Willis Towers Watson Public Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
July 31, 2025

Key Takeaways

  • Positive Sentiment: We delivered 5% organic revenue growth, expanded adjusted operating margin by 150 bps to 18.5%, and reported adjusted EPS of $2.86, a 20% year-over-year increase.
  • Positive Sentiment: Health, Wealth & Career delivered 4% organic growth overall—led by an 8% increase in health—and reiterated mid-single-digit revenue growth and margin-expansion targets, fueled by recurring services and cost-management demand.
  • Positive Sentiment: Risk & Broking marked its 10th consecutive quarter of high-single-digit growth ex-book of business and affirmed mid- to high-single-digit organic growth and 100 bps annual margin-expansion targets.
  • Neutral Sentiment: Investments in technology and AI, including the global broking platform and WeDo tools, are streamlining workflows and have reduced routine effort by up to 75%, with further efficiencies planned.
  • Positive Sentiment: Management reaffirmed full-year targets for mid-single-digit organic growth, margin expansion, and EPS growth while allocating $1.5 billion to share repurchases and pursuing disciplined bolt-on M&A.
AI Generated. May Contain Errors.
Earnings Conference Call
Willis Towers Watson Public Q2 2025
00:00 / 00:00

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Operator

Good morning, and welcome to the WTW Second Quarter twenty twenty five Earnings Conference Call. Please refer to wtwcov.com for the press release and supplemental information that were issued earlier today. Today's call is being recorded and will be available for the next three months on WTW's website. Some of the comments in today's call may constitute forward looking statements within the meaning of the Private Securities Reform Act of 1995. These forward looking statements are subject to risks and uncertainties.

Operator

Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law. For a more detailed discussion of these and other risk factors, investors should review the forward looking statements section of the earnings press release issued this morning as well as in the most recent Form 10 ks and other subsequent WTW SEC filings. During the call, certain non GAAP financial measures may be discussed. To provide direct comparability with prior periods, all commentary regarding the company's revenue growth results will be on a non GAAP organic basis unless specifically stated otherwise. For reconciliations of the non GAAP measures as well as other information regarding these measures, please refer to the most recent earnings release and other materials in the Investor Relations section of the company's website.

Operator

I'll now turn the call over to Carl Hess, WTW's Chief Executive Officer. Please go ahead.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Good morning, everyone. Thank you for joining us for WTW's second quarter twenty twenty five earnings call. Joining me today is Andrew Krasner, our Chief Financial Officer. Julie Gebauer, our President of Health, Wealth and Career and Lucy Clark, our President of Risk and Broking are also joining us for our Q and A session. In the second quarter, we delivered 5% organic growth, 150 basis points of adjusted operating margin expansion and adjusted EPS of $2.86 up roughly 20% year over year.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Through focused execution, these results were in line with our expectations for the quarter and we remain on track to deliver on our full year financial objectives. Our solid first half results underscore the progress we have made advancing the strategic objectives we introduced at our Investor Day last December. Our strategy to accelerate performance, enhance efficiency and optimize our portfolio continues to be a key driver of our results, especially in the face of a dynamic macroeconomic environment. We remain committed to our strategy and its execution, and we are confident in the value it will continue to generate. I want to sincerely thank all WTW colleagues for their commitment in executing these objectives.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Last quarter, we highlighted the impact of heightened geopolitical and macroeconomic uncertainty in our business, noting near term headwinds in some of our consulting businesses, especially for discretionary projects, as well as potential longer term tailwinds when conditions improve and clients begin responding more assertively to change. There were positive signs of improvement as the quarter went on, as capital markets rebounded and our businesses adapted to changes in demand and buyer sentiment. Clients are increasingly turning to us to help address the many people, risk, and capital issues they're facing amidst rising global trade, inflation, and geopolitical uncertainty. We feel positive about both our outlook and our ability to deliver for the second half of the year. In health, wealth and career, our strong mix of recurring revenue that supports required activities and our geographical diversification continue to provide a stable foundation for growth and for margin expansion.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

In the current environment, there continues to be significant demand for solutions focused on managing health care costs, derisking pension obligations, and core pay benchmarking work. And as we see consumer and corporate confidence begin to improve, we're also seeing increased demand for broad based compensation design, benefits governance reviews, and merger integration support. In risk and broking, the pace of innovation and continued challenges in global trade and inflationary and geopolitical issues are elevating both business opportunities and risk. This is demonstrated in CRB's top line performance. Q2 marks the tenth consecutive quarter where our corporate risk and broking business recorded high single digit growth when excluding the impact of both gain on sale activity and interest income.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Our strength in specialty and the relentless focus of our team are clearly resonating with the market and clients. I remain confident in the growth trajectory and resilience of our business amidst economic uncertainty, thanks to our proven ability to help our clients thrive in challenging circumstances time and time again. In addition, our consistent strategy execution is yielding clear benefits. The company's taken a holistic and intentional approach to technology and its role in accelerating growth and enhancing efficiency. There's observable progress in many client centric and digital efforts, such as the global broking platform, AI tools supporting digital interaction, and solutions that streamline data ingestion and further automate workflows, which allow our colleagues to further differentiate WTW in the market and win new work.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Our rollout of the global broking platform has demonstrated the power of seamlessly connecting brokers with the markets. The adoption of our broking platform is progressing on schedule, and it has and will continue to streamline service delivery and efficiency. We're also seeing early results in AI. Through the WTW Enterprise Delivery Organization or WeDo, we are raising AI literacy and fostering adoption throughout the company. We have several AI augmented tools that are making measurable differences for both clients and colleagues.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

