UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to ___________

Commission File Number: 001-16503

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)


Ireland (Jurisdiction of incorporation or organization)		98-0352587 (I.R.S. Employer Identification No.)

c/o Willis Group Limited 51 Lime Street, London EC3M 7DQ, England (Address of principal executive offices)		(011) 44-20-3124-6000 (Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Ordinary Shares, nominal value $0.000304635 per share

WTW

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of ‘large accelerated filer’, ‘accelerated filer’, ‘smaller reporting company’, and ‘emerging growth company’ in Rule 12b-2 of the Exchange Act.


Large accelerated filer		Accelerated filer		Non-accelerated filer		Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No 

As of July ~~25, 2022,~~24, 2023, there were outstanding ~~109,965,562~~104,822,898 ordinary shares, nominal value $0.000304635 per share, of the registrant.

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY

INDEX TO FORM 10-Q

For theThree and Six Months Ended June 30, ~~2022~~2023


		Page
Certain Definitions		3
Disclaimer Regarding Forward-looking Statements		4

PART I. FINANCIAL INFORMATION		7
Item 1. Financial Statements (Unaudited)		7
Condensed Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022		7
Condensed Consolidated Balance Sheets - June 30, ~~2022~~2023 and December 31, ~~2021~~2022		8
Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022		9
Condensed Consolidated Statements of Changes in Equity - Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022		10
Notes to the Condensed Consolidated Financial Statements		12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		3029
Item 3. Quantitative and Qualitative Disclosures About Market Risk		5246
Item 4. Controls and Procedures		5246

PART II. OTHER INFORMATION		5347
Item 1. Legal Proceedings		5347
Item 1A. Risk Factors		5347
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		5347
Item 3. Defaults Upon Senior Securities		5448
Item 4. Mine Safety Disclosures		5448
Item 5. Other Information		5448
Item 6. Exhibits		5550
Signatures		5651

Certain Definitions

The following definitions apply throughout this quarterly report unless the context requires otherwise:


‘We’, ‘Us’, ‘Company’, ‘Willis Towers Watson’, ‘Our’, ‘Willis Towers Watson plc’ or ‘WTW’		Willis Towers Watson Public Limited Company, a company organized under the laws of Ireland, and its subsidiaries

‘shares’		The ordinary shares of Willis Towers Watson Public Limited Company, nominal value $0.000304635 per share

‘~~Miller’~~TRANZACT’		~~Miller Insurance Services LLP~~CD&R TZ Holdings, Inc. and its subsidiaries, doing business as TRANZACT

‘U.S.’		United States

‘U.K.’		United Kingdom

‘Brexit’		The United Kingdom’s exit from the European Union, which occurred on January 31, 2020.

‘E.U.’		European Union or European Union 27 (the number of member countries following the United Kingdom’s exit)

‘U.S. GAAP’		United States Generally Accepted Accounting Principles

‘FASB’		Financial Accounting Standards Board

‘ASC’		Accounting Standards Codification

‘ASU’		Accounting Standards Update

‘SEC’		United States Securities and Exchange Commission

‘EBITDA’		Earnings before Interest, Taxes, Depreciation and Amortization

Disclaimer Regarding Forward-looking Statements

We have included in this document ‘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 created by those laws. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, that address activities, events or developments that we expect or anticipate may occur in the future, including such things asas: our ~~outlook,~~outlook; the potential impact of ~~the global pandemic on our business,~~natural or man-made disasters like health pandemics and other world health crises; future capital ~~expenditures,~~expenditures; ongoing working capital ~~efforts,~~efforts; future share ~~repurchases,~~repurchases; financial results (including our revenue, costs or margins), and the impact of changes to tax laws on our financial ~~results,~~results; existing and evolving business strategies and acquisitions and dispositions, including ~~the~~our completed sale of Willis Re to Arthur J. Gallagher & Co. (‘Gallagher’), and transitional arrangements related thereto; demand for our services and competitive ~~strengths, goals,~~strengths; strategic goals; the benefits of new ~~initiatives,~~initiatives; growth of our business and ~~operations,~~operations; our ability to successfully manage ongoing leadership, organizational and technology changes, including investments in improving systems and ~~processes,~~processes; our ability to implement and realize anticipated benefits of any cost-savings initiatives including the multi-year operational Transformation ~~program,~~program; and plans and references to future successes, including our future financial and operating results, short-term and long-term financial goals, plans, objectives, expectations and intentions, including with respect to free cash flow generation, adjusted net revenue, adjusted operating margin and adjusted earnings per share, are forward-looking statements. Also, when we use words such as ~~‘may,’ ‘will,’ ‘would,’ ‘anticipate,’ ‘believe,’ ‘estimate,’ ‘expect,’ ‘intend,’ ‘plan,’ ‘continues,’ ‘seek,’ ‘target,’ ‘focus,’ ‘probably,’~~‘may’, ‘will’, ‘would’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘plan’, ‘continues’, ‘seek’, ‘target’, ‘goal’, ‘focus’, ‘probably’, or similar expressions, we are making forward-looking statements. Such statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. All forward-looking disclosure is speculative by its nature.

There are important risks, uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including the following:

•

our ability to successfully establish, execute and achieve our global business strategy as it evolves;

•

our ability to fully realize anticipated benefits of our growth strategy;

•

our ability to ~~successfully deploy cost-mitigation measures~~achieve our short-term and ~~achieve longer-term offsets;~~long-term financial goals, such as with respect to our cash flow generation, and the timing with respect to such achievement;

•

the risks related to changes in general economic (including a possible recession), business and political conditions, including changes in the financial markets, inflation, credit availability, increased interest rates and ~~inflation;~~trade policies;

•

the risks to our short-term and long-term financial goals from any of the risks or uncertainties set forth herein;

•

the risks to our business, financial condition, ~~and~~ results of operations, and long-term goals that may be materially adversely affected by any negative impact on the global economy and capital markets resulting from or relating to inflation, the military conflict inbetween Russia and Ukraine or any other geopolitical tensions and the ~~intended~~ withdrawal from our high-margin businesses in ~~Russia;~~Russia and our ability to achieve cost-mitigation measures;

•

our ability to successfully hedge against fluctuations in foreign currency rates;

•

the risks relating to the adverse impacts of natural or man-made disasters like health pandemics and other world health crises, such as the ~~ongoing~~ COVID-19 pandemic, including supply chain, workforce availability, vaccination rates, ~~new or emerging variants~~ and ~~further social-distancing orders~~other impacts on the people and businesses in jurisdictions where we do business, on the demand for our products and services, our cash flows and our business ~~operations, including increased demand on~~operations;

•

material interruptions to or loss of our information processing capabilities, or failure to effectively maintain and upgrade our information technology resources and systems and related risks of cybersecurity breaches or incidents;

•

our ability to comply with complex and evolving regulations related to data privacy and cybersecurity;

•

the risks relating to the transitional arrangements in effect subsequent to our now-completed sale of Willis Re to ~~Gallagher, including incremental business, operational and regulatory risks created by transitional arrangements and pending transactions;~~Gallagher;

•

significant competition that we face and the potential for loss of market share and/or profitability;

•

the impact of seasonality and differences in timing of renewals and non-recurring revenue increases from disposals and book-of-business sales;

•

the failure to protect client data or breaches of information systems or insufficient safeguards against cybersecurity breaches or incidents;

•

the risk of increased liability or new legal claims arising from our new and existing products and services, and expectations, intentions and outcomes relating to outstanding litigation;

•

the risk of substantial negative outcomes on existing litigation or investigation matters;

•

changes in the regulatory environment in which we operate, including, among other risks, the impacts of pending competition law and regulatory investigations;

•

various claims, government inquiries or investigations or the potential for regulatory action;

•

our ability to make divestitures or acquisitions, ~~and~~including our ability to integrate or manage such acquired ~~businesses;~~

•

~~our ability to~~businesses as well as identify and successfully ~~hedge against fluctuations in foreign currency rates;~~execute on opportunities for strategic collaboration;

•

our ability to integrate direct-to-consumer sales and marketing solutions with our existing offerings and solutions;

•

~~our ability to comply with complex and evolving regulations related to data privacy and cyber security;~~

•

our ability to successfully manage ongoing organizational changes, including investments in improving systems and processes;

•

disasters or business continuity problems;

•

the ongoing impact of ~~Brexit;~~Brexit on our business and operations, including as a result of updated regulatory guidance, such as that issued by the European Insurance and Occupational Pensions Authority on February 3, 2023, ongoing efforts and resources allocated to the post-Brexit evolution of regulations and laws and the need to relocate talent or roles or both between or within the E.U. and the U.K., or otherwise;

•

our ability to successfully enhance our billing, collection and other working capital efforts, and thereby increase our free cash flow;

•

~~the impact of the anticipated replacement of the London Interbank Offered Rate (‘LIBOR’);~~

•

our ability to properly identify and manage conflicts of interest;

•

reputational damage, including from association with third parties;

•

reliance on third-party ~~services;~~service providers and suppliers;

•

risks relating to changes in our management structures and in senior leadership;

•

the loss of key employees or a large number of employees and ~~any rehiring;~~rehiring rates;

•

our ability to maintain our corporate culture;

•

doing business internationally, including the impact of foreign currency exchange rates;

•

compliance with extensive government regulation;

•

the risk of sanctions imposed by governments, or changes to associated sanction regulations (such as sanctions imposed on Russia) and related counter-sanctions;

•

our ability to effectively apply technology, data and analytics changes for internal operations, maintaining industry standards and meeting client preferences;

•

changes and developments in the insurance industry or the U.S. healthcare system, including those related to Medicare and any legislative actions from the current U.S. ~~Congress;~~Congress, and any other changes and developments in legal, economic, business or operational conditions impacting our Medicare benefits businesses such as TRANZACT;

•

the inability to protect ~~the Company’s~~our intellectual property rights, or the potential infringement upon the intellectual property rights of others;

•

fluctuations in our pension assets and ~~liabilities;~~liabilities and related changes in pension income, including as a result of, related to, or derived from movements in the interest rate environment, investment returns, inflation, or changes in other assumptions that are used to estimate our benefit obligations and its effect on adjusted earnings per share;

•

our capital structure, including indebtedness amounts, the limitations imposed by the covenants in the documents governing such indebtedness and the maintenance of the financial and disclosure controls and procedures of each;

•

our ability to obtain financing on favorable terms or at all;

•

adverse changes in our credit ratings;

•

the impact of recent or potential changes to U.S. or foreign laws, and the enactment of additional, or the revision of existing, state, federal, and/or foreign laws and regulations, recent judicial decisions and ~~the~~ development of case law, other regulations and any policy changes and legislative actions, including ~~the~~those that impact ~~of such changes on~~ our effective tax rate;

•

U.S. federal income tax consequences to U.S. persons owning at least 10% of our shares;

•

changes in accounting principles, estimates or assumptions;

•

risks relating to or arising from environmental, social and governance (‘ESG’) practices;

•

fluctuation in revenue against our relatively fixed or higher than expected expenses;

•

the laws of Ireland being different from the laws of the U.S. and potentially affording less protections to the holders of our securities; and

•

our holding company structure potentially preventing us from being able to receive dividends or other distributions in needed amounts from our subsidiaries.

The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For more information, please see Part I, Item 1A in our Annual Report on Form 10-K, and our subsequent filings with the SEC. Copies are available online at http://www.sec.gov or www.wtwco.com.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report on Form 10-Q, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved.

Our forward-looking statements speak only as of the date made and we will not update these forward-looking statements unless the securities laws require us to do so. With regard to these risks, uncertainties and assumptions, the forward-looking events discussed in this document may not occur, and we caution you against unduly relying on these forward-looking statements.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY

Condensed Consolidated Statements of Comprehensive Income

(In millions of U.S. dollars, except per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Revenue	$	2,031		$	2,091		$	4,191		$	4,319		$	2,159		$	2,031		$	4,403		$	4,191
Costs of providing services
Salaries and benefits		1,259			1,317			2,577			2,736			1,347			1,259			2,660			2,577
Other operating expenses		393			384			879			784			433			393			886			879
Depreciation		65			72			131			143			64			65			124			131
Amortization		83			97			168			200			70			83			141			168
Restructuring costs		56			0			62			0			10			56			13			62
Transaction and transformation, net		38			51			58			75
Transaction and transformation														93			38			152			58
Total costs of providing services		1,894			1,921			3,875			3,938			2,017			1,894			3,976			3,875
Income from operations		137			170			316			381			142			137			427			316
Interest expense		(51	)		(52	)		(100	)		(111	)		(57	)		(51	)		(111	)		(100	)
Other income, net		93			74			120			512			35			93			60			120
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		179			192			336			782			120			179			376			336
Provision for income taxes		(19	)		(75	)		(62	)		(119	)		(24	)		(19	)		(74	)		(62	)
INCOME FROM CONTINUING OPERATIONS		160			117			274			663			96			160			302			274
(LOSS)/INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		(46	)		69			(35	)		259
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX														—			(46	)		—			(35	)
NET INCOME		114			186			239			922			96			114			302			239
Income attributable to non-controlling interests		(5	)		(2	)		(8	)		(5	)		(2	)		(5	)		(5	)		(8	)
NET INCOME ATTRIBUTABLE TO WTW	$	109		$	184		$	231		$	917		$	94		$	109		$	297		$	231

EARNINGS PER SHARE
Basic earnings per share:
Income from continuing operations per share	$	1.38		$	0.89		$	2.31		$	5.07		$	0.88		$	1.38		$	2.78		$	2.31
(Loss)/income from discontinued operations per share		(0.41	)		0.53			(0.30	)		1.99
Loss from discontinued operations per share														—			(0.41	)		—			(0.30	)
Basic earnings per share	$	0.97		$	1.42		$	2.01		$	7.06		$	0.88		$	0.97		$	2.78		$	2.01
Diluted earnings per share:
Income from continuing operations per share	$	1.38		$	0.88		$	2.31		$	5.05		$	0.88		$	1.38		$	2.77		$	2.31
(Loss)/income from discontinued operations per share		(0.41	)		0.53			(0.30	)		1.99
Loss from discontinued operations per share														—			(0.41	)		—			(0.30	)
Diluted earnings per share	$	0.97		$	1.41		$	2.01		$	7.04		$	0.88		$	0.97		$	2.77		$	2.01

Comprehensive (loss)/income before non-controlling interests	$	(130	)	$	219		$	(61	)	$	1,005
Comprehensive income/(loss) before non-controlling interests													$	124		$	(130	)	$	383		$	(61	)
Comprehensive income attributable to non-controlling interests		(5	)		(2	)		(8	)		(7	)		(2	)		(5	)		(5	)		(8	)
Comprehensive (loss)/income attributable to WTW	$	(135	)	$	217		$	(69	)	$	998
Comprehensive income/(loss) attributable to WTW													$	122		$	(135	)	$	378		$	(69	)

See accompanying notes to the condensed consolidated financial statements

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY

Condensed Consolidated Balance Sheets

(In millions of U.S. dollars, except share data)

(Unaudited)


	June 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
ASSETS
Cash and cash equivalents	$	1,920		$	4,486		$	1,602		$	1,262
Fiduciary assets		11,988			11,014			8,608			11,772
Accounts receivable, net		2,025			2,370			2,206			2,387
Prepaid and other current assets		432			612			401			414
Current assets held for sale		5			6
Total current assets		16,370			18,488			12,817			15,835
Fixed assets, net		744			851			725			718
Goodwill		10,158			10,183			10,202			10,173
Other intangible assets, net		2,408			2,555			2,146			2,273
Right-of-use assets		621			720			570			586
Pension benefits assets		1,002			971			893			827
Other non-current assets		1,206			1,202			1,420			1,357
Total non-current assets		16,139			16,482			15,956			15,934
TOTAL ASSETS	$	32,509		$	34,970		$	28,773		$	31,769
LIABILITIES AND EQUITY
Fiduciary liabilities	$	11,988		$	11,014		$	8,608		$	11,772
Deferred revenue and accrued expenses		1,534			1,926			1,685			1,915
Current debt		0			613			899			250
Current lease liabilities		137			150			125			126
Other current liabilities		969			1,015			652			716
Current liabilities held for sale		64			6
Total current liabilities		14,692			14,724			11,969			14,779
Long-term debt		4,720			3,974			4,565			4,471
Liability for pension benefits		638			757			452			480
Deferred tax liabilities		804			845			721			748
Provision for liabilities		378			375			386			357
Long-term lease liabilities		645			734			602			620
Other non-current liabilities		215			253			201			221
Total non-current liabilities		7,400			6,938			6,927			6,897
TOTAL LIABILITIES		22,092			21,662			18,896			21,676
COMMITMENTS AND CONTINGENCIES
EQUITY (i)
Additional paid-in capital		10,855			10,804			10,910			10,876
Retained earnings		1,971			4,645			1,429			1,764
Accumulated other comprehensive loss, net of tax		(2,486	)		(2,186	)		(2,540	)		(2,621	)
Treasury shares, at cost, 128,391 shares in 2022 and 17,519 in 2021		(3	)		(3	)
Treasury shares, at cost, 17,519 shares in 2022								—			(3	)
Total WTW shareholders’ equity		10,337			13,260			9,799			10,016
Non-controlling interests		80			48			78			77
Total equity		10,417			13,308			9,877			10,093
TOTAL LIABILITIES AND EQUITY	$	32,509		$	34,970		$	28,773		$	31,769

(i)

Equity includes (a) Ordinary shares $0.000304635 nominal value; Authorized 1,510,003,775; Issued ~~110,207,079~~104,943,324 (2023) and 106,756,364 (2022) ~~and~~ ~~122,055,815~~ ~~(2021)~~; Outstanding ~~110,096,207~~104,943,324 (2023) and 106,756,364 (2022) ~~and~~ ~~122,055,815~~ ~~(2021)~~ and (b) Preference shares, $0.000115 nominal value; Authorized 1,000,000,000 and Issued ~~NaN~~none in ~~2022~~2023 and ~~2021.~~2022.

See accompanying notes to the condensed consolidated financial statements

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY

Condensed Consolidated Statements of Cash Flows

(In millions of U.S. dollars)

(Unaudited)


	Six Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME	$	239		$	922		$	302		$	239
Adjustments to reconcile net income to total net cash from operating activities:
Depreciation		131			143			124			131
Amortization		168			201			141			168
Impairment		81			0			—			81
Non-cash restructuring charges		49			0			8			49
Non-cash lease expense		64			73			58			64
Net periodic benefit of defined benefit pension plans		(80	)		(81	)		(11	)		(80	)
Provision for doubtful receivables from clients		12			8			5			12
(Benefit from)/provision for deferred income taxes		(45	)		56
Benefit from deferred income taxes								(37	)		(45	)
Share-based compensation		47			52			58			47
Net loss/(gain) on disposal of operations		96			(357	)
Non-cash foreign exchange gain		(1	)		(4	)
Net (gain)/loss on disposal of operations								(3	)		96
Non-cash foreign exchange loss/(gain)								6			(1	)
Other, net		(12	)		(12	)		16			(12	)
Changes in operating assets and liabilities, net of effects from purchase of subsidiaries:
Accounts receivable		180			(39	)		164			180
Other assets		(111	)		(91	)		(81	)		(111	)
Other liabilities		(573	)		(506	)		(346	)		(573	)
Provisions		13			1			26			13
Net cash from operating activities		258			366			430			258
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES
Additions to fixed assets and software for internal use		(60	)		(79	)		(80	)		(60	)
Capitalized software costs		(33	)		(27	)		(41	)		(33	)
Acquisitions of operations, net of cash acquired		(76	)		0			(4	)		(76	)
Proceeds from sale of operations		0			696			9			—
Cash and fiduciary funds transferred in sale of operations		(12	)		(216	)		(916	)		(12	)
Sale of investments		200			0
Net cash from investing activities		19			374
(Purchase)/sale of investments								(3	)		200
Net cash (used in)/from investing activities								(1,035	)		19
CASH FLOWS USED IN FINANCING ACTIVITIES
Senior notes issued		750			0			748			750
Debt issuance costs		(5	)		0			(6	)		(5	)
Repayments of debt		(583	)		(515	)		(2	)		(583	)
Repurchase of shares		(2,721	)		0			(454	)		(2,721	)
Proceeds from issuance of shares		1			2			—			1
Net proceeds/(payments) from fiduciary funds held for clients		85			(246	)
Net (payments)/proceeds from fiduciary funds held for clients								(194	)		85
Payments of deferred and contingent consideration related to acquisitions		(20	)		(17	)		(7	)		(20	)
Cash paid for employee taxes on withholding shares		(5	)		(1	)		(17	)		(5	)
Dividends paid		(189	)		(269	)		(177	)		(189	)
Acquisitions of and dividends paid to non-controlling interests		(3	)		(21	)		(4	)		(3	)
Net cash used in financing activities		(2,690	)		(1,067	)		(113	)		(2,690	)
DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (i)		(2,413	)		(327	)		(718	)		(2,413	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(170	)		(50	)		1			(170	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD (i)		7,691			6,301			4,721			7,691
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (i)	$	5,108		$	5,924		$	4,004		$	5,108

(i)

The amounts of cash, cash equivalents and restricted cash, their respective classification on the condensed consolidated balance sheets as well as their respective portions of the increase or decrease in cash, cash equivalents and restricted cash for each of the periods presented have been included in Note 19 — Supplemental Disclosures of Cash Flow Information.

See accompanying notes to the condensed consolidated financial statements

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY

Condensed Consolidated Statements of Changes in Equity

(In millions of U.S. dollars and number of shares in thousands)

(Unaudited)


	Six Months Ended June 30, 2022																							Six Months Ended June 30, 2023
	Shares outstanding			Additional paid-in capital		Retained earnings			Treasury shares			AOCL (i)			Total WTW shareholders’ equity			Non-controlling interests			Total equity			Shares outstanding			Additional paid-in capital			Retained earnings			Treasury shares			AOCL (i)			Total WTW shareholders’ equity			Non-controlling interests			Total equity
Balance as of December 31, 2021		122,056		$	10,804	$	4,645		$	(3	)	$	(2,186	)	$	13,260		$	48		$	13,308
Balance as of December 31, 2022																									106,756		$	10,876		$	1,764		$	(3	)	$	(2,621	)	$	10,016		$	77		$	10,093
Shares repurchased		(9,860	)		—		(2,250	)		—			—			(2,250	)		—			(2,250	)		(432	)		(3	)		(104	)		3			—			(104	)		—			(104	)
Net income		—			—		122			—			—			122			3			125			—			—			203			—			—			203			3			206
Dividends declared ($0.82 per share)		—			—		(94	)		—			—			(94	)		—			(94	)
Dividends attributable to non-controlling interests		—			—		—			—			—			—			(1	)		(1	)
Other comprehensive loss		—			—		—			—			(56	)		(56	)		—			(56	)
Dividends declared ($0.84 per share)																									—			—			(89	)		—			—			(89	)		—			(89	)
Other comprehensive income																									—			—			—			—			53			53			—			53
Issuance of shares under employee stock compensation plans		17			1		—			—			—			1			—			1			59			—			—			—			—			—			—			—
Share-based compensation and net settlements		—			20		—			—			—			20			—			20			—			18			—			—			—			18			—			18
Acquisition of non-controlling interests		—			—		—			—			—			—			21			21
Foreign currency translation		—			1		—			—			—			1			—			1			—			(1	)		—			—			—			(1	)		—			(1	)
Balance as of March 31, 2022		112,213		$	10,826	$	2,423		$	(3	)	$	(2,242	)	$	11,004		$	71		$	11,075
Balance as of March 31, 2023																									106,383		$	10,890		$	1,774		$	—		$	(2,568	)	$	10,096		$	80		$	10,176
Shares repurchased		(2,144	)		—		(471	)		—			—			(471	)		—			(471	)		(1,537	)		—			(350	)		—			—			(350	)		—			(350	)
Net income		—			—		109			—			—			109			5			114			—			—			94			—			—			94			2			96
Dividends declared ($0.82 per share)		—			—		(90	)		—			—			(90	)		—			(90	)
Dividends declared ($0.84 per share)																									—			—			(89	)		—			—			(89	)		—			(89	)
Dividends attributable to non-controlling interests		—			—		—			—			—			—			(2	)		(2	)		—			—			—			—			—			—			(4	)		(4	)
Other comprehensive loss		—			—		—			—			(244	)		(244	)		—			(244	)
Other comprehensive income																									—			—			—			—			28			28			—			28
Issuance of shares under employee stock compensation plans		27			—		—			—			—			—			—			—			97			—			—			—			—			—			—			—
Share-based compensation and net settlements		—			22		—			—			—			22			—			22			—			20			—			—			—			20			—			20
Sale of non-controlling interests		—			—		—			—			—			—			6			6
Foreign currency translation		—			7		—			—			—			7			—			7
Balance as of June 30, 2022		110,096		$	10,855	$	1,971		$	(3	)	$	(2,486	)	$	10,337		$	80		$	10,417
Balance as of June 30, 2023																									104,943		$	10,910		$	1,429		$	—		$	(2,540	)	$	9,799		$	78		$	9,877

(i)

Accumulated other comprehensive loss, net of tax (‘AOCL’).

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY

Condensed Consolidated Statements of Changes in Equity

(In millions of U.S. dollars and number of shares in thousands)

(Unaudited)


	Six Months Ended June 30, 2022
	Shares outstanding			Additional paid-in capital		Retained earnings			Treasury shares			AOCL (i)			Total WTW shareholders’ equity			Non-controlling interests			Total equity
Balance as of December 31, 2021		122,056		$	10,804	$	4,645		$	(3	)	$	(2,186	)	$	13,260		$	48		$	13,308
Shares repurchased		(9,860	)		—		(2,250	)		—			—			(2,250	)		—			(2,250	)
Net income		—			—		122			—			—			122			3			125
Dividends declared ($0.82 per share)		—			—		(94	)		—			—			(94	)		—			(94	)
Dividends attributable to non-controlling interests		—			—		—			—			—			—			(1	)		(1	)
Other comprehensive loss		—			—		—			—			(56	)		(56	)		—			(56	)
Issuance of shares under employee stock compensation plans		17			1		—			—			—			1			—			1
Share-based compensation and net settlements		—			20		—			—			—			20			—			20
Additional non-controlling interests		—			—		—			—			—			—			21			21
Foreign currency translation		—			1		—			—			—			1			—			1
Balance as of March 31, 2022		112,213		$	10,826	$	2,423		$	(3	)	$	(2,242	)	$	11,004		$	71		$	11,075
Shares repurchased		(2,144	)		—		(471	)		—			—			(471	)		—			(471	)
Net income		—			—		109			—			—			109			5			114
Dividends declared ($0.82 per share)		—			—		(90	)		—			—			(90	)		—			(90	)
Dividends attributable to non-controlling interests		—			—		—			—			—			—			(2	)		(2	)
Other comprehensive loss		—			—		—			—			(244	)		(244	)		—			(244	)
Issuance of shares under employee stock compensation plans		27			—		—			—			—			—			—			—
Share-based compensation and net settlements		—			22		—			—			—			22			—			22
Additional non-controlling interests		—			—		—			—			—			—			6			6
Foreign currency translation		—			7		—			—			—			7			—			7
Balance as of June 30, 2022		110,096		$	10,855	$	1,971		$	(3	)	$	(2,486	)	$	10,337		$	80		$	10,417

Six Months Ended June 30, 2021

Shares outstanding

Additional paid-in capital

Retained earnings

Treasury shares

AOCL (i)

Total WTW shareholders’ equity

Non-controlling interests

Total equity

Balance as of December 31, 2020

128,965

$
10,748

$
2,434

$
(3
)

$
(2,359
)

$
10,820

$
112

$
10,932

Net income

—

—

733

—

—

733

3

736

Dividends declared ($0.71 per share)

—

—

(92
)

—

—

(92
)

—

(92
)
Dividends attributable to non-controlling interests

—

—

—

—

—

—

(17
)

(17
)
Other comprehensive income

—

—

—

—

48

48

2

50

Issuance of shares under employee stock
compensation plans

9

1

—

—

—

1

—

1

Share-based compensation and net settlements

—

12

—

—

—

12

—

12

Reduction of non-controlling interests (ii)

—

—

—

—

—

—

(52
)

(52
)
Foreign currency translation

—

4

—

—

—

4

—

4

Balance as of March 31, 2021

128,974

$
10,765

$
3,075

$
(3
)

$
(2,311
)

$
11,526

$
48

$
11,574

Net income

—

—

184

—

—

184

2

186

Dividends declared ($0.71 per share)

—

—

(93
)

—

—

(93
)

—

(93
)
Dividends attributable to non-controlling interests

—

—

—

—

—

—

(4
)

(4
)
Other comprehensive income

—

—

—

—

33

33

—

33

Issuance of shares under employee stock
compensation plans

14

1

—

—

—

1

—

1

Share-based compensation and net settlements

—

20

—

—

—

20

—

20

Reduction of non-controlling interests (ii)

—

—

—

—

—

—

(1
)

(1
)
Foreign currency translation

—

(1
)

—

—

—

(1
)

—

(1
)
Balance as of June 30, 2021

128,988

$
10,785

$
3,166

$
(3
)

$
(2,278
)

$
11,670

$
45

$
11,715

(i)

Accumulated other comprehensive loss, net of tax (‘AOCL’).

