ITEM 7. 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 Part I, Item 1A Risk Factors for 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.
Our methods of calculating these measures may differ from those used by other companies and therefore comparability may be limited. These financial measures should be viewed in addition to, not in lieu of, the consolidated financial statements for the year ended December 31, 2025.
See ‘Non-GAAP Financial Measures’ below for further discussion of our adjusted, constant currency and organic non-GAAP financial measures.
Executive Overview
Impact of Market Conditions on Our Business
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, at the time of filing this Annual Report, we are seeing a softening market.
Market conditions in the broking industry in which we operate are generally defined by factors such as the strength of the various geographical economies 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 company 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 our current expectations.
With regard to the market for exchanges, we believe that clients base their decisions on a variety of factors that include the role of health care coverage in recruiting/retaining employees and transitioning employees to retirement, the availability of price competitive individual insurance policies, the array of coverage choices available through the exchange provider and its ability to deliver measurable cost savings for corporate clients, and to both execute efficiently and deliver high quality service. Since the individual insurance market for Medicare policies is well-established and a significant portion of corporate employers have already implemented an exchange for their Medicare retirees, growth in this population segment will be derived from public employers and educational and other not-for-profit institutions. This growth may be more episodic in nature. Growth in other population segments is likely to remain low unless a more competitive individual insurance market emerges for these segments.
Risks and Uncertainties of the Economic Environment
U.S. and global markets are continuing to experience uncertainty, volatility and disruption as a result of uncertain macroeconomic conditions including tariff actions and uncertainties relating to global trade, fluctuations in currency exchange rates, volatility in debt and equity markets, uncertainty around interest rates, softening consumer confidence and labor markets, changes in U.S. policies across a broad range of subjects and the speed with which such changes are or may be implemented, and the ongoing Russia-Ukraine and other geopolitical conflicts and tensions. Although the length and impact of these situations are highly unpredictable, the ongoing uncertainty and volatility of the global economy and capital markets, which has resulted in persistent inflation and fluctuating interest rates in many of the markets in which we operate, could accelerate recessionary pressures and continue to lead to further market disruptions. Further, in addition to the direct impact of the continuing dynamic tariff environment on our business (which we do not expect to be significant, so long as actions do not extend to services), recent U.S. legislation and other U.S. federal government actions continue to create uncertainty for the business as well as accounting and tax matters. Other indirect impacts from changes in tariffs or from legislative or regulatory developments, such as changes in consumer sentiment, trade relations, economic activity, of U.S. federal government operations, willingness to do business with U.S.-listed firms, inflationary pressures and employee , among others, could affect our business, operations and financial condition.
These general economic conditions, including inflation, stagflation, political volatility, costs of labor, cost of capital, interest rates, bank stability, credit availability and tax rates, affect not only the cost of and access to liquidity, but also our costs to run and invest in our business, including our operating and general and administrative expenses, and we have no control or limited ability to control such factors. These general economic conditions impact revenue from customers, as well as income from funds we hold on behalf of customers and pension-related income. While parts of our business could benefit from uncertainty or regulatory change, we may see increased caution in spending on services we provide that are more discretionary in nature or where there are alternatives, such as self-insurance. Other parts of our business, such as M&A-related services, may be adversely impacted when there is lower economic activity or transaction volumes.
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.
See Part I, Item 1A Risk Factors in this Annual Report on Form 10-K for a discussion of risks that may affect, among other things, our growth relative to expectation and our ability to achieve our objectives.
For management’s discussion of our results of operations for the year ended December 31, 2024 in comparison with the year ended December 31, 2023, please see our Annual Report on Form 10-K filed with the SEC on February 25, 2025.
Financial Statement Overview
The tables below set forth our summarized consolidated statements of comprehensive income and data as a percentage of revenue for the periods indicated.
Consolidated Statements of Comprehensive Income
($ in millions, except per share data)
Years ended December 31,
Revenue
Costs of providing services
Salaries and benefits
Other operating expenses
Impairment (i)
Depreciation
Amortization
Restructuring costs
Transaction and transformation
Total costs of providing services
Income from operations
Interest expense
Other loss, net (i)
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND
INTEREST IN EARNINGS OF ASSOCIATES
Provision for income taxes
Interest in earnings of associates, net of tax
Income attributable to non-controlling interests
NET INCOME/(LOSS) ATTRIBUTABLE TO WTW
Diluted earnings/(loss) per share
For the year ended December 31, 2024, Impairment and Other loss, net include goodwill-related impairment expense and loss on disposal, respectively, associated with the sale of our TRANZACT business (see Note 3 — Acquisitions and Divestitures within Item 8 of this Annual Report on Form 10-K).
Consolidated Revenue
We derive the majority of our revenue from commissions from our brokerage services and fees for consulting and administration services. No single client represented a significant concentration of our consolidated revenue for any of our three most recent fiscal years.
The following table details our top five markets based on percentage of consolidated revenue (in U.S. dollars) from the countries where work was performed for the year ended December 31, 2025. These figures do not represent the currency of the related revenue, which is presented in the next table.
Geographic Region
% of Revenue
United States
United Kingdom
France
Canada
Germany
The table below details the approximate percentage of our revenue and expenses by transactional currency for the year ended December 31, 2025.
Transactional Currency
Revenue
Expenses (i)
U.S. dollars
Pounds sterling
Euro
Other currencies
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.
The following table sets forth the total revenue for the years ended December 31, 2025 and 2024 and the components of the change in total revenue for the year ended December 31, 2025, as compared to the prior year. The components of the revenue change may not add due to rounding.
Components of Revenue Change
Less:
Constant
Less:
Years Ended December 31,
Reported
Currency
Currency
Acquisitions/
Organic
Change
Impact
Change
Divestitures
Change (i)
($ in millions)
Revenue
Interest income did not contribute to organic change for the year ended December 31, 2025.
Revenue for the year ended December 31, 2025 was $9.7 billion, compared to $9.9 billion for the year ended December 31, 2024, a decrease of $222 million, or 2%, on an as-reported basis. Adjusting for the impact of foreign currency and acquisitions and disposals, our organic revenue growth was 5% for the year ended December 31, 2025. The decrease in as-reported revenue was due primarily to the sale of our TRANZACT business on December 31, 2024. The increase in organic revenue was driven by strong performances in both segments. For additional information, please see the section entitled ‘Segment Revenue and Segment Operating Income’ elsewhere within this Item 7 of this Annual Report on Form 10-K.
Our revenue can be materially impacted by changes in currency conversions, which can fluctuate significantly over the course of a calendar year. For the year ended December 31, 2025, currency translation increased our consolidated revenue by $89 million. The primary currencies driving this change were the Euro and Pound Sterling.
Definitions of Constant Currency Change and Organic Change are included in the section entitled ‘Non-GAAP Financial Measures’ elsewhere within this Item 7 of this Annual Report on Form 10-K.
Segment Revenue and Segment Operating Income
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, as required by applicable accounting standards and SEC rules. Segment operating income excludes certain costs, including (i) amortization of intangibles; (ii) restructuring costs; and (iii) certain transaction and transformation expenses, and includes certain expense amounts which may be determined on both a direct and allocated basis. See Note 5 – Segment Information within Item 8 of this Annual Report on Form 10-K for more information about how our segment revenue and segment operating income is calculated and a reconciliation to our GAAP results.
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.
For all tables presented below, the components of the revenue change may not add due to rounding.
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 supports the interrelated challenges that the management teams of our clients face across human resources and finance.
HWC is the larger of the two segments of the Company, generating approximately 55% of our segment revenue for the year ended December 31, 2025. Addressing four key areas, Health, Wealth, Career and Benefits Delivery & Outsourcing (‘BDO’), 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 years ended December 31, 2025 and 2024, and the components of the change in revenue for the year ended December 31, 2025 from the year ended December 31, 2024.
Components of Revenue Change
Less:
Constant
Less:
Years ended December 31,
Reported
Currency
Currency
Acquisitions/
Organic
Change
Impact
Change
Divestitures
Change
($ in millions)
Segment revenue excluding interest income
Interest income
Total segment revenue
Segment operating income
HWC segment revenue for the years ended December 31, 2025 and 2024 was $5.3 billion and $5.8 billion, respectively. Health delivered organic revenue growth in all regions, led by double-digit increases across International which benefited from strong new business and geographic expansion. Wealth generated organic revenue growth from higher levels of Retirement work globally, alongside growth in our Investments business. Career reported revenue growth, largely driven by an uptick in advisory work in Europe and increased compensation survey sales globally. BDO increased primarily due to robust project and core administrative work in Europe, alongside higher commission revenue in Individual Marketplace.
HWC segment operating income for both the years ended December 31, 2025 and 2024 was $1.7 billion. HWC segment operating income declined slightly as improvements from operating efficiencies were offset by the operating income lost from sale of TRANZACT.
Risk & Broking (‘R&B’)
The Risk & Broking (‘R&B’) segment provides a broad range of risk advice, insurance brokerage and consulting services to clients worldwide ranging from small businesses to multinational corporations.
R&B generated approximately 45% of our segment revenue for the year ended December 31, 2025. The segment comprises two primary businesses - Corporate Risk & Broking and Insurance Consulting and Technology.
The following table sets forth R&B segment revenue for the years ended December 31, 2025 and 2024, and the components of the change in revenue for the year ended December 31, 2025 from the year ended December 31, 2024.
Components of Revenue Change
Less:
Constant
Less:
Years ended December 31,
Reported
Currency
Currency
Acquisitions/
Organic
Change
Impact
Change
Divestitures
Change
($ in millions)
Segment revenue excluding interest income
Interest income
Total segment revenue
Segment operating income
R&B segment revenue for the years ended December 31, 2025 and 2024 was $4.3 billion and $4.0 billion, respectively. Corporate Risk & Broking had organic revenue growth largely driven by the success of our global specialties model, with higher levels of new
business activity along with strong client retention across all regions. Insurance Consulting and Technology had modest organic revenue growth driven primarily by the Technology practice.
R&B segment operating income for the years ended December 31, 2025 and 2024 was $1.1 billion and $958 million, respectively. R&B segment operating income increased due primarily to operating leverage driven by strong organic revenue growth.
Costs of Providing Services
Total costs of providing services for the year ended December 31, 2025 were $7.5 billion, compared to $9.3 billion for the year ended December 31, 2024, a decrease of $1.8 billion, or 20%. See the following discussion for further details.
Salaries and Benefits
Salaries and benefits for the year ended December 31, 2025 were $5.6 billion, compared to $5.5 billion for the year ended December 31, 2024, an increase of $123 million, or 2%. The increase in the current year is primarily due to higher salary expense, driven by increased cost-of-living compensation adjustments, and higher share-based compensation costs.
Salaries and benefits, as a percentage of revenue, represented 58% and 55% for the years ended December 31, 2025 and 2024, respectively.
Other Operating Expenses
Other operating expenses include occupancy, legal, marketing, licenses, royalties, supplies, technology, printing and telephone costs, as well as insurance, including premiums on excess insurance and losses on professional liability claims, travel by colleagues, publications, professional subscriptions and development, recruitment, other professional fees and irrecoverable value-added and sales taxes.
Other operating expenses for the year ended December 31, 2025 were $1.4 billion, compared to $1.8 billion for the year ended December 31, 2024, a decrease of $425 million, or 23%. The decrease was primarily due to lower marketing expenses attributable to the sale of our TRANZACT business on December 31, 2024, decreased office expenses, and lower professional services and occupancy costs, partially offset by higher non-income-related tax expense for the current year as compared to the prior year.
Impairment
Impairment for the year ended December 31, 2024 was $1.0 billion. Impairment was attributable to the goodwill impairment associated with our Benefits Delivery & Outsourcing (‘BDO’) reporting unit related to the sale of our TRANZACT business (see Note 3 — Acquisitions and Divestitures within Item 8 of this Annual Report on Form 10-K).
Depreciation
Depreciation represents the expense incurred over the useful lives of our tangible fixed assets and internally-developed software. Depreciation for the year ended December 31, 2025 was $226 million, compared to $230 million for the year ended December 31, 2024, a decrease of $4 million, or 2%. The decrease was primarily due to a lower depreciable base of assets resulting from disposals associated with the Company’s Transformation program that concluded in the fourth quarter of 2024 and a lower dollar value of assets placed in service during the past few years.
Amortization
Amortization represents the amortization of acquired intangible assets, including customer relationships, trade names and internally-developed software. Amortization for the year ended December 31, 2025 was $192 million, compared to $226 million for the year ended December 31, 2024, a decrease of $34 million, or 15%. 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 has decreased and will continue to decrease over time.
Restructuring Costs
Restructuring costs for the year ended December 31, 2024 was $61 million and primarily related to the real estate rationalization component of our completed Transformation program (see Note 6 — Restructuring Costs within Item 8 of this Annual Report on Form 10-K).
Transaction and Transformation
Transaction and transformation costs for the year ended December 31, 2025 were $23 million, compared to $409 million for the year ended December 31, 2024, a decrease of $386 million. Transaction and transformation costs in the current year were comprised of transaction-related costs, and costs incurred in the prior year primarily included consulting and compensation costs related to our completed Transformation program.
Income from Operations
Income from operations for the year ended December 31, 2025 was $2.2 billion, compared to $627 million for the year ended December 31, 2024, an increase of $1.6 billion. This increase resulted primarily from the current-year absence of impairment expense associated with the prior-year sale of our TRANZACT business (see Note 3 — Acquisitions and Divestitures within Item 8 of this Annual Report on Form 10-K), lower transformation and transaction costs due to the completion of our Transformation program during the fourth quarter of 2024, lower marketing expenses, decreased office expenses and lower professional services costs in the current year, partially offset by lower revenue due to the prior-year sale of our TRANZACT business.
Interest Expense
Interest expense for the years ended December 31, 2025 and 2024 was $260 million and $263 million, respectively. Interest expense, which is attributable primarily to our senior notes, decreased by $3 million for the year ended December 31, 2025, which was primarily due to a lower average level of indebtedness in the current year.
Other (Loss)/Income, Net
Other (loss)/income, net includes gains and losses on disposals of operations, pension credits or expenses that are not attributable to service expense, interest in earnings of associates, foreign exchange gains and losses and other miscellaneous non-operating income and costs.
Other (loss)/income, net for the year ended December 31, 2025 was a loss of $21 million, compared to a loss of $262 million for the year ended December 31, 2024, a decreased loss of $241 million. The decreased 2025 loss was primarily due to gains on disposals of operations in the current year, as compared to the significant loss on disposal in the prior year, which was attributable to the sale of our TRANZACT business, partially offset by lower pension income, which was a result of a significant pension settlement in the current year, and the recognition of a $750 million earnout related to the 2021 sale of our Willis Re business which was received during the first half of 2025 (see Note 3 — Acquisitions and Divestitures and Note 13 — Retirement Benefits within Item 8 of this Annual Report on Form 10-K).
Provision for Income Taxes
Provision for income taxes for the year ended December 31, 2025 was $318 million, compared to $192 million for the year ended December 31, 2024. The effective tax rates for the years ended December 31, 2025 and 2024 were 16.3% and 188.8%, respectively. These effective tax rates are calculated using extended values from our consolidated statements of comprehensive income and are therefore more precise tax rates than can be calculated from rounded values. The current-year effective tax rate includes a $79 million tax benefit adjustment related to both the final allocation of the Willis Re earnout received and a change in uncertain tax positions. The prior-year effective tax rate includes a $137 million tax benefit recognized on the sale of our TRANZACT business, partially offset with a $55 million provision for tax expense on the accrual for the Willis Re earnout and a $34 million provision for changes in uncertain tax positions.
In January 2026, the Organisation for Economic Co-operation and Development announced the release of a new package of administrative guidance under the Pillar Two global minimum tax rules (the ‘side-by-side’ (SbS) package). Key components of the package include a simplified effective tax rate safe harbor, an extension of the transitional country-by-country reporting safe harbor, a substance-based tax incentive safe harbor, a side-by-side safe harbor for certain multinational groups located in eligible jurisdictions, an ultimate parent entity safe harbor for eligible countries, and a commitment to focus on additional clarifications and simplifications. However, these new safe harbor rules do not affect the application of a qualified domestic minimum top-up tax. The Pillar Two minimum tax is treated as a period cost beginning in 2024 and does not have a material impact on the Company's financial results of operations for the current period. The Company continues to monitor evolving tax legislation as well as additional guidance to enacted legislation in the jurisdictions in which we operate.
Net Income/(Loss) Attributable to WTW
Net income attributable to WTW for the year ended December 31, 2025 was $1.6 billion, compared to a net loss of $98 million for the year ended December 31, 2024, an increase of $1.7 billion. This increase resulted primarily from the current-year absence of loss on disposal and impairment expense associated with the sale of our TRANZACT business (see Note 3 — Acquisitions and Divestitures
within Item 8 of this Annual Report on Form 10-K) in the prior year, lower transformation and transaction costs due to the completion of our Transformation program during the fourth quarter of 2024, and lower marketing expenses for the current year, partially offset by higher tax expense due to prior-year tax benefits attributable to the losses associated with the TRANZACT sale as well as lower revenue due to the sale.
Liquidity and Capital Resources
Executive Summary
Our principal sources of liquidity funding our short-term and long-term obligations at December 31, 2025 are funds generated by operating activities, available cash and cash equivalents and amounts available under our revolving credit facility and any new debt offerings. Our most significant long-term obligations include mandatory debt and related interest, operating leases and pension obligations and contributions to our qualified pension plans.
There has 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 and we expect this volatility could continue, all of which may impact our access to liquidity.
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 to meet our cash needs, including debt repayment, for the next twelve months. Including our cash generated from operations, our liquidity also includes all of the borrowing capacity available to draw against our recently-amended and restated $1.5 billion revolving credit facility and our recently-acquired $775 million delayed draw term loan. During the year ended December 31, 2025, we completed offerings of $700 million aggregate principal amount of 4.550% senior notes due 2031 and $300 million aggregate principal amount of 5.150% senior notes due 2036. The net proceeds from the 2025 senior notes offering, after deducting underwriter discounts and commissions and estimated offering expenses, were $989 million and were used to pay the consideration for our Newfront acquisition, which was completed on January 27, 2026, and related fees, costs and expenses. Any remaining proceeds, coupled with borrowings against our new delayed draw term loan, will be used to repay in full the $550 million aggregate principal amount of the 4.400% senior notes due 2026 and related accrued interest, and to fund additional acquisitions (see Note 3 — Acquisitions and Divestitures, Note 11 — Debt and Note 22 — Subsequent Events within Item 8 of this Annual Report on Form 10-K).
Additionally, under our minority ownership interest in a joint venture with Bain Capital, in connection with which we re-entered the reinsurance broking space during the fourth quarter of 2024, we have an option to acquire a controlling interest in the joint venture in the future. Given the initial funding needs of a start-up venture, we expect to make certain capital contributions from time to time resulting in a reduction to earnings until such time as the joint venture generates sufficient revenue to be profitable.
During the year ended December 31, 2025, we repurchased $1.6 billion of our outstanding shares and have authorization to repurchase an additional $1.3 billion under our share repurchase program (as further described below under ‘Share Repurchase Program’). We consider many factors, including market and economic conditions, applicable legal requirements and other business considerations, when considering whether to repurchase shares. Our Share Repurchase Program has no termination date and may be suspended or discontinued at any time.
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 tax or regulatory matters, or future pension funding during periods of severe downturn in the capital markets.
Distributable Profits
We are required under Irish law to have available ‘distributable profits’ to make share repurchases or pay dividends to shareholders. Distributable profits are created through the earnings of the Irish parent company and, among other methods, through intercompany dividends or a reduction in share capital approved by the High Court of Ireland. Distributable profits are not linked to a U.S. GAAP reported amount (e.g. retained earnings). We believe that we will have sufficient distributable profits for the foreseeable future.
Tax considerations
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 the receipt of dividends or sale of investments. We continue to have certain subsidiaries whose earnings have not been deemed permanently reinvested, for which we have been accruing estimates of the tax effects of such repatriation. Excluding these certain subsidiaries, the Company has not provided for deferred taxes on outside basis differences in our investments, as these outside basis differences can either be repatriated in a nontaxable manner or are considered permanently reinvested. If future events, including material changes in estimates of cash, working capital, long-term investment
requirements or additional legislation, 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 through the settlement of intercompany loans or return of capital distributions in a tax-efficient manner.
Cash and Cash Equivalents
Our cash and cash equivalents at December 31, 2025 and 2024 totaled $3.1 billion and $1.9 billion, respectively. The significant changes in cash from December 31, 2024 to December 31, 2025 were due primarily to $1.8 billion of net cash from operations, $1.0 billion issuance of senior notes, receipt of the $750 million earnout related to the 2021 sale of our Willis Re business and $62 million associated with the settlement of a note receivable related to the sale of our Max Matthiessen subsidiary in 2020, partially offset by cash outflows of $1.6 billion of share repurchases, $358 million of dividend payments, $229 million of capital expenditures and capitalized software additions and $194 million of other investing outflows.
Additionally, at December 31, 2025 we had all of the borrowing capacity available to draw against our $1.5 billion revolving credit facility, which was amended and restated on October 17, 2025 (see Note 11 — Debt within Item 8 of this Annual Report on Form 10-K).
Included within cash and cash equivalents at December 31, 2025 and 2024 are amounts held for regulatory capital adequacy requirements, including $105 million and $104 million, respectively, within our regulated U.K. entities.
Summarized Consolidated Cash Flows
The following table presents the summarized consolidated cash flow information for the years ended:
Years ended December 31,
(in millions)
Net cash from/(used in):
Operating activities
Investing activities
Financing activities
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Effect of exchange rate changes on cash, cash equivalents and restricted cash
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF
YEAR (i)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR (i)
The amounts of the cash, cash equivalents and restricted cash, their respective classification on the 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 21 — Supplemental Disclosures of Cash Flow Information within Item 8 of this Annual Report on Form 10-K.
Cash Flows From Operating Activities
Cash flows from operating activities were $1.8 billion for 2025, compared to $1.5 billion for 2024. The $1.8 billion net cash from operating activities for 2025 included net income of $1.6 billion and $873 million of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $711 million. The $873 million of favorable non-cash adjustments primarily includes impairment, depreciation, amortization and non-cash lease expense. This increase in cash flows from operations as compared to the prior year was primarily driven by operating margin expansion and lower Transformation program residual cash outflows.
Cash flows from operating activities of $1.5 billion for 2024 included a net loss of $88 million and $1.9 billion of favorable non-cash adjustments, partially offset by unfavorable changes in operating assets and liabilities of $326 million. The $1.9 billion of favorable non-cash adjustments primarily included impairment, depreciation, amortization and non-cash lease expense.
Cash Flows From Investing Activities
Cash flows from investing activities for the year ended December 31, 2025 were $447 million compared to cash flows from investing activities of $250 million for the year ended December 31, 2024. The cash flows from investing activities in the current year consisted primarily of net proceeds from sales of operations resulting from divestitures that occurred in prior years. These inflows were partially offset by capital expenditures, including software additions, our net purchases of held-to-maturity and available-for-sale securities and cash and fiduciary fund transfers.