AI powered solutions are enhancing real time analytics and reducing manual effort by streamlining data ingestion, analysis, and workflows. In some instances, we've seen a 75 reduction in routine work and processing time. In other areas, AI infused voice bots, chat bots, and guided digital experiences are enhancing the client experience and satisfaction. We remain committed to harnessing the potential of our investments by balancing bold innovations with sustainable returns. The benefits we're seeing across the enterprise are measurable, and we intend to maintain pace and uphold rigor in ensuring these investments deliver net positive outcomes for our clients, our colleagues, and ultimately our shareholders.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

I'm looking forward to sharing more about our progress and the long term potential benefits to both growth and margins. This quarter, we continue to record strong new business wins with specialty, technology and global collaboration consistently being why we win in the market. In health, wealth and career, our innovative products and solutions, together with our focus on making smart connections, continue to drive growth across all our businesses. For example, in Europe, a large global shipping and logistics company chose WTW's global benefits management program for its 70,000 employees around the world. Key to delivering this win were our deep expertise and strong reputation in global benefits management alongside innovative tools and technology.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

In the wealth space, our innovative life site platform in The UK was selected by a prominent medical association as its new master trust pension provider. WTW won the business from one of our main competitors due to the deep technical knowledge and clear articulation of the value we provide coupled with our reputation for quality client service. In another great example, a major oil and gas company began using our career businesses' new AI driven automated job leveling tool to support regular restructuring across their business areas as they go through significant transformation and change. To quote them, we wouldn't have been able to evaluate 300 roles in three days without this tool. It was business critical to complete this work with speed and confidence while going through their transformation.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

In risk and broking, we continue to benefit from our specialization strategy and our ability to deliver differentiated value through technical expertise, global collaboration, and client centric solutions. For example, after obtaining our license to act as an insurance broker in Saudi Arabia, we successfully placed property damage and comprehensive general liability insurance for one of the world's largest chemical manufacturers. Our team's deep knowledge of the industry and our ability to tailor technical solutions to this client's needs were key to winning this mandate. We look forward to the opportunities for growth in The Middle East, which remains a key market for WTW. Our ability to provide tailored, specialized solutions continues to resonate with clients and transform businesses, and it's positioning WTW to capture market share in high growth industry sectors to fuel our own expansion.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

For instance, our construction specialty business is seeing strong results from sizable construction placements for data centers, an industry sector forecasted to experience significant global growth. Our specialty model and our depth of expertise allows us to add value throughout the data center life cycle from land identification through funding and construction, powering the facility, and into operational management or divestment. In addition, our construction and natural resources teams are working together to support clients on clean energy technologies during the construction and operational stages. We expect exponential growth with rising global demand in this area. And these are two great examples in our CRB business of how our highly agile specialty business model, coupled with our expertise, allows us to spot opportunities and plan for rapid growth.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Furthermore, our cutting edge technology and analytics have proven to help clients transform their businesses. Recently, a large UK health insurer decided to engage our insurance consulting and technology business to lead their pricing transformation initiative using Radar Vision. Radar Vision is an AI driven modeling tool for insurer clients, and it generates early actionable insights related to inflation, markets, competitors, and customer behaviors to help insurers manage pricing, underwriting, and claims. The implementation of RADAR vision helped our clients sustain a competitive advantage in a rapidly evolving market, while also reinforcing WTW's reputation as a trusted partner in pricing transformation and analytics innovation. Lastly, I wanna reinforce our commitment and disciplined approach to optimizing our portfolio.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

I've highlighted some of the success of our organic investments, but our inorganic growth strategy remains consistent with our prior comments, and we're deliberately patient and focused on first, enhancing our broking and wealth presence in key markets, while strengthening our offerings in high growth, high margin areas of our core business. Second, expanding our reach across the insurance value chain to further accelerate our growth while filling gaps in our capabilities and footprint. And third, finding businesses that are good strategic fits that help us enhance our margin and free cash flow profile. We're pleased to have announced an investment in The United Arab Emirates along with plans for Alphatim Willis to become a wholly owned WTW business. This acquisition further enhances our value proposition and client experience delivered to global and local clients, and it directly complements our recent investments in Saudi Arabia by strengthening our presence in The Middle East.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

We're looking forward to continuing to work with our partners Al Futame and The UAE to build on our years of success together. Looking ahead, we will look for ways to continue to balance our capital management strategy. We'll be intentional in delivering long term operating and free cash flow margin expansion, which will ultimately create long term value for our shareholders. In summary, results this quarter were solid as we delivered organic revenue growth that contributed to meaningful margin expansion across both segments. We look forward to building on these results in the second half of the year, and we remain confident in our ability to deliver on our 2025 guidance, including mid single digit organic growth, adjusted operating margin expansion, adjusted EPS growth and ongoing improvement in free cash flow margin.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

And with that, I'll turn the call over to Andrew.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

Thanks, Carl. Good morning and thanks everyone for joining us today. In the second quarter, we delivered solid organic revenue growth of 5% and expanded adjusted operating margin by 150 basis points year over year to 18.5 or 100 basis points of year over year improvement when excluding the tailwind from the divestiture of TRANZACT. Adjusted diluted earnings per share were $2.86 which is an increase of approximately 20% over the prior year. As a reminder, we completed the divestiture of TRANZACT on 12/31/2024 and for the full year 2025, this will create a $1.14 headwind to adjusted diluted earnings per share.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

As Carl discussed, our solid second quarter results reflect the strong foundation we've built and the benefits of the investments in talent and technology we've made recently. Our strategy continues to resonate with clients and colleagues and our businesses are highly resilient despite the uncertain operating environment. We are relentlessly focused on our strategic objectives, long term shareholder value creation and the financial framework outlined at Investor Day. Turning to our segment results, Health, Wealth and Career revenue grew 4% compared to the second quarter of last year. We saw a sequential improvement in growth and a strengthening pipeline during the quarter, although clients remain cautious about the macro environment.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

