WTW Q2 Earnings Beat Estimates on Revenue Growth and Margin Gains

WTW's Revenue Growth Stays Broad-Based

Reported revenues increased from $2.26 billion in the prior-year quarter. Excluding foreign-currency movements, revenues advanced 8%. Acquisitions and divestitures contributed 3 percentage points to the quarterly change.

Adjusted EBITDA increased 13% year over year to $529 million. The related margin widened 70 basis points to 21.5%, reflecting improved operating leverage and stronger adjusted profitability.

The total costs of providing services increased 11% year over year to $2.1 billion due to higher salaries and benefits, other operating expenses, and amortization and transaction and integration expenses. Our estimate was pegged at $2 billion.

Willis Towers Expands HWC Profitability

Health, Wealth & Career revenues increased 8% year over year to $1.27 billion. Our estimate was pegged at $1.26 billion. Revenues rose 7% on a constant-currency basis and 4% organically. Health generated organic growth across all regions, while Wealth benefited from higher retirement-related activity.

Career revenues were unchanged organically. Higher communications project and compensation work was offset by pressure in the Middle East. Benefits Delivery & Outsourcing gained from project activity, new client wins and regulatory work, partly offset by lower Individual Marketplace commissions.

The segment’s operating income rose 9% year over year to $306 million. Operating margin expanded 30 basis points to 24.1%, driven by expense discipline and improved operating leverage.

WTW's Risk & Broking Segment Leads Growth

Risk & Broking revenues advanced 11% to $1.16 billion. Our estimate was pegged at $1.12 billion. Constant-currency revenues increased 10%, while organic growth reached 7%, the stronger rate among WTW’s two operating segments.

Corporate Risk & Broking benefited from new business activity and strong client retention worldwide. Insurance Consulting and Technology recorded organic growth, primarily reflecting robust software sales in its Technology practice.

Segment operating income climbed 16% year over year to $258 million. Operating margin improved 100 basis points to 22.2% on operating leverage.

Willis Towers Balances Costs and Margin Gains

Adjusted operating income increased 15% year over year to $480 million. Adjusted operating margin expanded 100 basis points to 19.5%, indicating that underlying profit growth outpaced the increase in revenues.

On a reported basis, income from operations declined 1% year over year to $364 million. Operating margin contracted 150 basis points to 14.8%, partly reflecting transaction and integration expenses of $61 million compared with $2 million a year earlier.

Net income fell 30% year over year to $231 million, while diluted GAAP earnings decreased 27% to $2.43 per share. The divergence from adjusted results reflected acquisition-related and other excluded items.

WTW Strengthens Cash Flow and Capital Returns

Operating cash flow totaled $474 million during the first six months of 2026, up 45.4% from the prior-year period. Free cash flow increased 65.9% year over year to $360 million, primarily due to operating margin expansion.

WTW repurchased about 1.7 million shares for $450 million during the second quarter. The board also increased the company’s existing share-repurchase authorization by $1.5 billion, supplementing approximately $500 million remaining under the prior authority.

Cash and cash equivalents were $1.63 billion as of June 30, 2026, down 48.1% from the end of 2025. Long-term debt stood at $5.78 billion and grew 0.4% from year-end.

Willis Towers Launches Propel AI Initiative

WTW introduced Propel, an enterprise-wide plan designed to expand the use of artificial intelligence and automation through 2028. The initiative is intended to improve client service, support growth opportunities and streamline core processes.

The company expects to invest about $625 million in cash and incur $25 million of non-cash charges. Propel is targeted to generate roughly $400 million in run-rate savings. After reinvesting $50 million to support growth, WTW expects approximately $350 million in net run-rate savings.

Management is targeting an adjusted operating margin of approximately 30% in 2028. The company maintained its full-year 2026 financial considerations, including continued enterprise-level margin expansion and share repurchases of at least $1 billion, subject to market conditions.

WTW Provides 2026 Guidance

WTW expects continued adjusted operating margin expansion at the enterprise level. 

Willis Towers expects Health, Wealth & Career organic revenues to be in the mid-single digits.

WTW expects Risk & Broking organic revenues to be in the mid-single digits.

In terms of the Newfront acquisition, WTW expects 2026 post-close revenue of $250 million and an adjusted EBITDA margin of 26%.

WTW expects Newfront’s Total Rewards business segment (42%) will be included in HWC and Newfront’s Business Insurance business segment (58%) will be included in R&B.

WTW expects share repurchases of $1 billion or greater, subject to market conditions and potential capital allocation to organic and inorganic investment opportunities.

WTW expects continual improvement in free cash flow margin primarily from operating margin expansion along with an evolving business mix.

Zacks Rank

Willis Towers Watson currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Brown & Brown, Inc.’s BRO second-quarter 2026 adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate by 0.9%. The bottom line increased 3.9% year over year. Revenues of $1.67 billion missed the consensus mark by 2.9% but increased 30.4% year over year. Acquisition activity supported the top line, while organic revenues declined 0.7%. 

Commissions and fees rose 32.4% to $1.65 billion, while investment and other income declined to $22 million from $36 million. Adjusted EBITDAC margin contracted 100 basis points to 35.7%. Adjusted net income attributable to the company increased 18.4% to $361 million. 

Everest Group, Ltd. EG reported second-quarter 2026 operating earnings of $14.85 per share, which beat the Zacks Consensus Estimate by 1.8%. The bottom line declined 14.5% year over year. Strong underwriting income from its core businesses supported the earnings beat. Operating revenues of $3.96 billion decreased 11.8% year over year and missed the consensus estimate by 2.9%. 

Gross written premiums declined 19.4% year over year to $3.77 billion. Our estimate was $3.8 billion. Net premiums earned fell 12.6% to $3.49 billion, reflecting lower business volumes. Our estimate was $3.6 billion. Total claims and expenses fell 10.8% to $3.28 billion. Our estimate was $3.4 billion. 

Arch Capital Group Ltd. ACGL reported second-quarter 2026 operating income of $2.56 per share, which beat the Zacks Consensus Estimate by 2.8%. The bottom line decreased 0.8% year over year. Revenues of $4.43 billion declined 6.9% year over year and missed the consensus mark by 3.1%. 

Gross premiums written declined 1.1% year over year to $6.13 billion. Net premiums written decreased 6.9% to $4.05 billion, reflecting lower volumes in the Insurance and Reinsurance segments. Net premiums earned fell 8.1% to $3.99 billion. Underwriting income fell 19.7% to $657 million. 

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