WTW plots 'bold new future' strategy to grow, simplify and transform
Broker Willis Towers Watson (WTW) has unveiled a "bold new future" strategy to drive long-term growth and unlock value for shareholders as the company forges ahead independently following the failure of its mega-merger deal with rival Aon.
The key theme of its new strategy would be to "grow, simplify and transform".
The company will now focus on core opportunities with the highest growth and return, including gaining market share in risk and broking and individual marketplace, by innovating and evolving its offerings in markets such as defined contribution and wealth management, expediting capabilities in fast growth markets like health insurance markets, cyber and climate, and bringing targeted solutions to clients reflecting more connected offerings.
WTW plans to streamline its operational structure, developing a globally consistent client model and enhancing growth operations to improve sales and retention outcomes. This includes an agile decision-making process to increase speed of execution.
Finally, it plans to transform operations to drive savings while enhancing its client experience. The company will drive $300+ million in expected cost reductions to contribute 300 bps of margin improvement toward a fiscal year 2024 margin target through maximizing global platforms, right-shoring operations, rationalising real estate and modernising IT.
By year-end fiscal 2024, the company expects to grow its revenues to $10+ billion, improve margins to 24-25 percent, return significant capital to shareholders beginning with the execution of over $4 billion in share buybacks during fiscal years 2021-2022, and achieve adjusted EPS of at least $18-21 per share. Additionally, the company seeks to generate higher free cash flow conversion to deliver $5-6 billion in free cash flow which when combined with the after-tax proceeds from the Willis Re divestiture and current cash balances will give the company $10-11 billion of available cash by 2024 to help drive shareholder value.
John Haley, Willis Towers Watson’s chief executive officer, highlighted the company's distinctive mix of highly complementary businesses, scale and global reach, stating that “I am confident that – under the leadership of Carl Hess and his highly-accomplished global leadership team – our strategy sets the course to accelerate our performance as an independent company and positions Willis Towers Watson for a bold new future.”
Carl Hess, president and future chief executive officer, said: “The central priorities of our strategy – grow, simplify and transform – build upon our core strengths, with a focus on driving sustainable revenue growth, improved operating margins and higher free cash flow conversion.
"We are committed to a disciplined capital allocation policy, beginning with a plan to return $4+ billion to shareholders through share buybacks by fiscal year-end 2022. We have a world-class team and are energised and focused as we execute our strategy to capture the significant opportunities ahead.”
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