4% growth for the second quarter is in line with our expectations and we remain on track to deliver mid single digit growth and margin expansion for HWC in 2025. As a reminder, the vast majority of HWC's business is recurring with only a small portion being more economically sensitive and discretionary. Our health business achieved strong growth of 8% this quarter or 9% growth, excluding the impact of interest income and gain on sale activity. All regions saw robust growth driven by double digit increases outside of North America and solid performance in North America. Strong new business and focus on client retention remain key drivers of growth coupled with the ongoing appeal of our global benefits management solution.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

In North America, focused sales efforts and mid market growth led to an increase in commissions, while consulting projects increased with greater demand for cost management and legislative change projects. Looking ahead, we anticipate demand to remain strong for the health business driven by healthcare inflation and employers ongoing need to manage cost while providing a competitive employee value proposition. We also successfully introduced our enhanced mid market solution in North America and launched new panels and facilities. Overall, we've established a healthy pipeline for the second half of the year. Excluding the impact of interest income and gain on sale activity, Health grew 8% in the first half and we continue to expect high single digit growth for the full year 2025.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

Wealth had revenue growth of 3% in the second quarter, primarily driven by the retirement business, which delivered growth across all geographies and solutions. Our core defined benefits consulting offerings remained resilient and we saw growth in project work to support legislative changes, pension risk transfers and workforce actions. In addition, we continue to expand our client base for our LifeSite Master Trust and insured solutions. Our investments business saw low single digit growth with new products and client wins offset by capital market volatility, the latter of which improved as the quarter progressed. This was a headwind we pointed out last quarter and expected it to impact investments results in the second quarter.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

We continue to expect low single digit growth in the wealth business for the year. Career growth was 1% in the second quarter with solid growth outside of North America driven by healthy demand for pay transparency support, compensation design and employee communication projects and a net positive increase in compensation committee employment. As we communicated in the first quarter, advisory growth in North America was expected to be tempered by delays in certain discretionary projects. While lingering macroeconomic uncertainty may continue to impact some of our clients' decision making, we expect revenue growth to increase in the second half due to the seasonality of compensation benchmarking surveys and increased support required to prepare for the EU pay transparency directive that goes into effect in mid twenty twenty six. Discretionary advisory project work only comprises about one third of our career business or less than 5% of the HWC segment.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

As we previously communicated, we expect career to grow low to mid single digits in 2025. We continue to expect mid single digit growth in the long term based on our past and continued focus on product and technology offerings and recurring services. Benefits Delivery and Outsourcing or BD and O was flat versus last year's second quarter when we delivered 7% growth excluding TRANZACT. BD and O revenue benefited from growth in outsourcing due to increased projects and core administration work in Europe, which was offset by lower commission revenue in the individual marketplace business. It is important to remember that even following the sale of TRANZACT, BD and O maintains a B2B2C Medicare business and still generates nearly half of its revenue in the fourth quarter.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

The seasonality of this business is driven by the timing of the Medicare enrollment period and new business generation, which is even more acute within individual marketplace where the fourth quarter is about 80% of its annual revenues. Accordingly, we forecast BD and O growth to be stronger in the second half of the year, especially with the expected timing of commissions, new client implementations and new projects to support regulatory changes. We continue to expect BD and O to grow at mid single digits for the year. HWC's operating margin in the second quarter was 23.8%, an increase of 190 basis points compared to the prior year or an increase of 20 basis points excluding the impact of the TRANZACT divestiture. This demonstrates our ability to consistently deliver incremental margin expansion in cyclical macro conditions and adds to our strong track record of margin expansion in HWC.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

Let me move on to risk and broking, which delivered another strong quarter with revenue growth of 6% underscoring the continued momentum in the business. Our specialization strategy and our investments in talent, data and technology continue to pay dividends. Corporate risk and broking delivered another strong quarter growing 6% or 7% when excluding both book of business activity and fiduciary interest income. Notably, this is on top of 11% achieved in the prior year. And as Carl mentioned, this is the tenth consecutive quarter in a row of high single digit growth when excluding book of business activity and fiduciary interest income.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

CRB's growth was broad based across all regions, driven by sustained client retention in the mid-90s and strong business generation around the world. Importantly, we expanded our market presence with meaningful client wins in The Middle East, some of which Karl already highlighted. Our global specialization strategy remains a key growth driver for CRB. Our investments are yielding value as demonstrated by its growth continuing to outpace the rest of the segment. Globally, our construction, facultative, surety and natural resource specialty lines continue to deliver strong performance and were meaningful contributors to CRV's 6% growth this quarter and 7% growth in the first half of this year.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

Our recent investment in credit risk solutions, both organically and inorganically, is also helping to accelerate performance. From a geographic perspective, our Global Specialty business had double digit growth in all of our geographies underpinned by strong client retention and new business generation. We are excited by the results we are seeing from our specialization investments and we expect mid to high single digit growth to continue in CRB for 2025. In our insurance consulting and technology business, revenue was flat versus the same quarter last year. Our pipeline is strong for the second half of the year, especially on the technology sales side, but we observed a weaker consulting environment during the quarter as well as a more conservative buying behavior for large multi year technology implementations.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

Consulting offer services such as reserve calculations, financial and capital modeling and discretionary projects like transaction services for insurers. Whereas technology offers software products that support advanced analytics for claims underwriting rate, making and reserving for insurance clients with large multi year contracts that tend to have longer sales cycles. We have been making a focused effort to bring the combined proposition of consulting and technology closer together to create more value for clients and to drive growth. For the full year, we are now expecting low single to mid single digit growth in ICT. Turning back to R and B segment results overall, we are pleased with R and B's momentum year to date, which gives us confidence in our ability to deliver mid to high single digit growth for the full year.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

