John J. Haley
Chief Executive Officer and Executive Director at Willis Towers Watson Public
Thanks very much. Good morning, everyone, and thank you for joining us for our third quarter 2021 earnings call. Joining me today are Andrew Krasner, our Chief Financial Officer; and Carl Hess, our President and our future Chief Executive Officer. Today's call will be my last earnings call as CEO of this great company. Willis Towers Watson looks remarkably different than it did 22 years ago when I first started as CEO of Watson Wyatt and even more so than when I started at the Wyatt Company 44 years ago. It's been an amazing journey, and it underscores the resilience of this extraordinary organization. The combination of our exceptional people and strong value has enabled this company to reinvent itself and to continually evolve.
Our history has been defined by constant innovation and change. Together, we forged the legacy of quality service and solutions with strong client relationships and have built a Willis Towers Watson culture of resilience, inclusion and client focus. I'm proud of what we have achieved, and I feel fortunate to have had the opportunity to take the company this far with all of you. At the end of this year, I'll officially pass the baton to Carl Hess. Now is a time of reinvigoration for Willis Towers Watson. Carl is a great leader, focused on driving results and accountability by engaging colleagues. He has a wealth of knowledge and experience, and he has the skills to best lead the company during this transformative time.
I have every confidence that Carl will be successfully creating a new way forward and leading Willis Towers Watson and our top talent to an even brighter future. As we bring our new leadership team into place, we're also building One Willis Towers Watson. One WTW is about working across businesses, geographies and functions to achieve more and to be better. We're starting from a position of strength and recognize our potential. We're executing on our plan. We're focused on a bold new vision to be the best company in the business. We plan to drive change through new priorities to grow, simplify and transform.
We'll grow by investing in talent, by capturing market share, by innovating, by expediting capabilities in evolving markets and by bringing curated solutions to clients. We'll simplify by delivering more efficiently through technology and through standardization. For example, we've already begun by developing a plan to streamline to two business segments and three geographies at the beginning of 2022 and appointing a new global leadership team. We'll transform colleague and client experiences by streamlining our infrastructure, by fortifying our operations and by evaluating our real estate needs. While there's no doubt work ahead of us, we have confidence in our plan, One WTW, and most importantly, in our colleagues.
As we continue to look ahead, I'm especially excited about the industry-leading work we've done and will continue to do in addressing climate risk. We recently launched climate transition pathways, an accreditation framework that provides insurance companies and financial institutions with a consistent approach to identifying which organizations have robust transition plans, transition plans that are aligned to the Paris Agreement. And it supports the role as stewards and transition to a low-carbon economy.
We also partnered with Contigo to launch an innovative family of climate transition indices, driven by a next-generation methodology that directly quantifies the impact of the Paris-aligned climate transition on equity valuations. We intend to continue this momentum. Next week, we'll probably participate in the 26th United Nations Climate Change Conference of the Parties, or COP26. COP26 will bring together world leaders, government representatives, businesses and citizens to collaborate on how to tackle the many facets of climate change and plan for action.
Now let's move to our third quarter results. Please note that all metrics referenced are on a continuing operations basis, except where specifically stated otherwise. Reported revenue for the third quarter was $2 billion, up 4% as compared to the prior year third quarter, up 3% on a constant currency basis and up 7% on an organic basis. Net income, which includes discontinued operations, was $919 million, up 672% for the third quarter as compared to $119 million of net income in the prior year third quarter. It should be noted that GAAP profitability measures include the $1 billion in proceeds received in connection with the termination of the proposed business combination with Aon.
Adjusted EBITDA was $427 million or 21.6% of revenue for the third quarter as compared to $372 million or 19.6% of revenue for the same period last year, representing a 15% increase on an adjusted EBITDA dollar basis and 200 basis points of margin improvement. For the quarter, diluted earnings per share, which include discontinued operations, were $6.99, an increase of 140% as compared to the prior year. Adjusted diluted earnings per share were $1.73 for the third quarter, reflecting an increase of 32% compared to $1.31 in the prior year.
Overall, it was a strong quarter. We grew revenue. We enhanced margin, and we increased earnings per share. Now let's look at each of the segments in some more detail. To provide clear comparability with prior periods, all commentary regarding results of our segments will be on an organic basis, unless specifically stated otherwise. Segment margins are calculated using segment revenue and exclude unallocated corporate costs, such as amortization of intangibles, certain transaction and integration expenses resulting from mergers and acquisitions as well as other items, which we consider noncore to our operating results.
The segment results do include discretionary compensation. The Human Capital & Benefits or HCB segment revenue was up 6% on an organic basis and 5% on a constant currency basis compared to the third quarter of the prior year. This result represented sequential revenue improvement compared to our prior quarter, which was driven by continued increased demand for advisory services. Talent and Rewards revenue increased 22%, driven by strong market demand for broad-based rewards advisory work, coupled with talent and compensation products inclusive of compensation surveys, hiring assessments and employee listing and engagement offerings.
