise.
Current report
Goodwill is tested at the reporting unit level, and the Company has seven reporting units as of October 1, 2024. As discussed in Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q, in connection with the planned disposal of TRANZACT, during the three months ended September 30, 2024, the Company recorded a $1.0 billion non-cash goodwill impairment charge on the BDA reporting unit. The BDA reporting unit goodwill after impairment is approximately $1.2 billion. After reflecting the disposal of TRANZACT, the fair value of the remaining reporting unit is estimated to be significantly in excess of its carrying value.
Current report
The Company continuously monitors and evaluates relevant events and circumstances that could unfavorably impact the significant assumptions noted above, including changes to the regulatory environment, general industry, market and macro-economic conditions and recent market valuations from transactions of comparable companies. It is possible that future changes in such circumstances, or in the inputs or assumptions used in estimating the fair value of the reporting unit, could require the Company to record a non-cash impairment charge.
Current report
To perform the test, we used valuation techniques to estimate the fair value of a reporting unit that are under the income and/or market approaches of valuation methods:
Current report
Discounted cash flow method— Under the discounted cash flow method, an income approach, the business enterprise value is determined by discounting to present value the terminal value which is calculated using debt-free after-tax cash flows for a finite period of years. Key estimates in this approach were internal financial projection estimates prepared by management, assessment of business risk, and expected rates of return on capital.
Current report
Guideline public company method— The guideline public company method, a market approach, develops valuation multiples by comparing our reporting units to similar publicly traded companies. Key estimates and determination of valuation multiples rely on the selection of similar companies, obtaining forecast revenue and EBITDA estimates for the similar companies and selection of valuation multiples as they apply to the reporting unit characteristics.
Current report
Guideline transaction method— Under the guideline transactions method, a market approach, actual transaction prices and operating data from companies deemed reasonably similar to the reporting units are used to develop valuation multiples as an indication of how much a knowledgeable investor in the marketplace would be willing to pay for the business units.
Removed paragraphs (13)
Previous report
Income from Operations
Previous report
Income from operations for the six months ended June 30, 2024 was $492 million, compared to $427 million for the six months ended June 30, 2023, an increase of $65 million. This increase resulted primarily from higher revenue, partially offset by higher salary expense and incentive costs, as well as increased transformation and transaction costs in the current year.
Previous report
Other Income, Net
Previous report
Other income, net for the three months ended June 30, 2024 was $24 million, compared to $35 million for the three months ended June 30, 2023, a decrease of $11 million. The decrease was due primarily to lower pension income and a lower gain on disposal in the current-year period.
Previous report
Other income, net for the six months ended June 30, 2024 was $50 million, compared to $60 million for the six months ended June 30, 2023, a decrease of $10 million. The decrease was due primarily to lower pension income and a lower gain on disposal in the current year, partially offset by favorable foreign currency movement in the current year.
Previous report
Provision for Income Taxes
Previous report
effective tax rates are lower due to a benefit recognized from the recovery of a tax refund related to businesses in which the Company no longer participates.
Previous report
Net Income Attributable to WTW
Previous report
Net income attributable to WTW for the three months ended June 30, 2024 was $141 million, compared to $94 million for the three months ended June 30, 2023, an increase of $47 million, or 50%. This increase resulted primarily from higher revenue in the current-year period, partially offset by higher incentive costs and salary expense, increased interest expense and lower pension income in the current-year period.
Previous report
Net income attributable to WTW for the six months ended June 30, 2024 was $331 million, compared to $297 million for the six months ended June 30, 2023, an increase of $34 million, or 11%. This increase resulted primarily from higher revenue in the current year, partially offset by higher salary expense and incentive costs, increased transformation and transaction costs, higher interest expense and lower pension income in the current year.
Previous report
Interest income contributed 1% to organic change for total revenue for the three months ended June 30, 2024. Organic change for total revenue excluding this contribution was 5% for the three months ended June 30, 2024. Interest income did not contribute to organic change for the six months ended June 30, 2024.
Previous report
Our U.S. GAAP tax rates were 15.6% and 19.8% for the three months ended June 30, 2024 and 2023, respectively, and 18.1% and 19.6% for the six months ended June 30, 2024 and 2023, respectively. The current-year periods’ U.S. GAAP effective tax rates are lower due to a benefit recognized from the recovery of a tax refund related to businesses in which the Company no longer participates.
Previous report
Our adjusted income tax rates were 22.6% and 23.7% for the three months ended June 30, 2024 and 2023, respectively, and 22.5% and 22.0% for the six months ended June 30, 2024 and 2023, respectively.
