Note: This is an earnings call transcript. Content may contain errors.

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DATE

Thursday, October 30, 2025 at 9:00 a.m. ET

CALL PARTICIPANTS

Chief Executive Officer — Carl A. Hess

Chief Financial Officer — Andrew Krasner

President, Health, Wealth, and Career — Julie Gebauer

President, Risk and Broking — Lucy Clark

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RISKS

Management cited headwinds from “declining rates in certain segments of the commercial insurance market across various geographies,” according to Carl Hess, describing property as being most impacted by pricing pressure, especially in large and complex segments.

Management stated, “industry-wide pricing pressure is making high single-digit growth harder” according to Andrew Krasner in Corporate Risk and Broking, noting that achieving the high end of prior growth targets is now “more challenging” according to Carl Hess given the current environment.

Revenue in the Insurance Consulting and Technology business was flat, with management expressly stating, “the consulting environment has remained weak and clients continue to demonstrate caution before making large multiyear technology implementation decisions.”

Adjusted tax rate rose to 22.4% compared to 19.7% in the prior year, with management now expecting a rate consistent with the prior full year rather than improvement.

TAKEAWAYS

Organic Revenue Growth – Companywide organic growth of 5% in the third quarter, with segment-level organic growth of 4% in Health, Wealth, and Career and 6% organic growth in Risk and Broking.

Adjusted Operating Margin – Company adjusted operating margin expanded by 230 basis points to 20.4%, supported by segment contributions and prudent expense management; Health, Wealth, and Career operating margin rose 390 basis points to 28%, while Risk and Broking margin increased 70 basis points to 18.8% (100 basis points excluding FX impact).

Adjusted Diluted EPS – $3.07, an increase of approximately 11% over the prior year, with a $0.04 FX tailwind in the quarter and a projected FX tailwind of approximately $0.10 for fiscal 2025 (period ending Dec. 31, 2025).

Free Cash Flow – $838 million for the nine months ending September 30, 2025, representing a $114 million year-over-year increase, driven by margin expansion and lower transformation program costs.

Capital Return – $690 million returned to shareholders, including $600 million in share repurchases and $90 million in dividends; management targets $1.5 billion in share repurchases in fiscal 2025, conditional on market opportunities and capital allocation priorities.

TRANZACT Divestiture Impact – Divestiture completed December 31, 2024, resulting in a $1.14 headwind to full-year fiscal 2025 adjusted diluted EPS and a 110 basis point positive contribution to adjusted operating margin.

Segment Details—Health – Health revenue grew 7%, or 8% excluding book of business settlements and interest income, driven by international results, successful renewals, and health care inflation, with high single-digit growth expected for the full year.

Segment Details—Wealth – Revenue grew 5%, led by demand in Great Britain and North America for defined benefit work, with continued low single-digit growth expected for the year.

Segment Details—Career – Revenue increased 2%, with growth muted by changes in survey delivery timing but expected to accelerate in the fourth quarter and projected to reach low to mid-single-digit growth for fiscal 2025.

Segment Details—Benefits Delivery and Outsourcing (BD&O) – 2% revenue growth for BD&O, with seasonality expected to drive significant fourth-quarter volume as nearly 80% of Medicare Exchange revenue occurs in Q4; mid-single-digit growth expected for the year.

Segment Details—Corporate Risk and Broking – 6% organic revenue growth in Corporate Risk and Broking, or 7% excluding book of business activity and interest income, marking eleven consecutive quarters of high single-digit organic expansion on this basis.

Technology and AI Investments – New product launches include RADAR 5 analytics platform featuring generative AI, and Gemini digital placement facility to address insurance market complexity and pricing; management attributes efficiency gains and margin expansion to these ongoing technology investments.

Enterprise Initiative (WeDo) – Automation and AI projects supported by WeDo have contributed to streamlined billing, collections, and payment operations, with resulting improvements to margin and free cash flow this quarter.

SUMMARY

Willis Towers Watson (WTW 1.18%) management directly affirmed continued momentum and alignment with fiscal 2025 (period ending Dec. 31, 2025) financial targets for organic growth, adjusted operating margin, and free cash flow margin, as well as their ongoing strategy focused on portfolio optimization and operational efficiency. Rising health care costs and legislative requirements, such as the EU pay transparency directive, are fueling growth in Health, Wealth, and Career solutions, with several large client wins and product rollouts noted as market share drivers. In Risk and Broking, successful execution of the specialization strategy and technology-driven offerings enabled revenue expansion despite industry-wide pricing headwinds, bolstered by recurring and project-based volumes in global specialty lines. Free cash flow is positioned to improve further in fiscal 2025 as transformation costs decline and negative cash flows from TRANZACT roll off.

