Willis Towers Watson Q3 2026: adjusted EPS up 18% to $3.63 on 4% organic growth; GAAP EPS up 4%

WTW, the insurance broker and HR/benefits consultant formerly known as Willis Towers Watson, kept underlying growth steady in the third quarter of 2026 and widened its margins, but most of the improvement does not show in GAAP earnings. Revenue rose 7.5% to $2,460 million, of which 4 points was organic growth (growth that strips out currency moves, acquisitions and disposals) and about 4 points came from acquisitions, chiefly the US broker Newfront bought in January. Adjusted operating income rose 15% to $539 million and adjusted EPS 18% to $3.63. Net income attributable to WTW was flat at $303 million and diluted EPS rose 4% to $3.24, held back by $56 million of restructuring, deal and AI-program costs that were almost absent a year ago.

Q3 2026 results

Operating margin is the share of revenue left after running the business, before interest and tax. Interest income is what WTW earns on premiums and client money it holds briefly before passing it on; WTW says it contributed nothing to organic growth, and it fell as rates came down.

The two businesses

Health, Wealth & Career (benefits consulting, pensions and retirement advice, pay consulting, benefits administration) grew segment operating income 10% to $398 million on 7% reported revenue growth. Health grew in all regions "driven by new business and strong renewals"; Wealth grew on retirement work outside North America. Career, which was held back by the Middle East conflict in Q2, grew again, which the filing puts down to "higher compensation survey sales and a return to typical timing for compensation survey delivery", so part of that is timing rather than new demand. Benefits Delivery & Outsourcing shrank organically again because of "lower commissions in Individual Marketplace", WTW's Medicare and individual health plan exchange.

Risk & Broking (placing insurance for businesses and advising insurers; WTW earns commissions and fees and takes no insurance risk itself) grew segment income 14% to $216 million. Corporate Risk & Broking grew on "strong new business activity in North America and International, along with higher book-of-business settlement activity", against a prior-year quarter that included revenue from multi-year specialty placements. Insurance Consulting and Technology grew "primarily from strong software sales". The filing credits the margin gain "primarily" to the higher settlement activity, alongside cost control. The 10-Q also notes that insurance pricing "continue[s] to soften, with the exception of U.S. Casualty and a few specialty product lines", which pressures commissions because they are a share of premiums.

Takeaway: The quarter supports WTW's margin story more than its growth story. Adjusted operating income rose 15% on 4% organic growth, and the gain came from costs: salaries and benefits rose 6.7% against 7.5% revenue growth. The growth side leaned again on lumpy items (portfolio-sale fees in broking, software licences, survey timing), and management now guides HWC to low-to-mid single digits rather than mid.

What the headline numbers hide

GAAP understates the quarter, mainly because of program and deal costs. WTW's adjusted figures add back $59 million of amortization of acquired intangibles (up from $47 million, because of Newfront), $14 million of restructuring under Propel (its AI and automation plan) and $42 million of transaction and program expenses (vs $2 million), "primarily" Newfront and Cushon deal-related share-based pay plus integration and Propel costs. Those Newfront pay costs are a real, recurring cost to shareholders while the earn-out runs: total share-based compensation was $70 million in the quarter vs $36 million a year earlier.

There was also a one-off gain, which adjusted results remove. On September 30 WTW bought the remaining 51% of Al-Futtaim Willis, its UAE broking joint venture, for $58 million. Remeasuring the 49% it already owned produced a $37 million non-cash gain in other income. Last year's quarter had a $26 million disposal gain (from the TRANZACT sale). Adjusted EPS also strips out $19 million of pension income (vs $12 million), which includes an $11 million pension settlement gain. Netting everything, GAAP net income was about $36 million below adjusted this year, against about $3 million above it a year ago.

Buybacks explain about 5 points of the 18% adjusted EPS growth. Adjusted net income rose 12.6% to $339 million; the diluted share count fell 4.1% to 94 million. WTW repurchased 687,386 shares for $220 million in the quarter, down from $450 million in Q2, and paid $89 million of dividends ($0.96 per share). A lower adjusted tax rate (21.9% vs 22.4%) helped slightly. Working against growth: interest expense rose 23% to $80 million on notes issued in late 2025 and the $775 million term loan drawn for Newfront, and WTW's share of associates' results was a $13 million loss vs $7 million, mostly the Willis Re reinsurance joint venture that management expects to cost about $0.30 of adjusted EPS this year.

Cash conversion is strong. Q3 operating cash flow was $739 million and free cash flow (operating cash flow minus capital spending) about $704 million, against $309 million of net income; Q3 is seasonally strong for collections. Nine-month free cash flow of $1,064 million includes $29 million from selling buildings, which WTW then partly leased back and which also produced a $13 million gain inside operating expenses. Receivables fell to $2,462 million from $2,702 million at year-end while revenue grew, so there is no sign of billing being pulled forward. Cash rose to $1,946 million from about $1.6 billion at June 30; total debt was $6,532 million.

Guidance: one segment trimmed. The enterprise target stays at mid-single-digit organic growth for 2026, but HWC is now guided to "low-single digits (LSD) to MSD", where the Q2 release said mid-single digits. Nine-month organic growth is 4% for the company and 3% for HWC. The expected full-year currency boost to adjusted EPS stays about $0.35.

On balance the quarter is understated: GAAP EPS grew 4% while adjusted operating income grew 15%, because $56 million of Propel and Newfront costs (vs $2 million) outweighed the $37 million revaluation gain, though the Newfront pay costs will recur for some time.

Did last time's read hold up?

Our Q2 report said the next quarters would show whether Risk & Broking could stay near 5% "without another large software quarter", how much Propel spending WTW would exclude, and whether buybacks would keep their pace. R&B did hold 5%, but with strong software sales again and three times last year's portfolio-sale fees, so the question stays open. WTW excluded all $21 million of Propel costs to date from adjusted results, as expected. Buybacks slowed to $220 million from $450 million while cash was rebuilt, which keeps the "over $1.0 billion" 2026 target in reach ($970 million done through September).

Outlook

Management expects for 2026:

• mid-single-digit organic growth overall: HWC low-to-mid single digits (Health high single digits, Wealth and Career low single digits, BD&O flat), R&B mid single digits
• about 100 bps of adjusted margin expansion in R&B and some expansion in HWC
• share repurchases over $1.0 billion
• a currency tailwind of about $0.02 to adjusted EPS in Q4 and about $0.35 for the year; Newfront about $0.10 dilutive

For Propel, WTW reports $18 million of annualized run-rate savings so far, against a target of about $400 million gross ($350 million net) by the end of 2028 for about $625 million of cash costs, and an adjusted operating margin of about 30% in 2028.

Our read: hitting mid-single-digit organic growth for the year needs a Q4 above the 4% run rate, while softening insurance prices work against broking commissions. The margin path looks more reliable, since both segments are expanding before most Propel savings arrive. The gap between GAAP and adjusted earnings will widen as Propel spending ramps from $21 million to date toward $650 million in total, so GAAP EPS will keep trailing the adjusted figure through 2028. Watch Q4 for HWC organic growth (the trimmed guide), R&B growth without settlement fees, and the first sizeable Propel savings.

Source: WTW Form 10-Q for the quarter ended September 30, 2026 (filed October 29, 2026) and the Q3 2026 earnings release (8-K Exhibit 99.1, same day).