~~(ii)~~

~~Attributable to the divestiture of our less than wholly-owned Miller subsidiary.~~

See accompanying notes to the condensed consolidated financial statements

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts in millions of U.S. dollars, except per share data)

(Unaudited)

Note 1 — Nature of Operations

Willis Towers Watson ~~public limited company~~Public Limited Company is a leading global advisory, broking and solutions company that provides data-driven, insight-led solutions in the areas of people, risk and capital. The Company has more than ~~44,000~~46,000 colleagues serving more than 140 countries and markets.

We design and deliver solutions that manage risk, optimize benefits, cultivate talent and expand the power of capital to protect and strengthen institutions and individuals.

Our risk management services include strategic risk consulting (including providing actuarial analysis), a variety of due diligence services, the provision of practical on-site risk control services (such as health and safety and property loss control consulting), ~~advisory services, leading-edge technology solutions,~~ and ~~unparalleled~~ analytical and ~~modeling capabilities~~advisory services (such as hazard modeling). We also assist our clients with planning for addressing incidents or crises when they occur. These services include contingency planning, security audits and product tampering plans.

We help our clients enhance business performance by delivering consulting services, technology and solutions that ~~effectively deliver valuable~~optimize benefits and ~~create an engaging employee experience.~~cultivate talent. Our services and solutions encompass such areas as employee benefits, ~~total~~work and rewards, ~~talent, wellbeing~~employee experience and benefits outsourcing. In addition, we provide investment advice to help our clients develop disciplined and efficient strategies to meet their investment goals and expand the power of capital.

As an insurance broker, we act as an intermediary between our clients and insurance carriers by advising on their risk management requirements, helping them to determine the best means of managing risk and negotiating and placing insurance with insurance carriers through our ~~unrestricted access to the~~ global ~~insurance market.~~distribution network.

We operate a private Medicare marketplace in the U.S. through which, along with our active employee marketplace, we help our clients move to a more sustainable economic model by capping and controlling the costs associated with healthcare benefits. We also provide direct-to-consumer sales of Medicare coverage.

We are not an insurance company, and therefore we do not underwrite insurable risks for our own account. We help sharpen strategies, enhance organizational resilience, motivate workforces and maximize performance to uncover opportunities for sustainable success.

~~Segment Reorganization~~

On January 1, 2022, WTW realigned to provide its comprehensive offering of services and solutions to clients across two business segments: Health, Wealth & Career (‘HWC’), and Risk & Broking (‘R&B’). These changes were made in conjunction with changes in the WTW leadership team, including the appointment of a new chief executive officer who succeeded the prior CEO as the chief operating decision maker on that date. Prior to January 1, 2022, we operated across four segments: Human Capital and Benefits; Corporate Risk and Broking; Investment, Risk and Reinsurance; and Benefits Delivery and Administration. Following the realignment, the two new segments consist of the following businesses:

•

The HWC segment includes businesses previously aligned under the Human Capital and Benefits segment, the Benefits Delivery and Administration segment, and the Investment business, which was previously under the Investment, Risk and Reinsurance segment.

•

The R&B segment includes businesses previously aligned under the Corporate Risk and Broking segment, as well as the Insurance Consulting and Technology business, which was previously under the Investment, Risk and Reinsurance segment.

~~In addition, effective January 1, 2022, the Company manages its businesses across three geographical areas: North America, Europe (including Great Britain) and International.~~

Certain Investment, Risk and Reinsurance businesses that were part of the results from continuing operations in the prior-year period presented were divested during 2021. The revenue and income from operations for these businesses have been included as ‘divested businesses’ in the reconciliations between the total segment results and the consolidated results of the Company. However, the results of the divested Willis Re treaty-reinsurance business is presented as discontinued operations and is therefore excluded from the divested businesses presented in the segment reconciliations.

~~Segment results herein are presented on a retrospective basis to reflect the reorganization. See Note 4~~ — ~~Revenue, Note 5~~ — ~~Segment Information, Note 6~~ — ~~Restructuring Costs and Note 8~~ — ~~Goodwill and Other Intangible Assets for the Company's segment-based presentations.~~

Note 2 — Basis of Presentation and Recent Accounting Pronouncements

Basis of Presentation

The accompanying unaudited quarterly condensed consolidated financial statements of WTW and our subsidiaries are presented in accordance with the rules and regulations of the SEC for quarterly reports on Form 10-Q and therefore certain footnote disclosures have been condensed or omitted from these financial statements as they are not required for interim reporting under U.S. GAAP. We have reclassified certain prior period amounts to conform to the current period presentation due to the recognition of discontinued operations and assets and liabilities as held-for-sale (see below for further discussion). Additionally, certain amounts on the condensed consolidated statements of cash flows have been revised from their prior period classifications. See Note 19 - Supplemental Disclosures of Cash Flow Information for more information as to the nature of the revision and the amounts. In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial statements and results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements should be read together with the Company’s Annual Report on Form 10-K, filed with the SEC on February 24, ~~2022,~~2023, and may be accessed via EDGAR on the SEC’s web site at www.sec.gov.

The results of operations for the three and six months ended June 30, ~~2022~~2023 are not necessarily indicative of the results that can be expected for the entire year. The Company experiences seasonal fluctuations of its revenue. Revenue is typically higher during the Company’s first and fourth quarters due primarily to the timing of broking-related activities. The results reflect certain estimates and assumptions made by management, including those estimates used in calculating acquisition consideration and fair value of tangible and intangible assets and acquisition-related liabilities, professional liability claims, estimated bonuses, valuation of billed and unbilled receivables, and anticipated tax liabilities that affect the amounts reported in the condensed consolidated financial statements and related notes.

~~Risks and Uncertainties of~~Recent Accounting Pronouncements

There were no new pronouncements that are expected to have a significant impact to the ~~Economic Environment Caused by the Pandemic~~Company or its condensed consolidated financial statements.

Other Legislation

Inflation Reduction Act

The ~~COVID-19 pandemic has had an adverse~~Inflation Reduction Act (the ‘IRA’) was enacted into law on August 16, 2022 and certain portions of the IRA became effective January 1, 2023. The IRA introduced, among other provisions, a share repurchase excise tax and a new Corporate Alternative Minimum Tax (‘CAMT’) which imposes a 15% tax on the adjusted financial statement income of ‘applicable corporations’. The Company does not expect the excise tax or CAMT to have a significant impact on ~~global commercial activity, particularly on the global supply chain and workforce availability, and has contributed to significant volatility in the global~~its condensed consolidated financial ~~markets including, among other effects, occasional declines in the equity markets, changes in interest rates and reduced liquidity on a global basis.~~statements.

Supply and labor market disruptions caused by COVID-19 as well as other factors, such as accommodative monetary and fiscal policy and the Russian invasion of Ukraine, have contributed to significant inflation in many of the markets in which we operate. This impacts not only the costs to attract and retain employees but also other costs to run and invest in our business. If our costs grow significantly in excess of our ability to raise revenue, our margins and results of operations may be materially and adversely impacted and we may not be able to achieve our strategic and financial objectives.Pillar Two

~~Although we believe we have adapted~~On December 12, 2022, E.U. member states reached an agreement to implement Pillar Two, which introduces a global corporate minimum tax of 15% for certain large multinational companies beginning in 2023. For the ~~unique challenges posed~~rules to take effect, E.U. member states are required to enact domestic legislation by the ~~pandemic surrounding how and where we do our work, we are also impacted by~~end of 2023 to be effective January 1, 2024. The Company is currently evaluating the ~~negative effect~~impact Pillar Two will have on workforce availability, which could hamper our ability to grow our capacity on pace with increasing demand for our services. We expect the market for talent to remain highly competitive for at least the next several months. We will continue to monitor the situation and assess any implications to our business and our stakeholders.its condensed consolidated financial statements.

Note 3 — Acquisitions and Divestitures

~~Acquisitions~~

~~The Company completed acquisitions during the six months ended June 30, 2022 for cash payments of $106~~ ~~million and contingent considerations with estimated fair values totaling $~~22 ~~million.~~Divestitures

Divestment of Russian Business

During the first quarter of 2022, WTW announced its intention to transfer ownership of its Russian subsidiaries to local management who will operate independently in the Russian market. Due to the sanctions and prohibitions on certain types of business and activities, WTW deconsolidated its Russian entities on March 14, 2022. The transfer of its Russian subsidiaries to local management was completed on the agreed-upon terms on July 18, 2022, and the transfer was registered in Russia on July 25, 2022. The deconsolidation in the first quarter of 2022 resulted in a loss of $57 million, which includes an allocation of Risk & Broking goodwill, and was recognized as a loss on disposal of a business within ~~other~~Other income, net on our condensed consolidated ~~statement~~statements of comprehensive income. Further, certain Russian insurance contracts were placed historically by our U.K. brokers into the London market, the majority of which were under multi-year terms resulting in both current and non-current accounts receivables. Total net assets impaired, including accounts receivable balances related to our Russian business that are held outside of our Russian entities,

were $81 million recorded during the three months ended March 31, ~~2022. This impairment charge was recorded~~2022 in ~~other~~Other operating expenses on our condensed consolidated ~~statement~~statements of comprehensive income.

Willis Re Divestiture

On August 13, 2021, the Company entered into a definitive security and asset purchase agreement (the ‘Willis Re SAPA’) to sell its treaty-reinsurance business (‘Willis Re’) to Arthur J. Gallagher & Co. (‘Gallagher’), a leading global provider of insurance, risk management and consulting services, for total upfront cash consideration of $3.25 billion plus an earnout payable in 2025 of up to $750 million in cash, subject to certain adjustments. The deal was subject to required regulatory approvals and clearances, as well as other customary closing conditions, and was completed on December 1, 2021 (‘Principal Closing’). Although the majority of the Willis Re businesses transferred to Gallagher at Principal Closing, the assets and liabilities of certain Willis Re businesses were not transferred to Gallagher at the time due to local territory restrictions (‘Deferred Closing’). The Deferred Closing for all but one business was completed during the second quarter of 2022, and all net earnings of the Deferred Closing businesses accumulated between the Principal Closing and Deferred Closing ~~remain~~remained payable to Gallagher at June 30, 2022 and September 30, 2022. The Company recognized a preliminary pre-tax gain of $2.3 billion upon completion of the sale in 2021, and during the second quarter of 2022, WTW recognized a $60 million reduction to the pre-tax gain related to an updated estimate of the working capital transferred upon disposal. The Company recognized the final ~~purchase price~~allocation of the proceeds and related tax expense, as well as an adjustment ~~is still pending commercial settlement~~of certain indemnities for the three months ended September 30, 2022. These amounts as well as the amounts payable with ~~Gallagher, and further adjustments~~respect to the ~~gain may be recognized.~~settled Deferred Closing businesses were remitted to Gallagher in October 2022. The remaining Deferred Closing business transferred during the fourth quarter of 2022, and all businesses have now been transferred to Gallagher. The gain is subject to tax in certain jurisdictions, mainly in the U.S., and is predominantly tax-exempt in the U.K.

In connection with the transaction, the Company reclassified the results of its Willis Re operations as discontinued operations on its condensed consolidated statements of comprehensive income and reclassified Willis Re assets and liabilities as held for sale on its condensed consolidated balance sheets. The condensed consolidated cash flow statements were not adjusted for the divestiture. Willis Re was previously included in the Company's former Investment, Risk and Reinsurance segment. ~~The amounts owed as part~~As noted above, the results of the Deferred Closing ~~continue to be presented as held for sale on the condensed consolidated balance sheets at June 30, 2022 and December 31, 2021, and the results of these~~ businesses following the Principal Closing until their respective Deferred Closing dates have been included in income from discontinued operations on the condensed consolidated statements of comprehensive ~~income.~~income during 2022.

The Company will account for the earnout as a gain contingency and therefore did not record any receivables upon close. Rather, the earnout will be recognized in the Company’s condensed consolidated financial statements, if it is received, in 2025.

A number of services are continuing under a cost reimbursement Transition Services Agreement (‘TSA’) in which WTW is providing Gallagher support including real estate leases, information technology, payroll, human resources and accounting. These services are expected to be provided for a period not to exceed two years from the Principal Closing. Fees earned under the TSA were $9 million and $18 million during the three and six months ended June 30, 2023, respectively, and $11 million and $23 million during the three and six months ended June 30, 2022, respectively, and have been recognized as a reduction to the costs incurred to service the TSA and are included in continuing operations within ~~other~~Other operating expenses on the condensed consolidated statements of comprehensive income. Costs incurred to service the TSA are expected to be reduced as part of the Company’s Transformation program (see Note 6 — Restructuring Costs for a description of the program) as quickly as possible when the services are no longer required by Gallagher.

The following selected financial information relates to the operations of Willis Re for the periods presented:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30, 2022			Six Months Ended June 30, 2022
	2022			2021			2022			2021
Revenue from discontinued operations	$	12		$	195		$	40		$	557		$	12		$	40
Costs of providing services
Salaries and benefits		2			90			8			194			2			8
Other operating expenses		1			14			1			31			1			1
Amortization		0			1			0			1
Total costs of providing services		3			105			9			226			3			9
Other income, net		0			0			0			1			—			—
Income from discontinued operations before income taxes		9			90			31			332			9			31
Adjustment to gain on disposal of Willis Re		(61	)		0			(63	)		0			(61	)		(63	)
Benefit from/(provision for) income taxes		5			(21	)		2			(73	)
Benefit from income taxes														5			2
Net income receivable/(payable) to Gallagher on Deferred Closing		1			0			(5	)		0			1			(5	)
(Loss)/income from discontinued operations, net of tax	$	(46	)	$	69		$	(35	)	$	259
Loss from discontinued operations, net of tax													$	(46	)	$	(35	)

The expense amounts reflected above represent only the direct costs attributable to the Willis Re business and exclude allocations of corporate costs that will be retained following the sale. Neither the discontinued operations presented above, nor the unallocated corporate costs, reflect the impact of any cost reimbursement that will be received under the TSA.

Amounts classified as held for sale within our condensed consolidated balance sheets at both June 30, 2022 and December 31, 2021 are related to amounts payable as part of the Deferred Closing as well as the estimated purchase price adjustment at June 30, 2022. Certain amounts included in the condensed consolidated balance sheets ~~have been excluded from the held-for-sale balances disclosed since the assets are~~did not ~~transferring~~transfer to Gallagher under the terms of the ~~sale agreement,~~Willis Re SAPA, and instead ~~will~~were to be settled by the ~~Company.~~Company, noting that certain fiduciary positions continued to be held under the terms of various co-broking agreements between subsidiaries of the Company and Gallagher. At ~~June 30, 2022 and~~ December 31, ~~2021,~~2022, the amounts of significant assets and liabilities related to the Willis Re businesses which were not transferred in the sale ~~and are therefore not classified as held for sale on the condensed consolidated balance sheets are~~were $~~3.9~~ ~~billion and $2.6~~3.2 billion of fiduciary assets and liabilities, $66 ~~million and $~~7129 million of accounts receivable and $~~127~~73 million of other current liabilities. On May 31, 2023, the Company and Gallagher entered into a side letter to the Willis Re SAPA which became effective on June 1, 2023 and which (A) ended the co-broking agreements prospectively and which (B) transferred related fiduciary and certain non-fiduciary assets and liabilities to Gallagher at that time based on then-current estimates. These non-fiduciary amounts will be finalized in the third quarter of 2023. The value of the initial transfer amounted to $9174 million of other current liabilities ~~respectively.~~less $

~~Miller Divestiture~~26

~~On March 1, 2021,~~ million of accounts receivables due to the Company, ~~completed the transaction to sell its U.K.-based, majority-owned wholesale subsidiary Miller for final total consideration of GBP~~ totaling $~~623~~48 million ($of net cash transferred to Gallagher. Additionally, total fiduciary assets and liabilities of $~~818~~4.5 ~~million), which includes amounts paid to the minority shareholder. The~~billion, including $~~356~~868 million ~~net tax-exempt gain on the sale~~of fiduciary cash, was transferred to Gallagher. The total cash outflow of $916 million is included in ~~Other income, net~~cash used in investing activities in the condensed consolidated statement of ~~comprehensive income during the six months ended June 30, 2021. Prior to disposal, Miller was included within the Company's former Investment, Risk and Reinsurance segment.~~cash flows.

Note 4 — Revenue

The prior-year period presented has been recast to exclude the revenue of Willis Re, which has been reclassified as discontinued operations on the Company’s condensed consolidated financial statements (see Note 3 – Acquisitions and Divestitures).

Disaggregation of Revenue

The Company reports revenue by segment in Note 5 — Segment Information. The following tables present revenue by service offering and segment, as well as reconciliations to total revenue for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022. Along with reimbursable expenses and other, total revenue by service offering represents our revenue from customer contracts. ~~The prior year segment information has been retrospectively adjusted to conform to the current year presentation.~~


	Three Months Ended June 30,																						Three Months Ended June 30,
	HWC				R&B				Divested Businesses				Corporate (i)						Total				HWC				R&B				Corporate (i)					Total
	2022		2021		2022		2021		2022		2021		2022			2021			2022		2021		2023		2022		2023		2022		2023		2022			2023		2022
Broking	$	236	$	206	$	661	$	688	$	0	$	9	$	3		$	0		$	900	$	903	$	259	$	236	$	724	$	661	$	3	$	3		$	986	$	900
Consulting		617		637		91		99		0		0		3			2			711		738		643		617		87		91		4		3			734		711
Outsourced administration		224		245		16		19		0		0		0			0			240		264		245		224		17		16		—		—			262		240
Other		62		87		48		45		0		0		0			1			110		133		59		62		55		48		—		—			114		110
Total revenue by service offering		1,139		1,175		816		851		0		9		6			3			1,961		2,038		1,206		1,139		883		816		7		6			2,096		1,961
Reimbursable expenses and other (i)		14		14		2		2		0		0		(3	)		(2	)		13		14		18		14		3		2		1		(3	)		22		13
Total revenue from customer contracts	$	1,153	$	1,189	$	818	$	853	$	0	$	9	$	3		$	1		$	1,974	$	2,052	$	1,224	$	1,153	$	886	$	818	$	8	$	3		$	2,118	$	1,974
Interest and other income (ii)		20		4		36		34		0		0		1			1			57		39
Interest and other income																								9		20		17		36		15		1			41		57
Total revenue	$	1,173	$	1,193	$	854	$	887	$	0	$	9	$	4		$	2		$	2,031	$	2,091	$	1,233	$	1,173	$	903	$	854	$	23	$	4		$	2,159	$	2,031


	Six Months Ended June 30,
	HWC				R&B				Corporate (i)					Total
	2023		2022		2023		2022		2023		2022			2023		2022
Broking	$	548	$	507	$	1,415	$	1,357	$	8	$	7		$	1,971	$	1,871
Consulting		1,304		1,270		185		195		8		5			1,497		1,470
Outsourced administration		507		474		46		43		—		—			553		517
Other		128		126		122		109		—		—			250		235
Total revenue by service offering		2,487		2,377		1,768		1,704		16		12			4,271		4,093
Reimbursable expenses and other (i)		33		27		6		5		11		(1	)		50		31
Total revenue from customer contracts	$	2,520	$	2,404	$	1,774	$	1,709	$	27	$	11		$	4,321	$	4,124
Interest and other income		15		26		36		39		31		2			82		67
Total revenue	$	2,535	$	2,430	$	1,810	$	1,748	$	58	$	13		$	4,403	$	4,191

Six Months Ended June 30,

HWC

R&B

Divested Businesses

Corporate (i)

Total

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

Broking

$
507

$
456

$
1,357

$
1,405

$
0

$
54

$
7

$
0

$
1,871

$
1,915

Consulting

1,270

1,289

195

200

0

6

5

4

1,470

1,499

Outsourced administration

474

509

43

48

0

0

0

0

517

557

Other

126

148

109

102

0

0

0

2

235

252

Total revenue by service offering

2,377

2,402

1,704

1,755

0

60

12

6

4,093

4,223

Reimbursable expenses and other (i)

27

27

5

3

0

0

(1
)

0

31

30

Total revenue from customer contracts

$
2,404

$
2,429

$
1,709

$
1,758

$
0

$
60

$
11

$
6

$
4,124

$
4,253

Interest and other income (ii)

26

10

39

54

0

0

2

2

67

66

Total revenue

$
2,430

$
2,439

$
1,748

$
1,812

$
0

$
60

$
13

$
8

$
4,191

$
4,319

(i)

Reimbursable expenses and other, as well as Corporate revenue, are excluded from segment revenue, but included in total revenue on the condensed consolidated statements of comprehensive income. Amounts included in Corporate revenue may include eliminations, adjustments to reserves and impacts from hedged revenue transactions.

~~(ii)~~

I~~nterest~~Interest and other income is included in segment revenue and total revenue, however it has been presented separately in the above tables because it does not arise directly from contracts with customers. ~~In 2022, both HWC and R&B’s~~The significant components of interest and other income ~~resulted primarily from book-of-business settlements. For HWC, these~~are as follows for the periods presented above:


	Three Months Ended June 30,
	HWC				R&B					Corporate				Total
	2023		2022		2023			2022		2023		2022		2023		2022
Book-of-business settlements	$	—	$	15	$	3		$	30	$	—	$	—	$	3	$	45
Interest income		6		1		15			6		14		—		35		7
Other income		3		4		(1	)		—		1		1		3		5
Total interest and other income	$	9	$	20	$	17		$	36	$	15	$	1	$	41	$	57


	Six Months Ended June 30,
	HWC				R&B					Corporate				Total
	2023		2022		2023			2022		2023		2022		2023		2022
Book-of-business settlements	$	—	$	18	$	10		$	30	$	—	$	—	$	10	$	48
Interest income		11		2		27			9		29		—		67		11
Other income		4		6		(1	)		—		2		2		5		8
Total interest and other income	$	15	$	26	$	36		$	39	$	31	$	2	$	82	$	67

As a result of the cessation of the co-broking agreement, (see Note 3 — Acquisitions and Divestitures) interest income associated with fiduciary funds will be allocated more directly to the Risk and Broking segment beginning in the third quarter of 2023. These amounts ~~totaled $~~were previously allocated to the Corporate segment following the disposal of Willis Re.15 ~~million and $~~18 ~~million, respectively, for three and six months ended June 30, 2022. For R&B, these amounts totaled $~~30 ~~million for both the three and six months ended June 30, 2022. In the three and six months ended 2021, HWC had~~ 0 ~~significant settlements, and R&B had settlements totaling $~~31 ~~million and $~~47 ~~million, respectively.~~

The following tables present revenue from service offerings by the geography where our work iswas performed for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022. Reconciliations to total revenue on our condensed consolidated statements of comprehensive income and to segment revenue are shown in the ~~table~~tables above. ~~The prior year geographic information has been retrospectively adjusted to conform to the current year presentation.~~


	Three Months Ended June 30,																				Three Months Ended June 30,
	HWC				R&B				Divested Businesses				Corporate				Total				HWC				R&B				Corporate				Total
	2022		2021		2022		2021		2022		2021		2022		2021		2022		2021		2023		2022		2023		2022		2023		2022		2023		2022
North America	$	756	$	738	$	333	$	327	$	0	$	5	$	2	$	2	$	1,091	$	1,072	$	792	$	756	$	355	$	333	$	2	$	2	$	1,149	$	1,091
Europe		293		348		351		383		0		4		3		1		647		736		315		293		389		351		4		3		708		647
International		90		89		132		141		0		0		1		0		223		230		99		90		139		132		1		1		239		223
Total revenue by geography	$	1,139	$	1,175	$	816	$	851	$	0	$	9	$	6	$	3	$	1,961	$	2,038	$	1,206	$	1,139	$	883	$	816	$	7	$	6	$	2,096	$	1,961


	Six Months Ended June 30,																				Six Months Ended June 30,
	HWC				R&B				Divested Businesses				Corporate				Total				HWC				R&B				Corporate				Total
	2022		2021		2022		2021		2022		2021		2022		2021		2022		2021		2023		2022		2023		2022		2023		2022		2023		2022
North America	$	1,535	$	1,510	$	610	$	593	$	0	$	10	$	4	$	4	$	2,149	$	2,117	$	1,615	$	1,535	$	646	$	610	$	3	$	4	$	2,264	$	2,149
Europe		646		706		831		882		0		50		7		2		1,484		1,640		661		646		860		831		11		7		1,532		1,484
International		196		186		263		280		0		0		1		0		460		466		211		196		262		263		2		1		475		460
Total revenue by geography	$	2,377	$	2,402	$	1,704	$	1,755	$	0	$	60	$	12	$	6	$	4,093	$	4,223	$	2,487	$	2,377	$	1,768	$	1,704	$	16	$	12	$	4,271	$	4,093

Contract Balances

The Company reports accounts receivable, net on the condensed consolidated balance ~~sheet,~~sheets, which includes billed and unbilled receivables and current contract assets. In addition to accounts receivable, net, the Company had the following non-current contract assets and deferred revenue balances at June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


	June 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
Billed receivables, net of allowance for doubtful accounts of $46 million and $45 million	$	1,325	$	1,504
Billed receivables, net of allowance for doubtful accounts of $37 million and $46 million					$	1,408	$	1,464
Unbilled receivables		439		431		497		457
Current contract assets		261		435		301		466
Accounts receivable, net	$	2,025	$	2,370	$	2,206	$	2,387
Non-current accounts receivable, net	$	13	$	23	$	8	$	9
Non-current contract assets	$	599	$	532	$	792	$	745
Deferred revenue	$	622	$	576	$	694	$	646

During the three and six months ended June 30, ~~2022,~~2023, revenue of $5958 million and $~~310~~385 million, respectively, was recognized that was reflected as deferred revenue at December 31, ~~2021.~~2022. During the three months ended June 30, ~~2022,~~2023, revenue of $~~222~~262 million was recognized that was reflected as deferred revenue at March 31, ~~2022.~~2023.