Carl Hess said, “We have good momentum across the business, giving us added confidence in our ability to deliver on our 2025 targets,” explicitly highlighting leadership’s continued strategic focus for the remainder of the year.

Management identified automation, process optimization, and disciplined cost control as key tools for incremental segment margin expansion, with Julie Gebauer detailing a consistent track record and future opportunities for further improvement.

The company is poised for a strong seasonally driven fourth quarter, with BD&O and Medicare Exchange revenues weighted to this period and management expressing confidence that fourth-quarter demand will enable full-year growth targets to be met.

INDUSTRY GLOSSARY

Book of business settlement activity: Non-recurring revenue impacts from the resolution or reassignment of ongoing contractual client portfolios, particularly in insurance and brokerage contexts.

Operating leverage: The incremental effect of additional revenue on profitability due to a high proportion of fixed costs, frequently referenced in margin expansion discussions.

TRANZACT: A previously owned direct-to-consumer health insurance distribution business divested by Willis Towers Watson Public Limited Company, whose absence impacts segment comparability and overall earnings.

RADAR: Willis Towers Watson Public Limited Company’s proprietary end-to-end pricing and analytics platform for insurers, recently relaunched as RADAR 5 with generative AI capabilities.

Gemini: Willis Towers Watson Public Limited Company’s global digital insurance placement facility, designed to provide efficient, discounted insurance capacity using Lloyd’s syndicates.

B2B2C Medicare Exchange: Business-to-business-to-consumer sales channel facilitating Medicare plan comparison and purchasing for individuals, with revenue primarily realized during the annual open enrollment period.

BD&O: Benefits Delivery and Outsourcing, a business segment dedicated to the administration and technology enablement of employee benefits programs.

WeDo: The company’s enterprise-wide delivery and process automation initiative leveraging AI to drive operational efficiency, cost savings, and improved margins.

Full Conference Call Transcript

Good morning, everyone, and thank you for joining us for Willis Towers Watson Public Limited Company’s Third Quarter 2025 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&A session. We delivered another quarter of solid results driven by consistent and strong execution of our strategy. In the third quarter, we generated 5% organic growth, 230 basis points of adjusted operating margin expansion, and adjusted EPS of $3.07, up 11% year over year. We’ve sustained our momentum in the market and remain on track to deliver our full-year financial objectives.

I want to thank all my Willis Towers Watson Public Limited Company colleagues for their hard work and dedication to achieving our strategic and financial goals. As these results show, the strategy we laid out nearly one year ago to accelerate performance, enhance efficiency, and optimize our portfolio continues to drive value for all our stakeholders, despite the volatile macroeconomic environment. Against that backdrop, I’d like to provide some observations on current market conditions. Concerns about global trade, inflation, and geopolitical conditions remain, creating both opportunities and challenges. On one hand, some clients are looking for support to manage the related people and risk issues. And on the other, some companies are continuing to limit discretionary spending.

We continue to monitor relevant economic indicators such as employment, which may affect our business prospects over the short term. In addition, we’re facing headwinds from declining rates in certain segments of the commercial insurance market across various geographies. In the face of this dynamic environment, our businesses continue to be resilient, as we remain intensely focused on providing relevant services that deliver value to our clients. Health, Wealth, and Career delivered steady 4% organic growth or 5% when excluding book of business settlement activity and interest income with strong margin expansion. These results reflect our diversified and recurring revenue base and disciplined cost management.

Like last quarter, we saw robust demand for our solutions that help clients manage their health care costs, de-risk their defined benefit pension plans, and adapt to new legislative and regulatory requirements such as the EU pay transparency directive. We also experienced an increase in M&A due diligence integration work as well as in workforce management support. Our suite of technology tools continues to be a prominent factor in our success. For example, our talent flow analysis utilizes web crawling and data mining to identify clients’ real competition for talent, which is essential for meaningful benchmarking.

And our health and benefits Scout tool informs health plan design through an in-depth evaluation of health care access, quality, and cost, based on a client’s workforce location, demographics, claimed experience, and more. Through predictive analytics, we help forecast benefits cost and attrition risks, identify skills gap, and detect pay equity issues. We’re also using AI tools to improve the employee experience. In Risk and Broking, we generated 6% organic growth in the quarter and expanded adjusted operating margins by 70 basis points. This marks the eleventh consecutive quarter that our Corporate Risk and Broking business recorded high single-digit growth, excluding the impacts of book of business activity and interest income.

I’m pleased with the strong returns on our investments in talent and innovation, and we continue to look for opportunities to invest further. In particular, our investments in digital tools, AI, and automation have helped Risk and Broking capture growth opportunities and create efficiencies. As declining rates continue to pressure certain areas of the market, the impact of these investments has been increasingly valuable in driving meaningful efficiency gains and advancing our progress on delivering 100 basis points of annual average adjusted operating margin expansion in Risk and Broking over the medium term. We continue to launch a steady cadence of new tools and products that support our growth and margin objectives.

