Willis Towers Watson Public Limited Company

Good morning. Welcome to the WTW first quarter 2024 earnings conference call. Please refer to WTWcode.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. 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 visit the forward-looking statements section of the earnings press release issued this morning, as well as other disclosures in the company's most recent Form 10-K and in other filings the company has made with the SEC. During the call, certain non-GAAP financial measures will be discussed. For reconciliations of the non-GAAP measures, as well as other information regarding these measures, please refer to the earnings press release issued this morning and other materials in the investor relations section of the company's website. I'll now turn the call over to Carl Hess, WTW's Chief Executive Officer. Please go ahead.

Good morning, everyone.

Thank you for joining us for WTW's first quarter 2024 earnings call. Joining me today is Andrew Krasner, our Chief Financial Officer. we had a solid start to the year, delivering first quarter results in line with our expectations. Our momentum from last year has carried us into 2024 as we continue to execute on our strategic priorities to grow, simplify, and transform. Our exceptional solutions, productivity from new hires, and investments in talent and technology continue to play a pivotal role in fueling organic revenue growth of 5%. Simultaneously, Our transformation initiatives helped us generate adjusted operating margin expansion of 200 basis points year over year and 16% growth in adjusted diluting earnings per share. We had $33 million of incremental annualized savings from our transformation program during the first quarter, bringing the total to $370 million in cumulative annualized savings since the program's inception. We continue to look for more opportunities to optimize the business while leveraging our cost structure to our and our margins. This encouraging start to the year, our robust new business pipeline, and our plans for realizing operating efficiencies across the rest of the year give us a high level of confidence that we will deliver on our 2024 commitments. I'm pleased with how our strategic progress has driven this quarter's results and, more importantly, has positioned us for continued profitable growth. For the first quarter of 2024, we delivered top-line growth, underscoring the heightened importance of our services in the current market. Our distinctive data-driven and industry-specific approach is making us more attuned to specific economic dynamics that allow us to enhance outcomes and mitigate risk for our clients. Our global client model continues to resonate with the market, thanks to our world-class offerings and the unwavering dedication of our colleagues. All this puts us in a strong position to achieve sustainable, profitable growth and to enhance long-term shareholder value. Let me give you an update on the progress we've made and the opportunities ahead for our segments. Our specialization strategy in risk and broking remains a key growth driver for both the segment and the company. R&B had organic revenue growth of 8% for the quarter. Our specialty businesses continue to strongly outpace the rest of the segment's growth. And we also continue to see sustained client retention rates in the mid-90s, the product of the ongoing value of our data and analytics focus and the effective insurance solutions that we provide to our clients. We often get questions about WTW's specialist approach and how it sets us apart. What's unique about WTW's approach is that our entire business, not just the client-facing parts, is structured around industry concentrations. This has clear benefits for both our clients and our operations. Clients can tap into both our global and local expertise, which includes unique data and analytical tools that help create a continuous cycle as we tackle industry challenges, aggregate our experience and information, and use that to further improve our solutions to meet specific industry needs. From an operational point of view, these are businesses with national or even global P&Ls and not simply an industry practice class. Our dedicated industry teams have heightened accountability for end-to-end performance and make informed decisions based on their experience and in-depth knowledge that results in exceptional value delivered to our clients while achieving strong financial results. A client win from this past quarter illustrates the effectiveness of this approach. Members of our global construction line of business based in our Europe and international geographies came together to win a multi-year contract for our rail infrastructure lead. by creating a custom solution that fit the client's unique risk management profile. The global teams were assisted by our local teams of the country where the railway was being built, enabling us to provide even further specific expertise to the situation. Our team's familiarity with the industry-specific risks associated with rail infrastructure, combined with our specialized geographic knowledge, ultimately secured us the win amidst fierce competition. In North America, Our transition to industry-focused divisions is complete, enhancing our ability to meet client