Cash flows from investing activities of $250 million for the year ended December 31, 2024 consisted of proceeds of $619 million primarily from the sale of TRANZACT, partially offset by capital expenditures and capitalized software additions of $245 million and net cash paid for acquisitions of $104 million.
Cash Flows Used In Financing Activities
Cash flows used in financing activities for the year ended December 31, 2025 were $936 million. The significant financing activities included share repurchases of $1.6 billion and dividend payments of $358 million, partially offset by $984 million of net proceeds from the issuance of debt and net proceeds from fiduciary funds held for clients of $172 million.
Cash flows used in financing activities for the year ended December 31, 2024 were $459 million. The significant financing activities included share repurchases of $901 million and dividend payments of $354 million, partially offset by net proceeds from fiduciary funds held for clients of $785 million and $82 million of net proceeds from the issuance of debt.
Indebtedness
Total debt, total equity, and the capitalization ratio at December 31, 2025 and December 31, 2024 were as follows:
December 31,
(in millions)
Long-term debt
Current debt
Total debt
Total WTW shareholders’ equity
Capitalization ratio
At December 31, 2025, our mandatory debt repayments over the next twelve months include $550 million outstanding on our 4.400% senior notes, which will mature during the first quarter of 2026. In addition, our $1.5 billion revolving credit facility, which was set to expire on October 6, 2026, was replaced on October 17, 2025 by our third amended and restated $1.5 billion revolving credit facility (see Note 11 — Debt within Item 8 of this Annual Report on Form 10-K).
For more information regarding our current and long-term debt, please see ‘Supplemental Guarantor Financial Information’ elsewhere within this Item 7 of this Annual Report on Form 10-K.
At December 31, 2025 and 2024, 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, some of which are invested in open-ended mutual funds as directed by the participant. These fiduciary funds are included in fiduciary assets on our 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 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 December 31, 2025 and 2024, we had fiduciary funds of $3.8 billion and $3.4 billion, respectively.
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 September 20, 2023, the board of directors approved a $1.0 billion increase to the existing share repurchase program. Additionally, on November 20, 2024, the board of directors approved a $1.0 billion increase to the existing share repurchase program, and on September 16, 2025, approved a $1.5 billion increase to the existing share repurchase program. These increases brought the total approved authorization, since April 20, 2016, to $11.7 billion. See Part II, Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities in this Annual Report on Form 10-K for further information regarding the Company’s share repurchase program.
At December 31, 2025, approximately $1.3 billion 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 December 31, 2025 of $328.60 was 3,931,099.
The following table presents specified information about the Company’s repurchases of ordinary shares for the year ended December 31, 2025:
Year ended
December 31, 2025
Shares repurchased
Average price per share
Aggregate repurchase cost (excluding broker costs)
$1.6 billion
Dividends
Total cash dividends of $358 million were paid during the year ended December 31, 2025. In February 2026, the board of directors approved a quarterly cash dividend of $0.96 per share ($3.84 per share annualized rate), which will be paid on or around April 15, 2026 to shareholders of record as of March 31, 2026.
Capital Commitments
The Company’s capital expenditures for fixed assets and software were $229 million for the year ended December 31, 2025. Capital expenditures for fixed assets, capitalized software and software for internal use are expected to be in the range of $225 million to $250 million for the year ended December 31, 2026. We expect cash from operations to adequately provide for these cash needs.
Supplemental Guarantor Financial Information
As of December 31, 2025, WTW has issued the following debt securities (the ‘notes’):
Willis North America Inc. (‘Willis North America’) has approximately $5.5 billion senior notes outstanding, of which $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, $750 million were issued on May 17, 2023, $750 million were issued on March 5, 2024 and $1.0 billion were issued on December 22, 2025; and
Trinity Acquisition plc has approximately $825 million senior notes outstanding, of which $275 million were issued on August 15, 2013 and $550 million were issued on March 22, 2016, and a recently-amended and restated $1.5 billion revolving credit facility, on which no balance was outstanding, at December 31, 2025.
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 December 31, 2025. These subsidiaries are all consolidated by Willis Towers Watson plc (the ‘parent company’) and together with the parent company comprise the ‘Obligor group’. On December 16, 2024, TA I Limited, Willis Towers Watson UK Holdings Limited and Willis Netherlands Holdings B.V. ceased to be guarantors of our notes and are no longer part of the Obligor group, following the transfer of their respective properties and assets to other existing guarantors within the Obligor group. Further, Willis Towers Watson UK Holdings Limited was released from its guarantees under our credit agreement. TA I Limited and Willis Netherlands Holdings B.V. are not guarantors under our amended and restated credit agreement (see Note 11 — Debt within Item 8 of this Annual Report on Form 10-K).
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 Investment UK Holdings Limited
Guarantor
Guarantor
Willis Group Limited
Guarantor
Guarantor
Willis Towers Watson Sub Holdings Unlimited Company
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 third amended and restated $1.5 billion 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 December 31, 2025 and 2024, 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 and related arrangements, intercompany dividends and intercompany interest. At December 31, 2025 and 2024, the intercompany balances of the Obligor group with non-guarantor subsidiaries were net receivables of $1.9 billion and $1.0 billion, respectively, and net payables of $16.3 billion and $15.1 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.
December 31, 2025
December 31, 2024
(in millions)
Total current assets
Total non-current assets
Total current liabilities
Total non-current liabilities
Year ended
December 31, 2025
(in millions)
Revenue
Income from operations
Income from operations before income taxes and interest in earnings of associates (i)
Net income
Net income attributable to Willis Towers Watson
Includes intercompany expense, net of the Obligor group from non-guarantor subsidiaries of $552 million for the year ended December 31, 2025.
On January 7, 2026, the Company, together with Trinity Acquisition plc and Willis North America Inc. as borrowers, entered into a $775 million delayed draw term loan (see Note 22 — Subsequent Events within Item 8 of this Annual Report on Form 10-K).
Non-GAAP Financial Measures
In order to assist readers of our 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/(loss)/margin
Adjusted EBITDA/margin
Net income/(loss) attributable to WTW
Adjusted net income
Diluted earnings/(loss) per share
Adjusted diluted earnings per share
Income from operations before income taxes and interest
in earnings of associates
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/margin
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. These items include the following:
Restructuring costs and transaction and transformation – Management believes it is appropriate to adjust for restructuring costs and transaction and transformation 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 non-cash goodwill impairment associated with our BDO reporting unit related to the sale of our TRANZACT business.
Provisions for specified litigation matters – We will include provisions for litigation matters which we believe are not representative of our core business operations. Among other things, we determine this by reference to the amount of the loss (net of insurance and other recovery receivables) and by reference to whether the matter relates to an unusual and complex scenario that is not expected to be repeated as part of our ongoing, ordinary business. These amounts are presented net of insurance and other recovery receivables. See the footnotes to the reconciliation tables below for more specificity on the litigation matter excluded from adjusted results.
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.
Net periodic pension and postretirement benefits – Adjustment to remove the recognition of net periodic pension and postretirement benefits (including pension settlements), other than service costs. We have included this adjustment as applicable in our prior-year disclosures in order to conform to the current-year presentation.
Tax effect of significant adjustments – Relates to the incremental tax expense or benefit resulting from significant or unusual events including significant statutory tax rate changes enacted in material jurisdictions in which we operate, internal reorganizations of ownership of certain businesses that reduced the investment held by our U.S.-controlled subsidiaries and the recovery of certain refunds or payment of taxes related to businesses in which we no longer participate.
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 consolidated financial statements.
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 local currency results are first translated using the current year monthly average exchange rates. The change is calculated by comparing the prior year revenue, translated at the current year monthly average exchange rates, to the 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’ section within this Form 10-K. These measures are also reported by segment in the ‘Segment Revenue and Segment Operating Income’ section within this Form 10-K.
A reconciliation of the as-reported change to the constant currency and organic change for the year ended December 31, 2025 from the year ended December 31, 2024 is as follows. The components of revenue change may not add due to rounding.
Components of Revenue Change
Less:
Constant
Less:
Years ended December 31,
Reported
Currency
Currency
Acquisitions/
Organic
Change
Impact
Change
Divestitures
Change (i)
($ in millions)
Revenue
Interest income did not contribute to organic change for the year ended December 31, 2025.
For the year ended December 31, 2025, our as-reported revenue decreased by $222 million, or 2%, and our organic revenue increased by 5%. The decrease in as-reported revenue was due primarily to the sale of our TRANZACT business on December 31, 2024. The
increases in organic revenue were driven by strong performances in both segments. For additional information, please see the section entitled ‘Segment Revenue and Segment Operating Income’ elsewhere within Item 7 of this Annual Report on Form 10-K.
Adjusted Operating Income/Margin
We consider adjusted operating income/margin to be important financial measures, which are used internally to evaluate and assess our core operations and to benchmark our operating results against our competitors.
Adjusted operating income is defined as income from operations adjusted for impairment, amortization, restructuring costs, transaction and transformation and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted operating income margin is calculated by dividing adjusted operating income by revenue.
Reconciliations of income from operations to adjusted operating income for the years ended December 31, 2025 and 2024 are as follows:
Years Ended December 31,
($ in millions)
Income from operations
Adjusted for certain items:
Impairment
Amortization
Restructuring costs
Transaction and transformation
Provision for specified litigation matter (i)
Adjusted operating income
Income from operations margin
Adjusted operating income margin
Represents a provision related to litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.
Adjusted operating income for both the years ended December 31, 2025 and 2024 was $2.4 billion, an increase of $71 million. This increase resulted primarily due to lower marketing expenses attributable to the prior-year sale of our TRANZACT business, decreased office expenses and lower professional services costs in the current year, partially offset by lower revenue due to the prior-year sale of TRANZACT and higher salary expense.
Adjusted EBITDA/Margin
We consider adjusted EBITDA/margin to be important financial measures, which are used internally to evaluate and assess our core operations, to benchmark our operating results against our competitors and to evaluate and measure our performance-based compensation plans.
Adjusted EBITDA is defined as net income/(loss) adjusted for provision for income taxes, interest expense, impairment, depreciation and amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, net periodic pension and postretirement benefits and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue.
Reconciliations of net income/(loss) to adjusted EBITDA for the years ended December 31, 2025 and 2024 are as follows:
Years Ended December 31,
($ in millions)
NET INCOME/(LOSS)
Provision for income taxes
Interest expense
Impairment
Depreciation
Amortization
Restructuring costs
Transaction and transformation
Provision for specified litigation matter (i)
Net periodic pension and postretirement benefits
(Gain)/loss on disposal of operations
Adjusted EBITDA
Net income/(loss) margin
Adjusted EBITDA margin
Represents a provision related to litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.
Adjusted EBITDA for both the years ended December 31, 2025 and 2024 was $2.6 billion, an increase of $17 million. This increase resulted primarily due to lower marketing expenses, decreased office expenses and lower professional services costs in the current year, partially offset by lower revenue due to the prior-year sale of our TRANZACT business, and lower pension income and higher salary expense in the current year.
Adjusted Net Income and Adjusted Diluted Earnings Per Share
Adjusted net income is defined as net income/(loss) attributable to WTW adjusted for impairment, amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, net periodic pension and postretirement benefits and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results and the related tax effect of those adjustments and the tax effects of significant adjustments. This measure is used solely for the purpose of calculating adjusted diluted earnings per share.
Adjusted diluted earnings per share is defined as adjusted net income divided by the weighted-average number of ordinary shares, diluted. Adjusted diluted earnings per share is used to internally evaluate and assess our core operations and to benchmark our operating results against our competitors. When there is a net loss attributable to WTW for the period, basic and diluted shares and earnings per share are the same values.
Reconciliations of net income/(loss) attributable to WTW to adjusted diluted earnings per share for the years ended December 31, 2025 and 2024 are as follows:
Years Ended December 31,
($ and weighted-average shares in millions)
NET INCOME/(LOSS) ATTRIBUTABLE TO WTW
Adjusted for certain items:
Impairment
Amortization
Restructuring costs
Transaction and transformation
Provision for specified litigation matter (i)
Net periodic pension and postretirement benefits
(Gain)/loss on disposal of operations
Tax effect on certain items listed above (ii)
Tax effect of significant adjustments
Weighted-average ordinary shares — diluted
Diluted earnings/(loss) per share
Adjusted for certain items (iii) :
Impairment
Amortization
Restructuring costs
Transaction and transformation
Provision for specified litigation matter (i)
Net periodic pension and postretirement benefits
(Gain)/loss on disposal of operations
Tax effect on certain items listed above (ii)
Tax effect of significant adjustments
Adjusted diluted earnings per share (iii)
Represents a provision related to litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.
The tax effect was calculated using an effective tax rate for each item.
(iii)
Per share values and totals may differ due to rounding.
Our adjusted diluted earnings per share increased for the year ended December 31, 2025 as compared to the year ended December 31, 2024 primarily due to lower marketing expenses, decreased office expenses and lower professional services costs in the current year, partially offset by lower revenue due to the prior-year sale of our TRANZACT business, and lower pension income and higher salary expense in the current year.
Adjusted Income Before Taxes and Adjusted Income Taxes/Tax Rate
Adjusted income before taxes is defined as income from operations before income taxes and interest in earnings of associates adjusted for impairment, amortization, restructuring costs, transaction and transformation, gains and losses on disposals of operations, net periodic pension and postretirement benefits 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, gains and losses on disposals of operations, the tax effects of significant adjustments 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 years ended December 31, 2025 and 2024 are as follows:
Years Ended December 31,
($ in millions)
INCOME FROM OPERATIONS BEFORE INCOME TAXES
AND INTEREST IN EARNINGS OF ASSOCIATES
Adjusted for certain items:
Impairment
Amortization
Restructuring costs
Transaction and transformation
Provision for specified litigation matter (i)
Net periodic pension and postretirement benefits
(Gain)/loss on disposal of operations
Adjusted income before taxes
Provision for income taxes
Tax effect on certain items listed above (ii)
Tax effect of significant adjustments
Adjusted income taxes
U.S. GAAP tax rate
Adjusted income tax rate
Represents a provision related to litigation arising out of a structured insurance program originally placed for a client over 15 years ago. The program is of a type and complexity that was highly bespoke to the client and for that reason is unlikely to be exactly replicated elsewhere. Because of this, while we do not believe the potential litigation is material, we believe excluding this matter from adjusted results makes results more comparable from period to period and more representative of our core business operations.
The tax effect was calculated using an effective tax rate for each item.
Our U.S. GAAP tax rates were 16.3% and 188.8% for the years ended December 31, 2025 and 2024, respectively. The current-year U.S. GAAP effective tax rate includes a $79 million tax benefit adjustment related to both the final allocation of the Willis Re earnout received from the sale of our Willis Re business and a change in uncertain tax positions. The prior-year effective tax rate includes a $137 million tax benefit recognized on the sale of our TRANZACT business, partially offset with a $55 million provision for tax expense on the accrual for the Willis Re earnout and a $34 million provision for changes in uncertain tax positions.
Our adjusted income tax rates were 21.1% and 21.3% for the years ended December 31, 2025 and 2024, respectively.
Free Cash Flow/Margin
Free cash flow is defined as cash flows from operating activities less cash used to purchase fixed assets and software. Free cash flow margin, which we include on an annual basis as seasonal fluctuations in our revenue render it not meaningful during interim periods, is calculated by dividing free cash flow by revenue.
As a result of our change in presentation, free cash flow and free cash flow margin for the prior year have been adjusted to conform to the current year, which includes the deduction of our capitalized software costs.
Management believes that free cash flow and free cash flow margin present 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 years ended December 31, 2025 and 2024 are as follows:
Years ended December 31,
(in millions)
Cash flows from operating activities
Less: Additions to fixed assets and software
Free cash flow
Revenue
Free cash flow margin
The increase in free cash flow during the current year was primarily driven by operating margin expansion and lower Transformation program residual cash outflows.
Critical Accounting Estimates
These consolidated financial statements conform to U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates. The areas that we believe include critical accounting estimates are revenue recognition, income taxes, commitments, contingencies and accrued liabilities, pension assumptions, and goodwill and intangible assets. The critical accounting estimates discussed below involve making difficult, subjective or complex accounting estimates that could have a material effect on our financial condition and results of operations. These critical accounting estimates require us to make assumptions about matters that are highly uncertain at the time of the estimate or assumption. Different estimates that we could have used, or changes in estimates that are reasonably likely to occur, may have a material effect on our results of operations and financial condition.
Revenue Recognition
We use significant estimates related to revenue recognition most commonly during our estimation of the transaction prices or where we recognize revenue over time on a proportional performance basis. A brief description of these policies and estimates is included below:
Estimation of transaction prices — This process occurs most frequently in certain broking transactions. In situations in which our fees are not fixed but are variable, we must estimate the likely commission per policy, taking into account the likelihood of cancellation before the end of the policy. For Medicare broking and Affinity arrangements, the commissions to which we will be entitled can vary based on the underlying individual insurance policies that are placed. For Medicare broking in particular, we base the estimates of transaction prices on supportable evidence from an analysis of past transactions, and only include amounts that are probable of being received or not refunded (referred to as applying ‘constraint’ under ASC 606, Revenue From Contracts With Customers ). Prior to the sale of TRANZACT, we had direct-to-consumer Medicare broking arrangements. The estimate of the total renewal commissions received over the lifetime of the policy required significant judgment, and varied based on product type, estimated commission rates, the expected lives of the respective policies and other factors. The Company applied an actuarial model to account for these uncertainties, which was updated periodically based on actual experience. Each of these processes resulted in us estimating a transaction price that could have been significantly lower than the ultimate amount of commissions we would have collected. The transaction price was then adjusted over time as we received confirmation of our remuneration through receipt of commissions, or as other information became available.
Proportional performance basis over time recognition — Where we recognize revenue on a proportional performance basis, primarily in our consulting and outsourced administration arrangements, the amount we recognize is affected by a number of factors that can change the estimated amount of work required to complete the project, such as the staffing on the engagement and/or the level of client participation. Our periodic engagement evaluations require us to make judgments and estimates regarding the overall profitability and stages of project completion that, in turn, affect how we recognize revenue. We recognize a loss on an engagement when estimated revenue to be received for that engagement is less than the total estimated costs associated with the engagement.
Income Taxes
The Company recognizes deferred tax assets and liabilities for the estimated future tax consequences of events attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating and capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect
for the year in which the differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the consolidated statement of comprehensive income in the period in which the change is enacted. Deferred tax assets are reduced through the establishment of a valuation allowance at such time as, based on available evidence, it is more likely than not that the deferred tax assets will not be realized. The Company adjusts valuation allowances to measure deferred tax assets at the amounts considered realizable in future periods, which is assessed at each balance sheet date. In making such determinations, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operating results. We place more reliance on evidence that is objectively verifiable.
Commitments, Contingencies and Accrued Liabilities
We have established provisions against various actual and potential claims, lawsuits and other proceedings relating principally to alleged errors and omissions in connection with the placement of insurance and reinsurance and the provision of consulting services in the ordinary course of business. Such provisions cover claims that have been reported but not paid and also claims that have been incurred but not reported. These provisions are established based on actuarial estimates together with individual case reviews and are believed to be adequate in the light of current information and legal advice. In certain cases, where a range of loss exists, we accrue the minimum amount in the range if no amount within the range is a better estimate than any other amount.
See Note 15 — Commitments and Contingencies in Item 8 within this Annual Report on Form 10-K.
Pension Assumptions
We maintain defined benefit pension plans for employees in several countries, with the most significant defined benefit plans offered in the U.S. and U.K. Our disclosures in Note 13 — Retirement Benefits within this Annual Report on Form 10-K contain additional information about our other less significant but material retirement plans. Within our critical accounting policy discussion, we have excluded analysis for plans outside of those noted in the description below, as any variance of recorded information based on management’s estimates would not be material.
Descriptions of our U.S. and U.K. plans, which comprise 87% of our projected benefit obligations and 88% of our plan assets, are below:
United States
Legacy broking business – This plan was frozen in 2009. Approximately 550 WTW employees in the United States have a frozen accrued benefit under this plan. On August 31, 2025, this plan, including all of its assets and participants, merged into the WTW Plan.
WTW Plan – Substantially all U.S. employees are eligible to participate in this plan. Benefits are provided under a stable value pension plan design. The original stable value design came into effect on January 1, 2012. Plan participants prior to July 1, 2017 earn benefits without having to make employee contributions, and all newly-eligible employees after that date were required to contribute 2% of pay on an after-tax basis to participate in the plan. Effective January 1, 2024, stable value benefits are earned under the same contributory formula for all eligible colleagues. To participate, plan participants are required to contribute 2% of eligible earnings (base salary only) on an after-tax basis.
United Kingdom
Legacy broking business – This plan covers approximately 400 WTW employees in the U.K. that were historically part of the broking business. The plan is now closed to new entrants. New employees in the U.K. are offered the opportunity to join a defined contribution plan.
Legacy consulting business – There are two benefit formulas covering different legacy consulting populations. Benefit accruals earned under the first plan formula (predominantly pension benefits) ceased on February 28, 2015, although benefits earned prior to January 1, 2008 retain a link to salary until the employee leaves the Company. Benefit accruals earned under the second plan formula (predominantly lump sum benefits) were frozen on March 31, 2008. All participants now accrue defined contribution benefits.
The determination of the Company’s obligations and annual expense under the plans is based on a number of assumptions that, given the longevity of the plans, are long-term in focus. A change in one or a combination of these assumptions could have a material impact on our projected benefit obligation. However, certain of these changes, such as changes in the discount rates and other actuarial assumptions, are not recognized immediately in net income, but are instead recorded in other comprehensive income. The accumulated gains and losses not yet recognized in net income are amortized into net income as a component of the net periodic benefit cost/(credit) over the average remaining service period or average remaining life expectancy, as appropriate, of the plan’s participants to the extent that the net gains or losses as of the beginning of the year exceed 10% of the greater of the market-related value of plan assets or the projected benefit obligation.
WTW considers several factors prior to the start of each fiscal year when determining the appropriate annual assumptions, including economic forecasts, relevant benchmarks, historical trends, portfolio composition and peer company comparisons. These assumptions, used to determine our pension liabilities and pension expense, are reviewed annually by senior management and changed when appropriate. A discount rate will be changed annually if underlying rates have moved, whereas an expected long-term return on assets will be changed less frequently as longer-term trends in asset returns emerge or long-term target asset allocations are revised. To calculate the discount rate, we use the granular approach to determining service cost and interest cost. The expected rate of return assumptions for all plans are supported by an analysis of the weighted-average yield expected to be achieved with the anticipated makeup of investments. We have allowed for actual and known inflation in preparing our estimates. Other material assumptions include rates of participant mortality, and the expected long-term rates of compensation and pension increases.
Funding is based on actuarially determined contributions and is limited to amounts that are currently deductible for tax purposes, or as agreed to with the plan trustees for the U.K. plans. Since funding calculations are based on different measurements than those used for accounting purposes, pension contributions are not equal to net periodic benefit cost.