Our Health and Benefits revenue increased 5% for the quarter. We continue to grow revenue from advisory work in North America, driven by U.S. legislative changes and strategic benefit reviews. Revenue also grew outside of North America as a result of global benefit management and local brokerage appointments. Retirement revenue was flat compared to the prior year, with funding and guaranteed minimum pension equalization work in Great Britain, offset by declines in North America as less favorable market conditions for derisking work drove lower demand for bulk lump sum work. Technology and Administration Solutions revenue grew 9%, primarily due to increased project work and new business activity in Great Britain.
HCB's operating margin increased by 210 basis points compared to the prior year third quarter as a result of continued sustainable expense reduction efforts. We're pleased with HCB's sequential improvement and with their margin growth. Historically, HCB has had industry-leading margins, and we believe that trend will continue. HCB's talent base remains stable, and overall market tailwinds should continue to drive organic growth momentum for HCB. Both our near-term and long-term outlook on HCB remain positive. Now let's look at Corporate Risk & Broking, or CRB, which had a revenue increase of 6% on an organic and constant currency basis as compared to the prior year third quarter.
North America's revenue was up by 12% in the third quarter, driven by new business, particularly in M&A, FINEX, Construction and Aerospace lines. International and Great Britain's revenues increased 4% and 2%, respectively, for the third quarter. The revenue increases were primarily driven by growth in the retail and FINEX insurance lines. Revenue for Western Europe was up nominally due to growth in Poland and Sweden being largely offset by the departure of senior staff, which pressured business in certain geographies. CRB's revenue was $697 million for the quarter, with an operating margin of 16.3% compared to $647 million of revenue with an operating margin of 12.5% in the prior year third quarter.
The 380 basis point margin improvement mainly reflects the continuation of effective cost containment and, to a lesser degree, the benefit of gains from book of business sales and settlements. From time to time, colleagues who manage client relationships leave the company. When we lose colleagues such as those, it may result in them joining competitors. The impact of this on revenue may be delayed. This dynamic, which was most pronounced in our Corporate Risk & Broking segment in the second and third quarters of 2021, has caused CRB's organic growth to trail industry expected averages so far in 2021, and we expect the gap to narrow by the end of the first half of 2022.
During the third quarter, we focused on stemming attrition and hiring health. On a net basis, core CRB headcount is down about 100 colleagues or just under 1% as compared to the third quarter of last year. We have executed on our incentive plans, which provide both short-term and long-term retention benefits, and we believe attrition rates have already peaked for CRB. So while we may have some transitory headwinds ahead of us, we expect that the worst of the business disruption is behind us, and our longer-term outlook for CRB remains positive. Now turning to Investment, Risk & Reinsurance, or IRR. Revenue for the third quarter was $172 million, an increase of 10% on an organic basis and a decrease of 24% on a constant currency basis as compared to the prior year third quarter.
IRR revenue excludes the reinsurance line of business, which has been reported as discontinued operations. It also excludes revenue from Max Matthiessen, which was sold in September of 2020; and Miller, IRR's wholesale broking subsidiary, which was sold in March of 2021. The Insurance Consulting and Technology business, with revenue growth of 18%, led the segment's growth, with increased demand for advisory work alongside technology sales. The Investment business grew by 6% from performance-based new business and growth in delegated assets under management. IRR had an operating margin of 12.9%, up 360 basis points as compared to 9.3% for the prior year third quarter.
The strong margin expansion was a result of careful cost containment efforts, coupled with solid top line growth. Revenue for the Benefits Delivery & Administration, or BDA, segment, increased by 7% on an organic basis and constant currency basis from the prior year third quarter. The growth in revenue was largely driven by Individual Marketplace, primarily by TRANZACT, which contributed $111 million to BDA's top line this quarter, with growth in Medicare Advantage and Life products. The Benefits Outsourcing business also contributed to the increase in revenue, which was largely driven by its expanded client base.
The BDA segment had revenue of $242 million, with a minus 7.9% operating margin as compared to revenue of $226 million and an operating margin of minus 5.3% in the prior year third quarter. The margin decline was largely due to our increase in sales capacity ahead of the 2022 annual enrollment period, which will usher in expansion opportunities for both our Individual Marketplace and Benefits Outsourcing lines of business. We continue to feel positive about the momentum of our BDA business going into the fourth quarter, which is our seasonally strongest quarter. So in conclusion, overall, I'm very pleased with our results this quarter.
We delivered strong overall financial performance with top line growth, margin expansion and EPS growth, all while undergoing a massive shift in our go-forward strategy. In closing, I'd like to express my deepest gratitude to our colleagues, our clients and our shareholders for their trust in Willis Towers Watson and for the opportunity to be CEO of this extraordinary organization. I believe the company is well positioned to meet the opportunities and challenges that lie ahead, and it's been a privilege to serve you. Now I'll turn the call over to Andrew.