R and B's operating margin was 21.2% for the second quarter, a 60 basis point improvement over the prior year or 100 basis points improvement when excluding the impact of foreign exchange. This was primarily driven by operating leverage from strong organic revenue growth performance coupled with continued expense discipline as well as benefits from prior year transformation savings. Foreign exchange was a headwind of 40 basis points to RMB's operating margin this second quarter due to the weakening U. S. Dollar, but we expect the full year foreign exchange impact to be more modest.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

We achieved 90 basis points of adjusted operating margin improvement in RMB so far this year, and we are committed to delivering 100 basis points of average annual adjusted operating margin expansion over the next three years. The strategic investments we made in our global booking platform, our global placement strategy, as well as our digital automation and workflow optimization are strong foundations for additional operating leverage and efficiencies, and we will see these investments continue to deliver benefits for years to come. Finally, I will give some additional color on our enterprise level results. Adjusted operating margin for the second quarter was 18.5%, a 150 basis point improvement over the prior year, primarily driven by the strong margin expansion in the segments and prudent business expense management. The adjusted operating margin includes a 50 basis point tailwind from the TRANZACT divestiture for the quarter.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

As we enter the 2025, all of our businesses are operating with discipline and rigor, which gives us confidence in our ability to continue to expand margins. Foreign currency was neutral on adjusted EPS for the quarter and a negative $09 impact for the 2025. U. S. Dollar has been weakening during the quarter, so I want to give you some additional color on foreign exchange.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

At the current spot rates, we expect an approximately $05 tailwind to adjusted EPS for the full year, though the impact may fluctuate quarter to quarter. Our U. S. GAAP tax rate for the quarter was negative 6.8 versus 15.6% in the prior year. Our adjusted tax rate for the quarter was 18% compared to 22.4% for the 2024.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

We expect our full year 2025 tax rate to be relatively consistent with the prior year rate. We generated free cash flow of $217,000,000 for the first six months ending 06/30/2025, a decrease of $88,000,000 from the prior year. This was driven by increased incentive costs, the redesign of one of our ongoing retirement programs, higher cash tax payments and the absence of transact cash inflows, which were partially offset by reduced transformation program cash costs and operational improvements. Looking at the back half of the year, remaining transformation costs will reduce further and the divestiture of TRANZACT will become a tailwind to free cash flow as we lap the quarters in which that business recorded net cash outflows. Additionally, we received the Willis Re earn out payment in April, and we do not anticipate any material cash tax payment on it in 2025 or beyond.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

We remain on track to deliver on our free cash flow objective of annual margin expansion and our outlook remains largely unchanged. During the quarter, we returned $591,000,000 to our shareholders via share repurchases of $500,000,000 and dividends of $91,000,000 We view share repurchases as one of the primary methods of capital return and an attractive use of capital to efficiently deliver value to shareholders and therefore is a central component of our capital allocation strategy. We continue to expect share repurchases to total approximately $1,500,000,000 in 2025, subject to market conditions and potential capital allocation to inorganic investment opportunities. As we've mentioned, we are taking a more balanced disciplined approach to capital allocation to generate long term shareholder value. We'll continue to be selective as we invest in talent and in our platform to ensure we're driving sustainable growth and margin expansion.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

In closing, we are pleased by our business performance in the 2025. We are increasingly seeing the execution of our strategy manifest in our results, giving us confidence in delivering on our 2025 financial objectives and beyond. With that, let's open it up for Q and A.

Operator

Our first question comes from Rob Cox with Goldman Sachs. Your line is open.

Robert Cox
Robert Cox
VP - Equity Research at Goldman Sachs

Hey, thanks. Good morning. So I wanted to ask about HWC organic. I think you mentioned there's more positive signs of improvement as the quarter went on and there was guidance for acceleration in a couple of the businesses there. So net net are you thinking about HWC growth accelerating a bit from here and can you talk about the drivers?

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Thanks Rob for the question and good morning. So HWC grew second quarter last year. That was in line with our expectations. We're seeing demand remain strong for our global benefits management, for pensions, for outsourcing, where we won many notable new appointments that I've mentioned earlier. We feel confident morning. In our pipeline, and we continue to expect that HWC is gonna have mid single digit organic revenue growth and margin expansion for the full year.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

And it's Andrew. I can, briefly touch on HWC's growth and and then would want Julie to comment on what she's seeing. As it relates to health, this continues to be a key strategic focus area for us. We're capturing market share and seeing strong growth play out as Julie's highlighted in the past. Health saw organic growth of 8% in Q2, or that would have been 9% excluding interest income and gain on sale activity.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

And notably, we delivered 8% in the first half of the year with strong growth across all of our regions. So we're on pace for high single digits this year. We're also seeing strong demand for wealth, which generated 3% organic growth from strong growth in the retirement business, specifically for our life site solutions and our pension advisory and brokerage services. So we continue to see strong growth trajectory for our investment business as well. And putting those things together, we think of these as long term accelerators of growth, and we continue to expect low single digits there for 2025.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

We continue to be confident about our pipeline in HWC and would expect this segment to maintain mid single digit revenue growth and margin expansion in 2025 and over the longer term. Maybe Julie, you want to comment about what you're seeing in HWC?