For example, we recently launched the newest version of RADAR, an end-to-end rating and analytics software widely used by insurers. RADAR 5 brings advanced capabilities, including GenAI techniques, to provide greater speed and agility for pricing, portfolio management, claims, and underwriting, enabling insurers to unlock smarter data-driven decision-making at scale. We also launched Gemini, our global digital placement facility in the quarter. This innovative solution provides efficient access to additional insurance capacity, addresses the increasing complexity of risk and market volatility, offers competitive pricing to clients at a guaranteed discount, and is backed by A+ rated Lloyd Syndicates. Now I’ll turn to some of our new business wins in the quarter.

In Health, Wealth, and Career, our customer-centric solutions, differentiated technology, and focus on making smart connections continue to drive growth across all our businesses. In a notable example, we unseated the longtime incumbent providing global actuarial work for a Fortune 250 engineering company not only because of consistent actuarial expertise and tools across our global network, but also because of the innovative ideas we brought them to better manage pension risks around the world and to address retirement readiness for their workforce.

In a win featuring smart connections across Health, Wealth, and Career, we were selected to support the planned spin-off of a global Fortune 50 company with overall program management, communication, and change management, and the implementation and administration of a new US health plan. We won this business, which encompasses 40,000 employees, after building a strong reputation as a trusted partner to the parent organization. Another innovative Health, Wealth, and Career win involves the extension of our Embark employee experience portal to potential new hires of a health system to showcase their total rewards and culture, with the aim of boosting new hire acceptance rates.

In Risk and Broking, our specialization strategy and our ability to offer differentiated value through our technical expertise, global collaboration, and client-centric solutions continue to be key factors in bringing in new business. For example, in Corporate Risk and Broking, despite a challenging risk environment, we covered property damage, business interruption, and liability insurance for an energy portfolio in Eastern Europe. The client reached out to us directly as our technical knowledge of these types of assets and our global industry relationships are well known in the marketplace, highlighting the value of our specialization strategy. We also secured a significant new mandate in Europe covering property damage and business interruption for a leader in the electric vehicle sector.

Teams from different regions coordinated to identify and address gaps in the client’s coverage while achieving a premium reduction all in just three weeks. This win underscores our ability to deliver cost-efficient solutions to support high-growth, innovation-driven clients with complex coverage needs. Before turning it over to Andrew, I want to provide an update on WeDo, our enterprise delivery organization. We were especially pleased with the margin expansion we delivered this quarter across the business. Over the past quarter and as we look ahead, WeDo is helping us continue to improve how we operate, leveraging automation and AI to enhance efficiency and deliver savings.

Our approach combines generative and analytical technologies to identify opportunities, design more efficient solutions, and automate processes. With WeDo-backed automation projects, we’ve streamlined billing, collections, and payment to drive stronger margins and free cash flow, which were reflected in our results this quarter. Overall, I’m pleased with how we performed this quarter. We delivered solid financial results in line with our expectations, with mid-single-digit organic growth and meaningful margin expansion across both segments. We have good momentum across the business, giving us added confidence in our ability to deliver on our 2025 targets. And now I’ll pass it on to Andrew for a more detailed discussion of financials. Thanks, Carl. Good morning, and thanks, everyone, for joining us today.

In the third quarter, we delivered solid organic revenue growth of 5% and expanded adjusted operating margin by 230 points year over year to 20.4%, or 120 basis points of year-over-year improvement when excluding TRANZACT. Adjusted diluted earnings per share were $3.07, which is an increase of approximately 11% 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 headwind to adjusted diluted earnings per share of $1.14. As Carl discussed, our solid third-quarter results reflect the strong foundation we’ve built and the benefits of our investments in talent and technology.

Our strategy is resonating with clients and colleagues, and our businesses remain highly resilient despite the macro uncertainty. We remain firmly focused on our strategic objectives and the financial framework outlined at Investor Day to create long-term shareholder value. Turning to our segment results, Health, Wealth, and Career revenue grew 4% compared to the third quarter of last year. Excluding the impact of book of business settlement activity and interest income, growth was 5%. Our results for the third quarter are in line with our expectations, and we remain on track to deliver mid-single-digit growth and margin expansion for Health, Wealth, and Career in 2025.

As a reminder, the vast majority of Health, Wealth, and Career’s business is recurring, with only a small portion being more economically sensitive. Our Health business achieved strong growth of 7% this quarter, or 8% growth excluding the impact of book of business settlement activity and interest income. This growth was primarily driven by double-digit increases in international and solid performance in North America. Results in international were driven by new global benefits management and local appointments, successful renewals, health care inflation, and market expansion. In North America, focused sales efforts generated growth across all market segments. In Europe, growth was offset by a significant book of business sale in the prior year third quarter.