We recorded a combined $109 million net periodic benefit cost for our U.S. and U.K. plans for the year ended December 31, 2025. For the U.S. and U.K. plans, the following table presents our estimated net periodic benefit cost for 2025 and the impact to both plans of a 0.25% increase and decrease to both the expected return on assets (‘EROA’) and the discount rate assumptions; and the projected benefit obligations as of December 31, 2025 and the impact of a 0.25% increase and decrease to the discount rates:
Totals -
current estimates
Impact of 0.25% change to
EROA
Impact of 0.25% change to
discount rate
Increase
Decrease
Increase
Decrease
Estimated 2026 expense:
U.S. Plans
U.K. Plans
Projected benefit obligation at December 31, 2025:
U.S. Plans
U.K. Plans
Economic factors and conditions often affect multiple assumptions simultaneously, and the effects of changes in key assumptions are not necessarily linear.
Goodwill and Intangible Assets — Impairment Review
In applying the acquisition method of accounting for business combinations, amounts assigned to identifiable assets and liabilities acquired were based on estimated fair values as of the date of acquisition, with the remainder recorded as goodwill. Intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible asset. Intangible assets with definite lives are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise. Intangible assets with indefinite lives are tested for impairment annually as of October 1, and whenever indicators of impairment arise. The fair value of the intangible assets is compared with their carrying value and an impairment loss would be recognized for the amount by which the carrying amount exceeds the fair value. Goodwill is tested for impairment annually as of October 1, and whenever indicators of impairment arise.
Goodwill is tested at the reporting unit level and in accordance with the relevant accounting standards, a company has the option to perform the test qualitatively or to proceed directly to a quantitative test. As discussed in Note 3 — Acquisitions and Divestitures within Item 8 of this Annual Report on Form 10-K, in connection with the sale of TRANZACT, completed on December 31, 2024, the Company recorded a $1.0 billion non-cash goodwill impairment charge on the BDO reporting unit during the third quarter of 2024. The BDO reporting unit goodwill after impairment is approximately $1.2 billion. After reflecting the impairment and the sale of TRANZACT, the fair value of the remaining reporting unit was estimated to be significantly in excess of its carrying value, and in 2025, the reporting unit was combined with another reporting unit which reduced the number of reporting units from seven at October 1, 2024 to six at October 1, 2025.
Due to the substantial excess of the fair value for each reporting unit determined at October 1, 2024 over the respective carrying values of the six reporting units at October 1, 2025, the Company performed a qualitative impairment test for all reporting units and confirmed that it was highly unlikely that a quantitative test of fair value at October 1, 2025 would result in an impairment.
The Company continuously monitors and evaluates relevant events and circumstances that could unfavorably impact the significant assumptions noted above, including changes to the regulatory environment, general industry, market and macro-economic conditions and recent market valuations from transactions of comparable companies. It is possible that future changes in such circumstances, or in the inputs or assumptions used in estimating the fair value of the reporting unit, could require the Company to record a non-cash impairment charge.
To perform the qualitative test, the Company considered numerous factors besides the substantial excess of fair value as determined during 2024, including the financial performance and updated projections for each reporting unit, macroeconomic conditions, industry and market conditions, the impact of any significant acquisitions or dispositions and the performance of the Company's share price.
ITEM 7A. QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK
Financial Risk Management
We are exposed to market risk from changes in foreign currency exchange rates. In order to manage the risk arising from these exposures, we enter into a variety of foreign currency derivatives. We do not hold financial or derivative instruments for trading purposes.
A discussion of our accounting policies for financial and derivative instruments is included in Note 2 — Basis of Presentation, Significant Accounting Policies and Recent Accounting Pronouncements and Note 10 — Derivative Financial Instruments within Item 8 of this Annual Report on Form 10-K.
Foreign Exchange Risk
Because of the large number of countries and currencies we operate in, movements in currency exchange rates may affect our results.
We report our operating results and financial condition in U.S. dollars. Our U.S. operations earn revenue and incur expenses primarily in U.S. dollars. Outside the U.S., we predominantly generate revenue and expenses in the local currency with the exception of our London market operations which earn revenue in several currencies but incur expenses predominantly in Pounds sterling.
The table below gives an approximate analysis of revenue and expenses by currency in 2025.
dollars
Pounds
sterling
Euro
Other
currencies
Revenue
Expenses (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.
Our principal exposures to foreign exchange risk arise from:
our London market operations;
intercompany lending between subsidiaries; and
translation.
London market operations
The Company’s primary foreign exchange risks in its London market operations arise from changes in the exchange rate between the U.S. dollar and Pound sterling as its London market operations earn the majority of its revenue in U.S. dollars but incur expenses predominantly in Pounds sterling and may also hold significant foreign currency asset or liability positions on its consolidated balance sheet. In addition, the London market operations earn significant revenue in Euros.
The foreign exchange risks in our London market operations are hedged to the extent that:
forecasted Pounds sterling expenses exceed Pounds sterling revenue, in which case the Company limits its exposure to this exchange rate risk by the use of forward and option contracts matched to a portion of the forecasted Pounds sterling outflows arising in the ordinary course of business. In addition, we are also exposed to foreign exchange risk on any net non-dollar asset or liability positions on our London market operations' balance sheets; and
the U.K. operations also earn significant revenue in Euros. The Company limits its exposure to changes in the exchange rates between the U.S. dollar and Euros by the use of foreign exchange contracts matched to a proportion of forecast revenue inflows in these specific currencies and periods.
Intercompany lending between subsidiaries
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 that offset the underlying exposure created when the borrower and lender have different functional currencies. These derivatives are not generally designated as hedging instruments and at December 31, 2025, we had notional amounts of $739 million (denominated primarily in U.S. dollars, Pounds sterling and Euros), with a net fair value asset of $1 million. Such derivatives typically mature within three months.
Translation risk
Outside our U.S. and London market operations, we predominantly earn revenue and incur expenses in the local currency. When we translate the results and net assets of these operations into U.S. dollars for reporting purposes, movements in exchange rates will affect reported results and net assets. For example, if the U.S. dollar strengthens against the Euro, the reported results of our Eurozone operations in U.S. dollar terms will be lower.
The table below provides information about our foreign currency forward exchange and option contracts which are designated as hedging instruments and are sensitive to exchange rate risk. The table summarizes the U.S. dollar equivalent amounts of each currency bought and sold forward and the weighted-average contractual exchange rates. All forward exchange contracts mature within two years.
Settlement date before December 31,
December 31, 2025
Contract
amount
Average
contractual
exchange
rate
Contract
amount
Average
contractual
exchange
rate
(millions)
(millions)
Foreign currency sold
U.S. dollars sold for Pounds
sterling
Euros sold for U.S. dollars
Total
Fair value (i)
Represents the difference between the contract amount and the cash flow in U.S. dollars which would have been receivable had the foreign currency forward exchange contracts been entered into on December 31, 2025 at the forward exchange rates prevailing at that date.
Income earned within foreign subsidiaries outside of the U.K. is generally offset by expenses in the same local currency, however the Company does have exposure to foreign exchange movements on the net income of these entities.
Interest Rate Risk
The Company has access to $1.5 billion under a revolving credit facility (see Note 11 — Debt within Item 8 of this Annual Report on Form 10-K for further information). As of December 31, 2025, no amount was drawn on this facility. We are also subject to market risk from exposure to changes in interest rates based on our investing activities where our primary interest rate risk arises from changes in short-term interest rates in U.S. dollars, Pounds sterling and Euros.
The table below provides information about our financial instruments that are sensitive to changes in interest rates. The Company had no outstanding floating rate-based debt at December 31, 2025.
Expected to mature before December 31,
Thereafter
Total
Fair Value (i)
($ in millions)
Fixed rate debt
Principal
Fixed rate payable
Represents the net present value of the expected cash flows discounted at current market rates of interest or quoted market rates as appropriate.
Interest Income on Fiduciary Funds
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 high-quality bank term deposit and 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 which we earn interest, until the funds 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 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. Short-term rates in major currencies began to decrease over the second half of 2024 from end-of-2023 levels. This followed some steep central bank rate increases in 2023. Our increased interest income in 2024 reflected a combination of relatively high-average interest rates over the course of 2024 and some increases in our invested cash balances. Through the end of 2025, although at levels below the same period
in 2024, short-term rates have remained in line with expectations. Significant economic uncertainty prevails at this time, and the timing and magnitude of future central bank rate changes are uncertain. As to be expected, 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. Interest income was $156 million, $166 million and $145 million for the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, we held $2.7 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 $7 million on an annualized basis.
Credit Risk and Concentrations of Credit Risk
Credit risk represents the loss that would be recognized at the reporting date if counterparties failed to perform as contracted. The Company currently does not anticipate non-performance by its counterparties. The Company generally does not require collateral or other security to support financial instruments with credit risk.
Concentrations of credit risk that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. Financial instruments on the balance sheet that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, fiduciary funds, accounts receivable and derivatives which are recorded at fair value.
The Company maintains a policy of providing for the diversification of cash and cash equivalent investments and places such investments in an extensive number of financial institutions to limit the amount of credit risk exposure. These financial institutions are monitored on an ongoing basis for credit quality predominantly using information provided by credit agencies.
Concentrations of credit risk with respect to receivables are limited due to the large number of clients and markets in which the Company does business, as well as the dispersion across many geographic areas. Management does not believe that significant risk exists in connection with the Company’s concentrations of credit as of December 31, 2025.
ITEM 8. FINAN CIAL STATEMENTS AND SUPPLEMENTARY DATA
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
INDEX TO FORM 10-K
For the year ended December 31, 2025
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 34 )
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2025
Consolidated Balance Sheets as of December 31, 2025 and 2024
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2025
Consolidated Statements of Changes in Equity for each of the three years in the period ended December 31, 2025
Notes to the Consolidated Financial Statements
REPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Willis Towers Watson Public Limited Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Willis Towers Watson Public Limited Company and subsidiaries (the ‘Company’) as of December 31, 2025 and 2024, the related consolidated statements of comprehensive income, changes in equity and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the ‘financial statements’). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America (‘US GAAP’).
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (‘PCAOB’), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2026, expressed an unqualified opinion on the Company’ s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Provisions for Liabilities - Errors & Omissions Reserve — Refer to Notes 2, 15 and 16 to the financial statements
Critical Audit Matter Description
The Company has established provisions against various actual and potential claims, lawsuits and other proceedings relating principally to alleged errors and omissions (‘E&O’) which arise in connection with the placement of insurance and reinsurance and provision of broking, consulting and outsourcing services in the ordinary course of business. Such provisions cover claims that have been reported but not paid and also claims that have been incurred but not reported (‘IBNR’). These provisions are established based on actuarial estimates together with individual case reviews. Significant management judgment is required to estimate the amounts of such claims.
Auditing management’s judgments related to its E&O provision, and in particular the broking, consulting and outsourcing business provisions related to the IBNR, and the provisions related to significant claims reported but not paid, involved especially complex and subjective judgment and an increased extent of effort, including the need to involve our actuarial specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the determination of E&O provisions included the following, among others:
We tested the effectiveness of controls over the Company’s estimation of the E&O provisions, including controls over the underlying historical claims data, the actuarial methodology used, the assumptions selected by management that are used to calculate the broking, consulting and outsourcing business IBNR provisions, and the establishment and quarterly evaluation of provisions for reported claims, including significant claims.
For the IBNR provisions, we evaluated the appropriateness of the IBNR models, and evaluated the consistency of the model with prior years in order to challenge the methodology used to estimate the provisions. With the assistance of our actuarial specialists, we assessed the methodology and models used, including key inputs and assumptions used in, and arithmetical accuracy of, the models used. We also performed retrospective reviews of management’s estimated claims emergence in comparison to actual results and evaluated the provisions set by management in comparison to a range of independent estimates that we developed.
We evaluated the E&O matters and the appropriateness of their projected settlement values through inquiries of, and confirmations from, in-house counsel and external lawyers handling those matters for the Company.
/s/ Deloitte & Touche LLP
Philadelphia, PA
February 25, 2026
We have served as the Company’s auditor since 2017.
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
Consolidated Statements of Comprehensive Income
(In millions of U.S. dollars, except per share data)
Years ended December 31,
Revenue
Costs of providing services
Salaries and benefits
Other operating expenses
Impairment
Depreciation
Amortization
Restructuring costs
Transaction and transformation
Total costs of providing services
Income from operations
Interest expense
Other (loss)/income, net
INCOME FROM OPERATIONS BEFORE INCOME
TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
Provision for income taxes
INCOME/(LOSS) FROM OPERATIONS BEFORE INTEREST
IN EARNINGS OF ASSOCIATES
Interest in earnings of associates, net of tax
NET INCOME/(LOSS)
Income attributable to non-controlling interests
NET INCOME/(LOSS) ATTRIBUTABLE TO WTW
EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
NET INCOME/(LOSS)
Other comprehensive income/(loss), net of tax:
Foreign currency translation
Defined pension and post-retirement benefits
Derivative instruments
Other comprehensive income/(loss), net of tax, before non-controlling interests
Comprehensive income/(loss) before non-controlling interests
Comprehensive income attributable to non-controlling interests
Comprehensive income/(loss) attributable to WTW
See accompanying notes to the consolidated financial statements
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
Consolidated B alance Sheets
(In millions of U.S. dollars, except share data)
December 31,
December 31,
ASSETS
Cash and cash equivalents
Fiduciary assets
Accounts receivable, net
Prepaid and other current assets
Total current assets
Fixed assets, net
Goodwill
Other intangible assets, net
Right-of-use assets
Pension benefits assets
Other non-current assets
Total non-current assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Fiduciary liabilities
Deferred revenue and accrued expenses
Current debt
Current lease liabilities
Other current liabilities
Total current liabilities
Long-term debt
Liability for pension benefits
Provision for liabilities
Long-term lease liabilities
Other non-current liabilities
Total non-current liabilities
TOTAL LIABILITIES
COMMITMENTS AND CONTINGENCIES
EQUITY (i)
Additional paid-in capital
(Accumulated deficit)/retained earnings
Accumulated other comprehensive loss, net of tax
Total WTW shareholders’ equity
Non-controlling interests
Total equity
TOTAL LIABILITIES AND EQUITY
Equity includes (a) Ordinary shares $ 0.000304635 nominal value; Authorized 1,510,003,775 ; Issued 95,079,835 (2025) and 99,805,780 (2024); Outstanding 95,079,835 (2025) and 99,805,780 (2024); (b) Preference shares, $ 0.000115 nominal value; Authorized 1,000,000,000 and Issued none in 2025 and 2024.
See accompanying notes to the consolidated financial statements
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
Consolidated Statem ents of Cash Flows
(In millions of U.S. dollars)
Years ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME/(LOSS)
Adjustments to reconcile net income/(loss) to total net cash from operating activities:
Depreciation
Amortization
Impairment
Non-cash restructuring charges
Non-cash lease expense
Net periodic cost of/(credit for) defined benefit pension plans
Provision for doubtful receivables from clients
Provision for/(benefit from) deferred income taxes
Share-based compensation
Net (gain)/loss on disposal of operations
Non-cash foreign exchange loss/(gain)
Other, net
Changes in operating assets and liabilities, net of effects from purchase of subsidiaries:
Accounts receivable
Other assets
Other liabilities
Provisions
Net cash from operating activities
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Additions to fixed assets and software
Acquisitions of operations, net of cash acquired
Contributions to investments in associates
Net proceeds from sale of operations
Cash and fiduciary funds transferred in sale of operations
Net purchases of held-to-maturity securities
Net purchases of available-for-sale securities
Net cash from/(used in) investing activities
CASH FLOWS USED IN FINANCING ACTIVITIES
Senior notes issued
Debt issuance costs
Repayments of debt
Repurchase of shares
Net proceeds/(payments) from fiduciary funds held for clients
Payments of deferred and contingent consideration related to acquisitions
Cash paid for employee taxes on withholding shares
Dividends paid
Acquisitions of and dividends paid to non-controlling interests
Net cash used in financing activities
INCREASE/(DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED
CASH (i)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR (i)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR (i)
The amounts of cash, cash equivalents and restricted cash, their respective classification on the 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 21 — Supplemental Disclosures of Cash Flow Information.
See accompanying notes to the consolidated financial statements
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
Consolidated Statements of Changes in Equity
(In millions of U.S. dollars and number of shares in thousands)
Shares
outstanding
Additional
paid-in capital
Retained
earnings/
(accumulated deficit)
Treasury
shares
AOCL (i)
Total WTW
shareholders’
equity
Non-controlling
interests
Total equity
Balance as of January 1, 2023
Shares repurchased
Net income
Dividends declared ($ 3.36 per share)
Dividends attributable to non-controlling interests
Other comprehensive (loss)/income
Issuance of shares under employee stock
compensation plans
Share-based compensation and net settlements
Reduction of non-controlling interests (ii)
Foreign currency translation
Balance as of December 31, 2023
Shares repurchased
Net (loss)/income
Dividends declared ($ 3.52 per share)
Dividends attributable to non-controlling interests
Other comprehensive loss
Issuance of shares under employee stock
compensation plans
Share-based compensation and net settlements
Additional non-controlling interests
Reduction of non-controlling interests (ii)
Foreign currency translation
Balance as of December 31, 2024
Shares repurchased
Net income
Dividends declared ($ 3.68 per share)
Dividends attributable to non-controlling interests
Other comprehensive income
Issuance of shares under employee stock
compensation plans
Share-based compensation and net settlements
Reduction of non-controlling interests (ii)
Foreign currency translation
Balance as of December 31, 2025
Accumulated other comprehensive loss, net of tax (‘AOCL’).
Attributable to the divestiture of businesses that are less than wholly-owned or the acquisition of shares previously owned by minority interest holders. In an acquisition, additional paid-in capital is adjusted as well to the extent that the consideration transferred differs from the carrying value of non-controlling interests prior to the acquisition.
See accompanying notes to the consolidated financial statements
WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY
Notes to the Consolidat ed Financial Statements
(Tabular amounts are in millions of U.S. dollars, except per share data)
Note 1 — Nature of Operations
Willis Towers Watson 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 approximately 47,000 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 control 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 or property loss control consulting), and analytical and advisory services (such as hazard modeling and climate risk quantification). We also assist our clients with managing incidents or crises when they occur. These services include contingency planning, security audits and product tampering plans.
We help our clients enhance their business performance by delivering consulting services, technology and solutions that help them anticipate, identify and capitalize on emerging opportunities in human capital management, and by offering investment advice to help them develop disciplined and efficient strategies to meet their investment goals.
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 global 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 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.
Note 2 — Basis of Presentation, Significant Accounting Policies and Recent Accounting Pronouncements
Basis of Presentation
The accompanying audited consolidated financial statements of WTW and our subsidiaries are presented in accordance with the rules and regulations of the SEC for annual reports on Form 10-K and are prepared in accordance with U.S. GAAP. Certain prior-period amounts have been reclassified to conform to the current-period presentation. All intercompany accounts and transactions have been eliminated in consolidation.
Significant Accounting Policies
Principles of Consolidation — The accompanying consolidated financial statements include the accounts of WTW and those of our majority-owned and controlled subsidiaries. We determine whether we have a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (‘VIE’). Variable interest entities are entities that lack one or more of the characteristics of a voting interest entity and therefore require a different approach in determining which party involved with the VIE should consolidate the entity. With a VIE, either the entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or the equity holders, as a group, do not have the power to direct the activities that most significantly impact its financial performance, the obligation to absorb expected losses of the entity, or the right to receive the expected residual returns of the entity. The entity that has a controlling financial interest in a VIE is referred to as the primary beneficiary and is required to consolidate the VIE.
Voting interest entities are entities that have sufficient equity and provide equity investors voting rights that give them the power to make significant decisions related to the entity’s operations. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. Accordingly, we consolidate our voting interest entity investments in which we hold, directly or indirectly, more than 50 % of the voting rights.
Use of Estimates — These consolidated financial statements conform to U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Our estimates,
judgments and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates. Estimates are used when accounting for revenue recognition and related costs, the selection of useful lives of fixed and intangible assets, impairment testing, valuation of billed and unbilled receivables from clients, discretionary compensation, income taxes, pension assumptions, incurred but not reported claims, legal reserves and goodwill and intangible assets.
Going Concern — Management evaluates at each annual and interim period whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. Management’s evaluation is based on relevant conditions and events that are known and reasonably knowable at the date that the consolidated financial statements are issued. Management has concluded that there are no conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date of these financial statements.
Fair Value of Financial Instruments — The carrying values of our cash, cash equivalents and restricted cash, accounts receivable, short-term investments, accrued expenses and revolving lines of credit approximate their fair values because of the short maturity and liquidity of those instruments. The fair value of our senior notes and note receivable are considered Level 2 financial instruments as they are corroborated by observable market data. See Note 12 — Fair Value Measurements and Investments for additional information about our measurements of fair value.
Cash and Cash Equivalents — Cash and cash equivalents primarily consist of time deposits with original maturities of three months or less. In certain of the countries in which we conduct business, we are subject to capital adequacy requirements. Most significantly, Willis Limited, our U.K. brokerage subsidiary regulated by the Financial Conduct Auth ority, is currently required to maintain $ 100 million in unencumbered and available financial resources, of which at least $ 53 million must be in cash, fo r regulatory purposes. Term deposits and certificates of deposits with original maturities greater than three months are considered to be short-term investments and are included in Prepaid and other current assets. See Note 21 — Supplemental Disclosures of Cash Flow Information for a reconciliation of the cash, cash equivalents and restricted cash as presented on our consolidated balance sheets and the consolidated statements of cash flows.
Fiduciary Assets and Liabilities — The Company collects premiums from insureds and, after deducting commissions, remits the premiums to the respective insurers. The Company also collects claims or refunds from insurers on behalf of insureds. Certain of our health and welfare benefits administration outsourcing agreements require us to hold funds on behalf of clients to pay obligations on their behalf or for plan participants to pay for medical costs (‘benefit funds’). Benefit funds held in cash and cash equivalents are part of fiduciary funds. In some instances, plan participants direct us to invest these benefit funds on their behalf (‘benefit funds investments’). Each of these transactions is reported on our consolidated balance sheets as assets and corresponding liabilities unless such balances are due to or from the same party and a right of offset exists, in which case the balances are recorded net.
Fiduciary assets on the consolidated balance sheets are comprised of fiduciary funds, benefit funds investments and fiduciary receivables:
Fiduciary funds – These amounts are restricted cash and cash equivalents held for unremitted insurance premiums and claims and benefit funds not invested, and are recorded within fiduciary assets on the consolidated balance sheets. Fiduciary funds are generally required to be kept in certain 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 insureds and insurers and excluding earnings on benefit funds, the Company is entitled to retain investment income earned on fiduciary funds in accordance with industry custom and practice and, in some cases, as supported by agreements with insureds. The period for which the Company holds such funds in its broking capacity is dependent upon the date the insured remits the payment of the premium to the Company, or the date the Company receives a refund from the insurer, and the date the Company is required to forward such payments to the insurer or insured, respectively. For the benefit funds, cash and cash equivalents are held until the funds are directed by plan participants to either be invested in mutual funds or paid out on their behalf. Fiduciary funds are included in the beginning and ending balances of cash, cash equivalents and restricted cash in the consolidated statements of cash flows. See Note 21 — Supplemental Disclosures of Cash Flow Information for a reconciliation of the fiduciary funds as presented on our consolidated balance sheets and the consolidated statements of cash flows.
