Willis Towers Watson Public Limited Company · NASDAQ:WTW
Willis Towers Watson Public — Willis Group Holdings — Q4 2013 Earnings Presentation
27 slides from Willis Towers Watson Public's earnings presentation, Mar 10, 2014
Slide 1: Fact Book Fourth Quarter 2013
Exhibit 99.1 Fact Book Fourth Quarter 2013 WILLIS GROUP HOLDINGS March 2014
Slide 2: A leading global risk advisor, insurance and reinsurance broker
A leading global risk advisor, insurance and reinsurance broker Willis Global Franchise 2013 Commissions and Fees by Segment Willis Subsidiaries and Associates 2013 C&F: $3.63 billion With roots dating to 1828, Willis operates today on every continent, with more than 18,000 employees in over 400 off
Slide 3: Summary Q4 2013 financial results
Summary Q4 2013 financial results Q4 2013 Q4 2012 Reported 5.1% 7.0% Positive Q4 2013 organic commission commission and and fee growth across all three fee growth business segments Organic 3.7% 7.5% commission and fee growth Reported 16.5% (89.0)% operating margin Adjusted 16.3% 19.1% operating marg
Slide 4: Organic Q4 2013 commissions and fees growth
Organic Q4 2013 commissions and fees growth Organic growth excluding $9.4 million (110 bps) net Q4 2013 Q4 2012 negative revenue recognition adjustment would have been 4.8% North America 5.8% 5.0% North America – International 3.0% 7.4% Excluding $5.3 million (160 bps) positive Global 1.4% 11.6% rev
Slide 5: Q4 2013 financial results
Q4 2013 financial results Reported operating margin 16.5%; Adjusted operating margin 16.3% Adjusted operating margin down 280 bps from prior year quarter, primarily driven by: Higher salaries and benefits and other operating expenses Partially offset by higher commissions and fees Q4 2012 adjusted o
Slide 6: WSH & Peers – Organic growth trends
WSH & Peers – Organic growth trends Average 2008-2013: WSH: 3% Peers: 1% 5% 5% 4% 4% 4% 3% 2% 2% 2% 2008 2009 2010 2011 2012 2013 -1% -1% -2% WSH Peers Note: Peer averages are based on Willis estimates using public information regarding insurance brokerage operations of AJG, AON, BRO, MMC 6 See impo
Slide 7: Strong cash flow from operations
Strong cash flow from operations ($ millions) $561 $525 2013 corporate/non-operating uses of cash $489 Dividends $193 million $419 $439 Capex $112 million M&A expenditures of ~$34 million $253 2008 2009 2010 2011 2012 2013 $36 million increase in cash flow from operations in 2013 $796 million of cas
Slide 8: Leverage ratios
Leverage ratios Adjusted EBITDA $874 million in 2013 Debt outstanding $2.3 billion as at December 31, 2013 3.8x 2.7x 2.6x 2.6x 2.7x 2.5x (a) 2008 2009 2010 2011 2012 2013 Debt / Adjusted EBITDA (a) Includes impact from acquisition of HRH as of 10/1/2008. 8 See important disclosures regarding non-GAA
Slide 9: Segment Overviews
SEGMENT OVERVIEWS Willis
Slide 10: Willis North America overview
Willis North America overview Segment overview 2013 commissions and fees – by region Extensive retail platform Able to leverage industry and specialty West practice group expertise across Willis 14% South network Atlantic 16% 21% Major practice groups include: Human Capital (approximately 25% of CAP
Slide 11: Willis International overview
Willis International overview Segment overview 2013 commissions and fees – by region Retail operations in Western and Eastern Europe United Kingdom Latin America Latin America 16% Australasia Asia Pacific UK 8% 15% South Africa South Africa Middle East 1% Asia Offices designed to grow business 9% lo
Slide 12: Willis Global overview
Willis Global overview Segment overview 2013 commissions and fees – by business Reinsurance, Specialty Insurance and Capital Markets businesses Other Marine & Energy Political 4% Aerospace 13% 8% Approximately 3,600 associates; clients People and Terrorism around the globe 7% P&C and Construction 9%
Slide 13: Willis Global overview (continued)
Willis Global overview (continued) Segment overview 2013 commissions and fees – by business Global Specialty, with strong global positions in: Other Marine & Energy 4% Aerospace Aerospace – includes Inspace Political 8% 13% People and Terrorism Marine & Energy 7% P&C and Construction Construction 9%
Slide 14: Appendix
APPENDIX Willis