During the three and six months ended June 30, ~~2022,~~2023, the Company recognized revenue of $23 million and $57 million, respectively, related to performance obligations satisfied prior to ~~2022.~~2023.

Performance Obligations

The Company has contracts for which performance obligations have not been satisfied as of June 30, ~~2022~~2023 or have been partially satisfied as of this date. The following table shows the expected timing for the satisfaction of the remaining performance obligations. This table does not include contract renewals or variable consideration, which was excluded from the transaction prices in accordance with the guidance on constraining estimates of variable consideration.

In addition, in accordance with ASC 606, Revenue From Contracts With Customers (‘ASC 606’), the Company has elected not to disclose the remaining performance obligations when one or both of the following circumstances apply:

•

Performance obligations which are part of a contract that has an original expected duration of less than one year, and

•

Performance obligations satisfied in accordance with ASC 606-10-55-18 (‘right to invoice’).

Remainder of 2022

2023

2024 onward

Total

Revenue expected to be recognized on contracts as of June 30, 2022

$
331

$
642

$
746

$
1,719


	Remainder of 2023		2024		2025 onward		Total
Revenue expected to be recognized on contracts as of June 30, 2023	$	398	$	414	$	560	$	1,372

Since most of the Company’s contracts are cancellable with less than one year’s notice and have no substantive penalty for cancellation, the majority of the Company’s remaining performance obligations as of June 30, ~~2022~~2023 have been excluded from the table above.

Note 5 — Segment Information

WTW has 2two reportable operating segments or business areas:

•

Health, Wealth & Career (‘HWC’); and

•

Risk & Broking (‘R&B’).

WTW’s chief operating decision maker is its chief executive officer. We determined that the operational data used by the chief operating decision maker is at the segment level. Management bases strategic goals and decisions on these segments and the data presented below is used to assess the adequacy of strategic decisions and the methods of achieving these strategies and related financial results. Management evaluates the performance of its segments and allocates resources to them based on net operating income on a pre-tax basis.

The Company experiences seasonal fluctuations of its revenue. Revenue is typically higher during the Company’s first and fourth quarters due primarily to the timing of broking-related activities.

For the disclosures below, the prior-year periods presented have been recast to exclude the results of Willis Re, which has been reclassified as discontinued operations on the Company’s condensed consolidated financial statements (see Note 3 – Acquisitions and Divestitures).

The following table presents segment revenue and segment operating income for our reportable segments for the three months ended June 30, ~~2022~~2023 and ~~2021. The prior year information has been retrospectively adjusted to conform to the current year presentation.~~2022.

Three Months Ended June 30,

HWC

R&B

Total

2022

2021

2022

2021

2022

2021

Segment revenue

$
1,159

$
1,179

$
852

$
885

$
2,011

$
2,064

Segment operating income

$
217

$
218

$
168

$
204

$
385

$
422


	Three Months Ended June 30,
	HWC				R&B				Total
	2023		2022		2023		2022		2023		2022
Segment revenue	$	1,215	$	1,159	$	900	$	852	$	2,115	$	2,011

Segment operating income	$	222	$	217	$	145	$	168	$	367	$	385

The following table presents segment revenue and segment operating income for our reportable segments for the six months ended June 30, ~~2022~~2023 and ~~2021. The prior year information has been retrospectively adjusted to conform to the current year presentation.~~2022.


	Six Months Ended June 30,												Six Months Ended June 30,
	HWC				R&B				Total				HWC				R&B				Total
	2022		2021		2022		2021		2022		2021		2023		2022		2023		2022		2023		2022
Segment revenue	$	2,403	$	2,412	$	1,743	$	1,809	$	4,146	$	4,221	$	2,502	$	2,403	$	1,804	$	1,743	$	4,306	$	4,146

Segment operating income	$	474	$	460	$	360	$	407	$	834	$	867	$	531	$	474	$	325	$	360	$	856	$	834

The following table presents reconciliations of the information reported by segment to the Company’s condensed consolidated statements of comprehensive income amounts reported for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Revenue:
Total segment revenue	$	2,011		$	2,064		$	4,146		$	4,221		$	2,115		$	2,011		$	4,306		$	4,146
Divested businesses		0			9			0			60
Reimbursable expenses and other		20			18			45			38			44			20			97			45
Revenue	$	2,031		$	2,091		$	4,191		$	4,319		$	2,159		$	2,031		$	4,403		$	4,191

Total segment operating income	$	385		$	422		$	834		$	867		$	367		$	385		$	856		$	834
Divested businesses		0			(19	)		0			(29	)
Impairment (i)		0			0			(81	)		0			—			—			—			(81	)
Amortization		(83	)		(97	)		(168	)		(200	)		(70	)		(83	)		(141	)		(168	)
Restructuring costs		(56	)		0			(62	)		0
Transaction and transformation, net (ii)		(38	)		(51	)		(58	)		(75	)
Unallocated, net (iii)		(71	)		(85	)		(149	)		(182	)
Restructuring costs (ii)														(10	)		(56	)		(13	)		(62	)
Transaction and transformation (iii)														(93	)		(38	)		(152	)		(58	)
Unallocated, net (iv)														(52	)		(71	)		(123	)		(149	)
Income from operations		137			170			316			381			142			137			427			316
Interest expense		(51	)		(52	)		(100	)		(111	)		(57	)		(51	)		(111	)		(100	)
Other income, net		93			74			120			512			35			93			60			120
Income from continuing operations before income taxes	$	179		$	192		$	336		$	782		$	120		$	179		$	376		$	336

(i)

Represents the impairment related to the net assets of our Russian business that are held outside of our Russian entities (see Note 3 — Acquisitions and Divestitures for further information).

(ii)

See Note 6 — Restructuring Costs for the composition of costs for 2023 and 2022.

(iii)

In 2023 and 2022, in addition to legal fees and other transaction costs, includes primarily consulting fees and compensation costs related to the Transformation program (see Note 6 — Restructuring Costs). ~~In 2021, includes fees related to our then-proposed Aon combination.~~

~~(iii)~~(iv)

Includes certain costs, primarily related to corporate functions which are not directly related to the segments, and certain differences between budgeted expenses determined at the beginning of the year and actual expenses that we report for U.S. GAAP purposes.

The Company does not currently provide asset information by reportable segment as it does not routinely evaluate the total asset position by segment.

Note 6 — Restructuring Costs

In the fourth quarter of 2021, the Company initiated a three-year ‘Transformation program’ designed to enhance operations, optimize technology and align its real estate footprint to its new ways of working. ~~The~~During the second quarter of 2023, we revised the expected costs and savings under the program ~~is expected~~and we now expect the program to generate annual cost savings in excess of ~~approximately~~ $~~300~~380 million by the end of 2024. The program is expected to ~~include~~incur cumulative costs of approximately $~~490~~630 million and capital expenditures of approximately $~~260~~270 million, for a total investment of $~~750~~900 million. The main categories of charges will be in the following four areas:

•

Real estate rationalization — includes costs to align the real estate footprint to the new ways of working (hybrid work) and includes breakage fees and the impairment of right-of-use (‘ROU’) assets and other related leasehold assets.

•

Technology modernization — these charges are incurred in moving to common platforms and technologies, including migrating certain platforms and applications to the cloud. This category will include the impairment of technology assets that are duplicative or no longer revenue-producing, as well as costs for technology investments that do not qualify for capitalization.

•

Process optimization — these costs will be incurred in the right-shoring strategy and automation of our operations, which will include optimizing resource deployment and appropriate colleague alignment. These costs will include process and organizational design costs, severance and separation-related costs and temporary retention costs.

•

Other — other costs not included above including fees for professional services, other contract terminations not related to the above categories and supplier migration costs.

Certain costs under the Transformation program are accounted for under ASC 420, Exit or Disposal Cost Obligation, and are included as restructuring costs in the condensed consolidated statements of comprehensive income. Other costs incurred under the Transformation program are included in transaction and transformation ~~net~~ and were $82 million and $127 million during the three and six months ended June 30, 2023, respectively, and $26 million and $31 million ~~for~~during the three and six months ended June 30, 2022,

respectively. An analysis of total restructuring costs incurred under the Transformation program by category and by segment and corporate functions, from commencement to June 30, ~~2022,~~2023, is as follows:


	HWC		R&B		Corporate		Total		HWC		R&B		Corporate		Total
2021
Real estate rationalization	$	—	$	—	$	19	$	19	$	—	$	—	$	19	$	19
Technology modernization		—		5		—		5		—		5		—		5
Process optimization		—		—		—		—		—		—		—		—
Other		—		—		2		2		—		—		2		2
2022
Real estate rationalization		—		—		49		49		—		—		79		79
Technology modernization		—		—		12		12		—		3		16		19
Process optimization		1		—		—		1		1		—		—		1
Other		—		—		—		—		—		—		—		—
2023
Real estate rationalization										—		—		12		12
Technology modernization										—		—		1		1
Process optimization										—		—		—		—
Other										—		—		—		—
Total
Real estate rationalization		—		—		68		68		—		—		110		110
Technology modernization		—		5		12		17		—		8		17		25
Process optimization		1		—		—		1		1		—		—		1
Other		—		—		2		2		—		—		2		2
Total	$	1	$	5	$	82	$	88	$	1	$	8	$	129	$	138

A rollforward of the liability associated with cash-based charges related to restructuring costs associated with the Transformation program is as follows:


	Real estate rationalization			Technology modernization		Process optimization			Other			Total			Real estate rationalization			Technology modernization		Process optimization			Other			Total
Balance at October 1, 2021	$	—		$	—	$	—		$	0		$	0		$	—		$	—	$	—		$	—		$	—
Charges incurred		—			—		—			2			2			—			—		—			2			2
Cash payments		—			—		—			(1	)		(1	)		—			—		—			(1	)		(1	)
Balance at December 31, 2021		—			—		—			1			1			—			—		—			1			1
Charges incurred		12			—		1			—			13			27			—		1			—			28
Cash payments		(8	)		—		(1	)		(1	)		(10	)		(21	)		—		(1	)		(1	)		(23	)
Balance at June 30, 2022	$	4		$	—	$	—		$	0		$	4
Balance at December 31, 2022																6			—		—			—			6
Charges incurred																5			—		—			—			5
Cash payments																(9	)		—		—			—			(9	)
Balance at June 30, 2023															$	2		$	—	$	—		$	—		$	2

Note 7 — Income Taxes

Provision for income taxes for the three and six months ended June 30, ~~2022~~2023 was $24 million and $74 million, respectively, compared to $19 million and $62 ~~million, respectively, compared to $~~75 ~~million and $119~~ million for the three and six months ended June 30, ~~2021,~~2022, respectively. The effective tax rates were19.8% and 19.6% for the three and six months ended June 30, 2023, respectively, and 10.5% and 18.4% for the three and six months ended June 30, 2022, ~~respectively, and~~ ~~38.9% and~~ ~~15.2% for the three and six months ended June 30, 2021,~~ respectively. These effective tax rates are calculated using extended values from ~~the Company’s~~our condensed consolidated statements of comprehensive income and are therefore more precise tax rates than can be calculated from rounded values. The prior-year quarter effective tax rate was ~~higher~~lower due to ~~the discrete tax effect of the U.K. tax-rate increase enacted in the second quarter of 2021. Accordingly, the Company remeasured its U.K. deferred tax assets and liabilities, which resulted in a $~~40 ~~million deferred tax expense in the prior-year period. Additionally, the current quarter effective tax rate includes~~ certain discrete tax benefits primarily related to return-to-provision true ups.

The Company recognizes deferred tax balances related to the undistributed earnings of subsidiaries when it expects that it will recover those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of the investments. Historically, the Company has not provided taxes on cumulative earnings of its subsidiaries that have been reinvested indefinitely. As a result of its plans to restructure or distribute accumulated earnings of certain foreign operations, the Company has recorded an estimate of ~~non-US~~non-U.S. withholding and state income taxes. However, the Company asserts that the historical cumulative earnings of its other subsidiaries are reinvested indefinitely and therefore does not provide deferred tax liabilities on these amounts.

The Company records valuation allowances against net deferred tax assets based on whether it is more likely than not that the deferred tax assets will be realized. ~~It has~~We have liabilities for uncertain tax positions under ASC 740, Income Taxes of $3739 million, excluding

interest and penalties. The Company believes the outcomes that are reasonably possible within the next 12 months may result in a reduction in the liability for uncertain tax positions of approximately $31 million to $62 million, excluding interest and penalties.

Note 8 — Goodwill and Other Intangible Assets

The components of goodwill are outlined below for the six months ended June 30, ~~2022. The prior year segment information has been retrospectively adjusted to conform to the current year presentation.~~2023.

HWC

R&B

Total

Balance at December 31, 2021:

Goodwill, gross

$
7,904

$
2,771

$
10,675

Accumulated impairment losses

(130
)

(362
)

(492
)
Goodwill, net - December 31, 2021

7,774

2,409

10,183

Goodwill acquired

0

97

97

Goodwill disposals

0

(18
)

(18
)
Foreign exchange

(35
)

(69
)

(104
)
Balance at June 30, 2022:

Goodwill, gross

7,869

2,781

10,650

Accumulated impairment losses

(130
)

(362
)

(492
)
Goodwill, net - June 30, 2022

$
7,739

$
2,419

$
10,158


	HWC			R&B			Total
Balance at December 31, 2022:
Goodwill, gross	$	7,870		$	2,795		$	10,665
Accumulated impairment losses		(130	)		(362	)		(492	)
Goodwill, net - December 31, 2022		7,740			2,433			10,173
Foreign exchange		13			16			29
Balance at June 30, 2023:
Goodwill, gross		7,883			2,811			10,694
Accumulated impairment losses		(130	)		(362	)		(492	)
Goodwill, net - June 30, 2023	$	7,753		$	2,449		$	10,202

Other Intangible Assets

The ~~followin~~gfollowing table reflects changes in the net carrying amounts of the components of finite-lived intangible assets for the six months ended June 30, ~~2022:~~2023:


	Client relationships			Software			Trademark and trade name			Other			Total			Client relationships			Software			Trademark and trade name			Other			Total
Balance at December 31, 2021:
Balance at December 31, 2022:
Intangible assets, gross	$	3,794		$	742		$	1,039		$	102		$	5,677		$	3,760		$	725		$	1,038		$	98		$	5,621
Accumulated amortization		(2,118	)		(701	)		(257	)		(46	)		(3,122	)		(2,282	)		(712	)		(298	)		(56	)		(3,348	)
Intangible assets, net - December 31, 2021		1,676			41			782			56			2,555
Intangible assets, net - December 31, 2022																	1,478			13			740			42			2,273
Intangible assets acquired		60			0			1			0			61			4			—			—			—			4
Intangible asset disposals		(1	)		0			0			(5	)		(6	)
Amortization		(118	)		(23	)		(21	)		(6	)		(168	)		(107	)		(9	)		(21	)		(4	)		(141	)
Foreign exchange		(33	)		0			(1	)		0			(34	)		10			—			—			—			10
Balance at June 30, 2022:
Balance at June 30, 2023:
Intangible assets, gross		3,760			723			1,038			96			5,617			3,798			727			1,039			99			5,663
Accumulated amortization		(2,176	)		(705	)		(277	)		(51	)		(3,209	)		(2,413	)		(723	)		(320	)		(61	)		(3,517	)
Intangible assets, net - June 30, 2022	$	1,584		$	18		$	761		$	45		$	2,408
Intangible assets, net - June 30, 2023																$	1,385		$	4		$	719		$	38		$	2,146

The weighted-average remaining life of amortizable intangible assets at June 30, ~~2022~~2023 was ~~12.7~~12.0 years.

The table below reflects the future estimated amortization expense for amortizable intangible assets for the remainder of ~~2022~~2023 and for subsequent years:


	Amortization		Amortization
Remainder of 2022	$	143
2023		261
Remainder of 2023			$	124
2024		229		233
2025		208		210
2026		202		203
2027				199
Thereafter		1,365		1,177
Total	$	2,408	$	2,146

Note 9 — Derivative Financial Instruments

We are exposed to certain foreign currency risks. Where possible, we identify exposures in our business that can be offset internally. Where no natural offset is identified, we may choose to enter into various derivative transactions. These instruments have the effect of reducing our exposure to unfavorable changes in foreign currency rates. The Company’s board of directors reviews and approves policies for managing this risk as summarized below. Additional information regarding our derivative financial instruments can be found in Note 11 — Fair Value Measurements and Note 17 — Accumulated Other Comprehensive Loss.

Foreign Currency Risk

Certain ~~non-U.S~~.non-U.S. subsidiaries receive revenue and incur expenses in currencies other than their functional currency, and as a result, the foreign subsidiary’s functional currency revenue and/or expenses will fluctuate as the currency rates change. Additionally, the forecast Pounds sterling expenses of our London brokerage market operations may exceed their Pounds sterling revenue, and the entity with such operations may also hold significant foreign currency asset or liability positions in the condensed consolidated balance ~~sheet.~~sheets. To reduce such variability, we use foreign exchange contracts to hedge against this currency risk.

These derivatives were designated as hedging instruments and at June 30, ~~2022~~2023 and December 31, ~~2021~~2022 had total notional amounts of $~~134~~107 million and $~~155~~134 million, respectively, and had a net ~~liability~~ fair valueasset of $52 million and a net ~~asset~~ fair value liability of $3 million, respectively.

At June 30, ~~2022,~~2023, the Company estimates, based on current exchange rates, there will be less than $41 million of net derivative ~~losses~~gains on forward exchange rates reclassified from accumulated other comprehensive loss into earnings within the next twelve months as the forecast transactions affect earnings. At June 30, ~~2022,~~2023, our longest outstanding maturity was 1.7 years.

The effects of the material derivative instruments that are designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 are below. Amounts pertaining to the ineffective portion of hedging instruments and those excluded from effectiveness testing were immaterial for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.

(Loss)/gain recognized in OCI (effective element)

Three months ended June 30,

Six months ended June 30,

2022

2021

2022

2021

Forward exchange contracts

$
(5
)

$
1

$
(6
)

$
5


	Gain/(loss) recognized in OCI (effective element)
	Three months ended June 30,					Six months ended June 30,
	2023		2022			2023		2022
Forward exchange contracts	$	2	$	(5	)	$	3	$	(6	)


Location of gain/(loss) reclassified from Accumulated OCL into income (effective element)	Gain/(loss) reclassified from Accumulated OCL into income (effective element)											Gain/(loss) reclassified from Accumulated OCL into income (effective element)
	Three months ended June 30,						Six months ended June 30,					Three months ended June 30,					Six months ended June 30,
	2022			2021			2022		2021			2023		2022			2023			2022
Revenue	$	1		$	(1	)	$	1	$	(2	)	$	—	$	1		$	—		$	1
Salaries and benefits		(1	)		2			1		3			—		(1	)		(1	)		1
Discontinued operations		0			2			0		3
	$	0		$	3		$	2	$	4		$	—	$	—		$	(1	)	$	2

~~We also enter into~~The Company engages in intercompany borrowing and lending between subsidiaries, primarily through its in-house banking operations which give rise to foreign exchange exposures. The Company mitigates these risks through the use of short-term foreign currency forward and swap transactions ~~primarily to hedge certain intercompany loans~~that offset the underlying exposure created when the borrower and ~~other balance sheet exposures in currencies other than the~~lender have different functional ~~currency of a given entity.~~currencies. These derivatives are not generally designated as hedging instruments, and at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had notional amounts of $~~2.0~~1.6 billion and $~~2.9~~1.7 billion, respectively. At June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had a net ~~liability~~ fair value liability of $112 million and a net ~~asset~~ fair value asset of $1524 million, respectively. Such derivatives typically mature within three months.

The effects of derivatives that have not been designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 are as ~~follows:~~follows (see Note 16 — Other Income, Net for the net foreign currency impact on the Company’s condensed consolidated statements of comprehensive income which includes the results of the offset of underlying exposures):


		Loss recognized in income													Gain(loss) recognized in income
		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,					Six Months Ended June 30,
Derivatives not designated as hedging instruments:	Location of loss recognized in income	2022			2021			2022			2021			Location of gain/(loss) recognized in income	2023		2022			2023		2022
Forward exchange contracts	Other income, net	$	(20	)	$	(13	)	$	(26	)	$	(29	)	Other income, net	$	8	$	(20	)	$	16	$	(26	)

Note 10 — Debt

Current debt consists of the following:

June 30,
2022

December 31,
2021

2.125% senior notes due 2022 (i)

$
0

$
613

$
0

$
613


	June 30, 2023		December 31, 2022
4.625% senior notes due 2023	$	250	$	250
3.600% senior notes due 2024		649		—
	$	899	$	250

Long-term debt consists of the following:

June 30,
2022

December 31,
2021

Revolving $1.5 billion credit facility

$
—

$
—

4.625% senior notes due 2023

250

249

3.600% senior notes due 2024

648

648

4.400% senior notes due 2026

547

546

4.650% senior notes due 2027

744

0

4.500% senior notes due 2028

597

597

2.950% senior notes due 2029

726

726

6.125% senior notes due 2043

271

271

5.050% senior notes due 2048

395

395

3.875% senior notes due 2049

542

542

$
4,720

$
3,974

~~(i)~~

~~Notes issued in Euro (€540~~ ~~million).~~


	June 30, 2023		December 31, 2022
Revolving $1.5 billion credit facility	$	—	$	—
3.600% senior notes due 2024		—		649
4.400% senior notes due 2026		547		547
4.650% senior notes due 2027		744		744
4.500% senior notes due 2028		597		597
2.950% senior notes due 2029		726		726
5.350% senior notes due 2033		742		—
6.125% senior notes due 2043		272		271
5.050% senior notes due 2048		395		395
3.875% senior notes due 2049		542		542
	$	4,565	$	4,471

Senior Notes

On May ~~19, 2022,~~17, 2023, the Company, together with its wholly-owned subsidiary, Willis North America Inc. as issuer, completed an offering of $750 million aggregate principal amount of ~~4.650~~5.350% senior notes due ~~2027~~2033 (‘~~2027~~2033 senior notes’). The effective interest rate of the ~~2027~~2033 senior notes is ~~4.79~~5.47%, which includes the impact of the discount upon issuance. The ~~2027~~2033 senior notes will mature on ~~June~~May 15, ~~2027~~2033. Interest on the ~~2027~~2033 senior notes accrues from May ~~19, 2022~~17, 2023 and will be paid in cash on ~~June~~May 15 and ~~December~~November 15 of each year, commencing on ~~December~~November 15, ~~2022~~2023. . The net proceeds from this offering, after deducting the underwriting discount and estimated offering expenses, were approximately $~~744~~742 million and ~~were~~will be used to fully repay the €$~~540~~250 million ($~~582~~ ~~million on the date of repayment)~~ aggregate principal amount of the ~~2.125~~4.625% ~~Senior Notes due 2022~~senior notes, which will mature during the third quarter of 2023, and related accrued interest, and for general corporate purposes.

Revolving Credit Facility

On June 29, 2023, Trinity Acquisition plc amended its revolving credit facility to replace the use of London Interbank Offered Rate (‘LIBOR’) with the Secured Overnight Financing Rate (‘SOFR’) in connection with its base-rate borrowings. This amendment was done in connection with the cessation of LIBOR and all other terms remain the same.

At June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we were in compliance with all financial covenants.

Note 11 — Fair Value Measurements

The Company has categorized its assets and liabilities that are measured at fair value on a recurring and non-recurring basis into a three-level fair value hierarchy, based on the reliability of the inputs used to determine fair value as follows:

•

Level 1: refers to fair values determined based on quoted market prices in active markets for identical assets;

•

Level 2: refers to fair values estimated using observable market-based inputs or unobservable inputs that are corroborated by market data; and

•

Level 3: includes fair values estimated using unobservable inputs that are not corroborated by market data.

The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments:

•

~~Available-for-sale securities~~Mutual funds and exchange-traded funds are classified as Level 1 because we use quoted market prices in active markets in determining the fair value of these securities.

•

Commingled funds are not leveled within the fair value hierarchy as the funds are valued at the net value of shares held as reported by the manager of the funds. These funds are not exchange-traded.

•

Hedge funds are not leveled within the fair value hierarchy as the fair values for these investments are estimated based on the net asset values derived from the latest audited financial statements or most recent capital account statements provided by the funds’ investment manager or third-party administrator, as a practical expedient.

•

Market values for our derivative instruments have been used to determine the fair ~~value~~values of forward foreign exchange contracts based on estimated amounts the Company would receive or have to pay to terminate the agreements, taking into account observable information about the current foreign currency forward rates. Such financial instruments are classified as Level ~~2 in the fair value hierarchy.~~2.

•

Contingent consideration payable is classified as Level 3, and we estimate fair value based on the likelihood and timing of achieving the relevant milestones of each arrangement, applying a probability assessment to each of the potential outcomes, which at times includes the use of a Monte Carlo simulation and discounting the probability-weighted payout. Typically, milestones are based on revenue or earnings growth for the acquired business.

The following tables present our assets and liabilities measured at fair value on a recurring basis at June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


		Fair Value Measurements on a Recurring Basis at June 30, 2022									Fair Value Measurements on a Recurring Basis at June 30, 2023
	Balance Sheet Location	Level 1		Level 2		Level 3		Total		Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities:
Mutual funds / exchange traded funds	Prepaid and other current assets and other non-current assets	$	7	$	0	$	0	$	7
Mutual funds / exchange-traded funds (i)										Prepaid and other current assets and other non-current assets	$	100	$	—	$	—	$	100
	Fiduciary assets		131		0		0		131	Fiduciary assets		182		—		—		182
Commingled funds (i) (ii)										Other non-current assets		—		—		—		8
Hedge funds (i) (iii)										Other non-current assets		—		—		—		5
Derivatives:
Derivative financial instruments (i)	Prepaid and other current assets and other non-current assets	$	0	$	2	$	0	$	2
Derivative financial instruments (iv)										Prepaid and other current assets and other non-current assets	$	—	$	3	$	—	$	3
Liabilities:
Contingent consideration:
Contingent consideration (ii)	Other current liabilities and other non-current liabilities	$	0	$	0	$	56	$	56
Contingent consideration (v) (vi)										Other current liabilities and other non-current liabilities	$	—	$	—	$	43	$	43
Derivatives:
Derivative financial instruments (i)	Other current liabilities and other non-current liabilities	$	0	$	18	$	0	$	18
Derivative financial instruments (iv)										Other current liabilities and other non-current liabilities	$	—	$	3	$	—	$	3


		Fair Value Measurements on a Recurring Basis at December 31, 2021									Fair Value Measurements on a Recurring Basis at December 31, 2022
	Balance Sheet Location	Level 1		Level 2		Level 3		Total		Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities:
Mutual funds / exchange traded funds	Prepaid and other current assets and other non-current assets	$	9	$	0	$	0	$	9
Mutual funds / exchange-traded funds										Prepaid and other current assets and other non-current assets	$	7	$	—	$	—	$	7
	Fiduciary assets		152		0		0		152	Fiduciary assets		142		—		—		142
Certificates of deposit/term deposits	Prepaid and other current assets and other non-current assets		200		0		0		200
Derivatives:
Derivative financial instruments (i)	Prepaid and other current assets and other non-current assets	$	0	$	18	$	0	$	18
Derivative financial instruments (iv)										Prepaid and other current assets and other non-current assets	$	—	$	26	$	—	$	26
Liabilities:
Contingent consideration:
Contingent consideration (ii)	Other current liabilities and other non-current liabilities	$	0	$	0	$	51	$	51
Contingent consideration (v) (vi)										Other current liabilities and other non-current liabilities	$	—	$	—	$	40	$	40
Derivatives:
Derivative financial instruments (i)	Other current liabilities and other non-current liabilities	$	0	$	0	$	0	$	0
Derivative financial instruments (iv)										Other current liabilities and other non-current liabilities	$	—	$	5	$	—	$	5

(i)

With the exception of the funds included in fiduciary assets, the majority of these balances are held as part of deferred compensation plans with related liabilities in other current liabilities and other non-current liabilities on the condensed consolidated balance sheets.