Excluding the impact of interest income and book of business settlement activity, health has grown 8% year to date. We continue to expect strong demand across the global business driven by health care inflation and employers’ continued focus on managing costs while maintaining competitive employee benefits. A healthy pipeline for the remainder of the year, we continue to expect high single-digit growth for the full year even with a high double-digit growth rate in the fourth quarter of last year. Wealth had revenue growth of 5% in the third quarter, primarily from strong levels of retirement work in Great Britain and North America. Demand for our core defined benefit work, including financial forecasting, compliance support, and data projects, remains strong.

We also saw growth in project work to support pension de-risking, surplus utilization, and workforce restructuring. Our investments business delivered growth primarily from new products and client wins. We continue to expect low single-digit growth in the wealth business for the year. Career growth was 2% in the third quarter, with solid growth in Europe driven by strong demand for EU pay transparency support and employee communication projects. While compensation benchmarking survey work increased across all regions, a change in the survey delivery pattern limited growth this quarter when compared to the same period last year.

We are confident revenue growth will increase meaningfully in the fourth quarter due to this change in the pattern, combined with the continued demand for advisory work related to the EU pay transparency directive that goes into effect mid-2026. We continue to expect Career to grow low to mid-single digits in 2025. Over the long term, we expect mid-single-digit growth based on our track record and continued focus on product and technology offerings alongside recurring services. Benefits Delivery and Outsourcing, or BD&O, grew 2% versus last year’s third quarter, driven by growth in Outsourcing due to increased project and core administration work in Europe, which was partially offset by lower commission revenue in the individual marketplace.

Our B2B2C Medicare Exchange business. Keep in mind that our Medicare exchange generates about 80% of its revenue in the fourth quarter due to the timing of the Medicare enrollment period. In combination with the timing of new business, BD&O overall generates nearly half of its revenue in the fourth quarter. Accordingly, we forecast BD&O growth to be strongest in the fourth quarter of the year, reflecting the expected timing of commissions, new client implementations, and new projects to support regulatory changes. We continue to expect BD&O to grow at mid-single digits for the year.

Health, Wealth, and Career’s operating margin in the third quarter was 28%, an increase of 390 basis points compared to the prior year, an increase of 100 basis points excluding the impact of the TRANZACT divestiture. This result demonstrates our ability to consistently deliver incremental margin expansion regardless of cyclical macro conditions and supports our strong track record of margin expansion in Health, Wealth, and Career. Let me move on to Risk and Broking, which had revenue growth of 6%, underscoring the continued momentum in the business. Our specialization strategy and our investments in talent, data, and technology continue to drive sustainable growth.

Corporate Risk and Broking grew 6% or 7% when excluding both book of business activity and interest income. This was on top of the 10% growth rate achieved in the prior year comparable quarter. As Carl mentioned, this is the eleventh consecutive quarter of high single-digit growth when excluding both book of business activity and interest income. Corporate Risk and Broking’s growth this quarter was primarily driven by our global specialization strategy, which continued to support expansion amid the more challenging rate environment. Of note, we generated significant new business across a number of markets this quarter, as well as project revenue recognized in our global specialty businesses, with notable contributions from construction, surety, and credit risk solutions.

This illustrates that our commitment to global specialization continues to generate value for clients and drive growth. From a macro perspective, and relative to last quarter, we are seeing a more challenging growth environment as market rates continue to soften across various lines. Nonetheless, our specialization strategy is resonating in the market, and we are pleased by the results we are seeing from our global specialty businesses. We continue to expect mid to high single-digit growth in Corporate Risk and Broking for 2025. While industry-wide pricing pressure is making high single-digit growth harder, we believe it is still attainable.

In our Insurance Consulting and Technology business, revenue was flat versus last year’s third quarter when Insurance Consulting and Technology delivered 7% growth. Our combined approach of consulting and technology continues to add value. However, trends we highlighted last quarter persist. As the consulting environment has remained weak and clients continue to demonstrate caution before making large multiyear technology implementation decisions. While we are encouraged by our pipeline on the technology sales side, we do not expect to see a meaningful pickup in consulting activity in the fourth quarter. For the full year, we continue to expect low to mid-single-digit growth.

Turning back to Risk and Broking’s results overall, we are pleased with our momentum year to date, which gives us confidence in our ability to deliver mid to high single-digit growth for the full year. As I mentioned a moment ago, although the path to achieving high single-digit growth is more challenging, given the current pricing environment, we believe it is still possible. Risk and Broking’s operating margin was 18.8% for the third quarter, a 70 basis point improvement over the prior year or a 100 basis point improvement when excluding the impact of foreign exchange rates. This was primarily driven by operating leverage from strong organic growth performance coupled with continued expense discipline.