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

Sure, Andrew. I'd actually like to start with an overview across HWC, and that is that clients are carrying on with their recurring and required work, and that is most of what we do. Clients are also starting up new project work. It's typically related to managing cost and risk, and it includes support for corporate transactions plus some work on specific employee attraction and retention issues Now there are puts and takes across our businesses, so I'd like to go into more detail for each business area.

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

Starting with health. It is worth noting that this is the fifth quarter in a row where our growth has been either at the upper bound of mid single digits or at high single digits, or actually even more. And we expect that to continue at least for the rest of 2025. And that's because health care inflation hasn't abated. In The US, our latest estimates are for increases of 10% or more, and that's due to several things, like prescription drug costs are increasing significantly, and there are more high cost claims.

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

On that latter point, we had one client recently tell me that a patient had a $3,500,000 claim for gene therapy. Clients are facing similar challenges around the world. And so of course, they're responding. They're doing things like taking their health plans out for competitive bids. They're evaluating specialty solutions and also considering more significant design changes.

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

And these are all things that we can help with. So we've got a strong pipeline, and we're confident in delivering high single digit growth for the year. Now in wealth, beyond the core work that Andrew mentioned, clients are focusing on using pension surplus. They're focused on de risking, and they're focused on adapting to new legislation. Andrew also mentioned LifeSite.

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

We're live in 12 countries with this solution now, and we're implementing more clients. So all of this supports our outlook for low single digit growth for the year. For Career, we generated growth again this quarter, even with the challenging macro environment. And that's because most of our work is from recurring projects like compensation committee appointments or products like our Embark portal. And on the advisory side, even with some project delays, there are some strong areas, like Karl mentioned, pay transparency and incentive design.

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

Our sales pipeline in these areas for the rest of the year is healthy and is growing. I also just wanted to highlight that our compensation survey participation, which is a lead indicator of sales later in the year, is up again over last year. So our outlook for the year is for growth, and that's in the range of low single digit to mid single digit revenue growth for the year. Now finally in BDO, I want to highlight that a third of our revenues come from our individual Marketplace. That's our Medicare Exchange.

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

The other two thirds is outsourcing. I want to focus on the individual Marketplace business because we generate 80% of our revenue in this business in the fourth quarter. And we expect growth in that because we've added clients. We also expect to see increases in commissions because we think more retirees will review and switch their coverage. And as a result, we expect mid single digit growth this year across BD and O.

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

So Rob, those are the puts and takes. We think the areas of strength like health are expected to more than offset any short term headwinds or discretionary advisory work in 2025. So HWC expectation is mid single digit revenue growth for 'twenty five and over the long term.

Robert Cox
Robert Cox
VP - Equity Research at Goldman Sachs

Awesome. Thank you so much for the answer. Moving on to risk and broking, I think high single digits again, core organic growth there. Are we basically at steady state contributions from the talent investments at this point? And is growth does that make growth really a function of the core specialization strategy?

Robert Cox
Robert Cox
VP - Equity Research at Goldman Sachs

Or would you say there's still an extra lift relative to normal from the timing of talent investments?

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

So I mean, we're pretty pleased with the 6% growth we delivered in R and D. That was on top of a very 10% growth for the comparable quarter of the prior year. CRB delivered 6%, 7% excluding book of business sales and investment income. And that was on top of 11% comparable in the prior year. And we attributed this to our specialization strategy as we talked about our investments in talent, technology, innovation, new business wins and strong client retention continue to help move things forward.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

I mean, Lucy, any commentary on the growth and the talent perspective?

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

Yeah, sure. Thanks, Carl. Hey Rob, thanks for the question. Yeah, we're encouraged by the 6% organic growth in the quarter, 7% in CRB ex book of business sales and investment income. And combined with the strong results from the first quarter, we think we're in a good position to meet our full year goals.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

So the growth's been driven by new business. It's been driven by client retention. The impact of the investments we've made in people, which you noted, and technology both paying off, as well as the specialty strategy. We don't see any end to the progress that we're going to make on the specialty strategy. We remain well equipped to support our clients as they manage the ongoing volatility from trade and geopolitical challenges.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

We're also continuing to expand our market presence, strong winds across the globe, including The Middle East. Karl highlighted that during his prepared remarks. As a result, we're confident of achieving mid to high single digit growth organic in R and B. Just for a few further specifics, the strong growth we have in our specialty businesses continues to outpace the rest of CRB growing at double digits for the quarter. It's important to remember that it's growing at that rate because the strategy resonates with clients.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

It works for them, and we believe that that helps with the competitive edge. So yeah, the approach is working. It's a key driver of growth in R and B, and we expect that to continue.

Operator

Thank you. Our next question comes from Charlie Letter with BMO. Your line is open.

Charlie Lederer
Charlie Lederer
Vice President - Equity Research at BMO Capital Markets

Hey, thanks. Good morning. Andrew, you made some comments about free cash flow. I'm wondering if you can unpack second quarter performance and how we should think about the magnitude of free cash flow margin improvement over the balance of the year. Any puts and takes you could quantify would be helpful.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

Yes, absolutely. So for the first half of the year, we generated free cash flow of $217,000,000 While that's $88,000,000 below the prior year, it primarily reflects the headwinds we called out in our prepared remarks. Specifically, that was the increased compensation and cash tax payments, the timing impact from the redesign of the key retirement program, and the absence of $63,000,000 of transact related cash inflows that benefited the first half of last year. Those more than offset the gains from the transformation initiatives and underlying margin expansion. But looking ahead, we see a more favorable setup in the second half.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

The key headwinds from the first half, namely the incentive comp and the retirement program redesign are now behind us. And we expect a meaningful tailwind in the '25 from the absence of both transformation program cash outflows and the TRANZACT business, which adversely impacted free cash flow results in the prior year. So here's how we think about sort of the full year view of free cash flow. So first, we had free cash flow of $217,000,000 through the first six months. Twenty twenty four second half normalized free cash flow, so excluding the headwinds from transformation and transact, was about $1,200,000,000 We expect improvement on that $1,200,000,000 driven by organic growth, higher margins, and working capital management.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

And lastly, we do not anticipate any additional cash tax payments on the Willis III earn out in 2025 or beyond. So putting all of that together, we remain confident in our ability to deliver free cash flow margin expansion in 2025, and we see additional opportunity to build on that momentum in the years beyond.