(ii)

Consists of the Towers Watson Global Equity Focus Fund, for which redemptions can occur on any business day, and require a minimum of one business day’s notice.

(iii)

Consists of the Towers Watson Alternative Credit Fund, for which the redemption period is generally quarterly, however requires a 50-day notice.

(iv)

See Note 9 — Derivative Financial Instruments for further information on our derivative investments.

~~(ii)~~(v)

Probability weightings are based on our knowledge of the past and planned performance of the acquired entity to which the contingent consideration applies. The fair value weighted-average discount rates used in our material contingent consideration calculations were ~~12.00~~10.03% and ~~11.92~~10.26% at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The range of these discount rates was 3.53% - 13.80% at June 30, ~~2022.~~2023. Using different probability weightings and discount rates could result in an increase or decrease of the contingent consideration payable.

(vi)

Consideration due to be paid across multiple years until 2027.

The following table summarizes the change in fair value of the Level 3 liabilities:


Fair Value Measurements Using Significant Unobservable Inputs (Level 3)	June 30, 2022			June 30, 2023
Balance at December 31, 2021	$	51
Balance at December 31, 2022				$	40
Obligations assumed		22			—
Payments		(20	)		(2	)
Realized and unrealized losses (i)		5			5
Foreign exchange		(2	)		—
Balance at June 30, 2022	$	56
Balance at June 30, 2023				$	43

(i)

Realized and unrealized losses include accretion and adjustments to contingent consideration liabilities, which are included within Interest expense and Other operating expenses, respectively, on the condensed consolidated statements of comprehensive income.

There were 0no significant transfers to or from Level 3 in the six months ended June 30, ~~2022.~~2023.

Fair value information about financial instruments not measured at fair value

The ~~following~~following tables present our liabilities not measured at fair value on a recurring basis at June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


	June 30, 2022				December 31, 2021				June 30, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Long-term note receivable	$	65	$	63	$	69	$	70	$	71	$	61	$	68	$	63
Liabilities:
Current debt	$	0	$	0	$	613	$	616	$	899	$	884	$	250	$	248
Long-term debt	$	4,720	$	4,465	$	3,974	$	4,453	$	4,565	$	4,202	$	4,471	$	4,069

The carrying value of our revolving credit facility approximates its fair value. The fair values above, which exclude accrued interest, are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or ability to dispose of the financial instruments. The fair values of our respective senior notes and long-term note receivable are considered Level 2 financial instruments as they are corroborated by observable market data.

Note 12 — Retirement Benefits

Defined Benefit Plans ~~and Post-retirement Welfare Plans~~

WTW sponsors both qualified and non-qualified defined benefit pension ~~plans and other post-retirement welfare (‘PRW’)~~ plans throughout the world. The majority of our plan assets and obligations are in the U.S. and the U.K. We have also included disclosures related to defined benefit plans in certain other countries, including Canada, France, Germany, Switzerland and Ireland. Together, these disclosed funded and unfunded plans represent 9998% of WTW’s pension ~~and PRW~~ obligations and are disclosed herein. We have removed prior-period disclosures pertaining to our post-retirement welfare plans as the Company considers such disclosure to no longer be material.

Components of Net Periodic Benefit (Income)/Cost for Defined Benefit Pension ~~and Post-retirement Welfare~~ Plans

The ~~following~~following tables set forth the components of net periodic benefit (income)/cost for the Company’s defined benefit pension ~~and PRW~~ plans for the three and six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


	Three Months Ended June 30,																								Three Months Ended June 30,
	2022												2021												2023									2022
	U.S.			U.K.			Other			PRW			U.S.			U.K.			Other			PRW			U.S.			U.K.			Other			U.S.			U.K.			Other
Service cost	$	19		$	4		$	5		$	0		$	20		$	5		$	6		$	0		$	14		$	2		$	4		$	19		$	4		$	5
Interest cost		30			17			4			0			24			14			3			1			49			30			7			30			17			4
Expected return on plan assets		(82	)		(37	)		(9	)		0			(77	)		(43	)		(10	)		0			(76	)		(41	)		(10	)		(82	)		(37	)		(9	)
Settlement		0			0			0			0			0			1			0			0
Settlements																										1			—			(1	)		—			—			—
Amortization of net loss		3			7			1			1			11			7			2			1			3			12			—			3			7			1
Amortization of prior service credit		0			(3	)		0			(1	)		0			(5	)		0			(1	)		—			(3	)		1			—			(3	)		—
Net periodic benefit (income)/cost	$	(30	)	$	(12	)	$	1		$	0		$	(22	)	$	(21	)	$	1		$	1		$	(9	)	$	—		$	1		$	(30	)	$	(12	)	$	1

Six Months Ended June 30,

2022

2021

U.S.

U.K.

Other

PRW

U.S.

U.K.

Other

PRW

Service cost

$
38

$
7

$
11

$
0

$
40

$
9

$
12

$
0

Interest cost

59

36

8

1

47

28

6

1

Expected return on plan assets

(165
)

(76
)

(19
)

0

(154
)

(86
)

(19
)

0

Settlement

0

0

0

0

1

1

0

0

Amortization of net loss

7

15

2

1

22

14

3

1

Amortization of prior service credit

0

(6
)

0

(2
)

0

(9
)

0

(2
)
Net periodic benefit (income)/cost

$
(61
)

$
(24
)

$
2

$
0

$
(44
)

$
(43
)

$
2

$
0


	Six Months Ended June 30,
	2023									2022
	U.S.			U.K.			Other			U.S.			U.K.			Other
Service cost	$	28		$	3		$	7		$	38		$	7		$	11
Interest cost		98			59			14			59			36			8
Expected return on plan assets		(152	)		(80	)		(19	)		(165	)		(76	)		(19	)
Settlements		1			—			(1	)		—			—			—
Amortization of net loss		6			24			—			7			15			2
Amortization of prior service credit		—			(6	)		1			—			(6	)		—
Net periodic benefit (income)/cost	$	(19	)	$	—		$	2		$	(61	)	$	(24	)	$	2

Employer Contributions to Defined Benefit Pension Plans

The Company did 0not make any contributions to its U.S. plans during the six months ended June 30, ~~2022~~2023 and currently does 0not anticipate making contributions over the remainder of the fiscal year. The Company made contributions of $1610 million to its U.K. plans for the six months ended June 30, ~~2022~~2023 and anticipates making additional contributions of $238 million for the remainder of the fiscal year. The Company made contributions of $18 million to its other plans for the six months ended June 30, ~~2022~~2023 and anticipates making additional contributions of $65 million for the remainder of the fiscal year.

Defined Contribution Plans

The Company made contributions to its defined contribution plans of $41 million and $81 million during the three and six months ended June 30, 2023, respectively, and $38 million and $80 million during the three and six months ended June 30, 2022, ~~respectively, and $~~39 ~~million and $~~82 ~~million during the three and six months ended June 30, 2021,~~ respectively.

Note 13 — Leases

The following tables present lease costs recorded on our condensed consolidated statements of comprehensive income for the three and six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Finance lease cost:
Amortization of right-of-use assets	$	1		$	1		$	1		$	1		$	1		$	1		$	1		$	1
Interest on lease liabilities		0			0			1			1			—			—			1			1
Operating lease cost		56			45			95			91			37			56			71			95
Short-term lease cost		0			1			0			1
Variable lease cost		16			13			34			26			16			16			28			34
Sublease income		(5	)		(5	)		(9	)		(10	)		(3	)		(5	)		(6	)		(9	)
Total lease cost, net	$	68		$	55		$	122		$	110		$	51		$	68		$	95		$	122

The total lease cost is recognized in different locations in our condensed consolidated statements of comprehensive income. Amortization of the finance lease ~~right-of-use~~ROU assets is included in depreciation, while the interest cost component of these finance leases is included in interest expense. All other costs are included in other operating expenses, with the exception of $4 million and $5 million incurred during the three and six months ended June 30, 2023, respectively, and $26 million and $31 million ~~respectively,~~ incurred during the three and six months ended June 30, 2022, respectively, that ~~was~~were included in restructuring costs (see Note 6 — Restructuring Costs) that primarily related to the acceleration of amortization of certain abandoned ~~right-of-use~~ROU assets and the payment of early termination fees. There are no significant lease costs that have been included as discontinued operations in the condensed consolidated statements of comprehensive income during the three and six months ended June 30, ~~2022 and 2021.~~2022.

Note 14 — Commitments and Contingencies

Indemnification Agreements

WTW has various agreements which provide that it may be obligated to indemnify the other party to the agreement with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business and in connection with the purchase and sale of certain businesses, including the disposal of Willis Re. It is not possible to predict the maximum potential amount of future payments that may become due under these indemnification agreements because of the conditional nature of the Company’s obligations and the unique facts of each particular agreement. However, we do not believe that any potential liability that may arise from such indemnity provisions is probable or material.

Legal Proceedings

In the ordinary course of business, the Company is subject to various actual and potential claims, lawsuits and other proceedings. Some of the claims, lawsuits and other proceedings seek damages in amounts which could, if assessed, be significant. ~~We expect the impact of claims or demands not described below to be immaterial to the Company’s condensed consolidated financial statements.~~ The Company also receives subpoenas in the ordinary course of business and, from time to time, receives requests for information in connection with governmental investigations.

Errors and omissions claims, lawsuits, and other proceedings arising in the ordinary course of business are covered in part by professional indemnity or other appropriate insurance. The terms of this insurance vary by policy year. Regarding self-insured risks, the Company has established provisions which are believed to be adequate in light of current information and legal advice, or, in certain cases, where a range of loss exists, the Company accrues the minimum amount in the range if no amount within the range is a better estimate than any other amount. The Company adjusts such provisions from time to time according to developments. See Note 15 — Supplementary Information for Certain Balance Sheet Accounts for the amounts accrued at June 30, ~~2022~~2023 and December 31, ~~2021~~2022 in the condensed consolidated balance sheets.

On the basis of current information, the Company does not expect that the actual claims, lawsuits and other proceedings to which it is subject, or potential claims, lawsuits, and other proceedings relating to matters of which it is aware, will ultimately have a material adverse effect on its financial condition, results of operations or liquidity. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation and disputes with insurance companies, it is possible that an adverse outcome or settlement in certain matters could, from time to time, have a material adverse effect on the Company’s results of operations or cash flows in a particular quarterly or annual periods. In addition, given the early stages of some litigation or regulatory proceedings described below, it may not be possible to predict their outcomes or resolutions, and it is possible that any one or more of these events may have a material adverse effect on the Company.period.

The Company provides for contingent liabilities based on ASC 450, Contingencies, when it is determined that a liability, inclusive of defense costs, is probable and reasonably estimable. The contingent liabilities recorded are primarily developed actuarially. Litigation is subject to many factors which are difficult to predict so there can be no assurance that in the event of a material unfavorable result in one or more claims, we will not incur material costs.

Note 15 — Supplementary Information for Certain Balance Sheet Accounts

Additional details of specific balance sheet accounts are detailed below.

~~Prepaid and other current assets consist of the following:~~

June 30,
2022

December 31,
2021

Prepayments and accrued income

$
103

$
137

Short-term investments

0

200

Deferred contract costs

64

74

Derivatives and investments

19

35

Deferred compensation plan assets

13

19

Corporate income and other taxes

176

82

Acquired renewal commissions receivable

8

11

Other current assets

49

54

Total prepaid and other current assets

$
432

$
612

Deferred revenue and accrued expenses consist of the following:


	June 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
Accounts payable, accrued liabilities and deferred income	$	900	$	898
Accounts payable, accrued liabilities and deferred revenue					$	1,016	$	975
Accrued discretionary and incentive compensation		384		811		397		708
Accrued vacation		185		145		199		142
Other employee-related liabilities		65		72		73		90
Total deferred revenue and accrued expenses	$	1,534	$	1,926	$	1,685	$	1,915

Provision for liabilities consists of the following:

June 30,
2022

December 31,
2021

Claims, lawsuits and other proceedings

$
314

$
311

Other provisions

64

64

Total provision for liabilities

$
378

$
375

~~Other non-current liabilities consists of the following:~~

June 30,
2022

December 31,
2021

Deferred compensation plan liability

$
80

$
109

Contingent and deferred consideration on acquisitions

41

27

Liabilities for uncertain tax positions

37

43

Finance leases

14

15

Other non-current liabilities

43

59

Total other non-current liabilities

$
215

$
253


	June 30, 2023		December 31, 2022
Claims, lawsuits and other proceedings	$	319	$	296
Other provisions		67		61
Total provision for liabilities	$	386	$	357

Note 16 — Other Income, Net

Other income, net consists of the following:


	Three Months Ended June 30,						Six Months Ended June 30,					Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021			2022			2021		2023		2022			2023			2022
Gain/(loss) on disposal of operations (i)	$	22		$	(2	)	$	(32	)	$	357	$	3	$	22		$	3		$	(32	)
Net periodic pension and postretirement benefit credits		69			72			140			148		25		69			53			140
Interest in earnings of associates and other investments		2			2			4			4		1		2			2			4
Foreign exchange (loss)/gain		(1	)		2			5			3
Foreign exchange gain/(loss) (ii)													1		(1	)		(4	)		5
Other		1			0			3			0		5		1			6			3
Other income, net	$	93		$	74		$	120		$	512	$	35	$	93		$	60		$	120

(i)

For both the three and six months ended June 30, 2022, includes a $24 million non-cash revaluation gain related to an acquisition completed in stages.

(ii)

Includes the offsetting effects of the Company's foreign currency hedging program. See Note 9 — Derivative Financial Instruments.

~~Certain prior-year period amounts within the table above have been reclassified to discontinued operations within the condensed consolidated statements of comprehensive income.~~

Note 17 — Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss, net of non-controlling interests, and net of tax are provided in the following tables for the three and six months ended June 30, ~~2022~~2023 and ~~2021. These tables exclude~~2022. This table excludes amounts attributable to non-controlling interests, which are not material for further disclosure.

Foreign currency
translation (i)

Derivative
instruments (i)

Defined pension and
post-retirement
benefit costs (ii)

Total

2022

2021

2022

2021

2022

2021

2022

2021

Quarter-to-date activity:

Balance at March 31, 2022 and 2021, respectively

$
(548
)

$
(398
)

$
8

$
15

$
(1,702
)

$
(1,928
)

$
(2,242
)

$
(2,311
)
Other comprehensive (loss)/income before
   reclassifications

(246
)

22

(2
)

1

(4
)

(1
)

(252
)

22

(Gain)/loss reclassified from accumulated other
   comprehensive loss (net of income tax benefit of
   $1 and $1, respectively)

0

0

0

(3
)

8

14

8

11

Net current-period other comprehensive
   (loss)/income

(246
)

22

(2
)

(2
)

4

13

(244
)

33

Balance at June 30, 2022 and 2021, respectively

$
(794
)

$
(376
)

$
6

$
13

$
(1,698
)

$
(1,915
)

$
(2,486
)

$
(2,278
)

Year-to-date activity:

Balance at December 31, 2021 and 2020, respectively

$
(489
)

$
(400
)

$
11

$
9

$
(1,708
)

$
(1,968
)

$
(2,186
)

$
(2,359
)
Other comprehensive (loss)/income before
   reclassifications

(305
)

(20
)

(3
)

8

(2
)

0

(310
)

(12
)
Loss/(gain) reclassified from accumulated other
   comprehensive loss (net of income tax benefit of
   $4 and $7, respectively) (iii)

0

44

(2
)

(4
)

12

53

10

93

Net current-period other comprehensive
   (loss)/income

(305
)

24

(5
)

4

10

53

(300
)

81

Balance at June 30, 2022 and 2021, respectively

$
(794
)

$
(376
)

$
6

$
13

$
(1,698
)

$
(1,915
)

$
(2,486
)

$
(2,278
)


	Foreign currency translation (i)						Derivative instruments (i)					Defined pension and post-retirement benefit costs (ii)						Total
	2023			2022			2023		2022			2023			2022			2023			2022
Quarter-to-date activity:
Balance at March 31, 2023 and 2022, respectively	$	(944	)	$	(548	)	$	11	$	8		$	(1,635	)	$	(1,702	)	$	(2,568	)	$	(2,242	)
Other comprehensive income/(loss) before reclassifications		18			(246	)		1		(2	)		1			(4	)		20			(252	)
Loss reclassified from accumulated other comprehensive loss (net of income tax benefit of $3 and $1, respectively)		—			—			—		—			8			8			8			8
Net current-period other comprehensive income/(loss)		18			(246	)		1		(2	)		9			4			28			(244	)
Balance at June 30, 2023 and 2022, respectively	$	(926	)	$	(794	)	$	12	$	6		$	(1,626	)	$	(1,698	)	$	(2,540	)	$	(2,486	)

Year-to-date activity:
Balance at December 31, 2022 and 2021, respectively	$	(987	)	$	(489	)	$	9	$	11		$	(1,643	)	$	(1,708	)	$	(2,621	)	$	(2,186	)
Other comprehensive income/(loss) before reclassifications		61			(305	)		3		(3	)		—			(2	)		64			(310	)
(Gain)/loss reclassified from accumulated other comprehensive loss (net of income tax benefit of $6 and $4, respectively)		—			—			—		(2	)		17			12			17			10
Net current-period other comprehensive income/(loss)		61			(305	)		3		(5	)		17			10			81			(300	)
Balance at June 30, 2023 and 2022, respectively	$	(926	)	$	(794	)	$	12	$	6		$	(1,626	)	$	(1,698	)	$	(2,540	)	$	(2,486	)

(i)

Reclassification adjustments from accumulated other comprehensive loss related to derivative instruments are included in Revenue and Salaries and benefits in the accompanying condensed consolidated statements of comprehensive income. See Note 9 — Derivative Financial Instruments for additional details regarding the reclassification adjustments for the derivative settlements.

(ii)

Reclassification adjustments from accumulated other comprehensive loss are included in the computation of net periodic pension cost (see Note 12 — Retirement Benefits). These components are included in Other income, net in the accompanying condensed consolidated statements of comprehensive income.

~~(iii)~~

~~Includes reclassifications in 2021 of $~~44 ~~million and $~~31 million of foreign currency translation and defined pension and post-retirement benefit costs, respectively, attributable to the gain on disposal of our Miller business (see Note 3 — Acquisitions and Divestitures). The net gain on disposal is included in Other income, net in the accompanying condensed consolidated statements of comprehensive income.

Note 18 — Earnings Per Share

Basic and diluted earnings per share from continuing operations attributable to WTW and discontinued operations, net of tax are calculated by dividing net income from continuing operations attributable to WTW and discontinued operations, net of tax, respectively, by the average number of ordinary shares outstanding during each period. The computation of diluted earnings per share

reflects the potential dilution that could occur if dilutive securities and other contracts to issue shares were exercised or converted into shares or resulted in the issuance of shares that then shared in the net income of the Company.

At June 30, ~~2022~~2023 and ~~2021,~~2022, there were ~~0.1~~0.6 million and ~~0.3~~ ~~million performance-based options outstanding, respectively, and~~ 0.7 ~~million and~~ ~~0.6~~ million restricted performance-based stock units outstanding, ~~respectively. At June 30, 2022, there were~~respectively, and 0.5 million and 0.4 million restricted time-based stock units ~~outstanding; restricted time-based stock units were immaterial at June 30, 2021.~~outstanding, respectively. The Company’s time-based share options

were immaterial at both June 30, ~~2022;~~2023 and 2022. There were no performance-based options outstanding at June 30, 2023; there were 0.1 million ~~time-based share~~performance-based options outstanding at June 30, ~~2021.~~2022.

Basic and diluted earnings per share are as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Income from continuing operations	$	160		$	117		$	274		$	663		$	96		$	160		$	302		$	274
Less: income attributable to non-controllable interests		(5	)		(2	)		(8	)		(5	)		(2	)		(5	)		(5	)		(8	)
Income from continuing operations attributable to WTW	$	155		$	115		$	266		$	658		$	94		$	155		$	297		$	266

(Loss)/income from discontinued operations, net of tax	$	(46	)	$	69		$	(35	)	$	259
Loss from discontinued operations, net of tax													$	—		$	(46	)	$	—		$	(35	)

Basic average number of shares outstanding		112			130			115			130			107			112			107			115
Dilutive effect of potentially issuable shares		0			0			0			0			—			—			—			—
Diluted average number of shares outstanding		112			130			115			130			107			112			107			115

Basic earnings per share from continuing operations attributable to WTW	$	1.38		$	0.89		$	2.31		$	5.07		$	0.88		$	1.38		$	2.78		$	2.31
Dilutive effect of potentially issuable shares		0			(0.01	)		0			(0.02	)		—			—			(0.01	)		—
Diluted earnings per share from continuing operations attributable to WTW	$	1.38		$	0.88		$	2.31		$	5.05		$	0.88		$	1.38		$	2.77		$	2.31

Basic (loss)/earnings per share from discontinued operations, net of tax	$	(0.41	)	$	0.53		$	(0.30	)	$	1.99
Basic loss per share from discontinued operations, net of tax													$	—		$	(0.41	)	$	—		$	(0.30	)
Dilutive effect of potentially issuable shares		0			0			0			0			—			—			—			—
Diluted (loss)/earnings per share from discontinued operations, net of tax	$	(0.41	)	$	0.53		$	(0.30	)	$	1.99
Diluted loss per share from discontinued operations, net of tax													$	—		$	(0.41	)	$	—		$	(0.30	)

~~For~~Anti-dilutive restricted stock units were immaterial for the three and six months ended June 30, 2023; for the three and six months ended June 30, 2022, 0.3 million and 0.2 million restricted stock units, respectively, were not included in the computation of the dilutive effect of potentially issuable shares because their effect was anti-dilutive. ~~For both the three and six months ended June 30, 2021,~~ ~~0.2~~ ~~million restricted stock units were not included in the computation of the dilutive effect of potentially issuable shares because their effect was anti-dilutive.~~ There were 0no anti-dilutive options for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.

Note 19 — Supplemental Disclosures of Cash Flow Information

Supplemental disclosures regarding cash flow information are as follows:


	Six months ended June 30,						Six months ended June 30,
	2022			2021			2023			2022
Supplemental disclosures of cash flow information:
Cash and cash equivalents	$	1,920		$	2,217		$	1,602		$	1,920
Fiduciary funds (included in fiduciary assets)		3,183			3,703			2,402			3,183
Cash and cash equivalents and fiduciary funds (included in current assets held for sale)		5			0			—			5
Other restricted cash (included in prepaids and other current assets)		0			4
Total cash, cash equivalents and restricted cash	$	5,108		$	5,924		$	4,004		$	5,108

(Decrease)/increase in cash, cash equivalents and other restricted cash	$	(2,515	)	$	135
Increase/(decrease) in fiduciary funds		102			(462	)
Increase/(decrease) in cash, cash equivalents and other restricted cash							$	345		$	(2,515	)
(Decrease)/increase in fiduciary funds								(1,063	)		102
Total	$	(2,413	)	$	(327	)	$	(718	)	$	(2,413	)

~~Revision of previously issued financial statements~~ ~~- During the six months ended June 30, 2022, to reflect the guidance on restricted cash presentation in FASB ASC 230,~~ ~~Statement of Cash Flows~~, WTW corrected the classification of its fiduciary funds balances, in the amounts shown in the table above, on our condensed consolidated statements of cash flows, by including these amounts in the total cash, cash equivalents and restricted cash amounts held at each balance sheet date. As a result, cash, cash equivalents and restricted cash balances of $~~2.2~~ ~~billion and $2.1~~ ~~billion at June 30, 2021 and December 31, 2020, respectively, have been revised to $5.9~~ ~~billion and $6.3~~ billion, respectively. Additionally, the effect of exchange rate changes on cash, cash equivalents and restricted cash has been updated to include the effect of exchange rate changes on the fiduciary funds balances.

Prior to this correction, the changes in fiduciary funds were presented in fiduciary assets and liabilities on a gross basis in the cash flows from operating activities, where the amounts fully offset each period. In the current presentation, an additional line item, net (payments)/proceeds from fiduciary funds held for clients, has been included within cash flows from financing activities to represent the change in fiduciary funds balances during the periods. The remaining fiduciary assets and fiduciary liabilities, in equal and offsetting amounts, are no longer presented in the cash flows from operating activities. There was no impact to the total cash flows from operating activities as a result of these changes.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion includes forward-looking statements. See ‘Disclaimer Regarding Forward-looking Statements’ for certain cautionary information regarding forward-looking statements and a list of factors that could cause actual results to differ materially from those predicted in those statements.

This discussion includes references to non-GAAP financial measures as defined in the rules of the SEC. We present such non-GAAP financial measures, specifically, adjusted, constant currency and organic non-GAAP financial measures, as we believe such information is of interest to the investment community because it provides additional meaningful methods of evaluating certain aspects of the Company’s operating performance from period to period on a basis that may not be otherwise apparent under U.S. GAAP, and these provide a measure against which our businesses may be assessed in the future.

See ‘Non-GAAP Financial Measures’ below for further discussion of our adjusted, constant currency and organic non-GAAP financial measures.

Executive Overview

Market Conditions

Typically, our business benefits from regulatory change, political risk or economic uncertainty. Insurance broking generally tracks the economy, but demand for both insurance broking and consulting services usually remains steady during times of uncertainty. We have some businesses, such as our health and benefits and administration businesses, which can be counter cyclical during the early period of a significant economic change.

Within our insurance and brokerage business, due to the cyclical nature of the insurance market and the impact of other market conditions on insurance premiums, commission revenue may vary widely between accounting periods. A period of low or declining premium rates, generally known as a ‘soft’ or ‘softening’ market, generally leads to downward pressure on commission revenue and can have a material adverse impact on our revenue and operating margin. A ‘hard’ or ‘firming’ market, during which premium rates rise, generally has a favorable impact on our revenue and operating margin. Rates, however, vary by geography, industry and client segment. As a result, and due to the global and diverse nature of our business, we view rates in the aggregate. Overall, we are currently seeing a modest but definite increase in pricing in the market.

Market conditions in the broking industry in which we operate are generally defined by factors such as the strength of the economies in the various geographic regions in which we serve around the world, insurance rate movements, and insurance and reinsurance buying patterns of our clients.