Foreign exchange rates were a headwind of 30 basis points to Risk and Broking’s operating margin in the third quarter due to the weakening U.S. Dollar, but we expect the full-year foreign exchange impact to be slightly more modest. So far this year, we achieved 90 basis points of operating margin improvement in Risk and Broking or 120 basis points excluding the impact of foreign currency, and we are committed to delivering 100 basis points of average annual adjusted operating margin expansion over the next three years. As Carl highlighted earlier, investments we’ve made in our technology capabilities continue to provide value and provide a strong platform for us to deliver ongoing operating leverage and efficiencies across the business.

Finally, I will give some additional color on our enterprise-level results. Adjusted operating margin for the third quarter was 20.4%, a 230 basis point improvement over the prior year, reflecting strong margin expansion in the segments and prudent business expense management supported in part by our WeDo initiative. This result includes a 110 basis point tailwind from the TRANZACT divestiture. As we enter Q4, our seasonally strongest quarter of the year, all our businesses are operating with continued discipline and rigor, leaving us confident in our ability to continue to expand margins. Foreign currency was a $0.04 tailwind to adjusted EPS for the quarter and a $0.05 headwind year to date in 2025. The U.S.

Dollar has been weakening during the quarter, I want to give you some additional color on foreign exchange. At the current spot rates, we expect a foreign currency tailwind to adjusted EPS of approximately $0.15 in the fourth quarter and approximately $0.10 for the full year. Of course, the impact may fluctuate throughout the remainder of the year. Our U.S. GAAP tax rate for the quarter was 19.7% versus 16.1% in the prior year. Our adjusted tax rate for the quarter was 22.4% compared to 19.7% for 2024. We expect our full-year 2025 tax rate to be relatively consistent with the prior full-year rate.

We generated free cash flow of $838 million for the nine months ending 09/30/2025, an increase of $114 million from the prior year. This was driven by operating margin expansion and reduced transformation program cash costs. The favorable second-half setup we anticipated began to play out this quarter. As we previously noted, the remaining transformation costs continue to abate, and the divestiture of TRANZACT will act as a tailwind to free cash flow as we lap the prior year fourth quarter, in which that business recorded net cash outflows. We remain on track to deliver our objective of annual free cash flow margin expansion.

During the quarter, we returned $690 million to our shareholders via share repurchases of $600 million and dividends of $90 million. We continue to view share repurchases as one of our primary methods of capital return and an attractive use of capital to efficiently deliver value to Willis Towers Watson Public Limited Company shareholders. We continue to expect share repurchases to total approximately $1.5 billion in 2025, subject to market conditions and potential capital allocation to inorganic investment opportunities. Looking ahead, we’re confident our balanced and disciplined capital allocation approach will 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.

In closing, we are pleased by our performance year to date in 2025. We are increasingly seeing the execution of our strategy manifest in our results, giving us solid momentum as we enter the fourth quarter. We remain confident in delivering on our 2025 financial objectives of mid-single-digit organic growth, adjusted operating margin expansion, adjusted EPS growth, and ongoing improvement in free cash flow margin. With that, let’s open it up for Q&A.

Operator: Certainly. And ladies and gentlemen, we ask that you please limit yourselves to one question and one follow-up. You may get back in the queue as time allows. Our first question comes from the line of Gregory Peters from Raymond James. Your question please.

Gregory Peters: Great. Good morning, everyone. So for the first question, I’m gonna focus in on the Risk and Broking organic revenue results. I appreciate the color both you, Carl, and Andrew made. Specifically on the new business. And I guess what I’m getting at is how much of the third-quarter result reflected sort of unusual wins that won’t recur or come at it a different way? You know, you mentioned project-based placements. Were those unusual relative to other quarters? And maybe you can just, you know, build on that, you know, by line of business. Is there something nuanced or geographies that’s driving what I would characterize as a better-than-market result?

Carl Hess: Hey, good morning, Greg. Thanks for the question. We were really pleased with the 6% growth we achieved for the Risk and Broking segment. That was on top of, right, a 10% for a solid result in ’24. Corporate Risk and Broking delivered 6% organic or 7% when you exclude both book of business activity and fiduciary income. I think our specialization strategy and our investments in talent, data, and technology continue to drive sustainable growth. Lucy, can you give us some color commentary on that?

Lucy Clark: Yeah. Sure, Carl. Hi, Greg. Yeah. Let me just start by reiterating we had another good quarter overall. Within Corporate Risk and Broking, we’ve generated strong new business in all of our global markets across almost every single specialty line. Saw particularly meaningful contributions from construction, M&A, surety, credit risk solutions, and remain committed to delivering mid-single-digit to high-single-digit growth in Risk and Broking for the year. As you know, of course, our clients are benefiting from an improving rate environment, which can translate to a revenue headwind for us. Naturally, this industry-wide dynamic will make the path to high-single-digit growth for the year more challenging, but not out of reach.

