WTW surges on strong earnings as margins expand 490 basis points
Insurance advisory returns $1.65B to shareholders, projects continued margin expansion in 2026
Willis Towers Watson shares climbed Tuesday after the global insurance advisory reported fourth-quarter earnings that exceeded analyst expectations, driven by significant margin expansion and aggressive capital returns to shareholders.
The London-based company posted adjusted diluted earnings per share of $8.12 for the quarter ended December 31, 2025, surpassing analyst estimates of $7.79 to $7.93. Revenue of $2.94 billion also topped consensus projections of approximately $2.87 billion, according to data from multiple analyst tracking services.
The standout performance came in operating margins, which surged 490 basis points year-over-year to 34.6%. For the full year 2025, operating margins expanded by a remarkable 1,670 basis points to 23.0%, demonstrating significant operational leverage in the company's business model. Adjusted operating margin for the year reached 25.2%, up 130 basis points from the prior year.
"We delivered strong results in the fourth quarter and full year 2025, reflecting disciplined execution and the strength of our diversified platform," the company said in its earnings announcement.
The reported revenue decline of 3% year-over-year masks the underlying strength of the business. WTW achieved 6% organic revenue growth in the quarter, with the headline figure pulled down by the previously announced sale of TRANZACT, its US insurance distribution platform. Full-year organic growth reached 5%.
Capital allocation emerged as a key theme in the results. WTW returned $1.65 billion to shareholders through share repurchases during fiscal 2025, a substantial deployment given the company's approximately $31 billion market capitalization. Looking ahead to 2026, management projects share repurchases of $1 billion or more, contingent on market conditions and potential organic or inorganic investment opportunities.
The company provided guidance for continued margin expansion in the coming years, expecting approximately 100 basis points of average annual margin expansion in its Risk & Broking segment and incremental annual margin expansion in Health, Wealth & Career over the next two years. Free cash flow margins are expected to improve, driven by operating margin expansion and evolving business mix.
Several strategic factors will influence 2026 results. The Willis Re joint venture is projected to create approximately $0.30 of headwind on Adjusted Diluted EPS, while the recently announced Newfront acquisition is expected to be roughly $0.10 dilutive in its first year post-close. Newfront's expected 2026 revenue of approximately $250 million comes with an adjusted EBITDA margin of about 26%.
Foreign exchange should provide a tailwind of approximately $0.30 on Adjusted Diluted EPS in 2026 at current rates, with most of that benefit occurring in the first quarter.
Analysts maintain a generally positive outlook on WTW shares, with a Moderate Buy consensus rating and an average price target of approximately $369, according to recent analyst surveys. The company's low beta of 0.64 suggests lower volatility than the broader market, potentially appealing to risk-averse investors seeking exposure to the insurance services sector.
The strong margin expansion and aggressive share repurchase program underscore management's confidence in the company's cash generation capabilities and operational momentum. As WTW integrates recent acquisitions and continues to execute on its margin improvement initiatives, investors will be watching closely for signs that the impressive operating leverage can be sustained through economic cycles.