The markets for our consulting, technology and solutions, and marketplace services are affected by economic, regulatory and legislative changes, technological developments, and increased competition from established and new competitors. We believe that the primary factors in selecting a human resources or risk management consulting firm include reputation, the ability to provide measurable increases to shareholder value and return on investment, global scale, quality of service and the ability to tailor services to clients’ unique needs. In that regard, we are focused on developing and implementing technology, data and analytic solutions for both internal operations and for maintaining industry standards and meeting client preferences. We have made such investments from time to time and may decide, based on perceived business needs, to make investments in the future that may be different from past practice or what we currently anticipate.

With regard to the market for exchanges, we believe that clients base their decisions on a variety of factors that include the ability of the provider to deliver measurable cost savings for clients, a strong reputation for efficient execution and an innovative service delivery model and platform. Part of the employer-sponsored insurance market has matured and become more fragmented while other segments remain in the entry phase. As these market segments continue to evolve, we may experience growth in intervals, with periods of accelerated expansion balanced by periods of modest growth. In recent years, growth in the market for exchanges has slowed, and ~~we expect~~ this trend may continue.

From time to time, including but not limited to the period after the announcement of the proposed Aon combination through the period that has followed the termination of the proposed combination, we have lost (and may in the future continue to lose) colleagues who manage substantial client relationships or possess substantial experience or expertise; when we lose colleagues such as those, it often results in such colleagues competing against us. Further, the full impact of this competition may be delayed due to the timing of restrictive covenants or client renewals. We believe that this dynamic, which was most pronounced in our Risk & Broking segment during 2021, has caused the segment’s recent near-term and expected growth rates for the remainder of 2022 to be meaningfully slower than other competitors. This dynamic may be difficult to predict, given that the adverse impact in future periods is more significant than in the periods in which employees departed. Growth has been and will be adversely affected by the fact that 2021 performance in a number of businesses, particularly commercial risk broking and health & benefits broking, benefited from revenue

from book sales, which is non-repeatable revenue. It is possible that growth could be different than expected and our results of operations could be significantly and adversely impacted. See Part I, Item 1A ‘Risk Factors’ in our Annual Report on Form 10-K, filed with the SEC on February 24, 2022, for a discussion of risks that may affect our ability to compete.

We have transferred ownership of our Russian subsidiaries to our local management team on the agreed-upon terms. The Russian entities comprised approximately 1% of consolidated WTW revenue for 2021, primarily within our Risk & Broking segment. The lost profits from our Russia operations will, overall, create a modest margin headwind for the Company in 2022 and beyond. However, with the goal of offsetting this, we have taken action to deploy near-term cost-mitigation measures and to identify longer-term offsets. See ‘Disclaimer Regarding Forward-looking Statements’ and Part II, Item 1A ‘Risk Factors’ of this Quarterly Report on Form 10-Q for a discussion of the risks associated with expense actions.

Risks and Uncertainties of the Economic Environment ~~Caused by the Pandemic~~

U.S. and global markets are continuing to experience volatility and disruption as a result of the war between Russia and Ukraine. Although the length and impact of the ongoing situation is highly unpredictable, as the war in Ukraine continues, it has and could continue to lead to further market disruptions. The ~~COVID-19 pandemic~~war in Ukraine has ~~had an adverse impact on global commercial activity, particularly~~contributed to negative impacts on the global ~~supply chain~~economy and ~~workforce availability, and has contributed to significant volatility in the global financial~~capital markets including ~~among other effects, occasional declines in the equity markets, changes in interest rates and reduced liquidity on a global basis.~~

~~Supply and labor market disruptions caused by COVID-19 as well as other factors, such as accommodative monetary and fiscal policy and the Russian invasion of Ukraine, have contributed to~~ significant inflation in many of the markets in which we operate. This impacts not only the ~~costs~~cost of and access to ~~attract and retain employees~~liquidity, but also other costs to run and invest in our business.

Other global economic events, such as accommodative monetary and fiscal policy and geopolitical tensions beyond the war in Ukraine, have also contributed to significant inflation across the globe. In particular, inflation in the United States, Europe, and other geographies has risen to levels not experienced in recent decades and we are seeing its impact on various aspects of our business. Moreover, U.S. and global economic conditions have created market uncertainty and volatility. Such general economic conditions, including inflation, stagflation, political volatility, costs of labor, cost of capital, interest rates, bank stability, credit availability, and tax rates, affect our operating and general and administrative expenses, and we have no control or limited ability to control such factors.

If our costs grow significantly in excess of our ability to raise revenue, whether as a result of the foregoing global economic factors or otherwise, our margins and results of operations may be materially and adversely impacted and we may not be able to achieve our strategic and financial objectives.

~~Although we believe we have adapted to the unique challenges posed by the pandemic surrounding how and where we do~~In 2022, our ~~work, we are also~~financial results were negatively impacted by adverse workforce factors in a number of businesses, particularly commercial risk broking and health and benefits broking. Additionally, our 2022 performance benefited from revenue from book sales, which is non-repeatable revenue. The net impact of these factors, which caused our growth in 2022 to be meaningfully slower than other competitors, may affect the ~~negative effect~~comparability of our 2022 results against the same period (or periods) in 2023 or other future periods. See Part I, Item 1A ‘Risk Factors’ in our Annual Report on ~~workforce availability, which could hamper~~Form 10-K, filed with the SEC on February 24, 2023, for a discussion of risks that may affect our growth relative to expectation and our ability to grow our capacity on pace with increasing demand for our services. We expect the market for talent to remain highly competitive for at least the next several months. We will continue to monitor the situation and assess any implications to our business and our stakeholders.compete.

~~Segment Reorganization~~

On January 1, 2022, WTW realigned to provide its comprehensive offering of services and solutions to clients across two business segments: Health, Wealth & Career and Risk & Broking. These changes were made in conjunction with changes in the WTW leadership team, including the appointment of a new chief executive officer who succeeded the prior CEO as the chief operating decision maker on that date. Prior to January 1, 2022, we operated across four segments: Human Capital and Benefits; Corporate Risk and Broking; Investment, Risk and Reinsurance; and Benefits Delivery and Administration. Following the realignment, the two new segments consist of the following businesses:

•

The Health, Wealth & Career segment includes businesses previously aligned under the Human Capital and Benefits segment, the Benefits Delivery and Administration segment, and the Investment business, which was previously under the Investment, Risk and Reinsurance segment.

•

The Risk & Broking segment includes businesses previously aligned under the Corporate Risk and Broking segment, as well as the Insurance Consulting and Technology business, which was previously under the Investment, Risk and Reinsurance segment.

~~The following presents descriptions of our reorganized segments:~~

~~Health, Wealth & Career~~

The Health, Wealth & Career (‘HWC’) segment provides an array of advice, broking, solutions and technology for employee benefit plans, institutional investors, compensation and career programs, and the employee experience overall. Our portfolio of services support the interrelated challenges that the management teams of our clients face across human resources (‘HR’) and finance.

HWC is the larger of the two segments of the Company. Addressing four key areas, Health, Wealth, Career and Benefits Delivery & Outsourcing, the segment is focused on addressing our clients’ people and risk needs to help them succeed in a global marketplace.

~~Health~~

~~The Health & Benefits (‘H&B’) business provides strategy and design consulting,~~plan management service and support, broking and administration across the full spectrum of health, wellbeing and other group benefit programs, including medical, dental, disability, life, voluntary benefits and other coverage. Our reach extends from small/mid-market clients to large-market and multinational clients, across the full geographic footprint of the Company, and to most industries. We can address our clients’ needs in more than 140 countries.

Our consultants help clients make strategic decisions on topics such as optimizing program spend; evaluating emerging vendors, point solutions and coverage options (including publicly-subsidized health insurance exchanges and private exchanges in the U.S.); and dealing with above-inflation-rate increases in healthcare costs. We also assist clients in selecting the appropriate insurance carriers to cover benefit risks and administer the programs. In addition to our consulting and broking services, we manage a number of collective purchasing initiatives, such as pharmacy and stop-loss, that allow employers to realize greater value from third-party service providers than they can achieve on their own.

With Global Benefits Management, our suite of global services supporting medical, dental and risk (e.g., life, disability) programs, we have a tailored offering for multinationals. This offering includes a flexible set of ready-made solutions, proven technology and an integrated approach to service delivery that translates to a globally consistent, high-quality experience for our clients.

A meaningful portion of revenue in this business is from recurring work, though contracts may be annual or multi-year. Given the balance of revenue across consulting, broking and solutions, our revenue is somewhat weighted to the first quarter.

W~~ealth~~

~~Our wealth-related businesses include Retirement and Investment.~~

The Retirement business provides actuarial support, plan design, and administrative services for all forms of pension and retirement savings plans. Our colleagues help our clients assess the costs and risks of retirement plans on cash flow, earnings and the balance sheet, the effects of changing workforce demographics on their retirement plans, and retiree benefit adequacy and security. We offer clients a full range of integrated retirement consulting services and solutions to meet the needs of all types of employers, including those that continue to offer defined benefit plans and those that are reexamining their retirement benefit strategies. We help multinationals coordinate plan design and actuarial services across their complex global plans. We bring in-depth data analysis and perspective to their decision process, because we have tracked the retirement designs and financing strategies of companies around the world over many decades.

For clients that want to outsource some or all of their pension plan management, we offer broking services, as well as integrated solutions that can combine investment discretionary management, pension administration, core actuarial services, and communication and change management assistance.

Retirement relationships are generally long-term in nature, and client retention rates for this business are high. A significant portion of the revenue in this business is from recurring work, with multi-year contracts that are driven by the heavily regulated nature of pension plans and our clients’ annual needs for these services. Revenue for the Retirement business in some geographies is somewhat seasonal, as much of our work pertains to calendar-year plan administration, financing, reporting and compliance; thus, revenue is typically more weighted to the first and fourth quarters of the fiscal year.

Our Investment business provides advice and discretionary investment management solutions to defined benefit and defined contribution pension plans as well as to a range of other client types including insurers, endowments and foundations, and private wealth investors. We provide a solution to a significant business problem faced by our clients, namely sustaining the resources and skills required to deliver a financial services product in highly competitive capital markets. We offer a flexible approach that adapts to a wide range of client needs and circumstances, with the objective of higher returns, lower risk and lower costs within each client’s unique situation.

~~Our solutions range from single asset class activity, through complete management of entire pension plan assets including sophisticated liability hedging programs.~~

We bring together a broad array of specialist investment knowledge and skills across all asset classes, a high-quality execution platform, a cost advantage through our scale, and expert advisors with experience across all client types from the largest plans in the world to small corporate pension plans.

~~We have long-term relationships with our Investment clients, with the majority of our revenue driven by retainer contracts.~~

~~Career~~

~~Ourcareer-related offerings include advice, data, software and products to address clients’ total rewards and talent issues across the globe delivered through our~~ ~~Work & Rewards~~ ~~and~~ ~~Employee Experience~~ ~~businesses.~~

Within our Work & Rewards business, we help clients determine the best ways to get work done, the skills needed for jobs, and how to reward it. We address executive compensation and broad-based rewards. We advise our clients’ management and boards of directors on all aspects of executive pay programs, including base pay, annual bonuses, long-term incentives, perquisites and other

benefits. Our focus is on aligning pay plans with an organization’s business strategy and driving desired performance. Our solutions incorporate proprietary market benchmarking data and software to support compensation administration.

Our Employee Experience business focuses on the provision of solutions including employee insight and listening tools, talent assessment tools and services, communication and change management services.

Revenue for our career-related businesses is partly seasonal in nature, with heightened activity in the second half of the calendar year during the annual compensation, benefits, and survey cycles. While these businesses enjoy long-term relationships with many clients, work in several practices is often project-based and can be sensitive to economic changes. The businesses benefit from regulatory changes affecting our clients that require strategic advice, program changes and communication, as well as the focus on ESG as a component of executive and board pay, the redefinition of jobs, work location and career paths as technology disaggregates work, and the recalibration of pay and the employee experience amidst shifting labor markets.

~~Benefits Delivery & Outsourcing~~

~~Our Benefits Delivery & Outsourcing businesses include Benefits Delivery & Administration (‘BDA’) and Technology and Administration Solutions (‘TAS’).~~

~~TheBDA business provides primary medical and ancillary benefit exchange and outsourcing services to active employees and retirees across both the group and individual markets, primarily in the U.S.~~

A significant portion of the revenue in this business is recurring in nature, driven by either the commissions from the policies we sell, or from long-term service contracts with our clients that typically range from three to five years. Revenue across this business is seasonal and is generally higher in the fourth quarter as it is driven when typical annual enrollment activity occurs.

~~BDA provides services via two related offerings:~~

~~Benefits Outsourcing~~ is focused on serving active employee groups for clients across the U.S. Working closely with other HWC businesses, we use our proprietary technology to provide a suite of health and welfare and pension administration outsourcing services, including tools to enable benefit modeling, decision support, enrollment and benefit choice. Drawing on expertise in H&B and Retirement to create high-performing benefit plan designs, we believe we are well-positioned to help clients of all sizes simplify their benefits delivery, while lowering the total costs of benefits and related administration.

~~Individual Marketplace~~ offers decision support processes and tools to connect consumers with insurance carriers in private individual and Medicare markets. Individual Marketplace serves both employer-based and direct-to-consumer populations through its end-to-end consumer acquisition and engagement platforms, which tightly integrate call routing technology, an efficient quoting and enrollment engine, a customer relations management system and deep links with insurance carriers. By leveraging its multiple distribution channels and diverse product portfolio, Individual Marketplace offers solutions to a broad consumer base, helping individuals compare, purchase and use health insurance products, tools and information for life.

Our TAS business provides pension outsourcing services to hundreds of clients across multiple industries. Our TAS team focuses on clients outside of the U.S. where our services are supported by high quality administration teams using robust technology platforms. Given the nature of the work, our revenue is distributed generally evenly across the year.

With ongoing servicing requirements and multi-year contracts in place, we have high client retention rates. We are the leading administrator among the 200 largest pension plans in the U.K., as well as a leader in Germany.

For both our defined benefit and defined contribution administration services, we use highly-automated processes and technology to enable benefit plan members to access and manage their records, perform self-service functions and improve their understanding of their benefits. Our technology also provides trustees and HR teams with timely management information to monitor activity and service levels and reduce administration costs.

~~Risk & Broking~~

~~The segment comprises two primary businesses:~~

~~Corporate Risk & Broking (‘CRB’)~~

~~The~~ ‘CRB’ business places more than $25 billion of premiums into the insurance markets on an annual basis, and delivers integrated global solutions tailored to client needs, underpinned by data and analytics through a balanced matrix of global lines of business across all of the Company’s three geographical areas: North America, Europe (including Great Britain) and International.

~~The global lines of business include:~~

~~Property and Casualty~~ — Property and Casualty provides property and liability insurance brokerage services across a wide range of industries and segments including real estate, healthcare and retail. We also arrange insurance products and services for our affinity client partners to offer to their customers, employees, or members alongside, or in addition to, their principal business offerings.

~~Aerospace~~ —~~Aerospace~~provides specialist expertise to the aerospace and space industries. Our aerospace business provides insurance broking, risk management services, contractual and technical advisory expertise to aerospace clients worldwide, including the world’s leading airlines, aircraft manufacturers, air cargo handlers and other airport and general aviation companies. The specialist InSpace team is also prominent in providing insurance and risk management services to the space industry.

~~Construction~~ — Our Construction business provides services that include insurance broking, claims, loss control and specialized risk advice for a wide range of construction projects and activities. Clients include contractors, project owners, public entities, project managers, consultants and financiers, among others.

~~Global Markets Direct & Facultative~~ — Operating in the major wholesale reinsurance hubs across the world, including London, Bermuda, Singapore, Hong Kong and Shanghai, solutions are delivered both directly to clients for the most complex property and casualty risks and as facultative reinsurance placements where we serve as an intermediary for insurance companies. Facultative solutions are provided across various classes of risk for our insurer clients, some of which may also be direct clients of WTW. The aim is to deliver optimum results for our clients by getting the right risk to the right market by the right broker, be it local, wholesale or facultative every time.

~~Financial, Executive and Professional Risks (‘FINEX’)~~ — FINEX encompasses all financial and executive risks, delivering client solutions that range from management and professional liability, employment practices liability, crime, cyber and M&A-related insurances to risk consulting and advisory services. Specialist teams provide risk consulting and risk transfer solutions to a broad spectrum of clients across a multitude of industries, as well as the financial and professional service sectors.

~~Financial Solutions~~ — Financial Solutions provides insurance broking services and specialized risk advice related to credit and political risk and crisis management, including terrorism, kidnap and ransom and contingency risk. Clients include international banks, leasing companies, commodity traders, export credit agencies, multinational corporations and sporting institutions.

~~Surety~~ —The Global Surety team provides expertise in placing bonds across all industries and around the world. A surety bond is a financial instrument that guarantees contractual performance, statutory compliance, and financial assurance for domestic and international companies.

~~Marine~~ —~~Marine~~provides specialist expertise to the maritime and logistics industries. Our Marine business provides insurance broking services related to hull and machinery, cargo, protection and indemnity, fine art and general marine liabilities, among others. Our Marine clients include, but are not limited to, ship owners and operators, shipbuilders, logistics operations, port authorities, traders, shippers, exhibitors and secure transport companies.

~~Natural Resources~~ — Our Natural Resources practice encompasses the oil, gas and chemicals, mining and metals, power and utilities and renewable energy sectors. It provides sector-specific risk transfer solutions and insights, which include insurance broking, risk engineering, contractual reviews, wording analysis and claims management.

~~Insurance Consulting and Technology (‘ICT’)~~

ICT is a global business that provides advice and technology solutions to the insurance industry. We leverage our industry experience, strategic perspective and analytical skills to help clients measure and manage risk and capital, improve business performance and create a sustainable competitive advantage. Our services include software and technology, risk and capital management, products and product pricing, financial and regulatory reporting, financial and capital modeling, M&A, outsourcing and business management.

Transformation Program

Inthe fourth quarter of 2021, wethe Company initiated a three-year ‘Transformation program’ designed to enhance operations, optimize technology and align ~~our~~its real estate footprint to ~~our~~its new ways of working. WeDuring the second quarter of 2023, we revised the expected costs and savings under the program and we now expect the program to generate annual cost savings in excess of ~~$300~~$380 million by the end of 2024. The program is expected to ~~include~~incur cumulative costs of approximately ~~$490~~$630 million and capital expenditures of approximately ~~$260~~$270 million, for a total investment of ~~$750~~$900 million. The main categories of charges will be

in the following four areas:

•

Other — other costs not included above including fees for professional services, other contract terminations not related to the above categories and supplier migration costs.

Certain costs under the Transformation program are accounted for under ASC 420, Exit or Disposal Cost Obligation, and are included as restructuring costs in the condensed consolidated statements of comprehensive income. For the three and six months ended June 30, 2023, restructuring charges under our Transformation program totaled $10 million and $13 million, respectively; for the three and six months ended June 30, 2022, restructuring charges under our Transformation program totaled $56 million and $62 million, respectively. Other costs incurred under the Transformation program are included in transaction and transformation ~~net~~ and were $82 million and $127 million for the three and six months ended June 30, 2023, respectively, and $26 million and $31 million for the three and six months ended June 30, 2022, respectively. From the actions taken ~~through~~during the second quarter of ~~2022,~~2023, we have identified an additional ~~$35~~$53 million of annualized run-rate savings during the ~~quarter~~year due to ~~newly realized~~newly-realized opportunities and incremental sources of ~~value, and $71~~value. Since the inception of the program, we have identified $277 million of cumulative annualized run-rate savings, ~~identified to date since the inception of the program,~~ which ~~savings~~ overall are primarily attributable to the reduction of real estate and technology ~~costs, as well as process optimization.~~costs. The benefits from the program began to be recognized during 2022.

For a discussion of some of the risks associated with the Transformation program, see Part I, Item 1A ‘Risk Factors’ in our Annual Report on Form 10-K, filed with the SEC on February 24, ~~2022.~~2023.

3530

Financial Statement Overview

~~For~~all prior-year period financial information presented herein, the operating results of Willis Re have been reclassified as discontinued operations (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Form 10-Q for additional information).

The table below sets forth our summarized condensed consolidated statements of comprehensive income and data as a percentage of revenue for the periods indicated.


	Three Months Ended June 30,										Six Months Ended June 30,										Three Months Ended June 30,										Six Months Ended June 30,
	2022					2021					2022					2021					2023					2022					2023					2022
	($ in millions, except per share data)																				($ in millions, except per share data)
Revenue	$	2,031		100	%	$	2,091		100	%	$	4,191		100	%	$	4,319		100	%	$	2,159		100	%	$	2,031		100	%	$	4,403		100	%	$	4,191		100	%
Costs of providing services
Salaries and benefits		1,259		62	%		1,317		63	%		2,577		61	%		2,736		63	%		1,347		62	%		1,259		62	%		2,660		60	%		2,577		61	%
Other operating expenses		393		19	%		384		18	%		879		21	%		784		18	%		433		20	%		393		19	%		886		20	%		879		21	%
Depreciation		65		3	%		72		3	%		131		3	%		143		3	%		64		3	%		65		3	%		124		3	%		131		3	%
Amortization		83		4	%		97		5	%		168		4	%		200		5	%		70		3	%		83		4	%		141		3	%		168		4	%
Restructuring costs		56		3	%		—		—	%		62		1	%		—		—	%		10		—	%		56		3	%		13		—	%		62		1	%
Transaction and transformation, net		38		2	%		51		2	%		58		1	%		75		2	%
Transaction and transformation																						93		4	%		38		2	%		152		3	%		58		1	%
Total costs of providing services		1,894					1,921					3,875					3,938					2,017					1,894					3,976					3,875
Income from operations		137		7	%		170		8	%		316		8	%		381		9	%		142		7	%		137		7	%		427		10	%		316		8	%
Interest expense		(51	)	(3	)%		(52	)	(2	)%		(100	)	(2	)%		(111	)	(3	)%		(57	)	(3	)%		(51	)	(3	)%		(111	)	(3	)%		(100	)	(2	)%
Other income, net		93		5	%		74		4	%		120		3	%		512		12	%		35		2	%		93		5	%		60		1	%		120		3	%
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		179		9	%		192		9	%		336		8	%		782		18	%		120		6	%		179		9	%		376		9	%		336		8	%
Provision for income taxes		(19	)	(1	)%		(75	)	(4	)%		(62	)	(1	)%		(119	)	(3	)%		(24	)	(1	)%		(19	)	(1	)%		(74	)	(2	)%		(62	)	(1	)%
INCOME FROM CONTINUING OPERATIONS		160		8	%		117		6	%		274		7	%		663		15	%		96		4	%		160		8	%		302		7	%		274		7	%
(LOSS)/INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		(46	)	(2	)%		69		3	%		(35	)	(1	)%		259		6	%
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX																						—		—	%		(46	)	(2	)%		—		—	%		(35	)	(1	)%
Income attributable to non-controlling interests		(5	)	—	%		(2	)	—	%		(8	)	—	%		(5	)	—	%		(2	)	—	%		(5	)	—	%		(5	)	—	%		(8	)	—	%
NET INCOME ATTRIBUTABLE TO WTW	$	109		5	%	$	184		9	%	$	231		6	%	$	917		21	%	$	94		4	%	$	109		5	%	$	297		7	%	$	231		6	%
Diluted earnings per share from continuing operations	$	1.38				$	0.88				$	2.31				$	5.05				$	0.88				$	1.38				$	2.77				$	2.31

Consolidated Revenue (Continuing Operations)

Revenue for the three months ended June 30, 2023 was $2.2 billion, compared to $2.0 billion for the three months ended June 30, 2022, ~~compared to $2.1 billion for the three months ended June 30, 2021, a decrease~~an increase of ~~$60~~$128 million, or 3%6%, on an as-reported basis. Adjusting for the impacts of foreign currency and acquisitions and disposals, our organic revenue growth was 3%7% for the three months ended June 30, ~~2022.~~2023. Revenue for the six months ended June 30, ~~2022~~2023 was ~~$4.2~~$4.4 billion, compared to ~~$4.3~~$4.2 billion for the six months ended June 30, ~~2021, a decrease~~2022, an increase of ~~$128~~$212 million, or 3%5%, on an as-reported basis. Adjusting for the impacts of foreign currency and acquisitions and disposals, our organic revenue growth was 2%8% for the six months ended June 30, ~~2022.~~2023. The increases in both as-reported and organic revenue were driven by strong performances in both segments as well as the recognition of higher interest income that is not allocated to the segments.

Our revenue can be materially impacted by changes in currency conversions, which can fluctuate significantly over the course of a calendar year. For the three months ended June 30, ~~2022,~~2023, currency translation decreased our consolidated revenue by ~~$85~~$9 million. The primary currency driving this change was the Canadian Dollar and Argentine Peso. For the six months ended June 30, ~~2022,~~2023, currency translation decreased our consolidated revenue by ~~$139~~$72 million. The primary currencies driving ~~these changes~~this change were the ~~Euro~~Pound sterling and ~~Pound sterling.~~Euro.

The following table details our top five markets based on the percentage of consolidated revenue (in U.S. dollars) from the countries where work was performed for the six months ended June 30, ~~2022.~~2023. These figures do not represent the currency of the related revenue, which is presented in the next table.


Geographic Region	% of Revenue
United States		50	%
United Kingdom		19	%
France		5	%
Germany		3	%
Canada		3	%

3631

The table below details the approximate percentage of our revenue and expenses from continuing operations by transactional currency for the six months ended June 30, ~~2022.~~2023.


Transactional Currency	Revenue			Expenses (i)			Revenue			Expenses (i)
U.S. dollars		56	%		53	%		56	%		53	%
Pounds sterling		12	%		17	%		12	%		17	%
Euro		17	%		13	%		16	%		13	%
Other currencies		15	%		17	%		16	%		17	%

(i)

These percentages exclude certain expenses for significant items which will not be settled in cash, or which we believe to be items that are not core to our current or future operations. These items include amortization of intangible assets and transaction and ~~transformation, net.~~transformation.

The following tables set forth the total revenue for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 and the components of the changes in total revenue for the three and six months ended June 30, ~~2022,~~2023, as compared to the prior year periods. The components of the revenue change may not add due to rounding.

Components of Revenue Change

As

Less:

Constant

Less:

Three Months Ended June 30,

Reported

Currency

Currency

Acquisitions/

Organic

2022

2021

Change

Impact

Change

Divestitures

Change

($ in millions)

Revenue

$
2,031

$
2,091

(3)%

(4)%

1%

(1)%

3%

Components of Revenue Change

Less:

Constant

Less:

Three Months Ended June 30,

Reported

Currency

Acquisitions/

Organic

2023

2022

Change

Impact

Change

Divestitures

Change

($ in millions)

Revenue

2,159

2,031

—%

Components of Revenue Change

As

Less:

Constant

Less:

Six Months Ended June 30,

Reported

Currency

Currency

Acquisitions/

Organic

2022

2021

Change

Impact

Change

Divestitures

Change

($ in millions)

Revenue

$
4,191

$
4,319

(3)%

(3)%

—%

(2)%

2%

Components of Revenue Change

Less:

Constant

Less:

Six Months Ended June 30,

Reported

Currency

Acquisitions/

Organic

2023

2022

Change

Impact

Change

Divestitures

Change

($ in millions)

Revenue

4,403

4,191

(2)%

(1)%

Definitions of Constant Currency Change and Organic Change are included under the section entitled ‘Non-GAAP Financial Measures’ elsewhere within Item 2 of this Form 10-Q.