Benefit funds investments – Benefit funds investments can be invested in open-ended mutual funds at the direction of the participant. Such funds are not available to service the Company’s debt or for other corporate purposes and earnings accrue to the participant.
Fiduciary receivables – Uncollected premiums from insureds, uncollected claims or refunds from insurers and unremitted benefits funds are recorded as fiduciary assets on the consolidated balance sheets. In certain instances, the Company advances premiums, refunds or claims to insurance underwriters or insureds prior to collection. Such advances are made from fiduciary funds and are reflected in the consolidated balance sheets as fiduciary assets.
Fiduciary liabilities on the consolidated balance sheets represent the obligations to remit all fiduciary assets as required under the terms of the various arrangements. Fiduciary receivables and liabilities for which cash has not been collected are equal and offsetting and have not been presented in the consolidated statements of cash flows.
Accounts Receivable — Accounts receivable includes both billed and unbilled receivables and is stated at estimated net realizable values. Provision for billed receivables is recorded, when necessary, in an amount considered by management to be sufficient to meet probable future losses related to uncollectible accounts. Accrued and unbilled receivables are stated at net realizable value which includes an allowance for accrued and unbillable amounts. See Note 4 — Revenue for additional information about our accounts receivable.
Income Taxes — The Company recognizes deferred tax assets and liabilities for the estimated future tax consequences of events attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating and capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the consolidated statement of comprehensive income in the period in which the change is enacted. Deferred tax assets are reduced through the establishment of a valuation allowance at such time as, based on available evidence, it is more likely than not that the deferred tax assets will not be realized. The Company adjusts valuation allowances to measure deferred tax assets at the amounts considered realizable in future periods, which is assessed at each balance sheet date. In making such determinations, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operating results. The Company places more reliance on evidence that is objectively verifiable.
Positions taken in the Company’s tax returns may be subject to challenge by the taxing authorities upon examination. The Company recognizes the benefits of uncertain tax positions in the financial statements when it is more likely than not that a position will be sustained on the basis of the technical merits of the position assuming the tax authorities have full knowledge of the position and all relevant facts. Recognition also occurs upon either the lapse of the relevant statute of limitations or when positions are effectively settled. The benefit recognized is the largest amount of tax benefit that is greater than 50 percent likely to be realized on settlement with the tax authority. The Company adjusts its recognition of uncertain tax benefits in the period in which new information is available impacting either the recognition or measurement of its uncertain tax positions. Such adjustments are reflected as increases or decreases to income taxes in the period in which they are determined.
The Company recognizes interest and penalties relating to unrecognized tax benefits within income taxes. See Note 7 — Income Taxes for additional information regarding the Company’s income taxes.
Foreign Currency — Transactions in currencies other than the functional currency of the entity are recorded at the rates of exchange prevailing at the date of the transaction. Monetary assets and liabilities in currencies other than the functional currency are translated at the rates of exchange prevailing at the balance sheet date and the related transaction gains and losses are reported as income or expense in the consolidated statements of comprehensive income. Certain intercompany loans may be determined to be of a long-term investment nature. The Company records transaction gains and losses from re-measuring such loans as other comprehensive income in the consolidated statements of comprehensive income.
Upon consolidation, the results of operations of subsidiaries and associates whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the average exchange rates, and assets and liabilities are translated at year-end exchange rates. Translation adjustments are presented as a separate component of other comprehensive income in the financial statements and are included in net income only upon sale or liquidation of the underlying foreign subsidiary or associated company.
Derivatives — The Company uses derivative financial instruments to alter the risk profile of an existing underlying exposure. Forward and option foreign currency exchange contracts are used to manage currency exposures arising from future income and expenses and to offset balance sheet exposures in currencies other than the functional currency of an entity. We do not hold any derivatives for trading purposes. The fair values of derivative contracts are recorded in other assets and other liabilities in the consolidated balance sheets. The effective portions of changes in the fair value of derivatives that qualify for hedge accounting as cash flow hedges are recorded in other comprehensive income. Amounts are reclassified from other comprehensive income into earnings when the hedged exposure affects earnings. If the derivative is designated and qualifies as an effective hedge, the changes in the fair value of the derivative and of the hedged item associated with the hedged risk are both recognized in earnings. The amount of hedge ineffectiveness recognized in earnings is based on the extent to which an offset between the fair value of the derivative and hedged item is not achieved. Changes in the fair value of derivatives that do not qualify for hedge accounting, together with any hedge ineffectiveness on those that do qualify, are recorded in Other ()/income, net or interest expense as appropriate.
The Company evaluates whether its contracts include clauses or conditions which would be required to be separately accounted for at fair value as embedded derivatives. See Note 10 — Derivative Financial Instruments for additional information about the Company’s derivatives.
Commitments, Contingencies and Provisions for Liabilities — The Company establishes provisions against various actual and potential claims, lawsuits and other proceedings relating principally to alleged errors and omissions in the ordinary course of business. Such provisions cover claims that have been reported but not paid and also unasserted claims and related legal fees. These provisions are established based on actuarial estimates together with individual case reviews and are believed to be adequate in light of current information and legal advice. In certain cases, where a range of loss exists, we accrue the minimum amount in the range if no amount within the range is a better estimate than any other amount. To the extent such losses can be recovered under the Company’s insurance programs, estimated recoveries are recorded when losses for insured events are recognized and the recoveries are likely to be realized. Significant management judgment is required to estimate the amounts of such unasserted and the related insurance recoveries. The Company analyzes its exposure based on available information, including consultation with outside counsel handling the defense of these matters, to assess its potential liability. These contingent liabilities are not discounted. See Note 15 — Commitments and Contingencies and Note 16 — Supplementary Information for Certain Balance Sheet Accounts for additional information about our commitments, contingencies and provisions for liabilities.
Share-Based Compensation — The Company has equity-based compensation plans that provide for grants of restricted stock units and stock options to employees and non-employee directors of the Company. Additionally, the Company has cash-settled share-based compensation plans that provide for grants to employees.
The Company expenses equity-based compensation, which is included in Salaries and benefits in the consolidated statements of comprehensive income, primarily on a straight-line basis over the requisite service period. The significant assumptions underlying our expense calculations include the fair value of the award on the date of grant, the estimated achievement of any performance targets and estimated forfeiture rates. Forfeitures are estimated on the date of grant and revised for both actual and expected forfeiture activity. The awards under equity-based compensation are classified as equity and are included as a component of equity on the Company’s consolidated balance sheets, as the ultimate payment of such awards will not be achieved through use of the Company’s cash or other assets.
For the cash-settled share-based compensation, the Company recognizes a liability for the fair-value of the awards as of each reporting date. The liability for these awards is included within Other current liabilities or Other non-current liabilities in the consolidated balance sheets depending on when the amounts are payable. Expense is recognized over the service period, and as the liability is remeasured at the end of each reporting period, changes in fair value are recognized as compensation cost within Salaries and benefits in the consolidated statements of comprehensive income. The significant assumptions underlying our expense calculations include the estimated achievement of any performance targets and estimated forfeiture rates.
See Note 19 — Share-based Compensation for additional information about the Company’s share-based compensation.
Employee Share Purchase Plan — In the second quarter of 2024, the Company launched an employee share purchase plan (‘ESPP’), which was initially available to colleagues in North America and certain other countries and was expanded to additional countries in 2025. The ESPP allows eligible colleagues to defer a portion of their after-tax income during biannual six-month offering periods, at the end of which periods amounts deferred are converted to shares using the Company’s closing share price on the last trading day of the applicable offering period with a 15 % discount applied. ASC 840, Distinguishing Liabilities from Equity , requires these deferred amounts to be recognized as liabilities, which we have included in other current liabilities on our accompanying consolidated balance sheet until they are converted to shares on the purchase date. See Note 19 — Share-based Compensation for more information.
Fixed Assets — Fixed assets are stated at cost less accumulated depreciation. Expenditures for improvements are capitalized; repairs and maintenance are charged to expense as incurred. Depreciation is computed primarily using the straight-line method based on the estimated useful lives of assets.
Depreciation on internally-developed software is amortized over the estimated useful life of the asset ranging from 3 to 10 years. Buildings include assets held under finance leases and are depreciated over the lesser of 50 years, the asset lives or the lease terms, as appropriate. Depreciation on leasehold improvements is calculated over the lesser of the useful lives of the assets or the remaining lease terms. Depreciation on furniture and equipment is calculated based on a range of 3 to 10 years . Land is not depreciated.
Long-lived assets are tested for recoverability whenever events or changes in circumstance indicate that their carrying amounts may not be recoverable. An impairment loss is recognized if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. Recoverability is determined based on the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. See Note 8 — Fixed Assets for additional information about our fixed assets.
Leases — As an advisory, broking and solutions company providing services to clients in more than 140 countries, we enter into lease agreements from time to time, primarily for the use of real estate for our office space. We determine if an arrangement is a lease at the inception of the contract, and the nature of our operations is such that it is generally clear whether an arrangement contains a lease and what underlying asset is being leased. The majority of the leases into which we enter are operating leases. Upon entering into leases, we obtain the right to control the use of an identified space for a lease term and recognize these right-of-use (‘ROU’) assets on our consolidated balance sheets with corresponding lease liabilities reflecting our obligation to make the related lease payments. ROU assets are amortized over the term of the lease.
Our real estate leases are generally long-term in nature, with terms that currently range from 3 to 10 years . Our most significant lease supports our London market operations with a lease term through 2032. Our real estate leases often contain options to renew the lease, either through exercise of the option or through automatic renewal. Additionally, certain leases have options to cancel the lease with appropriate notice to the landlord prior to the end of the stated lease term. As we enter into new leases, we consider these options as we assess lease terms in our recognized ROU assets and lease liabilities. If we are reasonably certain to exercise an option to renew a lease, we include this period in our lease term. To the extent that we have the option to cancel a lease, we recognize our ROU assets and lease liabilities using the term that would result from using this earlier date. If a significant penalty is required to cancel the lease at an earlier date, we assess our lease term as ending at the point when no significant penalty would be due.
In addition to payments for previously-agreed base rent, many of our lease agreements are subject to variable and unknown future payments, typically in the form of common area maintenance charges (a non-lease component as defined by ASC 842, Leases (‘ASC 842’)) or real estate taxes. These variable payments are excluded from our lease liabilities and ROU assets, and instead are recognized as lease expense within Other operating expenses on the consolidated statement of comprehensive income as the amounts are incurred. To the extent that we have agreed to fixed charges for common area maintenance or other non-lease components, or our base rent increases by an index or rate (most commonly an inflation rate), these amounts are included in the measurement of our lease liabilities and ROU assets. We have elected the practical expedient under ASC 842 which allows the lease and non-lease components to be combined in our measurement of lease liabilities and ROU assets.
From time to time we may enter into subleases if we are unable to cancel or fully occupy a space and are able to find an appropriate subtenant. However, entering subleases is not a primary objective of our business operations and these arrangements do not currently represent a material amount of cash flows.
We are required to use judgment in the determination of the incremental borrowing rates to calculate the present values of our future lease payments. Since the majority of our debt is publicly traded, our real estate function is centralized, and our treasury function is centralized and generally prohibits our subsidiaries from borrowing externally, we have determined it appropriate to use the Company’s consolidated unsecured borrowing rate, and we adjust for collateralization in accordance with ASC 842. Using the resulting interest rate curves from publicly traded debt at this collateralized borrowing rate, we select the interest rate at lease inception by reference to the lease term and lease currency. At December 31, 2025, 84 % of our leases are denominated in U.S. dollars, Pounds sterling or Euros.
Our leases generally do not subject us to restrictive covenants and contain no residual value guarantees.
See Note 14 — Leases for additional information about our operating leases.
Goodwill and Other Intangible Assets — In applying the acquisition method of accounting for business combinations, amounts assigned to identifiable assets and liabilities acquired were based on estimated fair values as of the date of acquisition, with the remainder recorded as goodwill. Intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible asset. Intangible assets with definite lives are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise. Intangible assets with indefinite lives are tested for impairment annually as of October 1, and whenever indicators of impairment exist. The fair values of intangible assets are compared with their carrying values, and an impairment loss would be recognized for the amount by which a carrying amount exceeds its fair value.
Acquired intangible assets held at December 31, 2025 are being amortized on the basis noted and over the following expected life:
Amortization basis
Expected life
(years)
Client relationships
In line with underlying cash flows
Software
In line with underlying cash flows or straight-line basis
Trademark and trade name
Straight-line basis
Goodwill is tested for impairment annually as of October 1, and whenever indicators of impairment exist. Goodwill is tested at the reporting unit level, and the Company had six reporting units as of October 1, 2025. In the impairment test, the fair value of each reporting unit is compared with its carrying value, including goodwill. If the carrying value of a reporting unit exceeds its fair value, the difference is recognized as an impairment loss. As discussed in Note 3 — Acquisitions and Divestitures in connection with the sale
of TRANZACT, completed on December 31, 2024, the Company recorded a $ 1.0 billion non-cash goodwill impairment charge on the Benefits Delivery & Outsourcing reporting unit (‘BDO’) . The BDO reporting unit goodwill after impairment is approximately $ 1.2 billion. After reflecting the sale of TRANZACT, the fair value of the remaining reporting unit was estimated to be significantly in excess of its carrying value. A qualitative impairment test for all six reporting units resulted in estimated fair values that continue to be significantly in excess of their carrying values at October 1, 2025. See Note 9 — Goodwill and Other Intangible Assets for additional information about our goodwill and other intangible assets.
Pensions — The Company has multiple defined benefit pension and defined contribution plans. The net periodic cost of the Company’s defined benefit plans is measured on an actuarial basis using various methods and actuarial assumptions. The most significant assumptions are the discount rates (formulated using the granular approach to calculating service and interest cost) and the expected long-term rates of return on plan assets. Other material assumptions include rates of participant mortality, the expected long-term rates of compensation and pension increases and rates of employee termination. Gains and losses occur when actual experience differs from actuarial assumptions. If such gains or losses exceed ten percent of the greater of the market-related value of plan assets or the projected benefit obligation, the Company amortizes those gains or losses over the average remaining service period or average remaining life expectancy, as appropriate, of the plan participants. In accordance with U.S. GAAP, the Company records the funded status of its pension plans based on the projected obligation on its consolidated balance sheets.
Contributions to the Company’s defined contribution plans are recognized as incurred. Differences between contributions payable in the year and contributions actually paid are shown as either other assets or other liabilities in the consolidated balance sheets. See Note 13 — Retirement Benefits for additional information about our pensions.
Revenue Recognition — We recognize revenue from a variety of services, with broking, consulting and outsourced administration representing our most significant offerings. All other revenue streams, which can be recognized at either a point in time or over time, are individually less significant and are grouped in Other in our revenue disaggregation disclosures in Note 4 — Revenue. These Other revenue streams represent 6 % to 7 % of customer contract revenue each year. The Company experiences seasonal fluctuations of its revenue during the year, with revenue being typically higher during the Company’s first and fourth quarters due primarily to the timing of broking-related activities.
Broking — Representing 46 % to 49 % of customer contract revenue each year, in our broking arrangements, we earn revenue by acting as an intermediary in the placement of effective insurance policies. Generally, we act as an agent and view our client to be the party looking to obtain insurance coverage for various risks, or an employer or sponsoring organization looking to obtain insurance coverage for its employees or members. Our primary performance obligation under the majority of these arrangements is to place an effective insurance policy, but there can also be significant post-placement obligations in certain contracts to which we need to allocate revenue. The most common of these is for claims handling or call center support. The revenue recognition method for these, after the relative fair value allocation, is described further as part of the ‘Outsourced Administration’ description below.
Due to the nature of the majority of our broking arrangements, no single document constitutes the contract for ASC 606, Revenue From Contracts With Customers (‘ASC 606’) purposes. Our services may be governed by a mixture of different types of contractual arrangements depending on the jurisdiction or type of coverage, including terms of business agreements, broker-of-record letters, statements of work or local custom and practice. This is then confirmed by the client’s acceptance of the underlying insurance contract. Prior to the policy inception date, the client has not accepted nor formally committed to perform under the arrangement (i.e. pay for the insurance coverage in place). Therefore, in the majority of broking arrangements, the contract date is the date the insurance policy incepts. However, in certain instances such as employer-sponsored Medicare broking or Affinity arrangements, where the employer or sponsoring organization is our customer, client acceptance of underlying individual policy placements is not required, and therefore the date at which we have a contract with a customer is not dependent upon placement.
As noted, our primary performance obligations typically consist of only the placement of an effective insurance policy which precedes the inception date of the policy. Therefore, most of our fulfillment costs are incurred before we can recognize revenue, and are thus deferred during the pre-placement process. Where we have material post-placement services obligations, we estimate the relative fair value of the post-placement services using either the expected cost-plus-margin or the market assessment approach.
Revenue from our broking services consists of commissions or fees negotiated in lieu of commissions. At times, we may receive additional income for performing these services from the insurance and reinsurance carriers’ markets, which is collectively referred to as ‘market derived income’. In situations in which our fees are not fixed but are variable, we must estimate the likely commission per policy, taking into account the likelihood of cancellation before the end of the policy term. For employer-sponsored Medicare broking and Affinity arrangements, the commissions to which we will be entitled can vary based on the underlying individual insurance policies that are placed. For employer-sponsored Medicare broking in particular, we base the estimates of transaction prices on supportable evidence from an analysis of past transactions, and only include amounts that are probable of being received or not refunded (referred to as applying ‘constraint’ under ASC 606). This is an area requiring significant judgment and results in us estimating a transaction price that may be significantly lower than the ultimate amount of commissions we may collect. The
transaction price is then adjusted over time as we receive confirmation of our remuneration, or as other information becomes available.
We recognize revenue for most broking arrangements as of a point in time at the later of the policy inception date or when the policy placement is complete, because this is viewed as the date when control is transferred to the client. For employer-sponsored Medicare broking, we recognize revenue over time, as we stand ready under our agreements to place retiree Medicare coverage. For this type of broking arrangement, we recognize the majority of our placement revenue in the fourth quarter of the calendar year when most of the placement or renewal activity occurs.
Prior to the sale of TRANZACT, we also had a direct-to-consumer Medicare broking offering. The contractual arrangements in this offering differed from our employer-sponsored Medicare broking offering described above. The governing contracts in our direct-to-consumer Medicare broking offering were the contractual arrangements with insurance carriers, for whom we acted as an agent, that provided compensation in return for issued policies. Once an application was submitted to a carrier, our obligation was complete, and we had no ongoing fulfillment obligations. We received compensation from carriers in the form of commissions, administrative fees and marketing fees in the first year, and depending on the type of policy issued, we may have received renewal commissions for up to 25 years, provided the policies were renewed for such periods of time.
Because our obligation was complete upon application submission to the carrier, we recognized revenue at that date, which included both compensation that was due to us in the first year as well as an estimate of the total renewal commissions that would have been received over the lifetime of the policy. This variable consideration estimate required significant judgment, and varied based on product type, estimated commission rates, the expected lives of the respective policies and other factors. The Company applied an actuarial model to account for these uncertainties, which was updated periodically based on actual experience, and included an element of ‘constraint’ as defined by ASC 606 such that no significant reversal was expected to occur in the future. Actual results differed from these estimates.
The timing of renewal payments in our direct-to-consumer Medicare broking offering was reflective of regulatory restrictions and insurance carriers’ protection for cancellations and varied based on policy holder decisions that were outside of the control of both the Company and the insurance carriers. As such, the estimate of these renewal commissions receivables was not discounted to reflect a significant financing component.
Consulting — We earn revenue for advisory and consulting work that may be structured as different types of service offerings, including annual recurring projects, projects of a short duration or stand-ready obligations. Collectively, our consulting arrangements represent 31 % to 35 % o f customer contract revenue each year.
We have engagement letters with our clients that specify the terms and conditions upon which the engagements are based. These terms and conditions can only be changed upon agreement by both parties.
In assessing our performance obligations, our consulting work is typically highly integrated, with the various promised services representing inputs of the combined overall output. We view these arrangements as representing a single performance obligation. To the extent we do not integrate our services, as is the case with unrelated services that may be sourced from different areas of our business, we consider these separate performance obligations.
Fee terms can be in the form of fixed-fees (including fixed-fees offset by commissions), time-and-expense fees, commissions, per-participant fees, or fees based on assets under management. Payment is typically due on a monthly basis as we perform under the contract, and we are entitled to be reimbursed for work performed to date in the event of termination.
The majority of our revenue from these consulting engagements is recognized over time, either because our clients are simultaneously receiving and consuming the benefits of our services, or because we have an enforceable right to payment for performance rendered to date. Additionally, from time to time, we may be entitled to an additional fee based on achieving certain performance criteria. To the extent that we cannot estimate with reasonable assurance the likelihood that we will achieve the performance target, we will ‘constrain’ this portion of the transaction price and recognize it when or as the uncertainty is resolved.
We use different progress measures to determine our revenue depending on the nature of the engagement:
Annual recurring projects and projects of short duration. These projects are typically straightforward and highly predictable in nature with either time-and-expense or fixed fee terms. Time-and-expense fees are recognized as hours or expenses are incurred using the ‘right to invoice’ practical expedient allowed under ASC 606. For fixed-fee arrangements, to the extent estimates can be made of the remaining work required under the arrangement, revenue is based upon the proportional performance method, using the value of labor hours spent to date compared to the estimated total value of labor hours for the entire engagement. We believe that cost represents a faithful depiction of the transfer of value because the completion of these performance obligations is based upon the professional services of employees of differing experience levels and thereby
costs. It is appropriate that satisfaction of these performance obligations considers both the number of hours incurred by each employee and the value of each labor hour worked (as opposed to simply the hours worked).
Stand-ready obligations. These projects consist of repetitive monthly or quarterly services performed consistently each period. As none of the activities provided under these services are performed at specified times and quantities, but at the discretion of each customer, our obligation is to stand ready to perform these services on an as-needed basis. These arrangements represent a ‘series’ performance obligation in accordance with ASC 606. Each time increment (i.e., each month or quarter) of standing ready to provide the overall services is distinct and the customer obtains value from each period of service independent of the other periods of service.
Where we recognize revenue on a proportional performance basis, the amount we recognize is affected by a number of factors that can change the estimated amount of work required to complete the project such as the staffing on the engagement and/or the level of client participation. Our periodic engagement evaluations require us to make judgments and estimates regarding the overall profitability and stage of project completion that, in turn, affect how we recognize revenue. We recognize a loss on an engagement when estimated revenue to be received for that engagement is less than the total estimated costs associated with the engagement.
Outsourced Administration — We provide customized benefits outsourcing and co-sourcing solutions services in relation to the administration of defined benefit, defined contribution, and health and welfare plans. These plans are sponsored by our clients to provide benefits to their active or retired employees. Additionally, these services include operating call centers and may include providing access to, and managing, a variety of consumer-directed savings accounts. The operation of call centers and consumer-directed accounts can be provisioned as part of an ongoing administration or solutions service, or separately as part of a broking arrangement. The products and services available to all clients are the same, but the selections by client can vary and portray customized products and services based on the customer’s specific needs. Our services often include the use of proprietary systems that are configured for each of our clients’ needs. In total, our outsourced administration services represent 12 % of customer contract revenue each year.