Reworded paragraphs (66)
Previous wording
U.S. and global markets are continuing to experience volatility and disruption as a result of the ongoing Russia-Ukraine and Israel-Hamas wars. Although the length and impact of these situations are highly unpredictable, the conflicts have contributed to negative impacts on and volatility of the global economy and capital markets, resulting in significant inflation and fluctuating interest rates in many of the markets in which we operate, and could continue to lead to further market disruptions. This impacts not only the cost of and access to liquidity, but also other costs to run and invest in our business.
Current wording
U.S. and global markets are continuing to experience volatility and disruption as a result of the ongoing Russia-Ukraine and Middle East conflicts. Although the length and impact of these situations are highly unpredictable, the conflicts have contributed to negative impacts on and volatility of the global economy and capital markets, resulting in significant inflation and fluctuating interest rates in many of the markets in which we operate, and could continue to lead to further market disruptions. This impacts not only the cost of and access to liquidity, but also other costs to run and invest in our business.
Previous wording
In the fourth quarter of 2021, the Company initiated a three-year ‘Transformation program’ designed to enhance operations, optimize technology and align its real estate footprint to its new ways of working. During the fourth quarter of 2023, we revised the expected costs and savings under the program and we currently expect the program to generate annual cost savings in excess of $450 million by the end of 2024. The program is expected to incur cumulative costs of approximately $1.045 billion and capital expenditures of approximately $130 million, for a total investment of $1.175 billion. The main categories of charges have been in the following four areas:
Current wording
In the fourth quarter of 2021, the Company initiated a three-year ‘Transformation program’ designed to enhance operations, optimize technology and align its real estate footprint to its new ways of working. During the fourth quarter of 2023, we revised the expected costs and savings under the program and we currently expect the program to generate annual cost savings in excess of $450 million by the end of 2024. The program is expected to incur cumulative costs of approximately $1.045 billion and capital expenditures of approximately $130 million, for a total investment of approximately $1.175 billion. The main categories of charges have been in the following four areas:
Previous wording
Certain costs under the Transformation program are accounted for under ASC 420, Exit or Disposal Cost Obligation, and are included as restructuring costs in the condensed consolidated statements of comprehensive income. For the three and six months ended June 30, 2024, restructuring charges under our Transformation program totaled $3 million and $21 million, respectively; for the three and six months ended June 30, 2023, restructuring charges under our Transformation program totaled $10 million and $13 million, respectively. Other costs incurred under the Transformation program are included in transaction and transformation and were $86 million and $205 million for the three and six months ended June 30, 2024, respectively, and $82 million and $127 million for the three and six months ended June 30, 2023, respectively.
Current wording
Certain costs under the Transformation program are accounted for under ASC 420, Exit or Disposal Cost Obligation, and are included as restructuring costs in the condensed consolidated statements of comprehensive income. For the three and nine months ended September 30, 2024, restructuring charges under our Transformation program totaled $8 million and $29 million, respectively; for the three and nine months ended September 30, 2023, restructuring charges under our Transformation program totaled $17 million and $30 million, respectively. Other costs incurred under the Transformation program are included in transaction and transformation and were $67 million and $272 million for the three and nine months ended September 30, 2024, respectively, and $104 million and $231 million for the three and nine months ended September 30, 2023, respectively.
Previous wording
From the actions taken during the second quarter of 2024, we have identified an additional $24 million of annualized run-rate savings during the year due to newly-realized opportunities and incremental sources of value. Since the inception of the program, we have identified $394 million of cumulative annualized run-rate savings, which overall are primarily attributable to process optimization. We began to recognize the benefits from the program during 2022.
Current wording
From the actions taken during the third quarter of 2024, we have identified an additional $52 million of annualized run-rate savings during the year due to newly-realized opportunities and incremental sources of value. Since the inception of the program, we have identified $446 million of cumulative annualized run-rate savings, which overall are primarily attributable to process optimization. We began to recognize the benefits from the program during 2022.
Previous wording
Revenue for the three months ended June 30, 2024 was $2.3 billion, compared to $2.2 billion for the three months ended June 30, 2023, an increase of $106 million, or 5%, on an as-reported basis. Adjusting for the impacts of foreign currency and acquisitions and disposals, our organic revenue growth was 6% for the three months ended June 30, 2024. Revenue for the six months ended June 30, 2024 was $4.6 billion, compared to $4.4 billion for the six months ended June 30, 2023, an increase of $203 million, or 5%, on an as-reported basis. Adjusting for the impacts of foreign currency and acquisitions and disposals, our organic revenue growth was 5% for the six months ended June 30, 2024. The increases in both as-reported and organic revenue were driven by strong performances in both segments. For additional information, please see the section entitled ‘Segment Revenue’ elsewhere within this Item 2 of this Quarterly Report on Form 10-Q.