In terms of the project-based placements, it’s just important to keep in mind that the nature of our work in specialty is always a combination of recurring and one-off work. So as we noted, in those prepared remarks, we did see increased contributions from placements for multi-year projects undertaken by some of our clients. Normal growth in our specialty businesses, particularly in construction, M&A, surety, and natural resources. That specialization approach has been a key driver of growth for us in Risk and Broking. We expect that to continue. Thanks, Greg.

Gregory Peters: Thanks for that answer. I’m gonna follow-up just because it’s important. I know part of your expectation going forward is to expand your margin in Risk and Broking each year, and both Andrew and Lucy now have previewed that it’s becoming more difficult to get to the higher end of your organic revenue results in Risk and Broking. Should we be worried that if we go from mid-single-digit to high-single-digit just to mid-single-digit that there might be some pressure on your ability to generate that 100 basis points of margin improvement in the next two years?

Andrew Krasner: Hey, Greg, it’s Andrew. I’ll take that one. So we did see a strong margin improvement in the Risk and Broking segment of 70 basis points or 100 basis points excluding the impact of foreign currency. So year to date, 90 basis points of operating improvement or 120 basis points excluding the impact of foreign currency. You know, we’re not gonna sort of guide to a specific number for the full year, but, you know, we do remain absolutely committed to what we laid out at Investor Day of the 100 basis points, on average, over the next three years per year. And we feel like we’re on track to achieve that.

You know, it’s really driven by some of the investments in technology that we’ve made, really looking at process improvement, things of that nature that’s really gonna help drive those efficiencies. So I think despite, you know, the top line, we feel like we have the appropriate tools and levers to be able to get there.

Operator: Thank you. And our next question comes from the line of Elyse Greenspan from Wells Fargo. Your question please.

Elyse Greenspan: Hi, thanks. Good morning. My first question was on free cash flow. If you can just provide more expectations about how the favorable second half began to play out this quarter.

Andrew Krasner: Yeah. Perfect. Thanks, Elyse. The favorable second-half setup that we flagged continues to play out. Through the third quarter year to date, we had $838 million in free cash flow, which is a $114 million year-over-year increase. That was driven by operating margin expansion and reduced transformation cash costs. Looking at the fourth quarter, the remaining transformation cash costs will continue to abate, and the divestiture of TRANZACT will act as a tailwind as we lap the prior year fourth quarter. So taken together, we remain confident in our ability to deliver free cash flow margin expansion, not just in 2025, but beyond as well and just continue to build on that momentum.

Elyse Greenspan: Thanks. And then my second question was just hoping you guys would provide what the insurance pricing headwind was in the third quarter. And also, was that similar to the second quarter or worse?

Lucy Clark: Hey, Elyse. It’s Lucy. Thanks for the question. So sure, pricing pressure has continued in certain areas of the market, and it’s becoming more meaningful as we make progress through the year. From our perspective, property is the most impacted class, particularly in the large and complex segments. But most lines are showing softening other than, of course, North American casualty, where pricing continues to rise. Important to remember that these pricing improvements follow five years of pricing increases. So many of the markets still see these levels as rate adequate. It’s a welcome relief for our clients.

So we’re still expecting mid to high single-digit organic revenue growth in Risk and Broking for the year, in spite of any of the pricing developments.

Operator: Thank you. And our next question comes from the line of Rob Cox from Goldman Sachs. Your question please.

Rob Cox: Hey, thanks. Good morning. First question on Health, Wealth, and Career margins. I think if we exclude the impact of TRANZACT, the margins improved 100 basis points, as you all mentioned. If we do that in 2025, I think the margins contracted. So I was just curious sort of what changed in the quarter and how you guys are thinking about margin expansion excluding TRANZACT in the fourth quarter and beyond?

Andrew Krasner: Yes, sure. I mean, as we laid out in Investor Day, we’re committed to incremental margin improvement across that sector over the long term. You know, over the full year here, we’ll have some tailwinds right from the divestiture of TRANZACT. But everything is playing out exactly as we expected. And maybe, Julie, you wanna comment on some of the drivers of that?

Julie Gebauer: I would, Andrew. First, I want to highlight that so far this year, excluding the TRANZACT divestiture, we added 40 basis points of margin in Q1, 20 basis points in Q2, and now 100 basis points in Q3, as you mentioned, in line with our commitment to build on our strong track record. You know, we’ve been able to do this consistently over a lot of years for a few reasons. And that the foundation of this performance is the way we focused our portfolio. We’ve got businesses where we can not only differentiate but also scale and generate leverage.