These contracts typically consist of an implementation phase and an ongoing administration phase:
Implementation phase. Work performed during the implementation phase is considered a set-up activity because it does not transfer a service to the customer, and therefore costs are deferred during this phase of the arrangement. Since these arrangements are longer term in nature and subject to more changes in scope as the project progresses, our contracts generally provide that if the client terminates a contract, we are entitled to an additional payment for services performed through the termination date designed to recover our up-front costs of implementation.
Ongoing administration phase. The ongoing administration phase includes a variety of plan administration services, system hosting and support services. More specifically, these services include data management, calculations, reporting, fulfillment/communications, compliance services, call center support, and in our health and welfare arrangements, annual onboarding and enrollment support. While there are a variety of activities performed, the overall nature of the obligation is to provide an integrated outsourcing solution to the customer. The arrangement represents a stand-ready obligation to perform these activities on an as-needed basis. The customer obtains value from each period of service, and each time increment (i.e., each month, or each benefits cycle in our health and welfare arrangements) is distinct and substantially the same. Accordingly, the ongoing administration services represent a ‘series’ in accordance with ASC 606 and are deemed one performance obligation.
We have engagement letters with our clients that specify the terms and conditions upon which the engagements are based. These terms and conditions can only be changed upon agreement by both parties. Fees for these arrangements can be fixed, per-participant-per-month, or in the case of call center services, provided in conjunction with our broking services, with an allocation based on commissions. Our fees are not typically payable until the commencement of the ongoing administration phase. However, in our health and welfare arrangements, we begin transferring services to our customers approximately four months prior to payments being due as part of our annual onboarding and enrollment work. Although our per-participant-per-month and commission-based fees are considered variable, they are typically predictable in nature, and therefore we generally do not ‘constrain’ any portion of our transaction price estimates. Once fees become payable, payment is typically due on a monthly basis as we perform under the contract, and we are entitled to be reimbursed for work performed to date in the event of termination.
Revenue is recognized over time as the services are performed because our clients are simultaneously receiving and consuming the benefits of our services. For our health and welfare arrangements where each benefits cycle represents a time increment under the series guidance, revenue is recognized based on proportional performance. We use an input measure (value of labor hours worked) as the measure of progress. Given that the service is stand-ready in nature, it can be difficult to predict the remaining obligation under the benefits cycle. Therefore, the input measure is based on the historical effort expended each month, which is measured as labor cost. This results in slightly more revenue being recognized during periods of annual onboarding since we are performing both our normal monthly services and our annual services during this portion of the benefits cycle.
For all other outsourced administration arrangements where a month represents our time increment under the series guidance, we allocate transaction price to the month we are performing our services. Therefore, the amount recognized each month is the variable consideration related to that month plus the fixed monthly or annual fee. The fixed monthly or annual fee is recognized on a straight-line basis. Revenue recognition for these types of arrangements is therefore more consistent throughout the year.
Reimbursed expenses — Client reimbursable expenses, including those relating to travel, other out-of-pocket expenses and any third-party costs, are included in revenue, and an equivalent amount of reimbursable expenses is included in other operating expenses as a cost of revenue as incurred. Reimbursed expenses represented approximately 1 % of customer contract revenue each year. Taxes collected from customers and remitted to government authorities are recorded net and are excluded from revenue.
Interest income — Interest income is recognized as earned.
Other income — Other income includes gains on disposal of intangible assets, which primarily arise from settlements through enforcing non-compete agreements in the event of losing accounts through producer defection or the disposal of books of business.
Cost to obtain or fulfill contracts — Costs to obtain customers include compensation for brokers under specific agreements that would not be incurred without a contract being signed and executed. The Company has elected to apply the ASC 606 ‘practical expedient’ which allows us to expense these costs as incurred if the amortization period related to the resulting asset would be one year or less. Where the Company has instances of contracts that would be amortized for a period greater than a year, the related compensation has been capitalized.
Costs to fulfill include costs incurred by the Company that are expected to be recovered within the expected contract period. The costs associated with our system implementation activities and consulting contracts are recorded through time entry.
For our broking business, the Company must estimate the fulfillment costs incurred during the pre-placement of the broking contracts. These judgments include:
which activities in the pre-placement process should be eligible for capitalization;
the amount of time and effort expended on those pre-placement activities;
the amount of payroll and related costs eligible for capitalization; and,
the monthly or quarterly timing of underlying insurance and reinsurance policy inception dates.
We amortize costs to fulfill over the period we receive the related benefits. For broking pre-placement costs, this is typically less than a year. In our system implementation and consulting arrangements and in our cost to obtain broking arrangements which do not qualify for the practical expedient, we include the likelihood of contract renewals in our estimate of the amortization period, resulting in most costs being amortized for a greater length of time than the initial contract term.
Transaction and transformation — Transaction and transformation consists of two components, transaction-related costs related to acquisitions and disposals, and transformation expenses associated with our completed Transformation program (see Note 6 — Restructuring Costs).
Transaction costs primarily include legal and other professional fees as well as other costs that are directly attributable to an acquisition or an in-process but not yet completed divestiture. Costs related to divestitures incurred during the period of the divestment are not included in transaction costs, but are instead included in the gain or loss on disposal of a business within Other (loss)/income, net on the consolidated statements of comprehensive income.
Transformation costs are costs incurred under the Transformation program but are not eligible to be classified as restructuring costs under ASC 420, Exit or Disposal Cost Obligation (‘ASC 420’) . These costs are not expected to continue beyond the defined period of the program.
Recent Accounting Pronouncements
Not Yet Adopted
In March 2024, the SEC adopted final rules on the enhancement and standardization of climate-related disclosures for investors (the ‘SEC Climate Rules’). The SEC Climate Rules would require disclosure of certain climate-related information, including in the notes to the Company’s financial statements, in registration statements and annual reports on Form 10-K. Following a number of legal challenges, the SEC voluntarily stayed the SEC Climate Rules. In response to the SEC’s discontinuation of its defense of the SEC Climate Rules, the pending litigation is held in abeyance, awaiting the SEC to either defend, revise, or rescind the rules. The Company is monitoring the outcome.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expense , which is intended to provide transparency about the components of expenses included in the income statement. This ASU requires public companies to disclose additional information about certain expenses in the notes to the financial statements on a quarterly and annual basis, including purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion for each income statement line item that contains those expenses. The ASU requires a new tabular disclosure format that centralizes expense information and additional qualitative disclosure. The guidance does not change the existing income statement presentation. The annual requirements for this ASU become effective with the Company's Annual Report on Form 10-K for the year ended December 31, 2027, and for its interim periods beginning on January 1, 2028. Early adoption is permitted. The guidance is to be applied prospectively, with the option for retrospective application. The Company currently does not plan to early-adopt this ASU and is assessing the expected impact on its consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets , which is intended to improve guidance on the measurement of credit losses for accounts receivable and contract assets. This ASU provides an optional practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets. The requirements for this ASU became effective for the Company on January 1, 2026. Early adoption was permitted and the guidance was applied prospectively to estimates of expected credit losses on asset balances prepared after the date of adoption. The Company did not early-adopt this ASU and does not expect the ASU to have a material impact on its consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software , which is intended to clarify and modernize the accounting for costs related to internal-use software. This ASU changes capitalization requirements from being tied to development stages and instead creates a capitalization threshold which is achieved when it is probable the software will be completed for its intended purpose. The annual and interim requirements for this ASU become effective for the Company on January 1, 2028. Early adoption is permitted and may be applied using a prospective, retrospective, or modified transition approach. The Company is assessing all aspects of the ASU, including adoption timing and transition method, and the expected impact on its consolidated financial statements.
Adopted
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information within the income tax rate reconciliation and income taxes paid disclosures. It also includes certain other amendments intended to improve the effectiveness of income tax disclosures. Specifically, this ASU requires a tabular income tax rate reconciliation using both percentages and amounts disaggregated into specific categories with certain reconciling items at or above 5% of the statutory tax, further disaggregated by its nature and/or jurisdiction. Additionally, income taxes paid are required to be presented by federal, state, local and foreign jurisdictions, including amounts paid to individual jurisdictions representing 5% or more of the total income taxes paid. This ASU became effective for the Company on January 1, 2025, at which time it was adopted. The Company has included the required disclosures within Note 7 — Income Taxes .
Other Legislation
Pillar Two
In December 2021, the Organisation for Economic Co-operation and Development (‘OECD’) and G20 Inclusive Framework on Base Erosion and Profit Shifting released the Model Global Anti-Base Erosion (‘GloBE’) rules (the ‘OECD Model Rules’) under Pillar Two. In 2023, many E.U. countries, including Ireland, enacted the necessary legislation (based on the OECD Model Rules) to implement Pillar Two in 2024. Other countries and territories introduced Pillar Two legislation in 2024 and 2025. In January 2026, the OECD announced the release of a new package of administrative guidance under the Pillar Two global minimum tax rules (the ‘side-by-side’ (SbS) package). Key components of the package include a simplified effective tax rate safe harbor, an extension of the transitional country-by-country reporting safe harbor, a substance-based tax incentive safe harbor, a side-by-side safe harbor for certain multinational groups located in eligible jurisdictions, an ultimate parent entity safe harbor for eligible countries, and a commitment to focus on additional clarifications and simplifications. These new safe harbor rules do not affect the application of a qualified domestic minimum top-up tax. Except for the extension of the transitional country-by-country reporting safe harbor, the Company does not expect the new safe harbors to apply. The Pillar Two minimum tax is treated as a period-cost beginning in 2024 and does not have a material impact on the Company's financial results of operations for the periods presented.
On July 4, 2025, the ‘Act to provide for reconciliation pursuant to title II of H. Con. Res. 14’ (‘H.R. 1’) was enacted into law and generally became effective on January 1, 2026, with certain exceptions. H.R. 1 included numerous changes to existing tax law affecting businesses, including extending and modifying certain key provisions of the Tax Cuts and Jobs Act of 2017, both domestic and international, expanding certain Investment Retirement Account incentives while accelerating the phase-out of others. In 2025, the Company recognized cash tax benefits related to the acceleration of certain timing differences. The Company will continue to evaluate the overall impact of H.R. 1 and related regulations on our operations and tax positions.
Note 3 — Acquisitions and Divestitures
The following disclosures discuss significant transactions during the three-year period ended December 31, 2025.
Acquisitions
Willis Re Joint Venture
During the fourth quarter of 2024, the Company re-entered the reinsurance broking space by making an initial investment in Willis Re, a reinsurance joint venture with Bain Capital. WTW does not have a controlling financial interest in Willis Re and therefore does not consolidate the Willis Re entities. Rather, WTW holds a minority interest in the joint venture and has an option to acquire a controlling interest in the future. During 2025, the Company made further investments of $ 30 million and holds both preference and ordinary shares in Willis Re. The Company accounts for the ordinary share portion of these investments using the equity method of accounting, and has elected the accounting alternative under ASC 321, Investments – Equity Securities , for the accounting for the preference shares and call options and is therefore carrying those assets at cost. The net income and the assets and liabilities of Willis Re are not currently significant to the Company.
Pending Acquisitions
Newfront — On December 9, 2025, the Company entered into a definitive agreement to acquire Newfront Insurance Holdings, Inc. (‘Newfront’), a U.S.-based broker combining specialty expertise and cutting-edge technology, for up-front and contingent consideration payments totaling $ 1.3 billion. The $ 1.05 billion up-front portion is comprised of approximately $ 900 million in cash and $ 150 million in equity to be paid to Newfront employee-shareholders, and up to $ 250 million contingent consideration is payable primarily in equity, subject to Newfront’s achievement of specified performance targets. A significant portion of both equity awards payable are expected to be recognized as compensation cost. Additionally, up to an incremental $ 150 million, payable primarily in equity, would become payable if Newfront achieves above-target revenue growth. The transaction was completed on January 27, 2026 ( see Note 22 — Subsequent Events within Item 8 of this Annual Report on Form 10-K).
Cushon — On December 10, 2025, the Company entered into a definitive agreement to acquire Cushon, a workplace pensions, savings and financial wellbeing company for consideration of £ 150 million, subject to working capital and other adjustments, and contingent consideration of up to £ 100 million, a portion of which is expected to be recognized as compensation costs . The transaction is expected to close during the first half of 2026, subject to receipt of certain regulatory approvals and other customary closing conditions.
Al-Futtaim Willis — On May 2, 2025, the Company entered into a definitive agreement to acquire the remaining 51 % controlling interest of its longstanding broking joint venture, Al-Futtaim Willis ( ‘AFW’), based in the United Arab Emirates, for cash consideration of $ 58 million, subject to certain adjustments . The results of AFW are currently included in interest in earnings of associates, net of tax, on the consolidated statements of comprehensive income, but will be fully consolidated after the close of the transaction. The transaction is expected to close during the first half of 2026, subject to receipt of certain regulatory approvals and other customary closing conditions.
Other Acquisitions
The Company completed acquisitions, including acquisitions of assets and non-controlling interests of certain subsidiaries, and made contributions to interests in associates accounted for under the equity method of accounting, during the years ended December 31, 2025, 2024 and 2023 for combined cash payments of $ 20 million, $ 119 million and $ 56 million, respectively, and contingent or deferred consideration fair valued at $ 5 million, $ 3 million and $ 3 million, respectively.
Divestitures
TRANZACT Sale
Effective December 31, 2024, the Company sold TRANZACT, its direct-to-consumer insurance distribution business, for total cash consideration of $ 632 million, which was subject to certain adjustments pursuant to an equity purchase agreement dated September 30, 2024. The Company was providing a number of services to TRANZACT under a Transition Services Agreement which remained in effect through most of 2025.
In connection with the sale, the Company recorded a pre-tax loss on the disposal of $ 1.1 billion within Other (loss)/income , net on our consolidated statements of comprehensive income. Additionally, and in conjunction with the sale, the Company recognized a $ 1.0 billion pre-tax goodwill impairment charge within its BDO reporting unit. During the year ended December 31, 2025, the Company had disposal price and other adjustments to the sale of TRANZACT resulting in a gain of $ 14 million.
TRANZACT was included in our Health, Wealth and Career segment. The following selected financial information relates to the operations of TRANZACT for the periods presented:
Years Ended December 31,
Revenue
Operating 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.
Certain amounts included in the consolidated balance sheets did not transfer to Gallagher under the terms of the Willis Re SAPA, and instead were to be settled by the 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. 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 (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 were finalized in the third quarter of 2023. The value of the initial transfer during the second quarter of 2023 amounted to $ 74 million of other current liabilities less $ 26 million of accounts receivables due to the Company, totaling $ 48 million of net cash transferred to Gallagher. Additionally, total fiduciary assets and liabilities of $ 4.5 billion, including $ 868 million of fiduciary cash, were transferred to Gallagher. The total cash outflow of $ 916 million was included in cash used in investing activities in the consolidated statements of cash flows for the six months ended June 30, 2023. During the third quarter of 2023, WTW and Gallagher agreed to a final settlement of all balances which resulted in a $ 5 million increase to the gain on disposal recognized at that time, and is included within Other (loss)/income, net on our consolidated statements of comprehensive income. The settlement of remaining amounts owed to Gallagher totaling $ 11 million was transferred in October 2023.
In April 2025, the Company received $ 750 million pertaining to the earnout , for which the related gain was recognized in 2024.
A number of services continued under a cost reimbursement Transition Services Agreement (‘TSA’) in which WTW was providing Gallagher support including real estate leases, information technology, payroll, human resources and accounting. During the third quarter of 2023, the term for these services was extended from November 30, 2023 to May 31, 2024, and during the second quarter of 2024, the second of the two extensions allowed under the TSA was invoked and the term for these services was further extended to November 30, 2024 . Fees earned under the TSA were $ 19 million and $ 36 million during the years ended December 31, 2024 and 2023, respectively, and have been recognized as a reduction to the costs incurred to service the TSA and are included within Other operating expenses on the consolidated statements of comprehensive income.
Other Disposals
The Company completed other disposals during the years ended December 31, 2025, 2024 and 2023 for cash proceeds of $ 34 million, $ 18 million and $ 89 million, respectively. These disposals resulted in a net gain for the year ended December 31, 2025 of $ 26 million, and for the year ended December 31, 2023 a net gain on disposal of $ 38 million. There were no net gains or losses on disposal for the year ended December 31, 2024. There were no non-cash proceeds recognized on disposals for the years ended December 31, 2025, 2024 and 2023.
Note 4 — Revenue
Disaggregation of Revenue
The Company reports revenue by segment in Note 5 — Segment Information. The following table presents revenue by service offering and segment, as well as reconciliations to total revenue for the years ended December 31, 2025, 2024 and 2023. Along with reimbursable expenses and other, total revenue by service offering represents our revenue from customer contracts.
Year Ended
December 31,
Broking
Consulting
Outsourced
Administration
Other
Total revenue by service offering
Reimbursable expenses and other (i)
Total revenue from customer contracts
Interest and other income
Total revenue
HWC
Corporate (i)
Total
Reimbursable expenses and other, as well as Corporate revenue, are excluded from segment revenue, but included in total revenue on the consolidated statements of comprehensive income. Amounts included in Corporate revenue may include eliminations, adjustments to reserves and impacts from hedged revenue transactions.
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. The significant components of interest and other income are as follows for the periods presented above:
Year Ended December 31,
Book-of-business settlements
Interest income
Other income
Total
HWC
Corporate
Total interest and other income
As a result of the cessation of the co-broking agreement with Gallagher, (see Note 3 — Acquisitions and Divestitures) interest income associated with fiduciary funds is now allocated more directly to the Risk and Broking segment beginning in the third quarter of 2023. These amounts were previously allocated to the Corporate segment following the disposal of Willis Re.
The following table presents revenue from service offerings by the geography where our work was performed for the years ended December 31, 2025, 2024 and 2023. The reconciliations to total revenue on our consolidated statements of comprehensive income and to segment revenue is shown in the table above.
Year Ended
December 31,
North America
Europe
International
Total revenue by geography
HWC
Corporate
Total
Contract Balances
The Company reports accounts receivable, net on the consolidated balance sheets, which includes billed and unbilled receivables and current contract assets. In addition to accounts receivable, net, the Company had the following non-current receivable and deferred revenue balances at December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Billed receivables, net of allowance for doubtful accounts of $ 30 million and $ 36
million
Unbilled receivables
Current contract assets
Accounts receivable, net
Non-current accounts receivable, net
Deferred revenue
The Company receives payments from customers based on billing schedules or terms as written in our contracts. Those balances denoted as contract assets relate to situations where we have completed some or all performance under the contract, however our right to consideration is conditional. Contract assets result most materially in our Medicare intermediary businesses. Billed and unbilled receivables are recorded when the right to consideration becomes unconditional. Deferred revenue relates to payments received in advance of performance under the contract and is recognized as revenue as (or when) we perform under the contract.
During the year ended December 31, 2025, revenue of approximately $ 580 million was recognized that was reflected as deferred revenue at December 31, 2024.
During the year ended December 31, 2025, the Company recognized revenue of approximately $ 5 million related to performance obligations satisfied in a prior period.
Accounts receivable are stated at estimated net realizable values. The following table presents the changes in our allowance for doubtful accounts for the years ended December 31, 2025, 2024 and 2023.
December 31,
December 31,
December 31,
Balance at beginning of year
Additions charged to costs and expenses
Deductions/other movements
Foreign exchange
Balance at end of year
Performance Obligations
The Company has contracts for which performance obligations have not been satisfied as of December 31, 2025 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, 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’).
2028 onward
Total
Revenue expected to be recognized on contracts as of
December 31, 2025
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 December 31, 2025 have been excluded from the table above.
Costs to Obtain or Fulfill a Contract
The Company incurs costs to obtain or fulfill contracts which it would not incur if a contract with a customer was not executed.
The following table shows the categories of costs that are capitalized and deferred over the expected life of a contract.
Costs to fulfill
Costs to obtain (i)
December 31,
December 31,
December 31,
December 31,
December 31,
Balance at beginning of the year
New capitalized costs
Amortization
Foreign currency translation
Balance at end of the year
Costs to obtain incurred prior to 2024 only related to contracts where the related amortization period was less than one year. As such, these costs were expensed as incurred in accordance with our election of the practical expedient under ASC 606.
Note 5 — Segment Information
WTW has two reportable operating segments organized by business areas:
Health, Wealth & Career (‘HWC’); and
Risk & Broking (‘R&B’).
WTW’s chief operating decision maker (‘CODM’) is its chief executive officer . We determined that the operational data used by the CODM is at the segment level. Management bases strategic goals and decisions for these segments on the data presented below which 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 segment operating income performance and prospects on a pre-tax basis.
Under the segment structure and for internal and segment reporting, WTW segment revenue includes commissions and fees, interest and other income. U.S. GAAP revenue also includes amounts that were directly incurred on behalf of our clients and reimbursed by them (reimbursable expenses), which are not included in segment revenue. There is no significant segment revenue derived from transactions between the segments.
In accordance with ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (‘ASC 2023-07’), the Company has not presented any individual significant expense categories due to the following factors:
The CODM ’s review focuses on segment operating income results in total, rather than on individual expenses to arrive at segment operating income. The CODM uses segment operating income to make decisions and allocate resources.
The CODM does not regularly review any individual significant expense categories at the segment level. Rather, the segment leaders are tasked with achieving the targeted segment operating income and have discretion to determine how to manage their respective expense categories to achieve the targets set by the CODM.
Instead, the CODM routinely reviews budgeted, forecasted and actual expense information at the consolidated level only and not at the individual segment level.
Segment operating income excludes certain costs, including (i) amortization of intangibles; (ii) restructuring costs; (iii) certain transaction and transformation expenses; and (iv) to the extent that the actual expense based upon which allocations are made differs from the forecast/budget amount, a reconciling item will be created between internally-allocated expenses and the actual expenses that we report for U.S. GAAP purposes. Although not reviewed individually by the CODM, amounts included in segment expenses may be determined on both a direct and allocated basis and are related to salaries and benefits, depreciation, corporate overhead charges and other operating expenses, including for occupancy, colleague travel costs, legal, marketing, technology, professional fees and professional liability costs.
The following table presents segment revenue, segment expenses and segment operating income for our reportable segments for the years ended December 31, 2025, 2024 and 2023.
HWC
Total
Years ended December 31,
Years ended December 31,
Years ended December 31,
Segment revenue excluding interest income
Interest income
Total segment revenue
Other segment expenses
Depreciation
Total segment expenses
Segment operating income
The following table presents reconciliations of the information reported by segment to the Company’s consolidated amounts reported for the years ended December 31, 2025, 2024 and 2023.
Years ended December 31,
Revenue:
Total segment revenue
Corporate, reimbursable expenses and other
Revenue
Total segment operating income
Impairment (i)
Amortization
Restructuring costs
Transaction and transformation
Unallocated, net (ii)
Income from operations
Interest expense
Other (loss)/income, net
INCOME FROM OPERATIONS BEFORE INCOME TAXES
AND INTEREST IN EARNINGS OF ASSOCIATES
Represents the non-cash goodwill impairment associated with our BDO reporting unit related to the sale of our TRANZACT business (see Note 3 — Acquisitions and Divestitures for further information).