Current wording
Revenue for the three months ended September 30, 2024 was $2.3 billion, compared to $2.2 billion for the three months ended September 30, 2023, an increase of $123 million, or 6%, on an as-reported basis. Adjusting for the impacts of foreign currency and acquisitions and disposals, our organic revenue growth was 6% for the three months ended September 30, 2024. Revenue for the nine months ended September 30, 2024 was $6.9 billion, compared to $6.6 billion for the nine months ended September 30, 2023, an increase of $326 million, or 5%, on an as-reported basis. Adjusting for the impacts of foreign currency and acquisitions and disposals, our organic revenue growth was 5% for the nine months ended September 30, 2024. The increases in both as-reported and organic revenue were driven by strong performances in both segments. For additional information, please see the section entitled ‘Segment Revenue’ elsewhere within this Item 2 in this Quarterly Report on Form 10-Q.
Previous wording
Our revenue can be materially impacted by changes in currency conversions, which can fluctuate significantly over the course of a calendar year. For the three months ended June 30, 2024, currency translation decreased our consolidated revenue by $14 million. The primary currencies driving this change were the Argentine Peso and Euro. For the six months ended June 30, 2024, currency translation decreased our consolidated revenue by $4 million. The primary currency driving this change was the Argentine Peso.
Current wording
Our revenue can be materially impacted by changes in currency conversions, which can fluctuate significantly over the course of a calendar year. However, for the three months ended September 30, 2024, the impact of currency translation on our revenue was immaterial. For the nine months ended September 30, 2024, currency translation decreased our consolidated revenue by $4 million.
Previous wording
The following table details our top five markets based on the percentage of consolidated revenue (in U.S. dollars) from the countries where work was performed for the six months ended June 30, 2024. These figures do not represent the currency of the related revenue, which is presented in the next table.
Current wording
The following table details our top five markets based on the percentage of consolidated revenue (in U.S. dollars) from the countries where work was performed for the nine months ended September 30, 2024. These figures do not represent the currency of the related revenue, which is presented in the next table.
Previous wording
The table below details the approximate percentage of our revenue and expenses by transactional currency for the six months ended June 30, 2024.
Current wording
The table below details the approximate percentage of our revenue and expenses by transactional currency for the nine months ended September 30, 2024.
Previous wording
The following tables set forth the total revenue for the three and six months ended June 30, 2024 and 2023, and the components of the change in total revenue for the three and six months ended June 30, 2024, as compared to the prior-year periods. The components of the revenue change may not add due to rounding.
Current wording
The following tables set forth the total revenue for the three and nine months ended September 30, 2024 and 2023, and the components of the change in total revenue for the three and nine months ended September 30, 2024, as compared to the prior-year periods. The components of the revenue change may not add due to rounding.
Previous wording
Interest income contributed 1% to organic change for total revenue for the three months ended June 30, 2024. Organic change for total revenue excluding this contribution was 5% for the three months ended June 30, 2024. Interest income did not contribute to organic change for the six months ended June 30, 2024.
Current wording
Interest income did not contribute to organic change for the three and nine months ended September 30, 2024.
Previous wording
Definitions of Constant Currency Change and Organic Change are included under the section entitled ‘Non-GAAP Financial Measures’ elsewhere within Item 2 of this Quarterly Report on Form 10-Q.
Current wording
Definitions of Constant Currency Change and Organic Change are included under the section entitled ‘Non-GAAP Financial Measures’ elsewhere within Item 2 in this Quarterly Report on Form 10-Q.
Previous wording
HWC segment revenue for the three months ended June 30, 2024 and 2023 was $1.3 billion and $1.2 billion, respectively. Organic revenue growth in Health was driven by increased project work in North America and strong client retention, new local appointments and the continued expansion of our Global Benefits Management client portfolio in International and Europe. Our Wealth businesses generated organic revenue growth from higher levels of Retirement work in North America and Europe and an increase in our Investments business due to capital market improvements and growth from our LifeSight solution. Career had organic revenue growth from increased project work and product revenue in Employee Experience and Work & Rewards. Benefits Delivery & Outsourcing was flat for the quarter as a result of growth in Outsourcing offset by moderated growth in Individual Marketplace.