Segment Revenue

~~For further information on our~~The segment ~~reorganization and a~~descriptions below should be read in conjunction with the full ~~description~~descriptions of our businesses ~~please see~~ ‘~~Segment Reorganization~~’ ~~elsewhere within~~contained in Part I, Item ~~2 of this Quarterly~~1. ‘Business’, within our Annual Report on Form ~~10-Q.~~10-K, filed with the SEC on February 24, 2023.

Segment revenue excludes amounts that were directly incurred on behalf of our clients and reimbursed by them (reimbursed expenses); however, these amounts are included in consolidated ~~revenue.~~revenue, as permitted by applicable accounting standards and SEC rules.

The Company experiences seasonal fluctuations in its revenue. Revenue is typically higher during the Company’s first and fourth quarters due primarily to the timing of broking-related activities.

~~Within the tables~~For each table presented below, the components of the revenue change ~~provided~~ may not add due to rounding.

Health, Wealth & Career

The ~~prior-year~~Health, Wealth & Career (‘HWC’) segment ~~information has been conformed to~~provides an array of advice, broking, solutions and technology for employee benefit plans, institutional investors, compensation and career programs, and the ~~current-year presentation.~~employee experience overall. Our portfolio of services supports the interrelated challenges that the management teams of our clients face across human resources and finance.

HWC ~~Revenue~~is the larger of the two segments of the Company. Addressing four key areas, Health, Wealth, Career and Benefits Delivery & Outsourcing, the segment is focused on addressing our clients’ people and risk needs to help them succeed in a global marketplace.

The following table sets forth HWC ~~segment~~ revenue for the three months ended June 30, ~~2022~~2023 and ~~2021~~2022 and the components of the change in revenue for the three months ended June 30, ~~2022~~2023 from the three months ended June 30, ~~2021.~~2022.

Components of Revenue Change

As

Less:

Constant

Less:

Three Months Ended June 30,

Reported

Currency

Currency

Acquisitions/

Organic

2022

2021

Change

Impact

Change

Divestitures

Change

($ in millions)

Segment revenue

$
1,159

$
1,179

(2)%

(4)%

2%

—%

2%

Components of Revenue Change

Less:

Constant

Less:

Three Months Ended June 30,

Reported

Currency

Acquisitions/

Organic

2023

2022

Change

Impact

Change

Divestitures

Change

($ in millions)

Segment revenue

1,215

1,159

—%

HWC segment revenue for both the three months ended June 30, ~~2022~~2023 and ~~2021~~2022 was $1.2 billion. Organic growth was led by ~~the Health business, primarily due to gains recorded~~Benefits Delivery & Outsourcing, driven by higher volumes and placements of Medicare Advantage and Life policies in ~~connection with book-of-business settlements. Excluding these settlements, Health’s~~Individual Marketplace, and increased project activity in Outsourcing. Our Wealth businesses generated organic revenue ~~increased~~growth from ~~additional consulting~~higher levels of Retirement work in North America ~~as well as~~and Europe, along with new client acquisitions and higher fees related to value-added services in Investments. Though Health faced significant headwinds from book-of-business settlement revenue in the comparable period of last year, the business had organic revenue growth driven by the continued expansion of our ~~local portfolios~~client portfolio in International and ~~global benefits management appointments outside of~~Europe and increased project activity and brokerage income in North America. ~~Benefits Delivery & Outsourcing~~Our Career businesses grew revenue ~~also~~organically through increased ~~led by Individual Marketplace with growth in Medicare Advantage sales. Career also contributed strong growth, driven by increased~~reward-based advisory services and higher compensation survey participation.

~~project activity. Organic growth was partially offset by a decline in Wealth revenue, principally due to headwinds from performance fees received in the prior year.~~

The following table sets forth HWC segment revenue for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022 and the components of the change in revenue for the six months ended June 30, ~~2022~~2023 from the six months ended June 30, ~~2021.~~2022.

Components of Revenue Change

As

Less:

Constant

Less:

Six Months Ended June 30,

Reported

Currency

Currency

Acquisitions/

Organic

2022

2021

Change

Impact

Change

Divestitures

Change

($ in millions)

Segment revenue

$
2,403

$
2,412

—%

(3)%

2%

—%

2%

Components of Revenue Change

Less:

Constant

Less:

Six Months Ended June 30,

Reported

Currency

Acquisitions/

Organic

2023

2022

Change

Impact

Change

Divestitures

Change

($ in millions)

Segment revenue

2,502

2,403

(2)%

—%

HWC segment revenue for ~~both~~ the six months ended June 30, 2023 and 2022 was $2.5 billion and ~~2021 was~~ $2.4 ~~billion.~~billion, respectively. Organic growth was led by Benefits Delivery & Outsourcing, driven by higher volumes and placements of Medicare Advantage and Life policies in Individual Marketplace and increased project activity in Outsourcing. Though Health faced significant headwinds from book-of-business settlement revenue in the ~~Health~~comparable period of last year, the business ~~primarily due to an increase~~had organic revenue growth driven by the continued expansion of our client portfolio in ~~consulting assignments~~International and Europe and increased project activity and brokerage income in North America. Our Wealth businesses generated organic revenue growth from higher levels of Retirement work in North America and ~~expansion of our local portfolios and global benefits management appointments outside of North America. The Health business’~~Europe. Our Career businesses grew revenue ~~also benefited from gains recorded in connection with book-of-business settlements. Career also contributed strong growth, driven by~~organically through increased demand for ~~reward-based~~ advisory services and compensation benchmarking products alongside increased project activity. Benefits Delivery & Outsourcing revenue also increased, led by its expanded client base. Organic growth was partially offset by a declineincreases in ~~Wealth revenue, principally due to headwinds from outsized performance fees earned in the prior year.~~data, software license and survey sales.

~~R&B Revenue~~Risk & Broking

The Risk & Broking (‘R&B’) segment provides a broad range of risk advice, insurance brokerage and consulting services to clients worldwide ranging from small businesses to multinational corporations. The segment comprises two primary businesses - Corporate Risk & Broking and Insurance Consulting and Technology.

The following table sets forth R&B ~~segment~~ revenue for the three months ended June 30, ~~2022~~2023 and ~~2021~~2022 and the components of the change in revenue for the three months ended June 30, ~~2022~~2023 from the three months ended June 30, ~~2021.~~2022.

Components of Revenue Change

As

Less:

Constant

Less:

Three Months Ended June 30,

Reported

Currency

Currency

Acquisitions/

Organic

2022

2021

Change

Impact

Change

Divestitures

Change

($ in millions)

Segment revenue

$
852

$
885

(4)%

(5)%

1%

(3)%

3%

Components of Revenue Change

Less:

Constant

Less:

Three Months Ended June 30,

Reported

Currency

Acquisitions/

Organic

2023

2022

Change

Impact

Change

Divestitures

Change

($ in millions)

Segment revenue

900

852

(1)%

—%

R&B segment revenue for the three months ended June 30, 2023 and 2022 was $900 million and ~~2021 was~~ $852 million, ~~and $885 million,~~ respectively. ~~On an~~Despite significant pressure from headwinds from book-of-business settlement revenue in the comparable period, Corporate Risk & Broking generated solid organic ~~basis, ICT grew primarily as a result of new software sales as well as increased advisory work. CRB generated~~ revenue growth across all ~~regions,~~geographies, primarily driven by new business, improved retention and strong contributions from our global lines of ~~business, principally~~business. Insurance Consulting and Technology had organic revenue growth from ~~new business, most notably in Aerospace, Natural Resources~~software sales and ~~FINEX. Book-of-business settlement activity was largely in line with prior year and did not materially affect CRB's organic growth rate.~~increased project revenue.

The following table sets forth R&B segment revenue for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022 and the components of the change in revenue for the six months ended June 30, ~~2022~~2023 from the six months ended June 30, ~~2021.~~2022.

Components of Revenue Change

As

Less:

Constant

Less:

Six Months Ended June 30,

Reported

Currency

Currency

Acquisitions/

Organic

2022

2021

Change

Impact

Change

Divestitures

Change

($ in millions)

Segment revenue

$
1,743

$
1,809

(4)%

(4)%

—%

(1)%

2%

Components of Revenue Change

Less:

Constant

Less:

Six Months Ended June 30,

Reported

Currency

Acquisitions/

Organic

2023

2022

Change

Impact

Change

Divestitures

Change

($ in millions)

Segment revenue

1,804

1,743

(2)%

R&B segment revenue for the six months ended June 30, 2023 and 2022 was $1.8 billion and ~~2021 was~~ $1.7 billion, ~~and $1.8 billion,~~ respectively. ~~On an organic basis, ICT grew~~Despite significant pressure from ~~both increased advisory work and software sales. CRB also contributed to R&B’s revenue growth. Excluding~~ headwinds from book-of-business ~~sales and settlements recorded~~settlement revenue in the comparable period, Corporate Risk & Broking generated solid organic revenue ~~increased~~growth across all ~~regions,~~geographies, primarily ~~from~~driven by new business, ~~in FINEX, M&A,~~improved retention and ~~Aerospace lines.~~strong contributions from our global lines of business. Insurance Consulting and Technology had organic revenue growth from software sales and increased project revenue.

Costs of Providing Services (Continuing Operations)

Total costs of providing services for ~~both~~the three months ended June 30, 2023 were $2.0 billion, compared to $1.9 billion for the three months ended June 30, 2022, ~~and 2021 were $1.9 billion, a decrease~~an increase of ~~$27~~$123 million, or 1%6%. Total costs of providing services for ~~both~~the six months ended June 30, 2023 were $4.0 billion, compared to $3.9 billion for the six months ended June 30, 2022, ~~and 2021 were $3.9 billion, a decrease~~an increase of ~~$63~~$101 million, or 2%3%. See the following discussion for further details.

Salaries and Benefits

Salaries and benefits for both the three months ended June 30, ~~2022~~2023 and ~~2021~~2022 were $1.3 billion, ~~a decrease~~an increase of ~~$58~~$88 million, or 4%7%. The ~~decrease~~increase in the current year is primarily due to ~~lower~~higher salary expense and higher incentive and benefit costs for the period. Salaries and benefits, as a percentage of revenue, represented 62% ~~and 63%~~ for both the three months ended June 30, ~~2022~~2023 and ~~2021, respectively.~~2022.

Salaries and benefits for the six months ended June 30, ~~2022~~2023 were ~~$2.6~~$2.7 billion, compared to ~~$2.7~~$2.6 billion for the six months ended June 30, ~~2021, a decrease~~2022, an increase of ~~$159~~$83 million, or 6%3%. The ~~decrease~~increase in the current year is primarily due to ~~lower~~higher salary expense and higher incentive and benefit costs for the period. Salaries and benefits, as a percentage of revenue, represented ~~61%~~60% and ~~63%~~61% for the six months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively.

Other Operating Expenses

Other operating expenses for the three months ended June 30, ~~2022~~2023 were ~~$393~~$433 million, compared to ~~$384~~$393 million for the three months ended June 30, ~~2021,~~2022, an increase of $9$40 million, or 2%10%. The increase was primarily due to higher professional service and marketing-related expenses for the current-year period as compared to the prior-year comparable period, and higher travel and entertainment costs ~~local office expenses and bad debt expense, partially offset by decreases in non-income-related tax expense and occupancy costs.~~ as post-pandemic activity increased.

Other operating expenses for the six months ended June 30, ~~2022~~2023 were ~~$879~~$886 million, compared to ~~$784~~$879 million for the six months ended June 30, ~~2021,~~2022, an increase of ~~$95 million, or 12%.~~$7 million. The increase was primarily due to higher professional service and marketing-related expenses for the current-year as compared to the prior-year comparable period, and higher travel and entertainment costs as post-pandemic activity increased, partially offset by the absence of the prior-year asset impairments incurred, mostly accounts receivables, related to Russian insurance contracts placed by U.K. brokers in the London market (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Form 10-Q for additional information)~~, higher travel and entertainment costs and business insurance costs, partially offset by lower non-income-related tax expense for the current year as compared to the prior year.~~.

Depreciation

Depreciation for the three months ended June 30, ~~2022~~2023 was ~~$65~~$64 million, compared to ~~$72~~$65 million for the three months ended June 30, ~~2021,~~2022, a decrease of $7$1 million, or ~~10%~~2%. Depreciation for the six months ended June 30, ~~2022~~2023 was ~~$131~~$124 million, compared to ~~$143~~$131 million for the six months ended June 30, ~~2021,~~2022, a decrease of ~~$12~~$7 million, or 8%5%. ~~The quarter-over-quarter and year-over-year~~These decreases were primarily due to a lower depreciable base of assets resulting from business disposals over the last two years and a lower dollar value of assets placed in service during ~~2021.~~the past few years.

Amortization

Amortization for the three months ended June 30, ~~2022~~2023 was ~~$83~~$70 million, compared to ~~$97~~$83 million for the three months ended June 30, ~~2021,~~2022, a decrease of ~~$14~~$13 million, or ~~14%~~16%. Amortization for the six months ended June 30, ~~2022~~2023 was ~~$168~~$141 million, compared to ~~$200~~$168 million for the six months ended June 30, ~~2021,~~2022, a decrease of ~~$32~~$27 million, or 16%. Our intangible amortization is generally more heavily weighted to the initial years of the useful lives of the related intangibles, and therefore amortization related to intangible assets will continue to decrease over time.

Restructuring Costs

Restructuring costs for the three ~~and~~months ended June 30, 2023 were $10 million, compared to $56 million for the three months ended June 30, 2022. Restructuring costs for the six months ended June 30, ~~2022~~2023 were ~~$56~~$13 million, ~~and~~compared to $62 million ~~respectively.~~for the six months ended June 30, 2022. Restructuring costs in both the current-year and prior-year periods primarily ~~relate~~related to the real estate rationalization ~~and technology modernization components~~component of the Transformation program commenced by the Company during the fourth quarter of 2021 (see ~~‘Transformation~~

‘Transformation Program’ within this Part I, Item 2 and Note 6 — Restructuring Costs within Part I, Item 1 ‘Financial Statements’ of this Quarterly Report on Form 10-Q).

Transaction and Transformation ~~Net~~

Transaction and transformation ~~net costs~~for the three months ended June 30, 2023 were $93 million, compared to $38 million for the three months ended June 30, 2022, ~~were $38 million, compared to $51 million~~an increase of $55 million. Transaction and transformation for the ~~three~~six months ended June 30, ~~2021. Transaction and transformation, net costs~~2023 were $152 million, compared to $58 million for the six months ended June 30, 2022, ~~were $58 million, compared to $75 million for the six months ended June 30, 2021.~~an increase of $94 million. Transaction and transformation ~~expenses~~costs for the current year were ~~comprised of~~higher primarily due to increased consulting and compensation costs ~~and consulting fees~~ related to ~~the~~our Transformation program (see ‘Transformation Program’ within this Part I, Item 2), incurred in the current-year periods as ~~well as legal fees and other transaction costs. Transaction and transformation, net costs for~~compared to the prior-year ~~period were comprised primarily of legal fees and other professional fees related to our then-proposed combination with Aon.~~comparable periods.

Income from Operations

Income from operations for the three months ended June 30, ~~2022~~2023 was ~~$137~~$142 million, compared to ~~$170~~$137 million for the three months ended June 30, ~~2021, a decrease~~2022, an increase of ~~$33~~$5 million. This ~~decrease~~increase resulted primarily from ~~lower~~higher revenue and ~~current period~~lower restructuring costs in the current year, partially offset by ~~lower~~higher salary expense and incentive ~~compensation accruals~~and benefit costs, higher transaction and transformation costs, and higher professional service and marketing-related expenses in the ~~current quarter.~~current-year period as compared to the prior-year period.

Income from operations for the six months ended June 30, ~~2022~~2023 was ~~$316~~$427 million, compared to ~~$381~~$316 million for the six months ended June 30, ~~2021, a decrease~~2022, an increase of ~~$65~~$111 million. This ~~decrease~~increase resulted primarily from higher revenue, the absence of the prior-year’s asset impairment expense discussed above, ~~lower revenue~~ and ~~second-quarter~~lower restructuring costs in the current year, partially offset by ~~lower~~higher salary expense and incentive ~~compensation accruals~~and benefit costs, higher transaction and transformation costs, higher travel and entertainment costs and increased marketing-related and professional service expenses in the current-year ~~period.~~

~~The lower revenue for both~~period as compared to the ~~three and six months ending June 30, 2022 resulted from unfavorable foreign exchange and recent dispositions.~~prior-year period.

Interest Expense

Interest expense for the three months ended June 30, ~~2022~~2023 was ~~$51~~$57 million, compared to ~~$52~~$51 million for the three months ended June 30, ~~2021, a decrease~~2022, an increase of $1$6 million, or 2%12%. Interest expense for the six months ended June 30, ~~2022~~2023 was ~~$100~~$111 million as compared to ~~$111~~$100 million for the six months ended June 30, ~~2021, a decrease~~2022, an increase of $11 million, or ~~10%~~11%. These ~~decreases~~increases were primarily the result of ~~lower average~~higher levels of indebtedness in the current year.

Other Income, Net

Other income, net for the three months ended June 30, ~~2022~~2023 was ~~$93~~$35 million, compared to ~~$74~~$93 million for the three months ended June 30, ~~2021, an increase~~2022, a decrease of ~~$19~~$58 million, ~~or 26%,~~ mostly related to ~~a revaluation gain~~lower pension income, which was primarily attributable to higher interest costs resulting from higher assumed discount rates in the current year and lower gains on ~~an acquisition completed in stages~~disposals in the current quarter.

Other income, net for the six months ended June 30, ~~2022~~2023 was ~~$120~~$60 million, compared to ~~$512~~$120 million for the six months ended June 30, ~~2021. Other~~2022, a decrease of $60 million. This decrease was due primarily to lower pension income, ~~net~~which was mostly attributable to higher interest costs resulting from higher assumed discount rates in the ~~prior-year period consisted primarily of~~current year, and unfavorable foreign currency movement in the current-year period. The year-over-year decrease was also impacted by the net ~~gain~~losses on disposal of ~~our Miller business (see Note 3 – Acquisitions and Divestitures~~operations in ~~Part I, Item 1 ‘Financial Statements’ in this Form 10-Q),~~the prior year, which ~~primarily accounted for~~had partially offset the ~~decrease in~~ other income ~~net,~~gains in the ~~current~~prior year.

Provision for Income Taxes

Provision for income taxes for the three months ended June 30, ~~2022~~2023 was ~~$19~~$24 million, compared to ~~$75~~$19 million for the three months ended June 30, ~~2021, a decrease~~2022, an increase of ~~$56~~$5 million. The effective tax rate was 19.8% for the three months ended June 30, 2023 and 10.5% for the three months ended June 30, ~~2022, and 38.9% for the three months ended June 30, 2021.~~2022. Provision for income taxes for the six months ended June 30, ~~2022~~2023 was ~~$62~~$74 million, compared to ~~$119~~$62 million for the six months ended June 30, ~~2021, a decrease~~2022, an increase of ~~$57~~$12 million. The effective tax rate was 19.6% for the six months ended June 30, 2023 and 18.4% for the six months ended June 30, ~~2022 and 15.2% for the six months ended June 30, 2021.~~2022. These effective tax rates are calculated using extended values from ~~the Company’s~~our condensed consolidated statements of comprehensive income and are therefore more precise tax rates than can be calculated from rounded values. The prior-year ~~quarter~~quarter’s effective tax rate was ~~higher~~lower due to the discrete tax effect of the U.K. tax-rate increase enacted in the second quarter of 2021. Accordingly, the Company remeasured its U.K. deferred tax assets and liabilities, resulting in a $40 million deferred tax expense in the prior-year period. Additionally, the current quarter effective tax rate includes certain discrete tax benefits primarily related to return-to-provision true ups.

~~(Loss)/Income~~Loss from Discontinued Operations, Net of Tax

Loss from discontinued operations, net of tax for the three and six months ended June 30, 2022 was $46 million compared to income from discontinued operations, net of tax of $69 million for the three months ended June 30, 2021, a decrease of $115 million. Loss from discontinued operations, net of tax for the six months ended June 30, 2022 wasand $35 million, ~~compared to income from discontinued operations, net of tax of $259 million for the six months ended June 30, 2021, a decrease of $294 million.~~respectively. The operations of our Willis Re business were reclassified to discontinued operations upon our entering into an agreement to sell the business during the third quarter of 2021 (see Note 3 – Acquisitions and Divestitures in Part I, Item 1 ‘Financial Statements’ in this Form 10-Q). ~~Losses from discontinued operations in the current year are~~This loss was primarily attributable to the reduction to the gain on disposal resulting from of an updated

estimate of working capital which decreased the preliminary purchase price by $60 ~~million. This loss~~million, and was partially offset by the operations of the deferred closing entities and run-off activity associated with the divestiture.

Net Income Attributable to WTW

Net income attributable to WTW for the three months ended June 30, ~~2022~~2023 was ~~$109~~$94 million, compared to ~~$184~~$109 million for the three months ended June 30, ~~2021,~~2022, a decrease of ~~$75~~$15 million, or ~~41%~~14%. This decrease ~~was~~resulted primarily ~~due to~~from higher salary expense and incentive and benefit costs, higher transaction and transformation costs, higher professional service and marketing-related expenses, lower ~~net~~pension income ~~from the discontinued operations of our Willis Re business, the current quarter’s restructuring costs~~ and lower ~~revenue,~~gains on disposals in the current-year period, partially offset by higher revenue and lower ~~incentive compensation accruals this quarter.~~restructuring costs in the current year.

Net income attributable to WTW for the six months ended June 30, ~~2022~~2023 was ~~$231~~$297 million, compared to ~~$917~~$231 million for the six months ended June 30, ~~2021, a decrease~~2022, an increase of ~~$686~~$66 million, or ~~75%~~29%. This ~~decrease was~~increase resulted primarily ~~due to~~from higher revenue, the ~~prior-year gain on the sale~~absence of the ~~Miller business, lower net income from the discontinued operations of our Willis Re business, the~~prior-year’s asset impairment expense discussed above, and lower ~~revenue and~~restructuring costs in the current ~~year’s restructuring costs,~~year, partially offset by higher salary expense and incentive and benefit costs, higher transaction and transformation costs, lower ~~incentive compensation accruals~~pension income, higher travel and entertainment costs and increased marketing-related and professional service expenses in the ~~current-year period.~~current year.

Liquidity and Capital Resources

Executive Summary

Our principal sources of liquidity are funds generated by operating activities, available cash and cash equivalents and amounts available under our revolving credit facilities and any new debt offerings.

~~The COVID-19 pandemic~~There has ~~contributed to~~been significant volatility in financial markets, including occasional declines in equity markets, inflation and changes in interest rates and reduced liquidity on a global basis. Specific to WTW, ~~over~~following the ~~past two years,~~reduced spending driven by the COVID-19 pandemic, had an initial negative impact on discretionary work we perform for our clients, but we subsequently saw increased demand for these services begin to return in the second quarter of 2021 which continues into 2022. We continue to have decreased spending on travel and associated expenses began to increase in 2022, and ~~third-party contractors, and we~~this trend has continued in 2023 following the return to office for many companies which have ~~the ability to contain spending on discretionary projects and certain capital expenditures.~~increased in-person interactions.

Based on our current balance sheet and cash flows, current market conditions and information available to us at this time, we believe that WTW has access to sufficient liquidity, which includes all of the borrowing capacity available to draw against our $1.5 billion revolving credit facility, to meet our cash needs for the next twelve months, including investments in the business for growth and those related to our Transformation program, scheduled debt repayments, share repurchases and dividend payments. During the second quarter of ~~2022,~~2023, we completed an offering of $750 million aggregate principal amount of ~~4.650%~~5.350% senior notes due ~~2027, using~~2033. We plan to use the proceeds ~~in part~~ to repay in full ~~our €540~~the $250 million ~~($582 million on the date of repayment)~~ aggregate principal amount of ~~2.125% Senior Notes due 2022 ($594 million including accrued interest),~~4.625% senior notes, which ~~were to~~will mature during the ~~second~~third quarter of ~~2022.~~2023, and for general corporate purposes. Additionally, ~~during the second quarter of 2022, our board of directors approved a $1.0 billion increase to the existing share repurchase program, and~~ during the six months ended June 30, ~~2022~~2023 we repurchased ~~$2.7 billion~~$454 million of shares, with remaining authorization to repurchase an additional ~~$2.1 billion.~~$889 million.

From time to time, we will consider whether to repurchase shares based on many factors, including market and economic conditions, applicable legal requirements and other business considerations. The share repurchase program has no termination date and may be suspended or discontinued at any time.

During the prior year, the operating results and balance sheets of Willis Re were reclassified to discontinued operations. Willis Re’s operating cash flows approximate its pre-tax income and any adjustments for working capital movements (see Note 3 — Acquisitions and Divestitures in Part I, Item 1 ‘Financial Statements’ within this Quarterly Report on Form 10-Q). Certain costs historically allocated to the Willis Re business are included in continuing operations and were retained following the disposal, but are expected to be partially offset by reimbursements through the TSA. Costs incurred to service the TSA are expected to be reduced as part of the Company’s Transformation program as quickly as possible when the services are no longer required by Gallagher.

Events that could change the historical cash flow dynamics discussed above include significant changes in operating results, potential future acquisitions or divestitures, material changes in geographic sources of cash, unexpected adverse impacts from litigation or regulatory matters, or future pension funding during periods of severe downturn in the capital markets.

Undistributed Earnings of Foreign Subsidiaries

~~The Company continues~~We continue to have certain subsidiaries ~~for which the~~whose earnings have not been deemed permanently reinvested, ~~and~~ for which ~~it has~~we have been accruing estimates of the tax effects of such repatriation. Excluding these certain subsidiaries, ~~the Company continues~~we continue to assert that the historical cumulative earnings for the remainder of ~~its~~our subsidiaries have been reinvested indefinitely and therefore ~~does~~do not provide deferred taxes on these amounts. If future events, including material changes in estimates of cash, working capital, long-term investment requirements or additional legislation, ~~relating to U.S. Tax Reform,~~ necessitate that these earnings be distributed, an additional provision for income and foreign withholding taxes, net of credits, may be necessary. Other potential sources of cash may be ~~obtained~~ through the settlement of intercompany loans or return of capital distributions in a tax-efficient manner.

4136

Cash and Cash Equivalents

Our cash and cash equivalents at June 30, ~~2022~~2023 totaled ~~$1.9~~$1.6 billion, compared to ~~$4.5~~$1.3 billion at December 31, ~~2021.~~2022. The ~~decrease~~increase in cash from December 31, ~~2021~~2022 to June 30, ~~2022~~2023 was due primarily to ~~$2.7 billion~~the current-quarter net proceeds of ~~share repurchases.~~$742 million associated with our offering of 5.350% senior notes due 2033.

Additionally, we had all of the borrowing capacity available to draw against our $1.5 billion revolving credit facility at both June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

Included within cash and cash equivalents at June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are amounts held for regulatory capital adequacy requirements, including ~~$116~~$101 million and ~~$120~~$99 million, respectively, held within our regulated U.K. entities.

