Merger Failed, Top Talent Laid Off – How This Broker Succeeded Against All Odds | Insurance business America
And why specialization (and cost reduction) helped
Insurance News
By Jen Frost
WTW CEO Carl Hess has stated that the global brokerage’s risk and brokerage talent base is “back to full strength” after a period of investment necessitated by the failed merger with Aon.
“Our colleagues who joined us in 2022 and 2023 have become increasingly productive and have brought our talent base back to full strength, as evidenced by the segment’s strong organic revenue growth in the second half of 2023,” Hess told investors on the global broker’s 2023 annual results call.
WTW is now focused on “strategic and opportunistic” talent acquisition in companies and regions likely to generate the greatest profit and growth potential, Hess said.
The global broker has increased its investment in talent acquisition in recent years following its failed mega-merger with Aon.
The deal, which collapsed due to competition concerns under pressure from the U.S. Department of Justice, resulted in valued colleagues leaving the company, former WTW CEO John Haley confirmed in an August 2021 second-half earnings conference call in which he confirmed that the company was “aggressively” recruiting staff. At the time, Haley, who resigned from WTW in January 2022, noted that the merger process had made hiring new employees difficult because it was unclear where new employees would fit into the company.
WTW takes “tailored approach” to specialization after growth spurt
Specialization is expected to remain a key focus for WTW’s risk and brokerage segment in 2024 after driving growth last year, as the global brokerage also looks to expand the geographic reach of its Managing General Underwriter (MGU) Verita, Hess confirmed its annual profit call during the 2023 fiscal year.
“Our brokerage specialization strategy and risk has been a key growth driver for both the segment and the company,” Hess told investors on the global brokerage’s 2023 earnings call. “Our specialty stores continue to experience significantly higher growth than the rest of the segment.
“This growth is due in large part to improved customer retention and the expansion of existing customer relationships. Our strengthened ability to attract new customers and win back old customers has validated this approach.”
The global company has completed the development of 12 industry verticals in North America. Work continues across Western Europe and the launch process for its international business is scheduled for 2024.
The company is taking a “tailored approach” to specializing in the regions, Hess said.
MGU Verita is about to expand
WTW startup MGU Verita has experienced growth and expansion is planned as the group looks to develop differentiated revenue streams.
“It was only in the fourth quarter of 2023 that we brought brokers on board, tied premiums and received input from both external and our own broker customers,” said Hess. “In 2024, we will focus on expanding our MGA and MGU strategy to additional regions.”
The Portsmouth, New Hampshire-based property, casualty and financial MGU launched last September and is initially focused on hospitality and leisure, financial institutions and professional services firms.
WTW reports increase in sales
The global brokerage and advisory firm, which reported a 7% increase in revenue to $9.5 billion and net profit of $1.1 billion for the year (2022: $1 billion), saw an increase in share price after releasing its results on Tuesday morning, closing at $268.45, up 7.1% from Monday evening’s closing price of $250.60.
Across the company, restructuring costs trended downward over the year, reaching $68 million (2022: $99 million). The global broker’s transformation program, hailed by Hess as a “significant benefit to our bottom line,” resulted in $37 million in cost savings in 2023 and resulted in cumulative savings of $337 million since the program’s launch in 2021 U.S. dollar.
Do you have an overview of the talent turnaround and specialization focus post-Aon at WTW? Leave a comment below.
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2024-02-07 15:44:41
www.insurancebusinessmag.com