Current wording
HWC segment revenue for both the three months ended September 30, 2024 and 2023 was $1.3 billion. Health had organic revenue growth driven by strong client retention, new local appointments and the continued expansion of our Global Benefits Management client portfolio in International and Europe, along with increased brokerage income in North America. Wealth generated organic revenue growth from higher levels of Retirement work in Europe and an increase in our Investments business due to capital market improvements and growth from our LifeSight solution. Career had organic revenue growth from increased compensation survey sales and advisory services in Work & Rewards and product revenue in Employee Experience. Benefits Delivery & Outsourcing had an organic revenue decline for the quarter primarily as a result of deliberately moderating growth in Individual Marketplace and a stronger comparable in Outsourcing.
Previous wording
The following table sets forth HWC segment revenue for the six months ended June 30, 2024 and 2023 and the components of the change in revenue for the six months ended June 30, 2024 from the six months ended June 30, 2023.
Current wording
The following table sets forth HWC segment revenue for the nine months ended September 30, 2024 and 2023 and the components of the change in revenue for the nine months ended September 30, 2024 from the nine months ended September 30, 2023.
Previous wording
HWC segment revenue for the six months ended June 30, 2024 and 2023 was $2.6 billion and $2.5 billion, respectively. Organic revenue growth in Health was achieved across all regions and led by International. Our Wealth businesses generated organic revenue growth from higher levels of Retirement work in North America and Europe. Career had organic revenue growth from increased project work in Employee Experience and Work & Rewards. Organic growth in Benefits Delivery & Outsourcing was driven by higher project work in Outsourcing and higher commission and fees from Individual Marketplace.
Current wording
HWC segment revenue for the nine months ended September 30, 2024 and 2023 was $3.9 billion and $3.8 billion, respectively. Organic revenue growth in Health was achieved across all regions and led by International. Our Wealth businesses generated organic revenue growth from our Investments-related solutions and higher levels of Retirement work in North America and Europe. Career had organic revenue growth from increased project work in Employee Experience and Work & Rewards. Organic growth in Benefits Delivery & Outsourcing was driven by higher project work in Outsourcing and higher commissions and fees from Individual Marketplace.
Previous wording
R&B segment revenue for the three months ended June 30, 2024 and 2023 was $979 million and $900 million, respectively. Corporate Risk & Broking had organic revenue growth primarily driven by higher levels of new business activity, strong client retention and renewal increases across all geographies. Insurance Consulting and Technology had flat organic revenue growth for the quarter primarily due to tempered demand for discretionary services.
Current wording
R&B segment revenue for the three months ended September 30, 2024 and 2023 was $940 million and $855 million, respectively. Corporate Risk & Broking had organic revenue growth primarily driven by higher levels of new business activity and strong client retention. Insurance Consulting and Technology had organic revenue growth for the quarter primarily due to strong software sales in Technology, partially offset by tempered demand for discretionary services in Consulting.
Previous wording
The following table sets forth R&B segment revenue for the six months ended June 30, 2024 and 2023 and the components of the change in revenue for the six months ended June 30, 2024 from the six months ended June 30, 2023.
Current wording
The following table sets forth R&B segment revenue for the nine months ended September 30, 2024 and 2023 and the components of the change in revenue for the nine months ended September 30, 2024 from the nine months ended September 30, 2023.
Previous wording
R&B segment revenue for the six months ended June 30, 2024 and 2023 was $2.0 billion and $1.8 billion, respectively. Corporate Risk & Broking had organic revenue growth primarily driven by higher levels of new business activity and strong client retention and renewal increases across all geographies. Insurance Consulting and Technology had flat organic revenue growth for the year primarily due to tempered demand for discretionary services.
Current wording
R&B segment revenue for the nine months ended September 30, 2024 and 2023 was $2.9 billion and $2.7 billion, respectively. Corporate Risk & Broking had organic revenue growth primarily driven by higher levels of new business activity and strong client retention and renewal increases across all geographies. Insurance Consulting and Technology had flat organic revenue growth for the year primarily due to tempered demand for discretionary services.
Previous wording
Total costs of providing services for the three months ended June 30, 2024 were $2.1 billion, compared to $2.0 billion for the three months ended June 30, 2023, an increase of $36 million, or 2%. Total costs of providing services for the six months ended June 30, 2024 were $4.1 billion, compared to $4.0 billion for the six months ended June 30, 2023, an increase of $138 million, or 3%. See the following discussion for further details.
Current wording
Total costs of providing services for the three months ended September 30, 2024 were $3.1 billion, compared to $2.0 billion for the three months ended September 30, 2023, an increase of $1.0 billion. Total costs of providing services for the nine months ended September 30, 2024 were $7.2 billion, compared to $6.0 billion for the nine months ended September 30, 2023, an increase of $1.2 billion. These increases resulted from the impairment expense associated with the pending sale of our TRANZACT business in the current-year period (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q). See the following discussion for further details.