Summarized Condensed Consolidated Cash Flows

The following table presents the summarized condensed consolidated cash flow information for the six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


	Six Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2023			2022
	(in millions)						(in millions)
Net cash from/(used in):
Operating activities	$	258		$	366		$	430		$	258
Investing activities		19			374			(1,035	)		19
Financing activities		(2,690	)		(1,067	)		(113	)		(2,690	)
DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (i)		(2,413	)		(327	)		(718	)		(2,413	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(170	)		(50	)		1			(170	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD (i)		7,691			6,301			4,721			7,691
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (i)	$	5,108		$	5,924		$	4,004		$	5,108

(i)

The amounts of cash, cash equivalents and restricted cash, their respective classification on the condensed consolidated balance sheets, as well as their respective portions of the increase or decrease in cash, cash equivalents and restricted cash for each of the periods presented, have been included in Note 19 — Supplemental Disclosures of Cash Flow Information within Part I, Item I ‘Financial Statements’ within this Quarterly Report on Form 10-Q.

Cash Flows From Operating Activities

Cash flows from operating activities were $430 million for the six months ended June 30, 2023, compared to $258 million for the six months ended June 30, ~~2022, compared to $366~~2022. The $430 million of net cash from operating activities for the six months ended June 30, ~~2021.~~ 2023 included net income of $302 million and $365 million of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $237 million. This increase in cash flows from operations as compared to the prior year was primarily due to more favorable working capital movements resulting mostly from higher cash collections and lower discretionary compensation payments made in the current year as compared to the prior year, partially offset by increased transformation program-related costs.

The $258 million of net cash from operating activities for the six months ended June 30, 2022 included net income of $239 million and $510 million of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $491 million. This decrease in cash flows from operations as compared to the prior year was due primarily to cash disbursements and the elimination of cash generation resulting from the Willis Re divestiture, as well as additional tax payments resulting from both the Willis Re sale and the income receipt related to the termination of the then-proposed Aon transaction.

The $366 million of net cash from operating activities for the six months ended June 30, 2021 included net income of $922 million and $79 million of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $635 million.

Cash Flows (Used In)/From Investing Activities

Cash flows ~~from~~used in investing activities for the six months ended June 30, ~~2022~~2023 were ~~$19 million~~$1.0 billion as compared to ~~$374~~cash flows from investing activities of $19 million for the six months ended June 30, ~~2021.~~2022. The cash flows ~~from~~used in investing activities for the six months ended June 30, ~~2022~~2023 consist primarily of cash and fiduciary funds of $916 million associated with the transfer to Gallagher under a new side letter to the Willis Re SAPA (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Form 10-Q for additional information) and $121 million of capital expenditures and capitalized software additions. The cash flows from investing activities in the prior-year period primarily include sales of investments of $200 million, partially offset by capital expenditures and capitalized software additions of $93 million and acquisitions of $76 million made during the first half of 2022. The cash flows from investing activities in the prior year period primarily included the net proceeds from the sale of Miller of $696 million, partially offset by cash and fiduciary funds transferred on disposal of $216 million and capital expenditures and capitalized software additions of $106 million.

Cash Flows Used In Financing Activities

Cash flows used in financing activities for the six months ended June 30, 2023 were $113 million. The significant financing activities included share repurchases of $454 million, net payments from fiduciary funds held for clients of $194 million, and dividend payments of $177 million, partially offset by $740 million of net proceeds from issuance of debt.

Cash flows used in financing activities for the six months ended June 30, 2022 were $2.7 billion. The significant financing activities included share repurchases of $2.7 billion and dividend payments of $189 million, partially offset by $162 million of net proceeds from issuance of debt and $85 million of net proceeds from fiduciary funds held for clients.

Cash flows used in financing activities for the six months ended June 30, 2021 were $1.1 billion. The significant financing activities included debt repayments of $515 million, $246 million of net payments from fiduciary funds held for clients and dividend payments of $269 million.

Indebtedness

Total debt, total equity, and the capitalization ratios at June 30, ~~2022~~2023 and December 31, ~~2021~~2022 were as follows:


	June 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
	($ in millions)						($ in millions)
Long-term debt	$	4,720		$	3,974		$	4,565		$	4,471
Current debt		—			613			899			250
Total debt	$	4,720		$	4,587		$	5,464		$	4,721

Total WTW shareholders’ equity	$	10,337		$	13,260		$	9,799		$	10,016

Capitalization ratio		31.3	%		25.7	%		35.8	%		32.0	%

~~The capitalization ratio increased from December 31, 2021 primarily due to $2.7 billion of share repurchases during the six months ended June 30, 2022.~~

At June 30, ~~2022, the Company does not have any~~2023, our mandatory debt ~~repayment due within~~repayments over the next twelve ~~months.~~months include $250 million outstanding on our 4.625% senior notes, which will mature during the third quarter of 2023 and $650 million outstanding on our 3.600% senior notes due 2024. For more information regarding our current and long-term debt, please see ‘Supplemental Guarantor Financial Information’ elsewhere within this Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations.

At June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we were in compliance with all financial covenants.

Fiduciary Funds

As an intermediary, we hold funds, generally in a fiduciary capacity, for the account of third parties, typically as the result of premiums received from clients that are in transit to insurers and claims due to clients that are in transit from insurers. We also hold funds for clients of our benefits account businesses. These fiduciary funds are included in fiduciary assets on our condensed consolidated balance sheets. We present the equal and corresponding fiduciary liabilities related to these fiduciary funds representing amounts or claims due to our clients or premiums due on their behalf to insurers on our condensed consolidated balance sheets.

Fiduciary funds are generally required to be kept in regulated bank accounts subject to guidelines which emphasize capital preservation and liquidity; such funds are not available to service the Company’s debt or for other corporate purposes. Notwithstanding the legal relationships with clients and insurers, the Company is entitled to retain investment income earned on certain of these fiduciary funds in accordance with industry custom and practice and, in some cases, as supported by agreements with insureds.

At June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had fiduciary funds of ~~$3.3~~$2.6 billion and ~~$3.4~~$3.6 billion, ~~respectively,~~respectively. At December 31, 2022 $945 million of ~~which $788 million and $719 million, respectively, are~~these funds were attributable to ~~our~~the divested Willis Re business. All amounts have since been settled or transferred to Gallagher due to the termination of the co-broking agreement (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ of this Quarterly Report on Form 10-Q for further information).

Share Repurchase Program

The Company is authorized to repurchase shares, by way of redemption or otherwise, and will consider whether to do so from time to time, based on many factors, including market conditions. There are no expiration dates for our repurchase plans or programs.

On July 26, 2021, the board of directors approved a $1.0 billion increase to the existing share repurchase program, which was previously at $500 million. Additionally, on September 16, 2021, the board of directors approved a $4.0 billion increase to the existing share repurchase program, and on May 25, 2022, approved a $1.0 billion increase to the existing share repurchase program. These increases brought the total approved authorization to $6.5 billion.

At June 30, ~~2022,~~2023, approximately ~~$2.1 billion~~$889 million remained on the current repurchase authority. The maximum number of shares that could be repurchased based on the closing price of our ordinary shares on June 30, ~~2022~~2023 of ~~$197.39~~$235.50 was ~~10,902,395.~~3,772,856.

During the three and six months ended June 30, ~~2022,~~2023, the Company had the following share repurchase activity:


	Three Months Ended June 30, 2022	Six Months Ended June 30, 2022	Three Months Ended June 30, 2023	Six Months Ended June 30, 2023
Shares repurchased	2,143,914	12,004,328	1,537,312	1,969,452
Average price per share	$219.52	$226.64	$227.67	$230.59
Aggregate repurchase cost (excluding broker costs)	$471 million	$2.7 billion	$350 million	$454 million

Capital Commitments

~~Capital~~The Company’s capital expenditures for fixed assets and software for internal use were ~~$60~~$80 million during the six months ended June 30, ~~2022.~~2023. The Company estimates that there will be additional such expenditures, which ~~includes~~include those incurred under its Transformation program, in the range of ~~$130~~$110 million ~~to $180~~- $140 million during the remainder of ~~2022.~~2023. We currently expect cash from operations to adequately provide for these cash needs. There have been no material changes to our capital commitments since December 31, ~~2021.~~2022.

Dividends

Total cash dividends of ~~$189~~$177 million were paid during the six months ended June 30, ~~2022.~~2023. In May ~~2022,~~2023, the board of directors approved a quarterly cash dividend of ~~$0.82~~$0.84 per share ($~~3.28~~3.36 per share annualized rate), which was paid on July ~~15, 2022~~17, 2023 to shareholders of record as of June 30, ~~2022.~~2023.

Supplemental Guarantor Financial Information

As of June 30, ~~2022,~~2023, WTW has issued the following debt securities (the ‘notes’):

Willis North America Inc. (‘Willis North America’) has approximately ~~$3.7~~$4.4 billion senior notes outstanding, of which $650 million were issued on May 16, 2017, $1.0 billion were issued on September 10, 2018, $1.0 billion were issued on September 10, 2019, $275 million were issued on May 29, 2020, $750 million were issued on May 19, 2022, and $750 million were issued on May ~~19, 2022;~~17, 2023; and

Trinity Acquisition plc has approximately $1.1 billion senior notes outstanding, of which $525 million were issued on August 15, 2013 and $550 million were issued on March 22, 2016, and a $1.5 billion revolving credit facility, on which no balance was outstanding at June 30, ~~2022.~~2023.

The following table presents a summary of the entities that issue each note and those wholly-owned subsidiaries of the Company that guarantee each respective note on a joint and several basis as of June 30, ~~2022.~~2023. These subsidiaries are all consolidated by Willis Towers Watson plc (the ‘parent company’) and together with the parent company comprise the ‘Obligor group’.


Entity	Trinity Acquisition plc Notes	Willis North America Inc. Notes
Willis Towers Watson plc	Guarantor	Guarantor
Trinity Acquisition plc	Issuer	Guarantor
Willis North America Inc.	Guarantor	Issuer
Willis Netherlands Holdings B.V.	Guarantor	Guarantor
Willis Investment UK Holdings Limited	Guarantor	Guarantor
TA I Limited	Guarantor	Guarantor
Willis Group Limited	Guarantor	Guarantor
Willis Towers Watson Sub Holdings Unlimited Company	Guarantor	Guarantor
Willis Towers Watson UK Holdings Limited	Guarantor	Guarantor

The notes issued by Willis North America and Trinity Acquisition plc:

•

rank equally with all of the issuer’s existing and future unsubordinated and unsecured debt;

•

rank equally with the issuer’s guarantee of all of the existing senior debt of the Company and the other guarantors, including any debt under the Revolving Credit Facility;

•

are senior in right of payment to all of the issuer’s future subordinated debt; and

•

are effectively subordinated to all of the issuer’s secured debt to the extent of the value of the assets securing such debt.

All other subsidiaries of the parent company are non-guarantor subsidiaries (‘the non-guarantor subsidiaries’).

Each member of the Obligor group has only a stockholder’s claim on the assets of the non-guarantor subsidiaries. This stockholder’s claim is junior to the claims that creditors have against those non-guarantor subsidiaries. Holders of the notes will only be creditors of the Obligor group and not creditors of the non-guarantor subsidiaries. As a result, all of the existing and future liabilities of the non-guarantor subsidiaries, including any claims of trade creditors and preferred stockholders, will be structurally senior to the notes. As of and for the periods ended June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the non-guarantor subsidiaries represented substantially all of the total assets and accounted for substantially all of the total revenue of the Company prior to consolidating adjustments. The non-guarantor subsidiaries have other liabilities, including contingent liabilities that may be significant. Each indenture does not contain any limitations on the amount of additional debt that the Obligor group and the non-guarantor subsidiaries may incur. The amounts of this debt could be substantial, and this debt may be debt of the non-guarantor subsidiaries, in which case this debt would be effectively senior in right of payment to the notes.

The notes are obligations exclusively of the Obligor group. Substantially all of the Obligor group’s operations are conducted through its non-guarantor subsidiaries. Therefore, the Obligor group’s ability to service its debt, including the notes, is dependent upon the net cash flows of its non-guarantor subsidiaries and their ability to distribute those net cash flows as dividends, loans or other payments to the Obligor group. Certain laws restrict the ability of these non-guarantor subsidiaries to pay dividends and make loans and advances to the Obligor group. In addition, such non-guarantor subsidiaries may enter into contractual arrangements that limit their ability to pay dividends and make loans and advances to the Obligor group.

Intercompany balances and transactions between members of the Obligor group have been eliminated. All intercompany balances and transactions between the Obligor group and the non-guarantor subsidiaries have been presented in the disclosures below on a net presentation basis, rather than a gross basis, as this better reflects the nature of the intercompany positions and presents the funding or funded position that is to be received or owed. The intercompany balances and transactions between the Obligor group and non-guarantor subsidiaries, presented below, relate to a number of items including loan funding for acquisitions and other purposes, transfers of surplus cash between subsidiary companies, funding provided for working capital purposes, settlement of expense accounts, transactions related to share-based payment arrangements and share issuances, intercompany royalty arrangements, intercompany dividends and intercompany interest. At June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the intercompany balances of the Obligor group with non-guarantor subsidiaries were net receivables of ~~$600 million~~$1.8 billion and ~~$700~~$600 million, respectively, and net payables of ~~$10.9~~$11.1 billion and ~~$8.1~~$10.2 billion, respectively.

No balances or transactions of non-guarantor subsidiaries are presented in the disclosures other than the intercompany items noted above.

Presented below is certain summarized financial information for the Obligor group.


`	As of June 30, 2022		As of December 31, 2021		As of June 30, 2023		As of December 31, 2022
	(in millions)				(in millions)
Total current assets	$	156	$	243	$	191	$	216
Total non-current assets		787		862		1,796		685
Total current liabilities		8,299		7,747		7,127		6,916
Total non-current liabilities		7,628		5,298		9,604		8,212

Six months ended
June 30, 2022

(in millions)

Revenue

$
266

Loss from operations

(73
)
Loss from operations before income taxes (i)

(315
)
Net loss

(197
)
Net loss attributable to WTW

(197
)


	Six months ended June 30, 2023
	(in millions)
Revenue	$	907
Income from operations		760
Income from operations before income taxes (i)		391
Net income		485
Net income attributable to WTW		485

(i)

Includes intercompany expense, net of the Obligor group from non-guarantor subsidiaries of ~~$81~~$177 million for the six months ended June 30, ~~2022.~~2023.

4540

Non-GAAP Financial Measures

In order to assist readers of our condensed consolidated financial statements in understanding the core operating results that WTW’s management uses to evaluate the business and for financial planning purposes, we present the following non-GAAP measures and their most directly comparable U.S. GAAP measure:


Most Directly Comparable U.S. GAAP Measure		Non-GAAP Measure
As reported change		Constant currency change
As reported change		Organic change
Income from operations/margin		Adjusted operating income/margin
Net income/margin		Adjusted EBITDA/margin
Net income attributable to WTW		Adjusted net income
Diluted earnings per share		Adjusted diluted earnings per share
Income from continuing operations before income taxes		Adjusted income before taxes
Provision for income taxes/U.S. GAAP tax rate		Adjusted income taxes/tax rate
Net cash from operating activities		Free cash flow

The Company believes that these measures are relevant and provide pertinent information widely used by analysts, investors and other interested parties in our industry to provide a baseline for evaluating and comparing our operating performance, and in the case of free cash flow, our liquidity results.

Within the measures referred to as ‘adjusted’, we adjust for significant items which will not be settled in cash, or which we believe to be items that are not core to our current or future operations. Some of these items may not be applicable for the current quarter, however they may be part of our full-year results. ~~These~~Additionally, we have historically adjusted for certain items which are not described below, but for which we may adjust in a future period when applicable. Items applicable to the quarter or full year results, or the comparable periods, include the following:

•

Income from discontinued operations, net of tax – Adjustment to remove the after-tax income from discontinued operations and the after-tax gain attributable to the ~~divestiture of our~~divested Willis Re business.

•

Restructuring costs and transaction and transformation ~~net~~ – Management believes it is appropriate to adjust for restructuring costs and transaction and transformation ~~net~~ when they relate to a specific significant program with a defined set of activities and costs that are not expected to continue beyond a defined period of time, or significant acquisition-related transaction expenses. We believe the adjustment is necessary to present how the Company is performing, both now and in the future when the incurrence of these costs will have concluded.

•

Impairment – Adjustment to remove the impairment related to the net assets of our Russian business that are held outside of our Russian entities.

•

Gains and losses on disposals of operations – Adjustment to remove the gains or losses resulting from disposed operations that have not been classified as discontinued operations.

•

~~Pension settlement and curtailment gains and losses – Adjustment to remove significant pension settlement and curtailment gains and losses to better present how the Company is performing.~~

•

Provisions for significant litigation – We will include provisions for litigation matters which we believe are not representative of our core business operations. These amounts are presented net of insurance and other recovery receivables.

•

Tax effect of the Coronavirus Aid, Relief, and Economic Security (‘CARES’) Act – Relates to the incremental tax expense ~~impact,~~or benefit, primarily from the Base Erosion and Anti-Abuse Tax (‘BEAT’), generated from electing or changing elections of certain income tax provisions ofavailable under the CARES Act.

•

Tax ~~effects~~effect of internal reorganizations – Relates to the U.S. income tax expense resulting from the completion of internal reorganizations of the ownership of certain businesses that reduced the investments held by our U.S.-controlled subsidiaries.

These non-GAAP measures are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP measures should be considered in addition to, and not as a substitute for, the information contained within our condensed consolidated financial statements.

For all prior-year period financial information presented herein (with the exception of Free Cash Flow), the operating results of Willis Re have been reclassified as discontinued operations (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Form 10-Q for additional information).

Constant Currency Change and Organic Change

We evaluate our revenue on an as reported (U.S. GAAP), constant currency and organic basis. We believe presenting constant currency and organic information provides valuable supplemental information regarding our comparable results, consistent with how we evaluate our performance internally.

•

Constant currency change - Represents the year-over-year change in revenue excluding the impact of foreign currency fluctuations. To calculate this impact, the ~~prior year~~prior-year local currency results are first translated using the ~~current year~~current-year monthly average exchange rates. The change is calculated by comparing the ~~prior year~~prior-year revenue, translated at the ~~current year~~current-year monthly average exchange rates, to the ~~current year as reported~~current-year as-reported revenue, for the same period. We believe constant currency measures provide useful information to investors because they provide transparency to performance by excluding the effects that

foreign currency exchange rate fluctuations have on period-over-period comparability given volatility in foreign currency exchange markets.

•

Organic change - Excludes the impact of fluctuations in foreign currency exchange rates as described above and the period-over-period impact of acquisitions and divestitures on current-year revenue. We believe that excluding transaction-related items from our U.S. GAAP financial measures provides useful supplemental information to our investors, and it is important in illustrating what our core operating results would have been had we not included these transaction-related items, since the nature, size and number of these transaction-related items can vary from period to period.

The constant currency and organic change results, and a reconciliation from the reported results for consolidated revenue are included in the ‘Consolidated Revenue (Continuing Operations)’ section within this Form 10-Q. These measures are also reported by segment in the ‘Segment Revenue’ section within this Form 10-Q.

Reconciliations of the ~~reported~~as-reported changes to the constant currency and organic changes for the three and six months ended June 30, ~~2022~~2023 from the three and six months ended June 30, ~~2021~~2022 are as follows. The components of revenue change may not add due to rounding.

Components of Revenue Change

Less:

Constant

Less:

Three Months Ended June 30,

Reported

Currency

Acquisitions/

Organic

2023

2022

Change

Impact

Change

Divestitures

Change

($ in millions)

Revenue

2,159

2,031

—%

Components of Revenue Change

Less:

Constant

Less:

Six Months Ended June 30,

Reported

Currency

Acquisitions/

Organic

2023

2022

Change

Impact

Change

Divestitures

Change

($ in millions)

Revenue

4,403

4,191

(2)%

(1)%

~~Adjusting for the impacts of foreign currency and acquisitions and disposals in the calculation of our organic activity, our revenue growth was 3% for~~For the three months ended June 30, ~~2022~~2023, our as-reported revenue increased by 6% and ~~2% for~~our organic revenue grew by 7%. For the six months ended June 30, ~~2022. These~~2023, our as-reported revenue increased by 5% and our organic revenue grew by 8%. The increases in both as-reported and organic revenue were driven by strong performances in both segments as well as the recognition of higher interest income that is not allocated to the segments.

Adjusted Operating Income/Margin

We consider adjusted operating income/margin to be important financial measures, which are used internally to evaluate and assess our core operations and to benchmark our operating results against our competitors.

Adjusted operating income is defined as income from operations adjusted for impairment, amortization, restructuring costs, transaction and transformation ~~net~~ and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted operating income margin is calculated by dividing adjusted operating income by revenue.

Reconciliations of income from operations to adjusted operating income for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 are as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
	($ in millions)												($ in millions)
Income from operations	$	137		$	170		$	316		$	381		$	142		$	137		$	427		$	316
Adjusted for certain items:
Impairment		—			—			81			—			—			—			—			81
Amortization		83			97			168			200			70			83			141			168
Restructuring costs		56			—			62			—			10			56			13			62
Transaction and transformation, net		38			51			58			75
Transaction and transformation														93			38			152			58
Adjusted operating income	$	314		$	318		$	685		$	656		$	315		$	314		$	733		$	685

Income from operations margin		6.7	%		8.1	%		7.5	%		8.8	%		6.6	%		6.7	%		9.7	%		7.5	%
Adjusted operating income margin		15.5	%		15.2	%		16.3	%		15.2	%		14.6	%		15.5	%		16.6	%		16.3	%

Adjusted operating income ~~decreased~~increased for the three months ended June 30, ~~2022~~2023 to ~~$314~~$315 million, from ~~$318~~$314 million for the three months ended June 30, ~~2021~~2022 and increased for the six months ended June 30, ~~2022~~2023 to ~~$685~~$733 million from ~~$656~~$685 million for the six months ended June 30, ~~2021. This decrease~~2022. These increases resulted primarily from higher revenue in ~~adjusted operating income for~~ the ~~quarter was primarily due to lower revenue from unfavorable foreign exchange, recent business disposals and increased operating expenses, led by travel and entertainment expense,~~current year, partially offset by ~~lower compensation accruals. The increase~~higher salary expense and incentive and benefit costs, and higher professional service and marketing-related expenses in ~~adjusted operating income for~~ the ~~first half of~~current-year periods as compared to the ~~year was driven by reductions in compensation costs, which more than offset the reduction to revenue resulting from unfavorable foreign exchange and recent business disposals.~~prior-year periods.

Adjusted EBITDA/Margin

We consider adjusted EBITDA/margin to be important financial measures, which are used internally to evaluate and assess our core operations, to benchmark our operating results against our competitors and to evaluate and measure our performance-based compensation plans.

Adjusted EBITDA is defined as net income adjusted for income from discontinued operations, net of tax, provision for income taxes, interest expense, impairment, depreciation and amortization, restructuring costs, transaction and transformation, ~~net,~~ gains and losses on disposals of operations and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue.

Reconciliations of net income to adjusted EBITDA for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 are as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
	($ in millions)												($ in millions)
NET INCOME	$	114		$	186		$	239		$	922		$	96		$	114		$	302		$	239
Loss/(income) from discontinued operations, net of tax		46			(69	)		35			(259	)
Loss from discontinued operations, net of tax														—			46			—			35
Provision for income taxes		19			75			62			119			24			19			74			62
Interest expense		51			52			100			111			57			51			111			100
Impairment		—			—			81			—			—			—			—			81
Depreciation		65			72			131			143			64			65			124			131
Amortization		83			97			168			200			70			83			141			168
Restructuring costs		56			—			62			—			10			56			13			62
Transaction and transformation, net		38			51			58			75
Transaction and transformation														93			38			152			58
(Gain)/loss on disposal of operations		(22	)		2			32			(357	)		(3	)		(22	)		(3	)		32
Adjusted EBITDA	$	450		$	466		$	968		$	954		$	411		$	450		$	914		$	968

Net income margin		5.6	%		8.9	%		5.7	%		21.3	%		4.4	%		5.6	%		6.9	%		5.7	%
Adjusted EBITDA margin		22.2	%		22.3	%		23.1	%		22.1	%		19.0	%		22.2	%		20.8	%		23.1	%

Adjusted EBITDA for the three months ended June 30, ~~2022~~2023 was ~~$450~~$411 million, compared to ~~$466~~$450 million for the three months ended June 30, ~~2021,~~2022, and was $914 million for the six months ended June 30, 2023, compared to $968 million for the six months ended June 30, ~~2022, compared to $954 million for~~2022. These decreases resulted primarily from higher salary expense and incentive and benefit costs, higher professional service and marketing-related expenses, and lower pension income in the six months ended June 30, 2021. This decrease in adjusted EBITDA for the quarter was primarily due to lower revenue from unfavorable foreign exchange, recent business disposals and increased operating expenses, led by travel and entertainment expense,current-year periods, partially offset by ~~lower compensation accruals. The increase~~higher revenue in ~~adjusted EBITDA for~~ the ~~first half of~~current-year periods as compared to the ~~year was driven by reductions in compensation costs, which more than offset the reduction to revenue resulting from unfavorable foreign exchange and recent business disposals.~~prior-year periods.

Adjusted Net Income and Adjusted Diluted Earnings Per Share

Adjusted net income is defined as net income attributable to WTW adjusted for income from discontinued operations, net of tax, impairment, amortization, restructuring costs, transaction and transformation, ~~net,~~ gains and losses on disposals of operations and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results and the related tax effect of those adjustments and the tax effects of internal reorganizations. This measure is used solely for the purpose of calculating adjusted diluted earnings per share.

Adjusted diluted earnings per share is defined as adjusted net income divided by the weighted-average number of ordinary shares, ~~of common stock,~~ diluted. Adjusted diluted earnings per share is used to internally evaluate and assess our core operations and to benchmark our operating results against our competitors.