Charlie Lederer
Charlie Lederer
Vice President - Equity Research at BMO Capital Markets

Thanks. That's helpful. I know you just touched on the impact of investments in talent, but I just wanted to follow-up. It seems like we've been seeing headlines in the insurance media about heightened competition for insurance brokerage talent. I'm wondering if you guys would agree with that being a theme in today's marketplace and how you're feeling about it and any actions you're taking.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Thanks for the question. I'm not sure we see that as particularly a new thing. It's something we've been aware of and frankly capitalizing on for the past several years. Others may have woken up to talent being the key driver for this business. We believed in it for a long time.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

So we're staying focused on executing our strategy and making sure we have the right talent to play to support that. Currently our approach is more opportunistic and strategic aimed at enhancing our ability to achieve sustainable and profitable growth and create value. Lucy, you want to talk about we're expecting to see recent hires?

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

Yeah, sure. Thank you. Thanks, Charlie. As Carl mentioned, we have been complementing our existing talent by making strategic hires in the areas where we think they'll be most impactful within specialty or within geography in CRB since 2021. It was a deliberate systematic hiring strategy identified and executed by our existing talent and a key part actually of Grow, Simplify, and Transform, the strategy set out by Carl Andrew and my predecessor Adam Gerhard for risk and broking.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

It is a strategy that has proven successful for us. We will continue to execute on that strategy. I would also just mention our specialty approach, it's not only a meaningful contributor to organic growth, but it is a key reason we're attracting the right talent in the market. We expect strong growth to continue in our specialty businesses, which is outpacing the average of the rest of the business because the strategy works for clients and it resonates with our people. So yeah, identifying and attracting talent to complement our existing talent base will continue to be a really important part of our future strategy.

Operator

Thank you. Our next question comes from Elyse Greenspan with Wells Fargo. Your line is open.

Elyse Greenspan
Elyse Greenspan
Managing Director at Wells Fargo

Thanks. Good morning. My first question within the guidance, I saw you guys lowered the cost for the Vein and Willis joint venture. I think it's now expected to be $0.2 for the year, right? And I think prior was $0.25 to $0.35 So I guess my question there is, are you guys behind original hiring plans?

Elyse Greenspan
Elyse Greenspan
Managing Director at Wells Fargo

Or is there some other factor related to the change in guide there? And will you guys be ready to transact with that entity by 01/01/2026?

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

Yes, sure. It's Andrew. I'll take the first part. So the launch is progressing in line with our expectations. The revised estimate is simply due to having better insight into the expense picture for the remainder of the year.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

So we're very satisfied with the progress made so far and continue to be excited about our reentry into the reinsurance space.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Yeah. And remember, Elyse, this new launch, we're still the startup phase. We're focusing right now on building out the infrastructure, hiring new talent. And we'll update you on our plans for entering markets when there's more to share. That being said, we're really pleased with the progress we've made so far and remain really excited about our return to reinsurance.

Elyse Greenspan
Elyse Greenspan
Managing Director at Wells Fargo

And then my second question is just on margins. It sounds like the 100 basis points of margin expansion is the expectation for the full year within R and B. And can you just walk us through like the drivers that you see to achieve that improvement? And then I'm assuming the you guys also at the enterprise level reaffirmed the overall margin improvement. So is there anything related to operating leverage or margin expansion that you would point out now that we're beyond the transformation savings? Thank you.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

Yes, sure. It's Andrew. Why don't I start with the R and B piece of that? So during the quarter, we improved margins in our R and B segment by 100 basis points before FX, which had a negative 40 basis point impact. So that's on top of Q1 with margin improvement of over 100 basis points.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

So despite headwinds from excess FX and investment income, R and B had first half margin expansion of 90 basis points. And while we're not guiding a specific number for the full year, our commitment to deliver 100 basis points of annual margin expansion over the next three years has not changed. And our first half performance indicates we're on track to achieve that goal. And that's driven by operating leverage as well as other operational efficiencies, including the deployment of our global broking platform and workflow optimization, I think which we touched on during the prepared remarks. Maybe Lucy, you want to add some more color there?

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

Yeah, sure. Sure, Andrew. Thank you, Elise. Just in terms of the drivers for R and B, one is of course the continued impact of the enterprise delivery organization. This has played a key role in centralizing activities across the enterprise.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

And for one thing, it helps ensure that our teams are focused on doing the right work in the right places. And as Carl mentioned in his prepared remarks, it's also been a real foundational place to work on our stronger AI capabilities. In CRB, we're using AI to ingest and interpret unstructured data, accelerate workflows, just reducing manual effort. Our specific technology investments in R and B, global broking platform, our global placement strategies, and a number of other, like digital automation and workflow automation initiatives are driving productivity across the business, improving client service and operational efficiency. As you know, we have targeted mid to high single digit organic revenue growth, and we are also confident of being able to deliver operating leverage on that growth.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

We have room to grow in every specialty line we're in and in every geography. As we discussed at Investor Day, we're also taking deliberate steps to improve our business mix. We're trying to expand into higher growth, high margin markets, both organically and inorganically. Those initiatives will help us to deliver sustainable margin improvement and contribute to operating leverage. So efficiency gains, operating leverage, those will be the key drivers of the 100 basis points of average annual margin expansion in each of the next three years, and we remain confident in our ability to execute on that.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

So speaking a little bit about the enterprise, Elyse, I mean our expectations have not changed. We still expect to deliver margin expansion for the year. And I'll let Andrew sort of dive into some margin expectations in more detail.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

Yeah.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

Thanks, Carl. And you know, just start off by saying the 150 basis points of adjusted operating margin expansion we delivered this quarter was in line with expectations. That growth was really driven by strong organic growth and enhanced efficiencies, which drove greater operating leverage. We also had a 50 basis point tailwind from the divestiture of TRANZACT, which was mostly offset by headwinds in investment income and currency. Like Karl said, our margin expansion outlook remains unchanged.