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.
None of the Company’s clients individually represented more than 10 % of its consolidated revenue for the years ended December 31, 2025, 2024 and 2023.
Below are our revenue (on the basis of where the work was performed) and tangible long-lived assets for Ireland, our country of domicile, countries with significant concentrations, and all other foreign countries as of and for the years ended as indicated:
Revenue
Long-Lived Assets (i)
Years ended December 31,
December 31,
Ireland
United States
United Kingdom
Rest of World
Total Foreign Countries
Tangible long-lived assets consist of fixed assets and ROU assets.
Note 6 — Restructuring Costs
In the fourth quarter of 2024, the Company concluded a three-year ‘Transformation program’ designed to enhance operations, optimize technology and align its real estate footprint to its new ways of working. The program incurred cumulative costs of $ 1.115 billion and capital expenditures of $ 130 million, resulting in a total investment of $ 1.245 billion. Although the Transformation program concluded in 2024, additional cash outflows occurred in 2025 as a result of the settlement of accrued costs.
The main categories of charges were in the following four areas:
Real estate rationalization — included costs to align the real estate footprint to the new ways of working (hybrid work) as well as breakage fees and the impairment of ROU assets and other related leasehold assets.
Technology modernization — these charges were incurred in moving to common platforms and technologies, including migrating certain platforms and applications to the cloud. This category included the impairment of technology assets that were duplicative or no longer revenue-producing, as well as costs for technology investments that did not qualify for capitalization.
Process optimization — these costs were incurred in the right-shoring strategy and automation of our operations, which included optimizing resource deployment and appropriate colleague alignment. These costs included 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 were accounted for under ASC 420 and are included as restructuring costs in the consolidated statements of comprehensive income. Other costs incurred under the Transformation program are included in transaction and transformation and were $ 378 million and $ 347 million for the years ended December 31, 2024 and 2023, respectively . An analysis of total restructuring costs incurred under the Transformation program by category and by segment and corporate functions, from commencement to December 31, 2024, is as follows:
HWC
Corporate
Total
Real estate rationalization
Technology modernization
Process optimization
Other
Real estate rationalization
Technology modernization
Process optimization
Other
Real estate rationalization
Technology modernization
Process optimization
Other
Real estate rationalization
Technology modernization
Process optimization
Other
Total
Real estate rationalization
Technology modernization
Process optimization
Other
Total
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
Balance at October 1, 2021
Charges incurred
Cash payments
Balance at December 31, 2021
Charges incurred
Cash payments
Balance at December 31, 2022
Charges incurred
Cash payments
Balance at December 31, 2023
Charges incurred
Cash payments
Balance at December 31, 2024
Cash payments
Balance at December 31, 2025
Note 7 — Income Taxes
Provision for Income Taxes
An analysis of income from operations before income taxes and interest in earnings of associates by taxing jurisdiction is shown below:
Years ended December 31,
Ireland
Rest of World
Total
The components of the provision for income taxes include:
Years ended December 31,
Current tax expense:
Ireland
U.S. federal taxes
U.S. state and local taxes
U.K. corporation tax
Other jurisdictions
Total current tax expense
Deferred tax (expense)/benefit:
Ireland
U.S. federal taxes
U.S. state and local taxes
U.K. corporation tax
Other jurisdictions
Total deferred tax (expense)/benefit
Total provision for income taxes
Effective Tax Rate Reconciliation
The table below provides the updated requirements of ASU 2023-09 for 2025. See Note 2 — Basis of Presentation, Significant Accounting Policies and Recent Accounting Pronouncements for additional details on the adoption of this ASU.
Willis Towers Watson plc is a non-trading holding company tax resident in Ireland where it is taxed at the statutory corporate rate of 25 %. The reported provision for income taxes differs from the amounts that would have resulted had the reported income from operations before income taxes and interest in earnings of associates been taxed at the Irish statutory corporate tax rate. The principal reasons for the differences between the amounts provided and those that would have resulted from the application of the Irish statutory corporate tax rate are as follows:
Year ended
December 31, 2025
Amount
ETR %
INCOME FROM OPERATIONS BEFORE INCOME TAXES
AND INTEREST IN EARNINGS OF ASSOCIATES
Irish statutory corporate tax rate
Foreign tax effects:
United States
Statutory tax rate difference between United States and Ireland
Impact of U.S. state and local taxes (net of federal taxes)
Other adjustments
United Kingdom
Effect of cross-border tax laws
Other adjustments
Bermuda
Statutory tax rate difference between Bermuda and Ireland
Foreign tax credits
Changes in valuation allowances
Other Foreign Jurisdictions
Effect of cross-border tax laws
Changes in unrecognized tax benefits
Other adjustments
Provision for income taxes
The effective tax rate for the year ended December 31, 2025 includes a $ 79 million tax benefit adjustment related to both the final allocation of the Willis Re earnout received and a change in uncertain tax positions.
Prior to the adoption of ASU No. 2023-09, the Company disclosure of the provision for income taxes differed from the amounts that would have resulted had the reported income from operations before income taxes and interest in earnings of associates been taxed at the U.S. federal statutory rate. The principal reasons for the differences between the amounts provided and those that would have resulted from the application of the U.S. federal statutory tax rate are as follows:
Years ended December 31,
INCOME FROM OPERATIONS BEFORE INCOME TAXES
AND INTEREST IN EARNINGS OF ASSOCIATES
U.S. federal statutory income tax rate
Income tax expense at U.S. federal tax rate
Adjustments to derive effective tax rate:
Non-deductible expenses and dividends
Net adjustments on acquisition costs
Impact of change in rate on deferred tax balances
Effect of foreign exchange and other differences
Changes in valuation allowances
Net tax effect on intra-group items
Net tax effect on disposal of operations
Tax differentials of non-U.S. jurisdictions
Impact of U.S. state and local taxes
Global Intangible Low-Taxed Income (GILTI)
Subpart F income
Base Erosion Anti-Abuse Tax (BEAT)
Tax on unremitted earnings
Changes in uncertain tax positions
Other items, net
Provision for income taxes
The effective tax rate for the year ended December 31, 2024 includes a $ 187 million tax expense on disposal of operations. Included in the $ 187 million are three main components: a tax expense on the BDO goodwill impairment; a tax benefit from the capital loss incurred on the sale of TRANZACT; and a tax benefit on the Willis Re earnout in certain jurisdictions with statutory tax rates less than 21.0 %. The effective tax rate for the year ended December 31, 2023 includes a $ 20 million tax benefit related to changes in state apportionment and a $ 10 million d eferred tax benefit related to the remeasurement of deferred tax assets and liabilities associated with the enactment of the Bermuda corporate income tax law.
The provisions for income tax on operations for prior years have been reconciled above to the U.S. federal statutory tax rate of 21.0 % due to significant operations in the U.S.
Deferred Income Taxes
Deferred income tax assets and liabilities reflect the effect of temporary differences between the assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax purposes. We recognize deferred tax assets if it is more likely than not that a benefit will be realized.
Deferred income tax assets and liabilities included in the consolidated balance sheets at December 31, 2025 and 2024 are comprised of the following:
December 31,
Deferred tax assets:
Accrued expenses not currently deductible
Interest carryforwards
Net operating losses
Capital loss carryforwards
Accrued retirement benefits
Operating lease liabilities
Deferred compensation
Share-based compensation
Financial derivative transactions
Gross deferred tax assets
Less: valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Cost of intangible assets, net of related amortization
Operating lease right-of-use assets
Cost of tangible assets, net of related depreciation
Prepaid retirement benefits
Accrued revenue not currently taxable
Unremitted earnings
Deferred tax liabilities
Net deferred tax assets
The net deferred income tax assets are included in Other non-current assets and the net deferred tax liabilities are included in Other non-current liabilities in our consolidated balance sheets. At December 31, 2025, the Company had a net deferred tax asset of $ 126 million compared to a net deferred tax asset of $ 193 million at December 31, 2024 . The net change of $ 67 million is primarily related to the 2025 federal and state capital loss carryback of the 2024 capital loss generated on the sale of TRANZACT. The loss carryback was approximately $ 115 million on a tax-effected basis.
December 31,
Balance sheet classifications:
Other non-current assets
Other non-current liabilities
Net deferred tax asset
At December 31, 2025, we had U.S. federal and non-U.S. net operating loss carryforwards amounting to $ 186 million of which $ 159 million can be indefinitely carried forward under local statutes. The remaining $ 27 million of net operating loss carryforwards will expire, if unused, in varying amounts from 2026 through 2045. I n addition, we had U.S. state net operating loss carryforwards of $ 70 million, of which $ 22 million can be indefinitely carried forward, while the remaining $ 48 million will expire in varying amounts from 2026 to 2045.
Management believes, based on the evaluation of positive and negative evidence, including the future reversal of existing taxable temporary differences, it is more likely than not that the Company will realize the benefits of net deferred tax assets of $ 801 million, net of the valuation allowance. During 2025, the Company increased its valuation allowance by $ 11 million, primarily related to non-U.S. net operating losses. During 2024, the Company decreased its valuation allowance by $ 7 million, primarily related to state and non-U.S. net operating losses. During 2023, the Company increased its valuation allowance by $ 7 million, primarily related to state net operating losses and U.S. foreign tax credits.
At December 31, 2025 and 2024, the Company had valuation allowances of $ 39 million and $ 28 million, respectively, to reduce its deferred tax assets to their estimated realizable values. The valuation allowance at December 31, 2025 primarily relates to deferred taxes on U.S. state, capital and operating losses of $ 8 million and non-U.S. net operating losses of $ 24 million.
An analysis of our valuation allowance is shown below.
Years ended December 31,
Balance at beginning of year
Additions charged to costs and expenses
Deductions
Balance at end of year
The movement in the 2025 valuation allowance will differ to the 2025 rate reconciliation when the movement does not meet the 5% threshold, by nature or jurisdiction. The movement in the 2024 valuation allowance differs from the 2024 rate reconciliation primarily due to changes in our state deferred tax assets as a result of the sale of our TRANZACT business . The movement in the 2023 valuation allowance differs from the 2023 rate reconciliation primarily due to the increase in state net operating losses and the related valuation allowance.
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. At December 31, 2025, the Company has $ 37.4 billion of undistributed earnings in subsidiaries where no deferred tax has been recognized, the majority of which can be recovered in an untaxable manner. If future events, including material changes in estimates of cash, working capital and long-term investment requirements necessitate that these earnings be distributed, a provision for income and foreign withholding taxes, net of credits, may be necessary.
Uncertain Tax Positions
At December 31, 2025, the amount of unrecognized tax benefits associated with uncertain tax positions, determined in accordance with ASC 740, Income Taxes excluding interest and penalties, was $ 38 million. Reconciliations of the beginning and ending balances of the liability for unrecognized tax benefits is as follows:
Balance at beginning of year
Increases related to tax positions in prior years
Decreases related to tax positions in prior years
Increases related to tax positions in current year
Decreases related to settlements
Decreases related to lapse in statute of limitations
Cumulative translation adjustment and other adjustments
Balance at end of year
The liability for unrecognized tax benefits for the year ended December 31 , 2025 can be reduced by $ 1 million and 2024 and 2023 can be reduced by $ 3 million using offsetting deferred tax benefits associated with timing differences, foreign tax credits and the federal tax benefit of state income taxes. If these offsetting deferred tax benefits were recognized, there would be a favorable impact on our effective tax rate. There are no material balances that would result in adjustments to other tax accounts.
Interest and penalties related to unrecognized tax benefits are included as a component of income tax expense. At December 31, 2025, and 2024, we had cumulative accrued interest of $ 4 million and $ 8 million, respectively. Additionally, we had accrued penalties of $ 2 million for 2025. Accrued penalties were no t material in 2024.
Tax expense for both the years ended December 31, 2025 and 2024 includes $ 1 million and $ 2 million, respectively, of interest expense .
The Company and its subsidiaries file income tax returns in various tax jurisdictions in which it operates.
We have ongoing state income tax examinations in certain states for tax years ranging from December 31, 2018 to December 31, 2023. The statute of limitations in certain states remains open back to the tax period ended December 31, 2018.
All U.K. tax returns have been filed timely and are in the normal process of being reviewed by His Majesty’s Revenue & Customs. The Company is not currently subject to any material examinations in other jurisdictions. A summary of the tax years that remain open to tax examination in our major tax jurisdictions is as follows:
Open Tax Years
(fiscal year ending in)
Ireland
2020 and forward
U.S. — federal
2018 and forward
U.S. — various states
2018 and forward
2016 and forward
France
2022 and forward
Germany
2008 and forward
Canada — federal
2017 and forward
The following table summarizes cash paid for income taxes, net of refunds, for the year ended December 31, 2025:
Year ended
December 31, 2025 (i)
Ireland
United States
United Kingdom
Canada
Rest of World
The year ended December 31, 2025 is presented in accordance with the provisions of ASU 2023-09 (see Note 2 – Basis of Presentation, Significant Accounting Policies and Recent Accounting Pronouncements) .
For the years ended December 31, 2024 and 2023, cash paid for income taxes, net of refunds, was $ 312 million and $ 348 million, respectively.
Note 8 — Fixed Assets
The following table reflects changes in the net carrying amount of the components of fixed assets for the years ended December 31, 2025 and 2024:
Furniture,
equipment and
software
Leasehold
improvements
Land and
buildings
Total
Cost: at January 1, 2024
Additions
Disposals (i)
Foreign exchange
Cost: at December 31, 2024
Additions
Disposals
Foreign exchange
Cost: at December 31, 2025
Depreciation: at January 1, 2024
Depreciation expense
Disposals
Foreign exchange
Depreciation: at December 31, 2024
Depreciation expense
Disposals
Foreign exchange
Depreciation: at December 31, 2025
Net book value:
At December 31, 2024
At December 31, 2025
For 2024, includes $ 12 million of furniture, equipment and software costs and $ 8 million of leasehold improvements costs which have been written off as part of technology modernization and real estate rationalization under the Transformation program (see Note 6 – Restructuring Costs).
Included within land and buildings are the following assets held under finance leases:
December 31,
Finance leases
Accumulated depreciation
Note 9 — Goodwill and Other Intangible Assets
Goodwill
The components of goodwill are outlined below for the years ended December 31, 2025 and 2024.
HWC
Total
Balance at December 31, 2023
Goodwill, gross
Accumulated impairment losses
Goodwill, net - December 31, 2023
Goodwill acquired
Goodwill disposals (i)
Impairment
Foreign exchange
Balance at December 31, 2024
Goodwill, gross
Accumulated impairment losses
Goodwill, net - December 31, 2024
Goodwill acquired
Foreign exchange
Balance at December 31, 2025
Goodwill, gross
Accumulated impairment losses
Goodwill, net - December 31, 2025
The goodwill associated with the TRANZACT sale was reduced by $ 261 million resulting from a relative fair value allocation of the impairment of goodwill on the BDO reporting unit. Therefore the accumulated impairment losses at December 31, 2024 have been reduced by this amount.
Other Intangible Assets
The following table reflects changes in the net carrying amounts of the components of finite-lived intangible assets for the years ended December 31, 2025 and 2024:
Client relationships
Software
Trademark and trade name
Other
Total
Balance at December 31, 2023:
Intangible assets, gross
Accumulated amortization
Intangible assets, net - December 31, 2023
Intangible assets acquired
Intangible asset disposals
Amortization
Foreign exchange
Balance at December 31, 2024:
Intangible assets, gross
Accumulated amortization
Intangible assets, net - December 31, 2024
Intangible assets acquired
Amortization
Foreign exchange
Balance at December 31, 2025:
Intangible assets, gross
Accumulated amortization
Intangible assets, net - December 31, 2025
The weighted-average remaining life of amortizable intangible assets at December 31, 2025 was 10.7 years.
The table below reflects the future estimated amortization expense for amortizable intangible assets for the next five years and thereafter:
Years ended December 31,
Amortization
Thereafter
Total
Note 10 — 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 2 — Basis of Presentation, Significant Accounting Policies and Recent Accounting Pronouncements, Note 12 — Fair Value Measurements and Investments and Note 18 — Accumulated Other Comprehensive Loss.
Foreign Currency Risk
Certain 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 consolidated balance 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 December 31, 2025 and December 31, 2024 had total notional amounts of $ 165 million and $ 176 million, respectively, with a net fair value asset of $ 3 million an d a net fair value liability of $ 2 million, respectively .
At December 31, 2025, the Company estimates, based on current exchange rates, there will be $ 2 million of net derivative 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 December 31, 2025, our longest outstanding maturity was 1.7 years.
The effects of the material derivative instruments that are designated as hedging instruments on the consolidated statements of comprehensive income for the years ended December 31, 2025, 2024 and 2023 are below. Amounts pertaining to the ineffective portion of hedging instruments and those excluded from effectiveness testing were not material for the years ended December 31, 2025, 2024 and 2023.
Gain/(loss) recognized in OCL (effective element)
Foreign exchange contracts
Location of gain/(loss) reclassified from Accumulated OCL into income
(effective element)
Gain/(loss) reclassified from Accumulated OCL into income (effective element)
Revenue
Salaries and benefits
Other (loss)/income
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 that offset the underlying exposure created when the borrower and lender have different functional currencies. These derivatives are not generally designated as hedging instruments, and at December 31, 2025 and 2024 , we had notional amounts of $ 739 million and $ 1.2 billion, respectively , with a net fair value asset of $ 1 million and a net fair value liability of $ 3 million, respectively. Such derivatives typically mature within three months.
The effects of derivatives that have not been designated as hedging instruments on the consolidated statements of comprehensive income for the years ended December 31, 2025, 2024 and 2023 are as follows (see Note 17 — Other (Loss)/Income, Net for the net foreign currency impact on the Company’s consolidated statements of comprehensive income which includes the results of the offset of underlying exposures):
Location of gain/(loss)
Gain/(loss) recognized in income
Derivatives not designated as hedging instruments:
recognized in income
Foreign exchange contracts
Other (loss)/income, net
Note 11 — Debt
Current debt consists of the following:
December 31,
4.400 % senior notes due 2026
Long-term debt consists of the following:
December 31,
Revolving $ 1.5 billion credit facility
4.400 % senior notes due 2026
4.650 % senior notes due 2027
4.500 % senior notes due 2028
2.950 % senior notes due 2029
4.550 % senior notes due 2031
5.350 % senior notes due 2033
5.150 % senior notes due 2036
6.125 % senior notes due 2043
5.050 % senior notes due 2048
3.875 % senior notes due 2049
5.900 % senior notes due 2054
Guarantees
The following table presents a summary of the entities that issued each note or entered into the revolving credit facility and those wholly-owned and consolidated subsidiaries of the Company that guarantee each respective note and the revolving credit facility on a joint and several basis as of December 31, 2025. On December 16, 2024, TA I Limited, Willis Towers Watson UK Holdings Limited and Willis Netherlands Holdings B.V. ceased to be guarantors of our notes, following the transfer of their respective properties and assets to other existing guarantors. Further, Willis Towers Watson UK Holdings Limited was released from its guarantees under our revolving credit facility. TA I Limited and Willis Netherlands Holdings B.V. were released from their guarantees under our revolving credit facility in 2025.
Entity
Revolving credit facility
4.400% due 2026
6.125% due 2043
4.650% due 2027
4.500% due 2028
2.950% due 2029
4.550% due 2031
5.350% due 2033
5.150% due 2036
5.050% due 2048
3.875% due 2049
5.900% due 2054
Willis Towers Watson plc
Guarantor
Guarantor
Guarantor
Trinity Acquisition plc
Issuer
Issuer
Guarantor
Willis North America Inc.
Guarantor
Guarantor
Issuer
Willis Investment UK Holdings Limited
Guarantor
Guarantor
Guarantor
Willis Group Limited
Guarantor
Guarantor
Guarantor
Willis Towers Watson Sub Holdings Unlimited Company
Guarantor
Guarantor
Guarantor
Revolving Credit Facility
$1.5 billion revolving credit facility
On October 17, 2025, Trinity Acquisition plc entered into a third amended and restated revolving credit facility (the ‘Third A&R RCF’) for $ 1.5 billion that will mature on October 17, 2030 . The Third A&R RCF supersedes and replaces the Company’s previous $ 1.5 billion revolving credit facility which was due to expire in October 2026 .
Borrowing costs under the Third A&R RCF differ if the borrowing is a ‘base rate’ borrowing or a ‘Term Benchmark’ borrowing, both as defined in the Third A&R RCF, and equal the sum of the relevant benchmark plus a margin based on the Company’s senior unsecured long-term debt rating as described below:
For base rate borrowings, the benchmark rate will be the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50 %, and (c) the term s ecured overnight financing rate (‘Term SOFR’, as further defined in the Third A&R RCF) for an interest period of one month plus 1.0 %. The margin on the base rate benchmark is 0.00 % to 0.375 % depending on the Company’s senior unsecured long-term debt rating.
For Term Benchmark or Daily Simple Risk-Free Rate (‘RFR’) borrowings, the rate will be the applicable secured overnight financing rate (‘SOFR’, as further defined in the Third A&R RCF) or the applicable Daily Simple RFR (as applicable based on the currency of the borrowing) plus a margin of 0.75 % to 1.375 % depending on the Company’s guaranteed unsecured long-term debt rating.
The Third A&R RCF also carries a commitment (unused) fee of 0.065 % to 0.15 %, which is also based on the Company’s senior unsecured long-term debt rating.
Senior Notes
4.550% senior notes due 2031 and 5.150% senior notes due 2036
On December 22, 2025, the Company, together with its wholly-owned subsidiary, Willis North America Inc., as issuer, completed an offering of $ 700 million aggregate principal amount of 4.550 % senior notes due 2031 (‘2031 senior notes’) and $ 300 million aggregate principal amount of 5.150 % senior notes due 2036 (‘2036 senior notes’; collectively, the ‘2025 senior notes offering ’). The effective interest rates of the 2031 senior notes and 2036 senior notes are 4.71 % and 5.24 %, respectively, which include the impact of the discount upon issuance. The 2031 senior notes will mature on March 15, 2031 and the 2036 senior notes will mature on March 15, 2036 . Interest has accrued on both the 2031 senior notes and 2036 senior notes from December 22, 2025 and is paid in cash on March 15 and September 15 of each year, beginning on September 15, 2026. The net proceeds from the 2025 senior notes offering, after
deducting underwriter discounts and commissions and estimated offering expenses, were $ 989 million and, together with our new $ 775 million delayed draw term loan facility ( see Note 22 — Subsequent Events), was used to pay the consideration for the Newfront acquisition and related fees, costs and expenses (see Note 3 — Acquisitions and Divestitures) and will be used to repay in full the $ 550 million aggregate principal amount of the 4.400 % senior notes due 2026 and related accrued interest.