Slide 15: The Willis Cause
The Willis Cause The WillisGause We thoroughly. understand our clients’ needs and their industries. We develop client solutions with the bést markets, price and terms. : We Nelend deliver ‘quality Ob service. Willis -
Slide 16: Important disclosures regarding forward-looking statements
Important disclosures regarding forward-looking statements This presentation contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors cre
Slide 17: Important disclosures regarding non-GAAP measures
Important disclosures regarding non-GAAP measures This presentation contains references to "non-GAAP financial measures" as defined in Regulation G of SEC rules. We present these measures because we believe they are of interest to the investment community and they provide additional meaningful metho
Slide 18: Operating income to adjusted operating income (annual)
Important disclosures regarding non-GAAP measures (continued) Operating income (loss) to adjusted operating income 2008 2009 2010 2011 2012 2013 (In millions) FY FY FY FY FY FY Operating Income $503 $690 $753 $566 ($209) $685 Excluding: Fees related to the extinguishment of debt (a) - - - - - 1 Expe
Slide 19: Operating income to adjusted operating income (quarterly)
Important disclosures regarding non-GAAP measures (continued) Operating income (loss) to adjusted operating income 2012 2013 (In millions) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Operating Income (loss) $317 $179 $70 ($775) $287 $171 $75 $152 Excluding: Fees related to the extinguishment of debt (a) - - - - - - 1 -
Slide 20: Net income to adjusted net income (annual)
Important disclosures regarding non-GAAP measures (continued) Net income (loss) to adjusted net income 2008 2009 2010 2011 2012 2013 (In millions, except per share data) FY FY FY FY FY FY Net Income (loss) $302 $434 $455 $203 ($446) $365 Excluding the following, net of tax: Fees related to the extin
Slide 21: Net income to adjusted net income (quarterly)
Important disclosures regarding non-GAAP measures (continued) Net income (loss) to adjusted net income 2012 2013 (In millions, except per share data) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Net Income (loss) $225 $107 $26 ($804) $219 $105 ($27) $68 Excluding the following, net of tax: Loss on extinguishment of debt
Slide 22: Adjusted EBITDA and Debt/Adjusted EBITDA
Important disclosures regarding non-GAAP measures (continued) Adjusted EBITDA and Debt/Adjusted EBITDA 2008 2009 2010 2011 2012 2013 (In millions) FY FY FY FY FY FY Operating Income (loss) $503 $690 $753 $566 ($209) $685 Excluding: (a) Fees related to the extinguishment of debt - - - - - 1 Expense r
Slide 23: Adjusted EBITDA and Debt/Adjusted EBITDA 2013
Important disclosures regarding non-GAAP measures (continued) Adjusted EBITDA and Debt/Adjusted EBITDA 2013 (In millions) 1Q 2Q 3Q 4Q FY Operating Income $287 $171 $75 $152 $685 Excluding: Fees related to the extinguishment of debt (a) - - 1 - 1 Expense reduction initiative (b) 46 - - - 46 Net (gain
Slide 24: Commissions and fees analysis 2013
Important disclosures regarding non-GAAP measures (continued) Commissions and fees analysis Organic Foreign Acquisitions commissions currency and and fees 2013 2012 Change translation disposals growth ($ millions) % % % % Three months ended December 31, 2013 North America $353 $331 6.6 0.0 0.8 5.8 I
Slide 25: Commissions and fees analysis 2012 and 2011
Important disclosures regarding non-GAAP measures (continued) Commissions and fees analysis Foreign Acquisitions Organic currency and commissions 2012 2011 Change translation disposals and fees growth ($ millions) % % % % 2012 Full year Global $1,124 $1,073 4.8 (1.3) - 6.1 North America 1,306 1,314
Slide 26: Non-GAAP footnotes
Important disclosures regarding non-GAAP measures (continued) (a) In August 2013, Willis bought back $521 million of outstanding 2015, 2017 and 2019 senior notes through a tender offer. In conjunction with this activity, the Company recorded a loss on debt extinguishment of $60 million. Willis also
Slide 27: Willis Group Holdings
Fact Book Fourth Quarter 2013 WILLIS GROUP HOLDINGS March 2014
Willis Group Holdings — Q4 2013 Earnings Presentation on 6ix