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

As we communicated at our Investor Day, the financial framework, we're committed to driving continued annual margin expansion through efficiency and operating leverage. I already talked about the 100 basis points of average annual margin expansion in R and B. That coupled with building on HWC's strong track record of margin expansion, as you have seen this quarter, is what will get us there. I think for the full year, the key drivers of that margin expansion be a combination of the operating leverage, enhancing efficiency. You've heard, I think, about our we do strategy, which is set up to continue to drive efficiencies and further streamline processes, which I think gives us a really strong foundation, you know, alongside our business mix and portfolio optimization efforts to really drive sustainable annual margin expansion for for WTW going forward.

Operator

Thank you. Our next question comes from Mark Hughes with Tru Securities. Your line is open.

Mark Hughes
Mark Hughes
Analyst at Truist Securities

Yes, thank you. Good morning. You had mentioned in Health that outside of North America, your growth was quite strong, up in the double digits. Was that attributable to any kind of macro volatility, tariffs, that sort of thing? Or was that more just underlying momentum?

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

For outside of North America, our health growth was driven by momentum, as you suggested, and the very significant health care cost inflation that organizations are experiencing outside of The US.

Mark Hughes
Mark Hughes
Analyst at Truist Securities

Very good. And then I think in HWC, you mentioned the trajectory through the quarter was good. You saw a strengthening pipeline. Any similar observations about risk and broking, just how that progressed through the three months?

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

Yeah, we're expecting to continue to deliver mid to high single digit organic growth throughout the balance of the year and in the medium to long term.

Operator

Thank you. Our next question comes from Katie Saky with Autonomous Research. Your line is open.

Katie Sakys
Senior Research Associate at Autonomous Research

Hey, good morning. I wanted to dial in on ICT growth expectations over the balance of the year. Understand it's just one of many moving pieces and that there can be a lot of lumpy transactions that influence growth in the line. But in terms of thinking about the rest of this year, what are you guys thinking might drive higher organic growth? And what assumptions are you making about client spend management as you look into the next six months?

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Yeah, first let me take a bit of a step back, right? Just give everyone a quick refresher on some key points about ICT. It represents about 11% of the segment and it's focused on delivering top tier technology solutions and trusted consulting services to insurance carriers. That's the client base. On the consulting, we deliver both recurring services like reserve calculations, as well as discretionary project work for things like securities issuance or M and A amongst insurance companies.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

On the technology side, we do software products that support underwriting, rate making and reserving for clients. And those are typically larger and multi year contracts. And while we are seeing and continue to see significant value in the combined approach of consulting and technology offerings, due to the softer consulting environment, we're now expecting low to mid single digit growth for the full year. I'm gonna let Lucy want to elaborate.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

Yeah, sure. Thanks. Thanks, Katie, for the question. We feel good about the ICT business. We're particularly confident about the strong technology pipeline we have for the second half of the year.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

As we've seen in the past, the timing of some large scale finance or technology transformations often create variability in the timing of results. So some clients are taking a more measured approach to investment in the second quarter due to economic conditions. Our underlying pipeline and opportunities remain strong, And so our long term outlook for ICT remains mid to high single digit organic growth.

Katie Sakys
Senior Research Associate at Autonomous Research

Got it. Okay. And then on the changing guidance on the reinsurance JV, Is it fair to frame the discussion there in thinking that additional upside to that guide would come from further improvement to the insight on expenses? Or would we potentially see some further upside into that guide over the next six months as you get a better sight line on potential growth expectations?

Andrew Krasner
Andrew Krasner
CFO & Co-head of Corporate Development at Willis Towers Watson

Yeah. I mean, based on what we know today and and the start up phase of the business, we don't expect additional changes at this time in terms of the costs associated with getting that built and launched.

Operator

Thank you. Our next question comes from Brian Meredith with UBS. Your line is open.

Brian Meredith
Brian Meredith
Managing Director at UBS Group

Yes, thank you. Yes, so some other brokers in the quarter have talked about the impact of the rate environment, particularly large ticket business on growth this quarter. I'm curious, was there any impact on CRB? And maybe just remind us what the potential impact of just the pricing environment could have on your revenues?

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

Yeah, sure, Brian. Hi, it's Lucie. Thanks the question. So that's right. We've seen rates in certain classes continuing to trend downward.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

We've seen that in the market since the beginning of last year. Like the others have said, most lines are softening. The most affected part of the market is the large and complex property segment. And the part of the market where rates are still hardening is the North American casualty excess umbrella auto. The important thing to remember about where the rating is is that after many years of market hardening across all lines, this was expected.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

We planned for it. The industry will have planned for it. Obviously, we didn't know exactly where it was going to go, but we knew directionally. And so where carriers still consider that they're getting rate adequacy, the conditions will continue to improve for clients. So rate has been a moderate headwind for us, but the two elements that affect how it impacts us are how clients decide to behave and the makeup of our overall book.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

And just in terms of clients, right? Sometimes they take the savings. Sometimes they use the opportunity of a really good market to buy more. And in terms of the makeup of our book, we're about half property, half casualty. We skew to the middle market, so we're not as impacted by large and complex property.