needs and driving innovation and new offerings through our industry verticals. One example of this is Veritas, our open market MGU, which has continued to exceed our expectations since its introduction last quarter. The recent addition of workers' compensation capabilities further solidifies Veritas' proposition within the insurance ecosystem, enhancing its value proposition and expanding its market reach. We continue to expect the investments made in talented technology over the last few years, combined with the reorientation of the R&B business towards specialization, will drive higher levels of activity with new and existing clients that is fundamental to our organic revenue growth and margin expansion trajectory this year. In HWC, we remain focused on our core businesses while fostering smart connections to fuel sustainable organic growth of 4% per quarter. Clients continue to recognize that the deep expertise we have in each of our HWC businesses enables us to deliver market-leading solutions across our health, wealth, career, and benefits delivery and outsourcing businesses and make breakthroughs that matter in a complex and changing environment. For example, with many pension plans being well-funded, our retirement teams around the world have helped clients de-risk their plans and gain access to surplus assets not only through traditional means like annuity buy-ins and buy-outs, but also through novel approaches like reopening previously closed pension plans. In addition, we've assembled a unique solution involving bulk annuity purchases and our retiree health care exchange that enables U.S. organizations to de-risk retiree medical obligations. After launching this solution late last year, we've already helped clients settle some $430 million in retiree medical liabilities, and we expect another $500 million in settlements over the rest of this year. In other breakthroughs, we're using artificial intelligence and broader digital tools to help clients answer some big questions about their people processes. Specifically, we've doubled our digitally enabled revenue into the career area two years running and are focused on doubling again in 2024. This includes us helping dozens of the world's largest companies identify the skills their employees need to deliver solid business results and grow in their careers. We've also developed thousands of job profiles and aligned hundreds of jobs to specific career levels with AI, freeing up time for consultants so they can spend more of their time advising clients on reward strategy and program design. Our digital solutions extended to the executive pay area with our proprietary performance modeling tool that we've deployed to help hundreds of compensation committees make decisions about executive pay and performance targets. Stepping over to healthcare, we see no shortage of opportunities. There's continued high inflation around the world, and the introduction of new specialty solutions is not abating. Clients and prospects are looking for breakthroughs to deliver value and impact, evidenced by the more than 2,500 people who recently attended our flagship U.S. healthcare conference. All of our core businesses are helping organizations respond to new legislation and regulation, from the Netherlands pension legislation to the EU pay transparency requirements. An important part of core business growth in HWC is the smart connections that span the segment, which create opportunities to cultivate sustainable, sticky relationships. Two examples of this came with wins this past quarter with a telecommunications provider and a global biopharmaceutical company. In both instances, we were able to create a comprehensive bundle of solutions by engaging our teams across work and rewards, employee experience, retirement, and benefits delivery and administration. In addition to being simply larger, these multi-business relationships are typically more embedded and more profitable as we build connections with varied client stakeholders, deliver greater value, utilize our client knowledge, and leverage common resources. Our focus on smart connections continues to gain traction across our segments, demonstrating the complementary nature of our businesses and providing further evidence of the value of our multi-industry expertise. For example, this past quarter, our colleagues in HWC helped tee up a broking opportunity for our CRB team to do a complete review of a health and benefits client's P&C insurance strategy and program. After detailing our approach to industry specialization, our CRB colleagues were chosen for all lines of coverage over the incumbent. Putting it all together, good market demand, well-positioned core businesses, breakthrough solutions in new areas, and smart connections that add value, the outlook for HWC remains strong. In closing, I'm proud of our performance this quarter, which reflects our continued strategic progress. We're executing successfully on our priorities, and as a result, are in a solid position to deliver on our goals for 2024. I'm excited about the opportunities that lie ahead for the rest of the year and beyond. And as always, I extend my gratitude to our colleagues for continuing to stay dedicated and committed to WTW and our clients. And with that, I'll turn the call over to Andrew.