Reconciliations of net income attributable to WTW to adjusted diluted earnings per share for thethree and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 are as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
	($ in millions)												($ in millions)
NET INCOME ATTRIBUTABLE TO WTW	$	109		$	184		$	231		$	917		$	94		$	109		$	297		$	231
Adjusted for certain items:
Loss/(income) from discontinued operations, net of tax		46			(69	)		35			(259	)
Loss from discontinued operations, net of tax														—			46			—			35
Impairment		—			—			81			—			—			—			—			81
Amortization		83			97			168			200			70			83			141			168
Restructuring costs		56			—			62			—			10			56			13			62
Transaction and transformation, net		38			51			58			75
Transaction and transformation														93			38			152			58
(Gain)/loss on disposal of operations		(22	)		2			32			(357	)		(3	)		(22	)		(3	)		32
Tax effect on certain items listed above (i)		(50	)		(28	)		(92	)		(55	)		(43	)		(50	)		(77	)		(92	)
Tax effect on statutory rate change		—			40			—			40
Tax effect of internal reorganizations														(2	)		—			2			—
Adjusted net income	$	260		$	277		$	575		$	561		$	219		$	260		$	525		$	575

Weighted-average shares of common stock — diluted		112			130			115			130
Weighted-average ordinary shares — diluted														107			112			107			115

Diluted earnings per share	$	0.97		$	1.41		$	2.01		$	7.04		$	0.88		$	0.97		$	2.77		$	2.01
Adjusted for certain items (ii) :
Loss/(income) from discontinued operations, net of tax		0.41			(0.53	)		0.30			(1.99	)
Loss from discontinued operations, net of tax														—			0.41			—			0.30
Impairment		—			—			0.70			—			—			—			—			0.70
Amortization		0.74			0.74			1.46			1.53			0.65			0.74			1.31			1.46
Restructuring costs		0.50			—			0.54			—			0.09			0.50			0.12			0.54
Transaction and transformation, net		0.34			0.39			0.50			0.58
Transaction and transformation														0.87			0.34			1.42			0.50
(Gain)/loss on disposal of operations		(0.20	)		0.02			0.28			(2.74	)		(0.03	)		(0.20	)		(0.03	)		0.28
Tax effect on certain items listed above (i)		(0.45	)		(0.21	)		(0.80	)		(0.42	)		(0.40	)		(0.45	)		(0.72	)		(0.80	)
Tax effect on statutory rate change		—			0.31			—			0.31
Adjusted diluted earnings per share (ii)	$	2.32		$	2.12		$	4.99		$	4.31
Tax effect of internal reorganizations														(0.02	)		—			0.02			—
Adjusted diluted earnings per share													$	2.05		$	2.32		$	4.89		$	4.99

(i)

The tax effect was calculated using an effective tax rate for each item.

(ii)

Per share values and totals may differ due to rounding.

Our adjusted diluted earnings per share ~~increased~~decreased for both the three and six months ended June 30, ~~2022~~2023 as compared to the prior ~~year due in part to a~~year. These decreases resulted primarily from higher salary expense and incentive and benefit costs, higher professional service and marketing-related expenses, and lower ~~weighted-average outstanding share count attributable to our share repurchase activity~~pension income in the current year. The decrease to adjusted net income for the quarter was primarily due to lower revenue from unfavorable foreign exchange, recent business disposals and increased operating expenses, led by travel and entertainment expense,current-year periods, partially offset by ~~lower compensation accruals. The increase~~higher revenue in ~~adjusted net income for~~ the ~~first half of~~current- year periods as compared to the ~~year was driven by reductions in compensation costs, which more than offset the reduction to revenue resulting from unfavorable foreign exchange and recent business disposals.~~prior-year periods.

Adjusted Income Before Taxes and Adjusted Income Taxes/Tax Rate

Adjusted income before taxes is defined as income from operations before income taxes adjusted for impairment, amortization, restructuring costs, transaction and transformation, ~~net,~~ gains and losses on disposals of operations and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted income before taxes is used solely for the purpose of calculating the adjusted income tax rate.

Adjusted income taxes/tax rate is defined as the provision for income taxes adjusted for taxes on certain items of impairment, amortization, restructuring costs, transaction and transformation, ~~net,~~ gains and losses on disposals of operations, the tax effects of internal reorganizations and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results, divided by adjusted income before taxes. Adjusted income taxes is used solely for the purpose of calculating the adjusted income tax rate.

Management believes that the adjusted income tax rate presents a rate that is more closely aligned to the rate that we would incur if not for the reduction of pre-tax income for the adjusted items and the tax effects of internal reorganizations, which are not core to our current and future operations.

Reconciliations of income from operations before income taxes to adjusted income before taxes and provision for income taxes to adjusted income taxes for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 are as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
	($ in millions)												($ in millions)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	$	179		$	192		$	336		$	782		$	120		$	179		$	376		$	336
Adjusted for certain items:
Impairment		—			—			81			—			—			—			—			81
Amortization		83			97			168			200			70			83			141			168
Restructuring costs		56			—			62			—			10			56			13			62
Transaction and transformation, net		38			51			58			75
Transaction and transformation														93			38			152			58
(Gain)/loss on disposal of operations		(22	)		2			32			(357	)		(3	)		(22	)		(3	)		32
Adjusted income before taxes	$	334		$	342		$	737		$	700		$	290		$	334		$	679		$	737

Provision for income taxes	$	19		$	75		$	62		$	119		$	24		$	19		$	74		$	62
Tax effect on certain items listed above (i)		50			28			92			55			43			50			77			92
Tax effect of statutory rate change		—			(40	)		—			(40	)
Tax effect of internal reorganizations														2			—			(2	)		—
Adjusted income taxes	$	69		$	63		$	154		$	134		$	69		$	69		$	149		$	154

U.S. GAAP tax rate		10.5	%		38.9	%		18.4	%		15.2	%		19.8	%		10.5	%		19.6	%		18.4	%
Adjusted income tax rate		20.5	%		18.3	%		20.8	%		19.0	%		23.7	%		20.5	%		22.0	%		20.8	%

(i)

The tax effect was calculated using an effective tax rate for each item.

Our U.S. GAAP tax rates were ~~10.5%~~19.8% and ~~38.9%~~10.5% for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~18.4%~~19.6% and ~~15.2%~~18.4% for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The prior-year ~~quarter~~quarter’s effective tax rate was ~~higher~~lower due to the discrete tax effect of the U.K. tax rate increase enacted in the second quarter of 2021. Accordingly, the Company remeasured its U.K. deferred tax assets and liabilities, resulting in a $40 million deferred tax expense. Additionally, the current quarter effective tax rate includes certain discrete tax benefits primarily related to return-to-provision true ups.

Our adjusted income tax rates were ~~20.5%~~23.7% and ~~18.3%~~20.5% for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~20.8%~~22.0% and ~~19.0%~~20.8% for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The ~~current quarter~~current-quarter’s adjusted tax rate is higher due to the distribution of geographical income.

Free Cash Flow

Free cash flow is defined as cash flows from operating activities less cash used to purchase fixed assets and software for internal use. Free cash flow is a liquidity measure and is not meant to represent residual cash flow available for discretionary expenditures.

Management believes that free cash flow presents the core operating performance and cash generating capabilities of our business operations.

Reconciliations of cash flows from operating activities to free cash flow for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 are as follows:


	Six Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2023			2022
	(in millions)						(in millions)
Cash flows from operating activities	$	258		$	366		$	430		$	258
Less: Additions to fixed assets and software for internal use		(60	)		(79	)		(80	)		(60	)
Free cash flow	$	198		$	287		$	350		$	198

The ~~unfavorable movement~~increase in free cash ~~flows~~flow during the current-year period was primarily due to more favorable working capital movements resulting mostly from higher cash collections and lower discretionary compensation payments made in the ~~first half of 2022 was due primarily~~current year as compared to cash disbursements and the elimination of cash generation resulting from the Willis Re divestiture, as well as additional tax payments resulting from both the Willis Re sale and the income receipt related to the termination of the then-proposed Aon transaction.

~~Additionally, the free cash flow for~~ the prior year, period presented includes the operating cash flows of Willis Re. Willis Re’s operating cash flows approximate its pre-tax income and any adjustments for working capital movements (see Note 3 — Acquisitions and Divestitures within Part I, Item 1 ‘Financial Statements’ in this Form 10-Q for additional information), the absence of which is expected to be partially ~~made up~~offset by ~~reimbursements through the TSA.~~increased transformation program-related costs.

Critical Accounting Estimates

There were no material changes from the Critical Accounting Estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the SEC on February 24, ~~2022.~~2023.

5145

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have considered changes in our exposure to market risks during the six months ended June 30, ~~2022~~2023 and have determined that there have been no material changes to our exposure to market risks from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the SEC on February 24, ~~2022.~~2023. However, we have provided the following information to supplement or update our disclosures on our Form 10-K.

The Company has a global investment policy which is designed to ensure that we maintain diversification of our cash investments throughout the world in order to minimize the risk of loss due to a counterparty failure.

Interest Income on Fiduciary Funds

As described in our Annual Report on Form 10-K, we are exposed to interest rate risk. Specifically, as a result of our operating activities, we receive cash for premiums and claims which we deposit in ~~short-term investments denominated in U.S. dollars~~high-quality bank term deposit and ~~other currencies. We~~money market funds, on which we earn interest, where permitted. We also hold funds for clients of our benefits accounts businesses. For the benefit funds not invested, cash and cash equivalents are held, on ~~these~~which we earn interest, until the funds ~~which~~are directed by plan participants to either be invested in mutual funds or paid out on their behalf. This interest earned is included in our condensed consolidated financial statements as interest income. These funds are regulated in terms of access and the instruments in which they may be invested, most of which are short-term in maturity. As a result of measures taken by central banks around the world, rates offered on these investments have increased, in some cases significantly, over the course of the last year. This has resulted in the Company recognizing higher interest income over the same period in the prior year. Interest income in the future will be a function of the short-term rates we are able to obtain by currency and the cash balances available to invest in these instruments. Interest income was $35 million and $67 million for the three and six months ended June 30, 2023, respectively, and $7 million and $11 million for the three and six months ended June 30, 2022, respectively. At June 30, ~~2022,~~2023, we held ~~$1.7~~$2.0 billion of fiduciary funds invested in interest-bearing accounts. If short-term interest rates increased or decreased by 25 basis points, interest earned on these invested fiduciary funds, and therefore our interest income recognized, would increase or decrease by approximately $4$5 million on an annualized basis.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of June 30, ~~2022,~~2023, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (‘CEO’) and the Chief Financial Officer (‘CFO’), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined byin Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act ~~Rule 13a-15(e)~~of 1934, as amended (the ‘Exchange Act’). Based upon that evaluation, our management, including the CEO and ~~the~~ CFO, concluded that the ~~Company’s~~our disclosure controls and procedures are effective in ~~ensuring~~providing reasonable assurance that the information required to be included in the ~~Company’s~~ periodic ~~SEC filings~~reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in ~~the~~ SEC rules and forms, and ~~that such information is~~(2) accumulated and communicated to our management, including the CEO and the CFO, as appropriate, to allow for timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There ~~have been~~were no changes in ~~the Company’s~~our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) under the Exchange Act during the quarter ended June 30, ~~2022~~2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Most of our employees who are involved in our financial reporting processes and controls continue to work remotely following the onset of the COVID-19 pandemic and are expected to do so for the foreseeable future. COVID-19 has not had any specific impact to the design or operating effectiveness of our internal controls over financial reporting.

Limitations on the Effectiveness of Controls

Management, including the CEO and CFO, does not expect that our disclosure controls and procedures will necessarily prevent all errors and all fraud. However, management does expect that the control system provides reasonable assurance that its objectives will be met. A control system, no matter how well designed and operated, cannot provide absolute assurance that the control system’s objectives will be met. In addition, the design of such internal controls must take into account the costs of designing and maintaining such a control system. Certain inherent limitations exist in control systems to make absolute assurances difficult, including the realities that judgments in decision-making can be faulty, that breakdowns can occur because of a simple error or mistake, and that individuals can circumvent controls. The design of any control system is based in part upon existing business conditions and risk assessments. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in business conditions or deterioration in the degree of compliance with policies or procedures. As a result, they may require change or revision. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and may not be detected. Nevertheless, the disclosure controls and procedures are designed to provide reasonable assurance of achieving their stated objectives, and the CEO and CFO have concluded that the disclosure controls and procedures are effective at a reasonable assurance level.

5246

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to various lawsuits, arbitrations or mediations that arise in the ordinary course of business. The disclosure called for by Part II, Item 1 regarding our legal proceedings is incorporated by reference herein from Part I, Item 1 Note 14 — Commitments and Contingencies - Legal Proceedings of the notes to the condensed consolidated financial statements in this Form 10-Q for the quarter ended June 30, ~~2022.~~2023.

ITEM 1A. RISK FACTORS

Except as described below, there are no material changes from risk factors as previously disclosed in our Annual Report on Form 10-K, filed with the SEC on February 24, ~~2022.~~2023. We urge you to read the risk factors contained therein.

~~Our~~Macroeconomic trends, including inflation, increased interest rates and trade policies could continue to adversely affect our business, results of operations or financial condition.

Global economic events and other factors, such as accommodative monetary and fiscal policy and the impacts of the COVID-19 pandemic, have contributed to significant inflation in many of the markets in which we operate. In particular, inflation in the United States, Europe and other geographies has risen to levels not experienced in recent decades and we are seeing its impact on various aspects of our business, which in some cases have, or could in the future, negatively affect our business and financial condition. In order to combat inflation and restore price stability, a number of central banks around the world have raised interest rates and are expected to keep increasing interest rates in 2023. Increased inflation and interest rates may hinder the economic growth in a number of markets where we do business, and has had, and may continue to have, far reaching effects on the global economy. This weakness in the economy and the possibility of a global recession has had, and may continue to have, a negative effect on our business and financial condition, including on the value of our ordinary shares.

Moreover, U.S. and global economic conditions have created market uncertainty and volatility. Such general economic conditions, such as inflation, stagflation, political volatility, costs of labor, cost of capital, interest rates and tax rates, affect our operating and general and administrative expenses, and we have no control or limited ability to control such factors. If our costs grow significantly in excess of our ability to raise revenue, our margins and results of operations may ~~continue~~be materially and adversely impacted and we may not be able to beachieve our strategic and financial objectives. These conditions also affect our clients’ businesses and the markets that they serve and may reduce demand for our services, increase demands for pricing accommodations or cause a higher rate of delays in the collection of, or losses on, our accounts receivable, which could adversely ~~affected, possibly materially, by negative impacts on~~affect our results of operations.

Further, the continued slowdown in the global economy, including a recession, or in a particular region or industry, inflation or a tightening of the credit markets could negatively impact our business, financial condition and liquidity, including our ability to continue to access preferred sources of liquidity when we would like, and our borrowing costs could increase. In particular, further tightening of the credit markets could limit our ability to obtain external financing to fund our operations and capital ~~markets resulting from the conflict in Ukraine or~~expenditures, if and when needed. In addition, although we do not have any ~~other geopolitical tensions.~~

~~U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the crisis in Ukraine. Although the length and impact~~direct exposure to any of the ~~ongoing situation is highly unpredictable,~~banks affected by the recent banking crisis ~~in Ukraine~~(such as the recent closure of Silicon Valley Bank and receivership of Signature Bank), we could ~~lead~~experience losses on our holdings of cash and investments due to ~~further market disruptions.~~

~~Additionally, during the first quarter~~failures of ~~2022, WTW announced its intention to transfer ownership of its Russian subsidiaries to local management who will operate independently~~other financial institutions and other parties. If other banks and financial institutions enter receivership or become insolvent in the ~~Russian market. Due~~future in response to financial conditions affecting the ~~sanctions~~banking system and ~~prohibitions on certain types of~~financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could substantially and negatively impact our ability to do business and activities, WTW deconsolidated its Russian entities on March 14, 2022. The transfer of its Russian subsidiaries to local management was completed on the agreed-upon terms on July 18, 2022, and the transfer was registered in Russia on July 25, 2022. The deconsolidation in the first quarter of 2022 resulted in a loss of $57 million. Further, total net assets impaired, including accounts receivable balances related to our Russian business that are held outside of our Russian entities, were $81 million during the six months ended June 30, 2022. We are continuing to monitor the situation in Ukraine and globally and will continue to assess the potential impacts to our businesses.

~~Sanctions imposed by the U.S., the E.U., the U.K. and other countries,~~ as well as ~~Russian counter-sanctions, are extensive. Additional sanctions~~our financial condition. Furthermore, a continued deterioration or prolonged period of negative or stagnant macroeconomic conditions in the U.S. and penalties have also been enacted, proposed and/or threatened. Russian actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets. The ramifications of the hostilities and sanctions, however, may not be limited to Russia and Russian companies but may spill over to and negatively impact other regional and global economic markets (including Europe and the United States), companies in other countries (particularly those that have done business with Russia) and various sectors, industries and markets for securities and commodities globally such as oil and natural gas. Accordingly, the actions discussed above and the potential for a wider conflict could increase financial market volatility, cause severe negative effects on regional and global economic markets, industries, and companies. In addition, Russia may take retaliatory actions and other countermeasures, including cyberattacks and espionage against other countries and companies around the world, which may negatively impact such countries and companies. The extent and duration of the Russian actions or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted.

~~Any of the above-mentioned factors~~ could adversely affect our business, ~~prospects,~~results of operations or financial ~~condition and operating results. The extent and duration of the crisis, sanctions and resulting market disruptions are impossible to predict, but could be substantial.~~condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the six months ended June 30, ~~2022,~~2023, no shares were issued by the Company without registration under the Securities Act of 1933, as amended.

5347

The following table presents specified information about the Company’s repurchases of its ordinary shares in the second quarter of ~~2022~~2023 and the Company’s remaining repurchase authority.

Period

Total number of shares purchased

Average price
paid per share

Total number of shares purchased as part of publicly announced plans or programs

Maximum number of shares that may yet be purchased under the plans or programs

April 1, 2022 through April 30, 2022

913,804

$
237.90

913,804

12,132,505

May 1, 2022 through May 31, 2022

641,834

$
209.17

641,834

11,490,671

June 1, 2022 through June 30, 2022

588,276

$
202.25

588,276

10,902,395

2,143,914

$
219.52

2,143,914


Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Maximum number of shares that may yet be purchased under the plans or programs
April 1, 2023 through April 30, 2023		81,226	$	236.49		81,226		5,228,942
May 1, 2023 through May 31, 2023		452,370	$	225.41		452,370		4,776,572
June 1, 2023 through June 30, 2023		1,003,716	$	227.97		1,003,716		3,772,856
		1,537,312	$	227.67		1,537,312

At June 30, ~~2022~~2023 the maximum number of shares that may yet be purchased under the existing ~~stock~~share repurchase plan is ~~10,902,395,~~3,772,856, with approximately ~~$2.1 billion~~$889 million remaining on the current open-ended repurchase authority granted by the board. An estimate of the maximum number of shares under the existing authorities was determined using the closing price of our ordinary shares on June 30, ~~2022~~2023 of ~~$197.39.~~$235.50.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Disclosures Required Pursuant to Section 13(r) of the Securities Exchange Act of 1934

Set forth below is a description of a matter reported pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13(r) of the Exchange Act. Concurrently with this Quarterly Report on Form 10-Q, we are filing a notice pursuant to Section 13(r) of the Exchange Act that the matter has been disclosed herein.

This disclosure arises out of an internal review voluntarily carried out by the Company following discovery of the transactions with the F.A.I.R. Aviation Pool that were disclosed in our Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023 (our ‘Form 10-K’).

A now-former business unit of Willis Limited, WTW’s main broking entity in the U.K., at the request and on behalf of certain clients, obtained reinsurance coverage from the F.A.I.R. Non-Life Reinsurance Pool (‘the Pool’). The membership of the Pool changes each policy year but has in some, but not all, years included Iranian (re)insurance carriers. In the 2009 policy year, two members of the Pool were Bimeh Markazi Iran and Bimeh Iran (Iran Insurance Co) (collectively, the ‘Iranian Carriers’).

Years ago, the Company implemented a process aiming to ensure that no payments attributable to the Iranian Carriers were transacted with the Pool. To our knowledge, this process was generally followed in the ensuing years. In October 2021, however, the Pool issued a claims payment to Willis Limited on behalf of all members of the 2009 Pool, including the Iranian Carriers. The inclusion of the Iranian Carriers in this payment came despite an internal instruction from our Compliance team that the Iranian Carriers should not be so included, and a written acknowledgment of this instruction by a member of the team charged with processing the payment. Our current belief, therefore, is that inclusion of the Iranian Carriers was the result of human error during the process of arranging for payment.

The total amount of the claims payment from the Pool was $25,934.61, of which $1,296.73 was attributable to the Iranian Carriers.

As noted in our Form 10-K, an affiliate of Willis Limited has submitted a voluntary self-disclosure to the U.S. Office of Foreign Assets Control (‘OFAC’). It intends to cooperate fully with any investigation by OFAC.

The Company does not intend to engage in future transactions or dealings with the Iranian Carriers.

(a) None.

54(b) None.

For the quarter ended June 30, 2023, none of the Company’s directors and officers adopted, modified, or terminated any contract, instruction or written plan for the purchase or sale of Company securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any ‘non-Rule 10b5-1 trading arrangement’ as defined under applicable securities laws and each of the director’s or officer’s respective remaining sale or purchase authority under such plans.

ITEM 6. EXHIBITS

EXHIBIT INDEX


~~Exhibit~~ ~~Number~~		~~Description of Exhibit~~
~~4.1~~		Fifth Supplemental Indenture, dated as of May 19, 2022, among Willis North America Inc., as issuer, Willis Towers Watson Public Limited Company, Willis Towers Watson Sub Holdings Unlimited Company, Willis Netherlands Holdings B.V., Willis Investment UK Holdings Limited, TA I Limited, Willis Towers Watson UK Holdings Limited, Trinity Acquisition plc and Willis Group Limited, as guarantors, and Computershare Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Form 8-K filed by the Company on May 19, 2022).
~~4.2~~		Willis Towers Watson Public Limited Company 2012 Equity Incentive Plan (incorporated by reference to Exhibit A to the Definitive Proxy Statement on Schedule 14A filed by the Company on April 28, 2022).
~~10.1~~		~~Willis Towers Watson Public Limited Company Compensation Policy and Share Ownership Guidelines for Non-Employee Directors (as amended May 2022).*†~~
~~22.1~~		List of Issuers and Guarantor Subsidiaries.*
~~31.1~~		Certification of the Registrant’s Chief Executive Officer, Carl A. Hess, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.*
~~31.2~~		Certification of the Registrant’s Chief Financial Officer, Andrew J. Krasner, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.*
~~32.1~~		Certification of the Registrant’s Chief Executive Officer, Carl A. Hess, and Chief Financial Officer, Andrew J. Krasner, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
~~101.INS~~		~~Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.~~
~~101.SCH~~		Inline XBRL Taxonomy Extension Schema Document*
~~101.CAL~~		Inline XBRL Taxonomy Extension Calculation Linkbase Document*
~~101.DEF~~		Inline XBRL Taxonomy Extension Definition Linkbase Document*
~~101.LAB~~		Inline XBRL Taxonomy Extension Label Linkbase Document*
~~101.PRE~~		Inline XBRL Taxonomy Extension Presentation Linkbase Document*
~~104~~		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)*


		Incorporated by Reference
Exhibit Number	Description of Exhibit	Schedule/ Form	Exhibit	Filing Date	Filed Herewith
4.1	Sixth Supplemental Indenture, dated as of May 17, 2023, among Willis North America Inc., as issuer, Willis Towers Watson Public Limited Company, Willis Towers Watson Sub Holdings Unlimited Company, Willis Netherlands Holdings B.V., Willis Investment UK Holdings Limited, TA I Limited, Willis Towers Watson UK Holdings Limited, Trinity Acquisition plc and Willis Group Limited, as guarantors, and Computershare Trust Company, National Association, as trustee.	8-K	4.1	May 17, 2023
10.1	First Amendment dated as of June 29, 2023 to the Second Amended and Restated Credit Agreement dated as of October 6, 2021 by and among, inter alia, Trinity Acquisition PLC, as the Company, Willis Towers Watson Public Limited Company, as the Parent, the Guarantors party thereto, the Lenders party thereto, and Barclays Bank PLC, party thereto as administrative agent.				X
22.1	List of Issuers and Guarantor Subsidiaries.				X
31.1	Certification of the Registrant’s Chief Executive Officer, Carl A. Hess, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.				X
31.2	Certification of the Registrant’s Chief Financial Officer, Andrew J. Krasner, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.				X
32.1**	Certification of the Registrant’s Chief Executive Officer, Carl A. Hess, and Chief Financial Officer, Andrew J. Krasner, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.				X
101.SCH	Inline XBRL Taxonomy Extension Schema Document				X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				X
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)				X

* ~~Filed~~* Furnished herewith. Any exhibits furnished herewith (including the certification furnished in Exhibit 32.1) are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed ‘filed’ for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the ‘Exchange Act’), or ~~furnished herewith.~~otherwise subject to the liability of that section. Such information shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

~~† Management contract or compensatory plan or arrangement.~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Willis Towers Watson Public Limited Company
(Registrant)

/s/ Carl A. Hess		July ~~28, 2022~~27, 2023
Name:	Carl A. Hess	Date
Title:	Chief Executive Officer

/s/ Andrew J. Krasner		July ~~28, 2022~~27, 2023
Name:	Andrew J. Krasner	Date
Title:	Chief Financial Officer

/s/ Joseph S. Kurpis		July ~~28, 2022~~27, 2023
Name:	Joseph S. Kurpis	Date
Title:	Principal Accounting Officer and Controller

5651


	Six Months Ended June 30, 2021
	Shares outstanding		Additional paid-in capital			Retained earnings			Treasury shares			AOCL (i)			Total WTW shareholders’ equity			Non-controlling interests			Total equity
Balance as of December 31, 2020		128,965	$	10,748		$	2,434		$	(3	)	$	(2,359	)	$	10,820		$	112		$	10,932
Net income		—		—			733			—			—			733			3			736
Dividends declared ($0.71 per share)		—		—			(92	)		—			—			(92	)		—			(92	)
Dividends attributable to non-controlling interests		—		—			—			—			—			—			(17	)		(17	)
Other comprehensive income		—		—			—			—			48			48			2			50
Issuance of shares under employee stock compensation plans		9		1			—			—			—			1			—			1
Share-based compensation and net settlements		—		12			—			—			—			12			—			12
Reduction of non-controlling interests (ii)		—		—			—			—			—			—			(52	)		(52	)
Foreign currency translation		—		4			—			—			—			4			—			4
Balance as of March 31, 2021		128,974	$	10,765		$	3,075		$	(3	)	$	(2,311	)	$	11,526		$	48		$	11,574
Net income		—		—			184			—			—			184			2			186
Dividends declared ($0.71 per share)		—		—			(93	)		—			—			(93	)		—			(93	)
Dividends attributable to non-controlling interests		—		—			—			—			—			—			(4	)		(4	)
Other comprehensive income		—		—			—			—			33			33			—			33
Issuance of shares under employee stock compensation plans		14		1			—			—			—			1			—			1
Share-based compensation and net settlements		—		20			—			—			—			20			—			20
Reduction of non-controlling interests (ii)		—		—			—			—			—			—			(1	)		(1	)
Foreign currency translation		—		(1	)		—			—			—			(1	)		—			(1	)
Balance as of June 30, 2021		128,988	$	10,785		$	3,166		$	(3	)	$	(2,278	)	$	11,670		$	45		$	11,715


	Remainder of 2022		2023		2024 onward		Total
Revenue expected to be recognized on contracts as of June 30, 2022	$	331	$	642	$	746	$	1,719


	June 30, 2022		December 31, 2021
2.125% senior notes due 2022 (i)	$	0	$	613
	$	0	$	613


	June 30, 2022		December 31, 2021
Prepayments and accrued income	$	103	$	137
Short-term investments		0		200
Deferred contract costs		64		74
Derivatives and investments		19		35
Deferred compensation plan assets		13		19
Corporate income and other taxes		176		82
Acquired renewal commissions receivable		8		11
Other current assets		49		54
Total prepaid and other current assets	$	432	$	612


	June 30, 2022		December 31, 2021
Deferred compensation plan liability	$	80	$	109
Contingent and deferred consideration on acquisitions		41		27
Liabilities for uncertain tax positions		37		43
Finance leases		14		15
Other non-current liabilities		43		59
Total other non-current liabilities	$	215	$	253