Insurance broker WTW beats fourth-quarter profit estimates on robust product demand

By Prakhar Srivastava

(Reuters) -Insurance broker Willis Towers Watson beat Wall Street estimates for fourth-quarter profit on Tuesday, driven by a strong performance in its risk and brokerage business.

Businesses increased spending on insurance products as they prioritized financial security to safeguard against risks, despite higher premium prices.

Insurance brokers' commissions are tied to the premiums insurers charge.

Revenue from Willis Towers Watson's risk and broking unit, which advises clients on risk management and lets them negotiate and place policies with insurers, rose 6% from a year earlier to $1.14 billion, on the back of higher new business activity and strong client retention.

However, the company's shares are down 4.1% at $317.1.

"The stock's decline is likely tied to concerns around free cash flow, buyback levels and reinsurance costs," said TD Cowen analyst Andrew Kligerman.

"Organic revenue growth of 5% was in line with consensus, but below 3Q24's 6%, so investors may be disappointed in that as well," he added.

Meanwhile, the company's largest segment - health, wealth and career - saw revenue rise to $1.85 billion from $1.80 billion a year earlier, boosted by increased project work and brokerage income in North America.

Willis Tower Watson posted adjusted net income of $827 million, or $8.13 per share, for the three months ended Dec. 31, compared with $775 million, or $7.44 per share, a year earlier.

Analysts on average were expecting earnings of $8.03 per share, according to data compiled by LSEG.

Total revenue in the quarter jumped 4% from a year earlier to $3.04 billion.

(Reporting by Prakhar Srivastava in Bengaluru; Editing by Krishna Chandra Eluri and Mohammed Safi Shamsi)