And then on top of that, we have a really clear view of our top line and a firm command of our cost structure. We take a very disciplined approach to resource management. And then finally, we still see opportunities with process optimization, automation, and right-shoring to add to margin. So while we take pride in what we like to say are our industry-leading margins in Health, Wealth, and Career, we are very confident in our ability to build on that.

Rob Cox: Great. Thank you. And then I just wanted to follow-up on the BD&O business. It sounds like the guidance is being maintained for mid-single-digit organic growth for the full year. Just looking at what you guys have done year to date, it looks like you might need something like high single digits organic in the fourth quarter. Could you tell us what gives you confidence in the improvement there?

Julie Gebauer: Yeah, Rob. I’ll take that. I’m gonna start with a reminder that BD&O overall generates nearly half of its revenue in the fourth quarter. And in addition to typically our outsourcing clients going new clients going live in the next quarter. About a third of our revenue in this business comes from our individual marketplace business. In that business, we generate about 80% of our revenue in the fourth quarter, as Andrew mentioned, during open enrollment. That happens from October until early December. And given the new clients that we’ve added, our expectations for Medicare retirees to review and switch coverage during that enrollment period.

We expect to see increases in commissions and fees and solid growth in the quarter ahead. So overall, we expect mid-single-digit growth for the full year and over the longer term.

Operator: Thank you. And our next question comes from the line of Zaremski from BMO. Your question please.

Zaremski: Thanks. Good morning. Looking at the interest income levels, very better than expected. Is that the run rate or any one-timers we should be considering?

Andrew Krasner: No, no specific one-timers, but I just, you know, it’s important to keep in mind that some of the investment income is driven by sort of where the cash balances are held across jurisdictions and, you know, interest rates vary by geography. So sometimes, you know, geographic mix of business can have an impact there. So I think that’s the only nuance I’d call out there.

Zaremski: Okay. So we’ll I guess I’ll take that as what kinda use that as directionally the run rate. A follow-up to Greg Peter’s question earlier and just not trying to split hairs. We love when you give extra color. But, you know, in the Risk and Broking segment, you know, when you mentioned the project-based placements and specialty, which is great color, it just leads to the question, you know, is project-based mean, like, more nonrecurring or one-time that we should kinda be considering in our run rate on a go forward. So just wanted to try to ask that one last time to make sure we’re not new wording.

Lucy Clark: Hi. It’s just one last time. It’s yeah. Hi. It’s Lucy. Thanks for the question. Yeah. You’re right. It does mean one-time revenue. But we always have one-time revenue. The nature of our work and specialty is a combination of recurring and one-time revenue. We just saw increased contributions from the placement of multiyear projects in the quarter, so we called it out. It’s a normal part of the growth in specialty business. Thanks.

Operator: Thank you. And our next question comes from the line of Paul Newsome from Piper. Your question please.

Paul Newsome: Was hoping you could talk a little bit about the war for talent. I see a lot of headlines, particularly on the property and casualty side of the house about folks getting hired back and forth and where do you think Willis fits within that? And, do you think we’re seeing a heightened level of poaching back and forth?

Carl Hess: Yeah. Thanks for the question. We are really happy with our ability to attract and retain top talent. As Lucy shared after she joined last year, right, the success of our strategy over the last four years and the world-class resources we’ve developed to serve clients they’re highly attractive to prospective employees. With a focus on bringing in accretive talent, especially within our special lines and geographies. More broadly, we continue to make investments in the fastest-growing and most profitable areas of our business. And so we remain very excited about the innovation fostered by both these investments and the new talent in the organization. It’s helping us realize significant opportunities to accelerate profitable growth and to enhance our margins.

Paul Newsome: So do you think you’re getting kinda more than your fair share at point, or do you think you’re sort of reached a point where you’re kind of at your steady state of continued growth?

Lucy Clark: I’ll just pick up on that. Thanks. So of course, you know, our people are it for us. And our business is built around talent. Incredibly proud of the people who work here and how they look after our clients. That really strong focus on talent has been the key driver of our organic growth. And of course, particularly for new business growth over the last few years. We will continue to complement our existing talent by making strategic hires in the areas we think that they’ll be most impactful both in terms of geography and specialty. It’s proven to be a real successful strategy for us. And we’ll continue to execute on that.

Operator: Thank you. And our next question comes from the line of David Motemaden from Evercore ISI. Your question please.

David Motemaden: I had a question just on some of the Risk and Broking commentary. Just around the path to achieving the high single-digit growth just getting more challenging given the current pricing environment. And I’m not so much focused on fourth quarter, but just thinking bigger picture about the mid-single-digit to high-single-digit growth targets you guys had laid out at your Investor Day about a year ago within Risk and Broking. Just given the current environment and the direction of travel, that I guess, are you thinking about that target? Is it still that mid-single to high-single, mid-single know, is low single-digit on the table? Just interested in your thoughts on that.