5.900% senior notes due 2054
On March 5, 2024, the Company, together with its wholly-owned subsidiary, Willis North America Inc., as issuer, completed an offering of $ 750 million aggregate principal amount of 5.900 % senior notes due 2054 (‘2054 senior notes’). The effective interest rate of the 2054 senior notes is 6.00 %, which includes the impact of the discount upon issuance. The 2054 senior notes will mature on March 5, 2054 . Interest on the 2054 senior notes accrues from March 5, 2024 and will be paid in cash on March 5 and September 5 of each year, commencing on September 5, 2024. The net proceeds from this offering, after deducting the underwriting discount and offering expenses, were approximately $ 737 million, of which $ 662 million was used to fully repay the $ 650 million aggregate principal amount and related accrued interest of the 3.600 % senior notes at maturity during the second quarter of 2024. The Company used the remaining net proceeds for general corporate purposes.
5.350% senior notes due 2033
On May 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 5.350 % senior notes due 2033 (‘2033 senior notes’). The effective interest rate of the 2033 senior notes is 5.47 %, which includes the impact of the discount upon issuance. The 2033 senior notes will mature on May 15, 2033 . Interest on the 2033 senior notes accrues from May 17, 2023 and will be paid in cash on May 15 and November 15 of each year, commencing on November 15, 2023. The net proceeds from this offering, after deducting the underwriting discount and offering expenses, were $ 741 million, of which $ 256 million was used to fully repay the $ 250 million aggregate principal amount and related accrued interest of the 4.625 % senior notes at maturity during the third quarter of 2023. The Company used the remaining net proceeds for general corporate purposes.
4.650% senior notes due 2027
On May 19, 2022, 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 % senior notes due 2027 (‘2027 senior notes’). The effective interest rate of the 2027 senior notes is 4.79 %, which includes the impact of the discount upon issuance. The 2027 senior notes will mature on June 15, 2027 . Interest on the 2027 senior notes accrues from May 19, 2022 and will be paid in cash on June 15 and December 15 of each year, commencing on December 15, 2022 . The net proceeds from this offering, after deducting the underwriting discount and estimated offering expenses, were approximately $ 744 million and were used to fully repay the € 540 million ($ 582 million on the date of repayment) aggregate principal amount of the 2.125 % Senior Notes due 2022 and related accrued interest, and for general corporate purposes.
2.950% senior notes due 2029 and 3.875% senior notes due 2049
On September 10, 2019, the Company, together with its wholly-owned subsidiary, Willis North America Inc., as issuer, completed an offering of $ 450 million aggregate principal amount of 2.950 % senior notes due 2029 (the ‘initial 2029 senior notes’) and $ 550 million aggregate principal amount of 3.875 % senior notes due 2049 (‘2049 senior notes’; collectively, the ‘2019 senior notes offering’). On May 29, 2020, the Company, together with its wholly-owned subsidiary, Willis North America Inc., as issuer, completed an offering of an additional $ 275 million aggregate principal amount of 2.950 % senior notes due 2029 (the ‘additional 2029 senior notes’). The additional 2029 senior notes will be treated as a single class with, and otherwise identical to, the initial 2029 senior notes other than with respect to the date of issuance, the issue price and the amounts paid to holders for each class of note on the first interest payment date. The effective interest rates of the initial 2029 senior notes and 2049 senior notes are 2.971 % and 3.898 %, respectively, which include the impact of the discount upon issuance. The effective interest rate of the additional 2029 senior notes is 2.697 %, which includes the impact of the premium upon issuance. Both 2029 senior notes offerings will mature on September 15, 2029 , and the 2049 senior notes will mature on September 15, 2049 . Interest on the 2019 senior notes offering has accrued from September 10, 2019 and is paid in cash on March 15 and September 15 of each year. Interest on the additional 2029 senior notes has accrued from March 15, 2020 and is paid in cash on March 15 and September 15 of each year. The net proceeds from these offerings, after deducting underwriter discounts and commissions and estimated offering expenses, were approximately $ 988 million, and were used to prepay a portion of the amount outstanding under the Company’s previously-held one-year term loan commitment and to repay borrowings under a revolving credit facility previously held by the Company.
4.500% senior notes due 2028 and 5.050% senior notes due 2048
On September 10, 2018, the Company, together with its wholly-owned subsidiary, Willis North America Inc. as issuer, completed an offering of $ 600 million of 4.500 % senior notes due 2028 (‘2028 senior notes’) and $ 400 million of 5.050 % senior notes due 2048
(‘2048 senior notes’). The effective interest rates of the 2028 senior notes and 2048 senior notes are 4.504 % and 5.073 %, respectively, which include the impact of the discount upon issuance. The 2028 senior notes will mature on September 15, 2028 and the 2048 senior notes will mature on September 15, 2048 . Interest has accrued on both the 2028 senior notes and 2048 senior notes from September 10, 2018 and is paid in cash on March 15 and September 15 of each year. The net proceeds from this offering, after deducting underwriter discounts and commissions and estimated offering expenses, were $ 989 million and were used to prepay in full $ 127 million outstanding under the Company’s term loan due December 2019 and to repay a portion of the amount outstanding under the Company’s RCF.
4.400% senior notes due 2026
On March 22, 2016, Trinity Acquisition plc issued $ 550 million of 4.400 % senior notes due 2026 (‘2026 senior notes’). The effective interest rate on the 2026 senior notes is 4.572 %, which includes the impact of the discount upon issuance. The 2026 senior notes will mature on March 15, 2026 . Interest on the 2026 senior notes has accrued from March 22, 2016 and is paid in cash on March 15 and September 15 of each year. The net proceeds from this offering were used primarily to repay a revolving credit facility previously held by the Company .
4.625% senior notes due 2023 (repaid in August 2023) and 6.125% senior notes due 2043
On August 15, 2013, Trinity Acquisition plc issued $ 250 million of 4.625 % senior notes due 2023 (‘2023 senior notes’) and $ 275 million of 6.125 % senior notes due 2043 (‘2043 senior notes’). The effective interest rate of the 2023 senior notes was 4.696 % and the effective interest rate of the 2043 senior notes is 6.154 %, which includes the impact of the discount upon issuance. The proceeds were used to repurchase other previously-issued senior notes. The 2023 senior notes matured on August 15, 2023 ; the 2043 senior notes will mature on August 15, 2043 . In August 2023, the Company repaid in full the principal and related accrued interest associated with the 2023 senior notes using, in part, the proceeds from the issuance of the 2033 senior notes discussed above.
Additional Information Regarding Fully Repaid Senior Notes
3.600% senior notes due 2024
On May 16, 2017, Willis North America Inc. issued $ 650 million of 3.600 % senior notes due 2024 (‘2024 senior notes’). The effective interest rate of the 2024 senior notes was 3.614 %, which included the impact of the discount upon issuance. The 2024 senior notes matured on May 15, 2024 , and interest had accrued on the 2024 senior notes from May 16, 2017 and was paid in cash on May 15 and November 15 of each year. The net proceeds from this offering, after deducting underwriter discounts and commissions and estimated offering expenses, were $ 644 million and were used to pay down amounts outstanding under the RCF and for general corporate purposes. In May 2024, the 2024 senior notes were repaid in full using the net proceeds from the 2054 senior notes offering discussed above.
Covenants
The terms of our current financings also include certain limitations. For example, the agreements relating to the debt arrangements and credit facilities generally contain numerous operating and financial covenants, including requirements to maintain minimum ratios of consolidated EBITDA to consolidated cash interest expense and maximum levels of consolidated funded indebtedness in relation to consolidated EBITDA, in each case subject to certain adjustments. The operating restrictions and financial covenants in our current credit facilities do, and any future financing agreements may, limit our ability to finance future operations or capital needs or to engage in other business activities. At December 31, 2025 and 2024, we were in compliance with all financial covenants.
Debt Maturity
The following table summarizes the maturity of our debt and interest on senior notes and excludes any reduction for debt issuance costs:
Thereafter
Total
Senior notes
Interest on senior notes
Revolving $ 1.5 billion credit facility
Total
Interest Expense
The following table shows an analysis of the interest expense for the years ended December 31, 2025, 2024 and 2023:
Years ended December 31,
Senior notes
Revolving credit facility
Other (i)
Total interest expense
Other primarily includes interest expense on finance leases and accretion on deferred and contingent consideration.
Note 12 — Fair Value Measurements and Investments
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:
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 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.
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 December 31, 2025 and December 31, 2024:
Fair Value Measurements on a Recurring Basis at
December 31, 2025
Balance Sheet Location
Level 1
Level 2
Level 3
Total
Assets:
Available-for-sale securities:
Mutual funds/exchange traded funds (i)
Prepaid and other current assets and
Other non-current assets
Fiduciary assets
Commingled funds (i) (ii)
Prepaid and other current assets and
Other non-current assets
Hedge funds (i) (iii)
Prepaid and other current assets and
Other non-current assets
Derivatives:
Derivative financial instruments (iv)
Prepaid and other current assets and
Other non-current assets
Liabilities:
Contingent consideration:
Contingent consideration (v) (vi)
Other current liabilities and
Other non-current liabilities
Derivatives:
Derivative financial instruments (iv)
Other current liabilities and
Other non-current liabilities
Fair Value Measurements on a Recurring Basis at
December 31, 2024
Balance Sheet Location
Level 1
Level 2
Level 3
Total
Assets:
Available-for-sale securities:
Mutual funds/exchange traded funds (i)
Prepaid and other current assets and
Other non-current assets
Fiduciary assets
Commingled funds (i) (ii)
Other non-current assets
Hedge funds (i) (iii)
Other non-current assets
Derivatives:
Derivative financial instruments (iv)
Prepaid and other current assets and
Other non-current assets
Liabilities:
Contingent consideration:
Contingent consideration (v)
Other current liabilities and
Other non-current liabilities
Derivatives:
Derivative financial instruments (iv)
Other current liabilities and
Other non-current liabilities
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 consolidated balance sheets.
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.
See Note 10 — Derivative Financial Instruments for further information on our derivative contracts.
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 11.00 % and 13.43 % at December 31, 2025 and December 31, 2024 , respectively. Using different probability weightings and discount rates could result in an increase or decrease of the contingent consideration payable.
Consideration due to be paid across multiple years until 2029.
The following table summarizes the change in fair value of the Level 3 liabilities:
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
December 31, 2025
Balance at December 31, 2024
Obligations assumed
Payments
Realized and unrealized losses (i)
Foreign exchange
Balance at December 31, 2025
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 consolidated statements of comprehensive income .
There were no significant transfers to or from Level 3 during the years ended December 31, 2025 and 2024.
Held-to-Maturity Securities
During the year ended December 31, 2025, the Company invested $ 50 million in debt securities, which it intends to hold to maturity. The following table summarizes the types of holdings and related values:
Held-to-Maturity Securities
Corporate securities
Amortized cost basis
Allowance for credit losses
Net carrying amount
Gross unrealized gains
Gross unrealized losses
Aggregate fair value
Non-recurring Fair Value Measurement
The Company has assets that may be required to be recorded at fair value on a non-recurring basis. These assets are evaluated when certain triggering events occur (including the planned disposal of a business or a decrease in estimated future cash flows) that indicate their carrying amounts may not be recoverable. During the year ended December 31, 2024, the Company recorded goodwill impairment charges of $ 1.0 billion on its BDO reporting unit in connection with the sale of TRANZACT (see Note 3 — Acquisitions and Divestitures). The fair value of the reporting unit was determined in part using discounted future cash flows, which is a Level 3 valuation technique.
Fair Value Information about Financial Instruments Not Measured at Fair Value
The following tables present our assets and liabilities not measured at fair value on a recurring basis at December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Assets:
Note receivable (i)
Held-to-maturity securities:
Due in one year or less
Due in one year through five years
Due in greater than five years
Liabilities:
Current debt
Long-term debt
The note receivable was settled with the Company on April 30, 2025.
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 held-to-maturity securities are considered Level 1
financial instruments as they are based on quoted market prices in active markets. The fair values of our respective senior notes and short-term note receivable are considered Level 2 financial instruments as they are corroborated by observable market data.
Note 13 — Retirement Benefits
Defined Benefit Plans
WTW sponsors both qualified and non-qualified defined benefit pension 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 98 % of WTW’s pension obligations and are presented herein.
As part of these obligations, in the U.S., the U.K. and Canada, we have non-qualified plans that provide for the additional pension benefits that would be covered under the qualified plan in the respective country were it not for statutory maximums. The non-qualified plans are unfunded.
The significant plans within each grouping are described below:
United States
WTW Plan – Substantially all U.S. employees are eligible to participate in this plan. Benefits are provided under a stable value pension plan design. The original stable value design came into effect on January 1, 2012. Plan participants prior to July 1, 2017 earn benefits without having to make employee contributions, and all newly-eligible employees after that date were required to contribute 2 % of pay on an after-tax basis to participate in the plan. Effective January 1, 2024, stable value benefits are earned under the same contributory formula for all eligible colleagues. To participate, plan participants are required to contribute 2 % of eligible earnings (base salary only) on an after-tax basis.
Legacy broking business – This plan was frozen in 2009. Approximately 550 WTW employees in the United States have a frozen accrued benefit under this plan. On August 31, 2025, this plan, including all of its assets and participants, merged into the WTW Plan.
United Kingdom
Legacy broking business – This plan covers approximately 400 WTW employees in the U.K. that were historically part of the broking business. The plan is now closed to new entrants. New employees in the U.K. are offered the opportunity to join a defined contribution plan.
Legacy consulting business – There are two benefit formulas covering different legacy consulting populations. Benefit accruals earned under the first plan formula (predominantly pension benefits) ceased on February 28, 2015, although benefits earned prior to January 1, 2008 retain a link to salary until the employee leaves the Company. Benefit accruals earned under the second plan formula (predominantly lump sum benefits) were frozen on March 31, 2008. All participants now accrue defined contribution benefits.
Other
Canada – Participants accrue qualified benefits based on a career-average benefit formula. Benefits earned prior to January 1, 2012 retain a link to final average earnings until the participant leaves the Company. Additionally, participants can choose to make voluntary contributions to purchase enhancements to their pension. Non-qualified benefit accruals ceased on January 1, 2025.
France (legacy broking business) – The mandatory retirement indemnity plan is a termination benefit which provides lump sum benefits at retirement. There is no vesting before the retirement date, and the benefit formula is determined through the collective bargaining agreement and the labor code. All employees with permanent employment contracts are eligible.
Germany – The defined benefit plans are closed to new entrants and include certain legacy employee populations hired before 2011. These benefits are primarily account-based, with some long-service participants continuing to accrue benefits according to grandfathered final-average-pay formulas.
Ireland (legacy broking business) – Benefit accruals ceased effective from December 31, 2019; however accrued benefits for active employees are indexed to salary increases (to a maximum annual salary of € 150,000 ) until the member leaves the Company.
Ireland (legacy consulting business) – Benefit accruals ceased effective from May 1, 2015; however accrued benefits for active employees are indexed to salary increases (to a maximum annual salary of € 160,000 ) until the member leaves the Company.
Switzerland – The defined benefit plans require all employees with local employment contracts to participate. The Company provides benefits in excess of the mandatory minimum required under Swiss occupational pension law. Participants continue to accrue benefits until retirement or upon leaving the Company.
Amounts Recognized in our Consolidated Financial Statements
The following schedules provide information concerning the defined benefit pension plans as of and for the years ended December 31, 2025 and 2024:
Other
Other
Change in Benefit Obligation
Benefit obligation, beginning of year
Service cost
Interest cost
Employee contributions
Actuarial losses/(gains)
Settlements
Benefits paid
Plan amendments
Other
Foreign currency changes
Benefit obligation, end of year
Change in Plan Assets
Fair value of plan assets, beginning of
year
Actual return on plan assets
Employer contributions
Employee contributions
Settlements
Benefits paid
Other
Foreign currency changes
Fair value of plan assets, end of year
Funded status at end of year
Accumulated Benefit Obligation
Components on the Consolidated
Balance Sheet
Pension benefits assets
Current liability for pension benefits
Non-current liability for pension
benefits
Regarding the drivers for the changes in actuarial losses for the U.S. plans for the year ended December 31, 2025, bond yields decreased which drove decreases in the discount rates, and mortality adjustments increased life expectancy. The U.K. and Other plans had actuarial gains resulting from unfavorable effects from foreign exchange.
Annuity Purchase – In February 2025, the U.S. qualified plan purchased a nonparticipating single premium group annuity contract from a third-party insurance company and irrevocably transferred to that insurance company approximately $ 423 million of the plan’s defined benefit pension obligations and related plan assets, thereby reducing the pension obligations and assets of the plan by this same amount. The group annuity contract was purchased using assets of the plan and no additional funding contribution was required by the Company. As a result of this transaction, the Company recognized a one-time, non-cash pre-tax pension settlement charge of $ 82 million in the first quarter of 2025, attributable to the accelerated recognition of accumulated actuarial losses of the plan. An additional true-up to the settlement charge of $ 5 million was recorded in the fourth quarter of 2025.
For the year ended December 31, 2024, bond yields increased, driving increases in the discount rates and decreasing the benefit obligation for all plans. The U.K. and Other plans also had favorable effects from foreign exchange.
Amounts recognized in accumulated other comprehensive loss as of December 31, 2025 and 2024 consist of:
Other
Other
Net actuarial loss
Net prior service loss
Accumulated other comprehensive loss
The following table presents the projected benefit obligation and fair value of plan assets for our plans that have a projected benefit obligation in excess of plan assets as of December 31, 2025 and 2024:
Other
Other
Projected benefit obligation at end of year
Fair value of plan assets at end of year
The following table presents the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for our plans that have an accumulated benefit obligation in excess of plan assets as of December 31, 2025 and 2024.
Other
Other
Projected benefit obligation at end of year
Accumulated benefit obligation at end of year
Fair value of plan assets at end of year
The components of the net periodic benefit income and other amounts recognized in other comprehensive (income)/loss for the years ended December 31, 2025, 2024 and 2023 for the defined benefit pension plans are as follows:
Other
Other
Other
Components of net periodic
benefit cost/(credit):
Service cost
Interest cost
Expected return on plan
assets
Amortization of unrecognized
prior service (credit)/cost
Amortization of unrecognized
actuarial loss
Settlement
Net periodic benefit cost/(credit)
Other changes in plan assets
and benefit obligations
recognized in other
comprehensive (income)/loss:
Net actuarial loss/(gain)
Amortization of unrecognized
actuarial loss
Prior service cost
Amortization of unrecognized
prior service credit/(cost)
Settlement
Total recognized in other
comprehensive loss/(income)
Total recognized in net periodic
benefit cost/(credit) and other
comprehensive loss/(income)
Assumptions Used in the Valuations of the Defined Benefit Pension Plans
The determination of the Company’s obligations and annual expense under the plans is based on a number of assumptions that, given the longevity of the plans, are long-term in focus. A change in one or a combination of these assumptions could have a material impact on our projected benefit obligation. However, certain of these changes, such as changes in the discount rate and actuarial assumptions, are not recognized immediately in net income, but are instead recorded in other comprehensive income. The accumulated gains and losses not yet recognized in net income are amortized into net income as a component of the net periodic benefit cost/(credit) generally based on the average working life expectancy or remaining life expectancy, where appropriate, of each of the plan’s active
participants to the extent that the net gains or losses as of the beginning of the year exceed 10% of the greater of the market-related value of plan assets or the projected benefit obligation.
The Company considers several factors prior to the start of each fiscal year when determining the appropriate annual assumptions, including economic forecasts, relevant benchmarks, historical trends, portfolio composition and peer company comparisons. These assumptions, used to determine our pension liabilities and pension expense, are reviewed annually by senior management and changed when appropriate. A discount rate will be changed annually if underlying rates have moved, whereas an expected long-term return on assets will be changed less frequently as longer-term trends in asset returns emerge or long-term target asset allocations are revised. To calculate the discount rate, we use the granular approach to determining service and interest costs. The expected rate of return assumptions for all plans are supported by an analysis of the weighted-average yield expected to be achieved based upon the anticipated makeup of the plans’ investments. Other material assumptions include rates of participant mortality, and the expected long-term rate of compensation and pension increases.
The following assumptions were used in the valuations of WTW’s defined benefit pension plans. The assumptions presented in each column represent the weighted-average of rates for all plans included in the U.S., U.K., and Other groups. The assumptions used to determine net periodic benefit cost for the fiscal years ended December 31, 2025, 2024 and 2023 were as follows:
Years ended December 31,
Other
Other
Other
Discount rate - PBO
Discount rate - service cost
Discount rate - interest cost on PBO
Expected long-term rate of return on
assets
Rate of increase in compensation levels
The following tables present the assumptions used in the valuation to determine the projected benefit obligation for the fiscal years ended December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Other
Other
Discount rate
Rate of increase in compensation levels
The expected return on plan assets was determined on the basis of the weighted-average of the expected future returns of the various asset classes, using the target allocations shown below. The Company’s pension plan asset target allocations as of December 31, 2025 were as follows (note the French plan is unfunded):
Ireland
Asset Category
Broking
Consulting
Switzerland
Canada
Germany
Broking
Consulting
Equity securities
Debt securities
Real estate
Other (i)
Total
The Other asset category includes investments in private markets/equities, reinsurance, liability-driven investments, secure income and insurance contracts.
Our investment strategy is designed to generate returns that will reduce the interest rate risk inherent in each of the plan’s benefit obligations and enable the plans to meet their future obligations. The precise amount for which these obligations will be settled depends on future events, including the life expectancy of the plan participants and salary inflation. The obligations are estimated using actuarial assumptions based on the current economic environment.
Each pension plan seeks to achieve total returns sufficient to meet expected future obligations when considered in conjunction with expected future contributions and prudent levels of investment risk and diversification. Each plan’s targeted asset allocation is generally determined through a plan-specific asset-liability modeling study. These comprehensive studies provide an evaluation of the projected status of asset and benefit obligation measures for each plan under a range of both positive and negative factors. The studies include a number of different asset mixes, spanning a range of diversification and potential equity exposures.
In evaluating the strategic asset allocation choices, an emphasis is placed on the long-term characteristics of each individual asset class, such as expected return, volatility of returns and correlations with other asset classes within the portfolios. Consideration is also given to the proper long-term level of risk for each plan, the impact of the volatility and magnitude of plan contributions and costs, and the impact that certain actuarial techniques may have on the plan’s recognition of investment experience.
We monitor investment performance and portfolio characteristics on a quarterly basis to ensure that managers are meeting expectations with respect to their investment approach. There are also various restrictions and controls placed on managers, including prohibition from investing in our stock.
Fair Value of Plan Assets
The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value:
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 fair values of our U.S. plan assets by asset category at December 31, 2025 and 2024 are as follows:
December 31, 2025
December 31, 2024
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Asset category:
Cash
Short-term securities
Pooled/commingled funds
Private equity
Hedge funds
Total assets
The fair values of our U.K. plan assets by asset category at December 31, 2025 and 2024 are as follows:
December 31, 2025
December 31, 2024
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Asset category:
Cash
Government bonds
Corporate bonds
Other fixed income
Pooled/commingled funds
Private equity
Derivatives
Real estate
Insurance contracts
Total assets
Liability category:
Repurchase agreements
Derivatives
Net assets/(liabilities)
The fair values of our Other plan assets by asset category at December 31, 2025 and 2024 are as follows:
December 31, 2025
December 31, 2024
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Asset category:
Cash
Pooled/commingled funds
Private equity
Hedge funds
Real estate
Insurance contracts
Investment in multiple-
employer pension plan
Total assets
We evaluate the need to transfer between levels based upon the nature of the financial instrument and size of the transfer relative to the total net assets of the plans. There were no significant transfers between Levels 1, 2 or 3 in the fiscal years ended December 31, 2025 and 2024.