Previous wording
Salaries and benefits for both the six months ended June 30, 2024 and 2023 were $2.7 billion, an increase of $79 million, or 3%. The increase in the current year is primarily due to higher salary expense, driven by increased colleague headcount and cost-of-living compensation adjustments, and higher incentive costs for the period. Salaries and benefits, as a percentage of revenue, represented 59% and 60% for the six months ended June 30, 2024 and 2023, respectively.
Current wording
Salaries and benefits for both the three months ended September 30, 2024 and 2023 were $1.4 billion, an increase of $37 million, or 3%. The increase in the current-year period is primarily due to higher salary expense, driven by increased colleague headcount and cost-of-living compensation adjustments, and higher benefit costs for the period. Salaries and benefits, as a percentage of revenue, represented 61% and 63% for the three months ended September 30, 2024 and 2023, respectively.
Previous wording
Salaries and benefits for the three months ended June 30, 2024 were $1.4 billion, compared to $1.3 billion for the three months ended June 30, 2023, an increase of $50 million, or 4%. The increase in the current-year period is primarily due to higher incentive costs and salary expense, driven by increased colleague headcount and cost-of-living compensation adjustments, partially offset by lower benefit costs for the period. Salaries and benefits, as a percentage of revenue, represented 62% for both the three months ended June 30, 2024 and 2023.
Current wording
Salaries and benefits for the nine months ended September 30, 2024 were $4.1 billion, compared to $4.0 billion for the nine months ended September 30, 2023, an increase of $116 million, or 3%. The increase in the current year is primarily due to higher salary expense, driven by increased colleague headcount and cost-of-living compensation adjustments, and higher incentive and benefit costs for the period. Salaries and benefits, as a percentage of revenue, represented 60% and 61% for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
Other operating expenses for the three months ended June 30, 2024 were $439 million, compared to $433 million for the three months ended June 30, 2023, an increase of $6 million. The increase was primarily due to losses on professional liability claims and higher non-income-related tax expense, partially offset by lower occupancy costs for the current-year period as compared to the prior-year period.
Current wording
Other operating expenses for the three months ended September 30, 2024 were $419 million, compared to $396 million for the three months ended September 30, 2023, an increase of $23 million, or 6%. The increase was primarily due to higher non-income-related tax expense for the current-year period as compared to the prior-year period.
Previous wording
Other operating expenses for the six months ended June 30, 2024 were $896 million, compared to $886 million for the six months ended June 30, 2023, an increase of $10 million. The increase was primarily due to higher non-income-related tax expense and increased marketing costs, partially offset by lower occupancy and travel and entertainment costs for the current year as compared to the prior year.
Current wording
Other operating expenses for both the nine months ended September 30, 2024 and 2023 were $1.3 billion, an increase of $33 million, or 3%. The increase was primarily due to higher non-income-related tax expense and increased marketing costs, partially offset by lower occupancy costs for the current year as compared to the prior year.
Previous wording
Depreciation for the three months ended June 30, 2024 was $57 million, compared to $64 million for the three months ended June 30, 2023, a decrease of $7 million, or 11%. Depreciation for the six months ended June 30, 2024 was $116 million, compared to $124 million for the six months ended June 30, 2023, a decrease of $8 million, or 6%. The year-over-year decreases were primarily due to a lower depreciable base of assets resulting from business disposals and a lower dollar value of assets placed in service during the past few years.
Current wording
Depreciation for both the three months ended September 30, 2024 and 2023 was $60 million. Depreciation for the nine months ended September 30, 2024 was $176 million, compared to $184 million for the nine months ended September 30, 2023, a decrease of $8 million, or 4%. The year-over-year decrease was primarily due to a lower depreciable base of assets resulting from business disposals and a lower dollar value of assets placed in service during the past few years.
Previous wording
Amortization for the three months ended June 30, 2024 was $60 million, compared to $70 million for the three months ended June 30, 2023, a decrease of $10 million, or 14%. Amortization for the six months ended June 30, 2024 was $120 million, compared to $141 million for the six months ended June 30, 2023, a decrease of $21 million, or 15%. Our intangible amortization is generally more weighted to the initial years of the useful lives of the related intangibles, and therefore amortization related to intangible assets has decreased and will continue to decrease over time.