Carl Hess: Yeah. I mean, you know, stepping back right, our solid performance this year reflects the success of the specialization strategy and demonstrated by 6% you know, the solid 6% we got out of Corporate Risk and Broking, you know, and that’s 7% when you exclude book business and fiduciary income for the quarter. Given our performance year to date, we remain committed to mid to high single-digit growth in Risk and Broking for the year. But as we’ve said, right, we acknowledge that high single-digit is a bit more challenging now the current environment.

Lucy Clark: Yeah. Let me just add to that. Thanks, Carl. Yeah. So we’ve made the comments about where we expect ’25 to end up and obviously, we’re not going to comment on ’26 until next quarter. But we still have plenty of room to grow across Risk and Broking. We expect client demand and the attractiveness of the specialty structure to continue to generate growth rates that continue to lead the market. So we see a lot to be optimistic about, but we’ll talk about ’26 next quarter.

David Motemaden: Got it. Okay. Thank you. And then just following up, you know, just seeing, you know, an economy that looks like capital spending and spending is still solid, then employment growth which, Carl, you mentioned, that’s slowed a bit. And hear you loud and clear that Health, Wealth, and Career is vastly recurring in nature if I think about their revenues. But could you just help me think about just general employment levels and how that might impact some of the contracts that you have, particularly in BD&O, even if it is recurring, are there different bands there that can tweak up and down based on your client employment levels?

Or could you just help me think through the sensitivity of your businesses to that?

Julie Gebauer: David, I’ll pick up on that one. Overall, we haven’t seen softening employment impact our revenue overall. And I can tell you that even with a softening employment landscape, we expect to deliver mid-single-digit revenue growth in Health, Wealth, and Career this year. And while it’s worth noting that employee turnover has dropped across the industry, there is still high competition for certain jobs and skills. We do these talent intelligence reports that found that organizations are investing heavily in technology talent, data roles, customer service jobs. Then balancing that alongside other external factors like things I’ve mentioned before or have been mentioned before in health care inflation, healthy pension funded status, new legislation where our clients need support.

We believe that overall environment is generally favorable for our Health, Wealth, and Career services. That includes BD&O that you specifically mentioned.

Operator: Thank you. And our next question comes from the line of Mark Hughes from Truist. Your question please.

Mark Hughes: Yes, thank you very much. Good morning. In the health business, you talked about the strong pipeline. How much of that do you think is you’re taking share versus there’s just a lot of movement, a lot of folks looking for solutions given health care in?

Carl Hess: Yeah. Good morning, Mark. Thanks for the question. You know, just to take this one step back, right? The health business at 7% for the quarter, and that’s 8% before, when you exclude book settlement and really reflecting broad-based growth across all regions. We think our strategy is continuing to yield meaningful results. This is the sixth consecutive quarter of growth in the high single digits range. Our expectation is that demand is going to remain solid for the rest of the year driven by a very solid pipeline and supportive external trends.

Julie Gebauer: And, you know, though we do recognize we have a strong comp in Q4, we continue to expect to deliver high single-digit growth for the full year. But maybe Julie could give a bit more commentary about what we’re seeing in Health.

Julie Gebauer: Yeah, sure, Carl. And Mark, to pick up on your point, I’ll start with the is still front and center for a lot of organizations due to the higher cost that driven by things like increased utilization, technological advances, prescription drug cost increases, and the list goes on. In fact, we’ve done some recent research that shows that 73% of companies, 73% are feeling more cost pressure in this area than at any point in the last ten years. So it isn’t a surprise that they’re turning to us for help in managing these costs whether that’s to take health plans out for competitive bids or considering more significant changes.

So this environment has been favorable, and we’ve been successful with focused sales efforts and a strong service, and that has generated strong retention new business, and good results for some of our solutions like global benefits management and our middle market offerings. And so our pipeline is strong. And I’ll, you know, to repeat what Carl said, we are confident in delivering high single-digit growth for the full year.

Mark Hughes: Very good. And then on the in the Retirement business, what is the prospects for continued project work if interest rates are going to be declining here, presumably, most pension funds are pretty doing pretty well, but what is the how does 2026 shape up relative to 2025 on that front?

Carl Hess: Yeah. And, again, let’s ground this where we’re starting from. Wealth generated 5% organic for the quarter, driven by strength in retirement, new clients in core DB services and LifeSite, and to your point, expanded project work for existing clients. Right? Our investments business is delivering growth from new products and client wins. We continue to expect low single-digit growth for the year and over the long term. And Julie, what are we seeing on the ground and what do we think about the?

Julie Gebauer: Yeah. Yeah. I’d like to actually break this into three pieces. Let’s core defined benefit work, emerging work in the defined contribution area, and then developing