In accordance with ASC Subtopic 820-10, Fair Value Measurement and Disclosures , certain investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the total fair value of plan assets.
The following is a description of the valuation methodologies used for investments at fair value:
Short-term securities : Valued at the net value of shares held by the Company at year end as reported by the sponsor of the funds.
Government bonds : Valued at the closing price reported in the active market in which the bond is traded.
Corporate bonds: Valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing values on yields currently available on comparable securities of issuers with similar credit ratings.
Other fixed income : Foreign and municipal bonds are valued using pricing models maximizing the use of observable inputs for similar securities.
Pooled / commingled funds : Valued at the net value of shares held by the Company at year end as reported by the manager of the funds. These funds are not exchange-traded and have not been classified in the fair value hierarchy in the tables above.
Derivative investments : Over-the-counter (‘OTC’) derivatives are stated at fair value using pricing models and relevant market data at the year-end date.
Private equity funds, real estate funds, hedge funds: 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 private equity fund’s investment manager or third-party administrator.
Insurance contracts: The fair values are determined using model-based techniques that include option-pricing models, discounted cash flow models and similar techniques.
Investment in multiple-employer pension plan: The Company sponsors a pension plan for its Swiss employees in which assets of the plan are invested in a collective fund with multiple employers through a Swiss insurance company. WTW does not have rights to, nor does it have investment authority over, the individual assets of the plan. The fair value of the plan assets is estimated based on information provided by the collective fund.
Repurchase agreements: Valued at the repurchase obligation which includes an interest rate linked to the underlying fixed interest government bond portfolio. These agreements are short-term in nature (less than one year) and were entered into for the purpose of purchasing additional government bonds.
The following table reconciles the net plan investments to the total fair value of the plan assets:
December 31,
Net assets held in investments
Receivable for interest income and other
Fair value of plan assets
Level 3 investments
As a result of the inherent limitations related to the valuations of the Level 3 investments, due to the unobservable inputs of the underlying funds, the estimated fair values may differ significantly from the values that would have been used had a market for those investments existed.
The following table sets forth a summary of changes in the fair value of the plans’ Level 3 assets for the fiscal year ended December 31, 2025:
Level 3
Roll Forward
Beginning balance at December 31, 2024
Purchases
Unrealized loss
Foreign exchange
Ending balance at December 31, 2025
Contributions and Benefit Payments
Funding is based on actuarially-determined contributions and is limited to amounts that are currently deductible for tax purposes. Since funding calculations are based on different measurements than those used for accounting purposes, pension contributions are not equal to net periodic pension costs.
The following table sets forth our projected pension contributions to our qualified plans for fiscal year 2025, as well as the pension contributions to our qualified plans in fiscal years 2025 and 2024:
(Projected)
(Actual)
(Actual)
Other
Expected benefit payments from our defined benefit pension plans to current plan participants, including the effects of their expected future service, as appropriate, are as follows:
Benefit Payments
Fiscal Year
Other
Total
Years 2031 – 2035
Defined Contribution Plans
We have defined contribution plans covering eligible employees in many countries. The most significant plans are in the U.S. and U.K. and are described here.
We have a U.S. defined contribution plan covering all eligible employees of WTW. The plan allowed participants to make pre-tax and Roth after-tax contributions, and the Company provided a 100 % match on the first 1 % of employee contributions and a 50 % match on the next 5 % of employee contributions. Effective January 2024, the Company provides to non- BDO participants a non-elective
company contribution of 3.5 % of eligible earnings, regardless of the contributions they make to the plan. Participants employed in BDO business entities will continue under the prior formula. Employees vest in the Company match upon two years of service. All investment assets of the plan are held in a trust account administered by independent trustees.
Our U.K. pension plans provide for a defined contribution component as part of a master trust. We make contributions to the plan, a portion of which represents matching contributions made by the participants up to a maximum rate.
We had defined contribution plan expense for the years ended December 31, 2025, 2024 and 2023 amounting to $ 170 million, $ 169 million and $ 158 million, respectively.
Note 14 — Leases
The following tables present amounts recorded on our consolidated balance sheets at December 31, 2025 and 2024, classified as either operating or finance leases. Operating leases are presented separately on our consolidated balance sheets. For the finance leases, the ROU assets are included in fixed assets, net, and the liabilities are classified within Other current liabilities and Other non-current liabilities.
December 31, 2025
December 31, 2024
Operating Leases
Finance Leases
Total
Leases
Operating Leases
Finance Leases
Total
Leases
Right-of-use assets
Current lease liabilities
Long-term lease liabilities
The following tables present amounts recorded on our consolidated statements of comprehensive income for the years ended December 31, 2025, 2024 and 2023:
Years ended December 31,
Finance lease cost:
Amortization of right-of-use assets
Interest on lease liabilities
Operating lease cost
Short-term lease cost
Variable lease cost
Sublease income
Total lease cost, net
The total lease cost is recognized in different locations in our consolidated statements of comprehensive income. Amortization of the finance lease 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 $ 41 million and $ 38 million incurred during the years ended December 31, 2024 and 2023, respectively, that were included in restructuring costs (see Note 6 — Restructuring Costs) that primarily related to the acceleration of amortization of certain abandoned ROU assets and the payment of early termination fees.
Cash paid for amounts included in the measurement of lease liabilities for the years ended December 31, 2025, 2024 and 2023, as well as its location in the consolidated statements of cash flows, is as follows:
Years ended December 31,
Cash flows from operating activities:
Operating leases
Finance leases
Cash flows used in financing activities:
Finance leases
Total lease payments
Non-cash additions to our operating lease ROU assets, net of modifications, were $ 66 million, $ 66 million and $ 85 million during the years ended December 31, 2025, 2024 and 2023, respectively.
Our operating and finance leases have the following weighted-average terms and discount rates as of December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Operating
Leases
Finance
Leases
Operating
Leases
Finance
Leases
Weighted-average term (in years)
Weighted-average discount rate
The maturity of our lease liabilities on an undiscounted basis, including a reconciliation to the total lease liabilities reported on the consolidated balance sheet as of December 31, 2025, is as follows:
Operating Leases
Finance Leases
Total Leases
Thereafter
Total future lease payments
Interest
Total lease liabilities
Note 15 — Commitments and Contingencies
Guarantees
Guarantees issued by certain of WTW’s subsidiaries with respect to the senior notes and credit facilities are discussed in Note 11 — Debt.
Certain of WTW’s subsidiaries in the U.S. and the U.K. have given the landlords of some leased properties occupied by the Company guarantees with respect to the repayment of the lease obligations. The operating lease obligations subject to such guarantees amounted to $ 273 million and $ 301 million at December 31, 2025 and 2024 , respectively. There were no finance lease obligations subject to such guarantees at December 31, 2025 and 2024.
Acquisition Liabilities
In addition to the contingent consideration that may be payable related to our acquisitions (see Note 12 — Fair Value Measurements and Investments ), we have deferred consideration of $ 2 million at December 31, 2025, which is payable until 2027 . The Company had deferred consideration of $ 2 million at December 31, 2024.
Other Contractual Obligations
For certain subsidiaries and associates, the Company has the right to purchase shares (a call option) from co-shareholders at various dates in the future. In addition, the co-shareholders of certain subsidiaries and associates have the right to sell their shares (a put option) to the Company at various dates in the future. Generally, the exercise prices of such put options and call options are formula-based (using revenue and earnings) and are designed to reflect fair value. Based on current projections of profitability and exchange rates, and assuming the put options are exercised, the potential amount payable from these put options is not expected to exceed $ 3 million.
Additionally, the Company has capital commitments with Trident V Parallel Fund, LP, an investment fund managed by Stone Point Capital, Dowling Capital Partners I, LP., and PruVen Capital Partners Fund II, LP. At December 31, 2025, the Company is obligated to make capital contributions of $ 22 million, collectively, to these funds.
Indemnification Agreements
WTW has various agreements with third parties pursuant to which 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. 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, the limited history of prior indemnification claims, and the unique facts of each particular agreement and each indemnification provision therein (even where such indemnification provisions are subject to a maximum liability limit). As of December 31, 2025, we have not incurred a material loss with respect to the indemnification of such third parties. In addition, as of December 31, 2025, we do not believe that any potential liability that may arise from such indemnity obligations is probable or will be 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. 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 16 — Supplementary Information for Certain Balance Sheet Accounts for the amounts accrued at December 31, 2025 and 2024 in the 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 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 16 — 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:
December 31,
December 31,
Prepayments and accrued income
Deferred contract costs
Derivatives and investments
Deferred compensation plan assets
Corporate income and other taxes
Earnout receivable (i)
Short-term note receivable
Held-to-maturity securities
Available-for-sale securities
Other current assets
Total prepaid and other current assets
See Note 3 — Acquisitions and Divestitures for more information.
Other non-current assets consist of the following:
December 31,
December 31,
Prepayments and accrued income
Deferred contract costs
Deferred compensation plan assets
Deferred tax assets
Accounts receivable, net
Investment in associates
Other investments
Held-to-maturity securities
Insurance recovery receivables
Other non-current assets
Total other non-current assets
Deferred revenue and accrued expenses consist of the following:
December 31,
December 31,
Accounts payable, accrued liabilities and deferred revenue
Accrued discretionary and incentive compensation
Accrued vacation
Accrued 401(k) contributions
Other employee-related liabilities
Total deferred revenue and accrued expenses
Other current liabilities consist of the following:
December 31,
December 31,
Dividends payable
Income taxes payable
Interest payable
Deferred compensation plan liabilities
Contingent and deferred consideration on acquisitions
Accrued retirement benefits
Payroll and other benefits-related liabilities
Other taxes payable
Derivatives
Third-party commissions
Other current liabilities
Total other current liabilities
Provision for liabilities consists of the following:
December 31,
December 31,
Claims, lawsuits and other proceedings
Other provisions
Total provision for liabilities
Other non-current liabilities consist of the following:
December 31,
December 31,
Deferred and long-term compensation plan liabilities
Contingent and deferred consideration on acquisitions
Liabilities for uncertain tax positions
Deferred tax liabilities
Finance leases
Other non-current liabilities
Total other non-current liabilities
Note 17 — Other (Loss)/Income, Net
Other (loss)/income, net consists of the following:
Years ended December 31,
Gain/(loss) on disposal of operations
Net periodic pension and postretirement benefit (cost)/credit
Foreign exchange (loss)/gain (i)
Other
Other (loss)/income, net
Includes the offsetting effects of the Company's foreign currency hedging program. See Note 10 — Derivative Financial Instruments.
Note 18 — Accumulated Other Comprehensive Loss
The components of other comprehensive (loss)/income are as follows:
December 31, 2025
December 31, 2024
December 31, 2023
Before
tax
amount
Tax
Net of
tax
amount
Before
tax
amount
Tax
Net of
tax
amount
Before
tax
amount
Tax
Net of
tax
amount
Other comprehensive income/(loss):
Foreign currency translation
Defined pension and post-retirement benefits
Derivative instruments
Other comprehensive income/(loss)
Less: Other comprehensive income
attributable to non-controlling interests
Other comprehensive income/(loss) attributable
to WTW
Changes in accumulated other comprehensive loss, net of non-controlling interests and net of tax are provided in the following table. This table excludes amounts attributable to non-controlling interests, which are not material for further disclosure.
Foreign currency
translation
Derivative
instruments (i)
Defined pension
and post-
retirement
benefit costs (ii)
Total
Balance, January 1, 2023
Other comprehensive income/(loss) before reclassifications
Loss reclassified from accumulated other
comprehensive loss (net of income tax benefit of $ 11 )
Net other comprehensive income/(loss)
Balance, December 31, 2023
Other comprehensive loss before reclassifications
(Gain)/loss reclassified from accumulated other
comprehensive loss (net of income tax benefit of $ 18 )
Net other comprehensive loss
Balance, December 31, 2024
Other comprehensive income/(loss) before reclassifications
(Gain)/loss reclassified from accumulated other
comprehensive loss (net of income tax benefit of $ 25 )
Net other comprehensive income/(loss)
Balance, December 31, 2025
Reclassification adjustments from accumulated other comprehensive loss related to derivative instruments are included in Revenue and Salaries and benefits in the accompanying consolidated statements of comprehensive income. See Note 10 — Derivative Financial Instruments for additional details regarding the reclassification adjustments for the derivative settlements.
Reclassification adjustments from accumulated other comprehensive loss are included in the computation of net periodic pension cost (see Note 13 — Retirement Benefits). These components are included in Other income/(loss), net in the accompanying consolidated statements of comprehensive income.
Note 19 — Share-based Compensation
Plan Summaries
On December 31, 2025, the Company had a number of open share-based compensation plans, which provide for the granting of time-based and performance-based options, time-based and performance-based restricted stock units, and various other share-based grants to employees. All of the Company’s share-based compensation plans under which any options, restricted stock units (‘RSUs’) or other share-based grants are outstanding as of December 31, 2025 are described below.
Approximatel y 370,000 RSUs vested during 2025. Of these, 229,000 were not issued due to net settlements, cash settlements, and retirement eligibility provisions associated with future issuances. In addition, 72,000 RSUs were issued in 2025 that vested in prior years, and 200,000 shares were issued related to non-qualified retirement plans or the ESPP. In total, approximately 413,000 shares were issued under employee stock compensation plans and non-qualified retirement plans during the year ended Decemb er 31, 2025. See below for further detail on the RSUs vested in 2025.
The compensation cost recognized for these plans for the years ended December 31, 2025, 2024 and 2023 was $ 153 million, $ 121 million and $ 125 million, respectively. Of these amounts, the portion recognized within transaction and transformation on the consolidated statements of comprehensive income was not material for the year ended December 31, 2025 and was $ 13 million and $ 31 million for the years ended December 31, 2024 and 2023, respectively. The total income tax benefits recognized in the consolidated statements of comprehensive income for share-based compensation arrangements for the years ended December 31, 2025, 2024 and 2023 were $ 23 million, $ 20 million and $ 21 million, respectively.
2012 Equity Incentive Plan
This plan, established on April 25, 2012 and amended and restated on June 10, 2016, provides for the granting of incentive stock options, time-based or performance-based non-statutory stock options, share appreciation rights, restricted shares, time-based or performance-based RSUs, performance-based awards and other share-based grants or any combination thereof to employees, officers, non-employee directors and consultants of the Company (‘2012 Plan’). The board of directors also adopted a sub-plan under the 2012 Plan to provide an employee sharesave scheme in the U.K.
There we re 3,584,223 share s remaining available for grant under this plan as of December 31, 2025. The 2012 Plan shall continue in effect until terminated by the board of directors, except that no incentive stock option may be granted under the 2012 Plan after April 21, 2026 or after its expiration. That termination will not affect the validity of any grants outstanding at that date.
Options
There were no options granted during the years ended December 31, 2025, 2024 and 2023.
Award Activity
Classification of options as time-based or performance-based is dependent on the original terms of the award.
During the year ended December 31, 2023, the remaining 15,000 time-based stock options were exercised with a weighted-average exercise price of $ 117.36 , and had no material intrinsic value, leaving no options outstanding at December 31, 2023. Cash received from option exercises under all share-based payment arrangements for the year ended December 31, 2023 was not material. The actual tax benefit recognized for the tax deductions from option exercises of the share-based payment arrangements totaled $ 6 million for the year ended December 31, 2023.
Equity-settled RSUs
Valuation Assumptions
The grant date fair value of each time-based RSU is equal to the grant date stock price. Performance-based RSUs granted during the year ended December 31, 2023 contain only non-market-based performance targets, and the grant date fair value of these awards are equal to the grant date stock prices. Because performance-based RSUs granted during the years ended December 31, 2025 and December 31, 2024 contain market-based performance targets, the fair value is estimated on the grant date using a Monte-Carlo simulation that uses the assumptions noted in the following table. Expected volatility is based on the historical volatility of the Company's shares. A historical correlation coefficient was calculated based on daily share price changes between WTW and the constituents in the peer group. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. Since the award payout includes dividend equivalents and total shareholder return includes the value of reinvested dividends, no dividend assumption is required for the valuation.
Year ended
December 31,
Expected volatility
Average expected volatility of peer companies
Average correlation coefficient of peer companies
Expected life (years)
Risk-free interest rate
During the year ended December 31, 2023, certain performance-based RSU awards were modified to either better align the payout percentages for the broad-based population with the awards granted to the executive officers, or to reflect the impact of the divestment of our Russian business in 2022. In total, 464 grantees benefited from the modifications. Incremental compensation cost of $ 14 million has been recognized over the remaining service periods, $ 6 million of which was included within transaction and transformation on the consolidated statement of comprehensive income during the year ended December 31, 2023.
Award Activity
A summary of time-based and performance-based RSU activity under the plans at December 31, 2025, and changes during the year then ended, is presented below:
Shares
(thousands)
Weighted-
Average
Grant Date
Fair Value
Time-based RSUs
Balance as of December 31, 2024
Granted
Vested
Forfeited
Balance as of December 31, 2025
Performance-based RSUs
Balance as of December 31, 2024
Granted
Vested
Forfeited
Balance as of December 31, 2025
Time-based RSUs
The weighted-average grant date fair values of time-based RSUs granted during the years ended December 31, 2025, 2024 and 2023 were $ 317.79 , $ 272.19 and $ 231.33 , respectively.
Time-based RSUs approximating 114,000 , 328,000 and 122,000 vested during the years ended December 31, 2025, 2024 and 2023, respectively, with average share prices at the time of vesting of $ 333.33 , $ 289.52 a nd $ 221.26 , respectively .
Time-based RSUs generally vest over three years but may be subject to other vesting schedules. The total fair values of time-based RSUs issued during the years ended December 31, 2025, 2024 and 2023 were $ 35 million, $ 92 million and $ 21 million, respectively. At December 31, 2025, there was $ 44 million of total unrecognized compensation cost related to the time-based RSU plan; that cost is expected to be recognized over a weighted-average period of 1.9 years .
Performance-based RSUs
The weighted-average grant date fair values of performance-based RSUs granted during the years ended December 31, 2025, 2024 and 2023 were $ 321.97 , $ 292.13 and $ 232.98 , respectively .
Performance-based RSUs approximating 256,000 , 165,000 and 273,000 vested during the years ended December 31, 2025, 2024 and 2023, respectively, with average share prices at time of vesting of $ 335.93 , $ 264.27 and $ 234.44 , respectively.
Performance-based RSUs generally vest over three years . The total fair values of performance-based RSUs issued during the years ended December 31, 2025, 2024 and 2023 were $ 83 million, $ 51 million and $ 47 million, respectively. At December 31, 2025, there was $ 88 million of total unrecognized compensation cost related to the performance-based RSU plan; that cost is expected to be recognized over a weighted-average period of 1.8 years .
The actual tax benefits recognized for the tax deductions from RSUs that vested totaled $ 17 million, $ 24 million and $ 9 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The amounts reflected above include awards which will be cash-settled due to local requirements. These awards are classified as liabilities in our consolidated balance sheets and are not material.
Employee Share Purchase Plan
The ESPP operates under the WTW Amended and Restated 2010 Employee Share Purchase Plan, as amended and restated on February 28, 2024. During the years ended December 31, 2025 and December 31, 2024, employee contributions to the ESPP totaled $ 40 million and $ 16 million, respectively. The total fair value of shares purchased during the years ended December 31, 2025 and December 31, 2024 was $ 45 million and $ 16 million, respectively. The ESPP initially had 1,377,500 shares available for purchase,
and at December 31, 2025, 868,264 sha res remain available. For more information on this plan, refer to Note 2 — Basis of Presentation, Significant Accounting Policies and Recent Accounting Pronouncements .
Note 20 — Earnings Per Share
Basic and diluted earnings/(loss) per share are calculated by dividing net income/(loss) attributable to WTW by the average number of ordinary shares outstanding during each period. The computation of diluted earnings/(loss) 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.
Basic and diluted earnings/(loss) per share are as follows:
Years ended December 31,
Net income/(loss) attributable to WTW
Basic weighted-average number of shares outstanding
Dilutive effect of potentially issuable shares
Diluted weighted-average number of shares outstanding
Basic earnings/(loss) per share
Dilutive effect of potentially issuable shares
Diluted earnings/(loss) per share
For the year ended December 31, 2025, 0.1 million RSUs were not included in the computation of the dilutive effect of potentially issuable shares because their effect was anti-dilutive; for the year ended December 31, 2023, anti-dilutive RSUs were not material. The dilutive effect of potentially issuable shares was not computed for the year ended December 31, 2024 as the Company reported a net loss within its consolidated statement of comprehensive income.
Note 21 — Supplemental Disclosures of Cash Flow Information
Supplemental disclosures regarding cash flow information and non-cash investing and financing activities are as follows:
As of and for the years ended December 31,
Supplemental disclosures of cash flow information:
Cash and cash equivalents
Fiduciary funds (included in fiduciary assets)
Total cash, cash equivalents and restricted cash
Increase in cash, cash equivalents and other restricted cash
Increase/(decrease) in fiduciary funds
Total
Cash payments for interest
Cash acquired
Supplemental disclosures of non-cash investing and financing activities:
Fair value of deferred and contingent consideration related to acquisitions
Note 22 — Subsequent Events
Delayed Draw Term Loan — On January 7, 2026, the Company, together with Trinity Acquisition plc and Willis North America Inc. as borrowers (the ‘Borrowers’), entered into a $ 775 million delayed draw term loan facility (the ‘DDTL’). Drawings against the DDTL may be used (i) to finance a portion of the Newfront acquisition (see Note 3 — Acquisitions and Divestitures); (ii) to refinance certain outstanding indebtedness of the Company and its subsidiaries, and (iii) for working capital, capital expenditures, permitted acquisitions and general corporate purposes.
Amounts outstanding under the DDTL shall bear interest, at the Borrowers’ option, at a rate equal to (i) the Term SOFR rate plus an applicable margin of 0.625 % to 1.250 % (based upon the Company’s guaranteed senior-unsecured long-term debt rating) or (ii) the base rate plus an applicable margin of 0.00 % to 0.250 % (based upon the Company’s guaranteed senior-unsecured long-term debt rating). In addition, the Borrowers will pay a commitment fee in an amount equal to 0.055 % to 0.140 % (based upon the Company’s guaranteed senior-unsecured long-term debt rating) on the unused amount of commitments under the DDTL.
The DDTL may be drawn on up to four borrowings, each of which is subject to customary conditions, including, solely in the case of drawings that are not used to fund the Newfront acquisition, the accuracy and completeness in all material respects of all representations and warranties in the loan documentation and that no default under the DDTL shall exist, or would result from such borrowing or the application of the drawings thereof.
Acquisition of Newfront — On January 27, 2026, the Company completed the acquisition of Newfront. There were no drawings made under the DDTL as part of the funding of the purchase price.