Current wording
Amortization for the three months ended September 30, 2024 was $56 million, compared to $62 million for the three months ended September 30, 2023, a decrease of $6 million, or 10%. Amortization for the nine months ended September 30, 2024 was $176 million, compared to $203 million for the nine months ended September 30, 2023, a decrease of $27 million, or 13%. Our intangible amortization is generally more weighted to the initial years of the useful lives of the related intangibles, and therefore amortization related to intangible assets has decreased and will continue to decrease over time.
Previous wording
Restructuring costs for the three months ended June 30, 2024 were $3 million, compared to $10 million for the three months ended June 30, 2023. Restructuring costs for the six months ended June 30, 2024 were $21 million, compared to $13 million for the six months ended June 30, 2023. Restructuring costs in both the current-year and prior-year periods primarily related to the real estate rationalization component of the Transformation program commenced by the Company during the fourth quarter of 2021 (see ‘Transformation Program’ within this Part I, Item 2 and Note 6 — Restructuring Costs within Part I, Item 1 ‘Financial Statements’ of this Quarterly Report on Form 10-Q).
Current wording
Restructuring costs for the three months ended September 30, 2024 were $8 million, compared to $17 million for the three months ended September 30, 2023. Restructuring costs for the nine months ended September 30, 2024 were $29 million, compared to $30 million for the nine months ended September 30, 2023. Restructuring costs in both the current-year and prior-year periods primarily related to the real estate rationalization component of the Transformation program commenced by the Company during the fourth quarter of 2021 (see ‘Transformation Program’ within this Part I, Item 2 and Note 6 — Restructuring Costs within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q).
Previous wording
Transaction and transformation for the three months ended June 30, 2024 were $97 million, compared to $93 million for the three months ended June 30, 2023, an increase of $4 million. Transaction and transformation for the six months ended June 30, 2024 were $222 million, compared to $152 million for the six months ended June 30, 2023, an increase of $70 million. Transaction and transformation costs for the current year were higher primarily due to increased consulting and compensation costs related to our Transformation program (see ‘Transformation Program’ within this Part I, Item 2) incurred in the current-year periods as compared to the prior-year comparable periods.
Current wording
Transaction and transformation costs for the three months ended September 30, 2024 were $74 million, compared to $113 million for the three months ended September 30, 2023, a decrease of $39 million. Transaction and transformation costs for the nine months ended September 30, 2024 were $296 million, compared to $265 million for the nine months ended September 30, 2023, an increase of $31 million. Transaction and transformation costs for the current year-to-date period were higher primarily due to increased compensation and consulting costs related to our Transformation program (see ‘Transformation Program’ within this Part I, Item 2) incurred in the current year as compared to the prior-year comparable period.
Previous wording
Income from operations for the three months ended June 30, 2024 was $212 million, compared to $142 million for the three months ended June 30, 2023, an increase of $70 million. This increase resulted primarily from higher revenue, partially offset by higher incentive costs and salary expense in the current-year period.
Current wording
Loss from operations for the nine months ended September 30, 2024 was $274 million, compared to income from operations of $586 million for the nine months ended September 30, 2023, a decrease of $860 million. This decrease resulted from the impairment expense associated with the pending sale of our TRANZACT business, higher salary expense and increased incentive and benefit costs in the current year, partially offset by higher revenue in the current year.
Previous wording
Interest expense for the three months ended June 30, 2024 was $68 million, compared to $57 million for the three months ended June 30, 2023, an increase of $11 million, or 19%. Interest expense for the six months ended June 30, 2024 was $132 million as compared to $111 million for the six months ended June 30, 2023, an increase of $21 million, or 19%. These increases were primarily the result of a greater level of indebtedness in the current year and the higher interest rate-bearing senior notes issued by the Company during the last two years.
Current wording
Interest expense for the three months ended September 30, 2024 was $65 million, compared to $61 million for the three months ended September 30, 2023, an increase of $4 million, or 7%. Interest expense for the nine months ended September 30, 2024 was $197 million as compared to $172 million for the nine months ended September 30, 2023, an increase of $25 million, or 15%. These increases were the result of a greater level of indebtedness in the current year and the higher interest rate-bearing senior notes issued by the Company during the last two years.