Lucy Clarke
Lucy Clarke
President of Risk & Broking at Willis Towers Watson

And we have a good balance between commission and fee. And just as an overall observation, we've made significant investments in the business over the last three years, and those investments are continuing to pay off. So we can't predict the extent to which rates may continue to decline, but we do not rely on pricing to drive our organic growth. And we remain well positioned and confident about our mid to high single digit organic growth guidance for risk and broking.

Brian Meredith
Brian Meredith
Managing Director at UBS Group

That's really helpful. Thank you. And then Karl, I wonder if you could just remind us of kind of your view with respect to inorganic growth and I know you talked about strategic acquisitions. A number of the other major brokers have made some very large acquisitions. Is your view that you're more focused on kind of bolt ons or do you have the capacity and the ability to do something of larger scale?

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Yeah, let me talk a little bit about our thinking on M and A. And let me start with some illustrations of what we have been up to. Earlier this year, we completed the purchase of Global Commercial Credit. That's a specialist broker focused on trade credit and political risk. We've talked about the buyout of Alphoutine Willis that's currently pending.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

We are actively looking for opportunities and we're being thoughtful and disciplined in our approach. We're particularly interested in bolt on acquisitions that fit nicely to our specialty strategy. In the wealth space, the market's fast and expanding. So we are particularly interested in wealth management and defined contribution capabilities in growing markets. And beyond bolt ons, we'll also consider larger opportunities to enhance our presence in select geographies or market segments.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Ultimately, WTW is leading data and technology platforms and a unique culture. These assets should make a lot of sense for any business that may be looking to join us. So to be a bit more specific, we're aiming to increase our business mix and broking wealth through M and A. We see this as a key opportunity expanding into high growth, high margin areas of our core business. Secondly, we see an opportunity to play across the insurance value chain, like our reentry into free reinsurance with Bain to accelerate growth.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

And third, a combination WTFU should have a compelling financial story, enhancing our margins and free cash flow profile. And lastly, wanna remind you that we're looking for those that could be a good cultural fit, minimize business disruption, and satisfy the criteria that I just talked about. Now, as far as size, I'm not gonna talk about hypotheticals, right? We'll only get to pursue something that the expected return and value creation potential are compelling versus our other capital allocation options. And if we're confident we can execute the opportunity without disrupting our existing business and adding, we want to add value to our clients and business and our shareholders along the way.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

The last few years we solidified our infrastructure, we've strengthened the company, and we now have the right business focus and more efficient processes and the tools to integrate potential targets with WTW and deliver long term value.

Operator

Thank you. And our last question comes from Mark Marcon with Robert W. Baird. Your line is open.

Mark Marcon
Senior Research Analyst at Robert W. Baird & Co

Thanks for squeezing me in. Two long term questions. Carl, you mentioned AI in your prepared script. I'm wondering if you can elaborate a little bit more in terms of your efforts there in terms of increasing efficiencies, automating and how you're thinking about that from a long term perspective. And then Julie, health within HWC has been a key driver.

Mark Marcon
Senior Research Analyst at Robert W. Baird & Co

Obviously, things are looking very good for this year. I'm wondering if you can talk a little bit about longer term in terms of the next three to five years and particularly how much work you expect in terms of plan redesign given the healthcare inflation that's occurring? Thank you.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

Sure, and I'll treat that to two questions. Let me get to the AI one first and I'll let Julie attack first. I talked about this in my prepared remarks, right? And we've been implementing various forms of AI for years such as advanced analytics, machine learning models, right? And that helps drive efficiency and deliver our client solutions.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

We use these types of AI for in our risk modeling for clients and in other risk management solutions. Let me give an example, right? Coverage clarified in our construction business. That uses AI to verify that insurance coverage is adequate and contractually compliant, which is otherwise a pretty time consuming and labor intensive manual process. We built coverage clarified in house and we estimate it's making our process up to 40% more efficient.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

And that's just one example. We continue to explore opportunities to use AI to improve the overall client experience, streamline our internal processes, and to enhance both client and our decision making. Now, as always, we're doing it thoughtfully and responsibly by putting our clients first and in full alignment with our values and applicable legal and regulatory requirements. I'm sure my general counsel's out there smiling somewhere to ensure the quality of our advice solutions and what clients expect and what they're accustomed to getting from WTW. So we intend to balance innovation with sustainable return, and we see long term potential benefits to both growth and margins from our AI investments. Julie?

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

Sure. And thanks for the question on health, Mark. Look, as you know, healthcare coverage is a significant component of the employee value proposition in virtually all countries around the world, and the cost of that coverage is meaningful relative to other components, particularly in some large economies like The US. The drivers of cost increase are there currently I mentioned before prescription drug. There's overall utilization.

Julie Gebauer
Julie Gebauer
President of Health, Wealth & Career at Willis Towers Watson

There are new treatments that are driving high cost claims, and we don't see those changing in the short term for sure, but also in the medium term. So organizations will need to continue to keep an eye on this component of their total compensation and benefits costs. And we expect long term to see high single digit growth for this business.

Operator

Thank you. This concludes the question and answer session. I would now like to turn it back to Carl Hess for closing remarks.

Carl Hess
Carl Hess
CEO & Director at Willis Towers Watson

So thank you all for joining us this morning. I want to thank all our WTW colleagues again for their hard work and dedication. And thank you to our shareholders for their continued support of our efforts. Have a great day everyone.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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