Previous wording
Provision for income taxes for the three months ended June 30, 2024 was $26 million, compared to $24 million for the three months ended June 30, 2023, an increase of $2 million. The effective tax rates were 15.6% for the three months ended June 30, 2024 and 19.8% for the three months ended June 30, 2023. Provision for income taxes for both the six months ended June 30, 2024 and 2023 was $74 million. The effective tax rates were 18.1% for the six months ended June 30, 2024 and 19.6% for the six months ended June 30, 2023. These effective tax rates are calculated using extended values from our condensed consolidated statements of comprehensive income and are therefore more precise tax rates than can be calculated from rounded values. The current-year periods’
Current wording
Benefit from/(provision for) income taxes for the three months ended September 30, 2024 was a benefit of $322 million, compared to a provision of $25 million for the three months ended September 30, 2023, a decrease of $347 million. The effective tax rates were 16.1% for the three months ended September 30, 2024 and 15.5% for the three months ended September 30, 2023. Benefit from/(provision for) income taxes for the nine months ended September 30, 2024 was a benefit of $248 million, compared to a provision of $99 million for the nine months ended September 30, 2023. The effective tax rates were 15.6% for the nine months ended September 30, 2024 and 18.3% for the nine months ended September 30, 2023. These effective tax rates are calculated using extended values from our condensed consolidated statements of comprehensive income and are therefore more precise tax rates than can be calculated from rounded values. The prior-year effective tax rate for the three months ended September 30, 2023 was lower due to the tax-exempt gain on a business disposal. The current-year effective tax rate for the nine months ended September 30, 2024 was lower due to deferred tax benefits recognized on the gross-up to carrying value of net assets to be disposed and a deferred tax benefit of $56 million, net of a $37 million valuation allowance, on the expected tax loss on disposal of TRANZACT (see Note 3 – Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q). The Company records valuation allowances against net deferred tax assets based on whether it is more likely than not that the deferred tax assets will be realized. During the three months ended September 30, 2024 the Company recorded a $37 million valuation allowance related to unrealized capital losses that are not more-likely-than-not to be realized.
Previous wording
Based on our current balance sheet and cash flows, current market conditions and information available to us at this time, we believe that WTW has access to sufficient liquidity, which includes all of the borrowing capacity available to draw against our $1.5 billion revolving credit facility, to meet our cash needs for the next twelve months, including investments in the business for growth and those related to our Transformation program, scheduled debt repayments, share repurchases and dividend payments. During the first quarter of 2024, we completed an offering of $750 million aggregate principal amount of 5.900% senior notes due 2054 and used the net proceeds during the current quarter to repay in full the $650 million aggregate principal amount and related accrued interest of the 3.600% senior notes. The Company will use the remaining net proceeds for general corporate purposes. Additionally, during the six months ended June 30, 2024, we repurchased $301 million of shares, and have authorization to repurchase an additional $1.0 billion.
Current wording
Based on our current balance sheet and cash flows, current market conditions and information available to us at this time, we believe that WTW has access to sufficient liquidity, which includes all of the borrowing capacity available to draw against our $1.5 billion revolving credit facility, to meet our cash needs for the next twelve months, including investments in the business for growth and those related to our Transformation program, scheduled debt repayments, share repurchases and dividend payments. During the first quarter of 2024, we completed an offering of $750 million aggregate principal amount of 5.900% senior notes due 2054 and used the net proceeds during the second quarter to repay in full the $650 million aggregate principal amount and related accrued interest of the 3.600% senior notes. The Company is using the remaining net proceeds for general corporate purposes. Additionally, during the nine months ended September 30, 2024, we repurchased $506 million of shares and have authorization to repurchase an additional $837 million.
Previous wording
Events that could change the historical cash flow dynamics discussed above include significant changes in operating results, potential future acquisitions or divestitures, material changes in geographic sources of cash, unexpected adverse impacts from litigation or regulatory matters, or future pension funding during periods of severe downturn in the capital markets.
Current wording
Events that could change the historical cash flow dynamics discussed above include significant changes in operating results, the receipt of significant earnout payments related to past divestitures, potential future acquisitions or divestitures, material changes in geographic sources of cash, unexpected adverse impacts from litigation or regulatory matters, or future pension funding during periods of severe downturn in the capital markets.
Previous wording
Our cash and cash equivalents at June 30, 2024 totaled $1.2 billion, compared to $1.4 billion at December 31, 2023. The decrease in cash from December 31, 2023 to June 30, 2024 was due primarily to $301 million of share repurchases, $176 million of dividend payments and $158 million of cash outflows attributable to investing activities, partially offset by $431 million of cash inflows from operating activities and $85 million of net proceeds from the issuance of debt.
Current wording
Our cash and cash equivalents at September 30, 2024 and December 31, 2023 totaled $1.4 billion. The decrease of $52 million in cash from December 31, 2023 to September 30, 2024 was due primarily to $506 million of share repurchases, $265 million of dividend payments and $230 million of cash outflows attributable to investing activities, partially offset by $913 million of cash inflows from operating activities.
Previous wording
Included within cash and cash equivalents at June 30, 2024 and December 31, 2023 are amounts held for regulatory capital adequacy requirements, including $96 million and $105 million, respectively, within our regulated U.K. entities.
Current wording
Included within cash and cash equivalents at September 30, 2024 and December 31, 2023 are amounts held for regulatory capital adequacy requirements, including $108 million and $105 million, respectively, within our regulated U.K. entities.
Previous wording
The following table presents the summarized condensed consolidated cash flow information for the six months ended June 30, 2024 and 2023:
Current wording
The following table presents the summarized condensed consolidated cash flow information for the nine months ended September 30, 2024 and 2023:
Previous wording
The amounts of cash, cash equivalents and restricted cash, their respective classification on the condensed consolidated balance sheets, as well as their respective portions of the increase or decrease in cash, cash equivalents and restricted cash for each of the periods presented, have been included in Note 19—Supplemental Disclosures of Cash Flow Information within Part I, Item I ‘Financial Statements’ within this Quarterly Report on Form 10-Q.
Current wording
The amounts of cash, cash equivalents and restricted cash, their respective classification on the condensed consolidated balance sheets, as well as their respective portions of the increase or decrease in cash, cash equivalents and restricted cash for each of the periods presented, have been included in Note 19—Supplemental Disclosures of Cash Flow Information within Part I, Item I ‘Financial Statements’ in this Quarterly Report on Form 10-Q.
Previous wording
Cash flows from operating activities were $431 million for the six months ended June 30, 2024, compared to $430 million for the six months ended June 30, 2023. The $431 million of net cash from operating activities for the six months ended June 30, 2024 included net income of $336 million and $335 million of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $240 million. This increase in cash flows from operations as compared to the prior year was primarily driven by operation margin expansion, partially offset by increased cash outflows related to the Transformation program and discretionary compensation payments in the current year as compared to the prior year.
Current wording
Cash flows from operating activities were $913 million for the nine months ended September 30, 2024, compared to $823 million for the nine months ended September 30, 2023. The $913 million of net cash from operating activities for the nine months ended September 30, 2024 included $2.4 billion of favorable non-cash adjustments, partially offset by a net loss of $1.3 billion and unfavorable changes in operating assets and liabilities of $139 million. This increase in cash flows from operations as compared to the prior year was primarily driven by operating margin expansion, partially offset by increased cash outflows related to the Transformation program and discretionary compensation payments in the current year as compared to the prior year.
Previous wording
The $430 million of net cash from operating activities for the six months ended June 30, 2023 included net income of $302 million and $365 million of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $237 million.
Current wording
The $823 million of net cash from operating activities for the nine months ended September 30, 2023 included net income of $441 million and $484 million of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $102 million.
Previous wording
Cash flows used in investing activities for the six months ended June 30, 2024 were $158 million as compared $1.0 billion for the six months ended June 30, 2023. The cash flows used in investing activities in the current year consisted primarily of capital expenditures and capitalized software additions.
Current wording
Cash flows used in investing activities for the nine months ended September 30, 2024 were $230 million as compared $1.0 billion for the nine months ended September 30, 2023. The cash flows used in investing activities in the current year consisted primarily of capital expenditures and capitalized software additions.
Previous wording
The cash flows used in investing activities for the six months ended June 30, 2023 consisted primarily of cash and fiduciary funds of $916 million associated with the transfer to Gallagher under a side letter agreement to the Willis Re SAPA (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q for additional information) and $121 million of capital expenditures and capitalized software additions.
Current wording
The cash flows used in investing activities for the nine months ended September 30, 2023 consisted primarily of cash and fiduciary funds of $922 million associated with the transfer to Gallagher under a side letter agreement to the Willis Re SAPA (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Quarterly Report on Form 10-Q for additional information) and $182 million of capital expenditures and capitalized software additions.
Previous wording
Cash flows from financing activities for the six months ended June 30, 2024 were $364 million. The significant financing activities included net proceeds from fiduciary funds held for clients of $783 million and $85 million of net proceeds from the issuance of debt, partially offset by share repurchases of $301 million and dividend payments of $176 million.
Current wording
Cash flows from financing activities for the nine months ended September 30, 2024 were $205 million. The significant financing activities included net proceeds from fiduciary funds held for clients of $934 million and $84 million of net proceeds from the issuance of debt, partially offset by share repurchases of $506 million and dividend payments of $265 million.
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Current report — wording carried from elsewhere
Interest income did not contribute to organic change for the three and nine months ended September 30, 2024.