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Research from Willis Towers Watson's Thinking Ahead Institute highlights that investment organizations are failing to learn from past experiences, particularly in enhancing investment committee (IC) practices. The study advocates emulating the aircraft industry's learning culture to improve decision-making and governance. It proposes a best-practices checklist for ICs and emphasizes the importance of strong leadership and strategic focus. The report suggests that adopting the Total Portfolio Approach (TPA) can drive innovation and efficiency, especially amid current pressures.
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Willis Towers Watson (NASDAQ: WLTW) reported second-quarter 2020 revenue of $2.11 billion, up 3% year-over-year, with a flat organic growth. Cash flows from operations surged 126% to $685 million, and free cash flow hit $550 million, a 201% increase. However, diluted EPS decreased 32% to $0.72, while adjusted diluted EPS rose 1% to $1.80. The company withdrew its full-year guidance due to COVID-19 uncertainties, acknowledging a negative impact on revenue, particularly in discretionary services. CEO John Haley emphasized the resilience of the business and the commitment of employees during challenging times.
In Q2 2020, InsurTech firms raised $1.56 billion, marking a 71% increase from Q1 amid a global slow down due to COVID-19. The number of deals reached 74, a 23% decrease from the previous quarter, with a notable shift towards later-stage investments. The P&C sector dominated funding at 68%, while L&H investments rose to 32%. New insurance partnerships hit a record 34 deals. Experts caution that lingering economic effects from the pandemic may impact future InsurTech activities, highlighting potential challenges for highly leveraged firms.
Willis Re Securities, in collaboration with Willis Re, has successfully structured and placed €100 million of insurance-linked securities (ILS) for UnipolSai Assicurazioni S.p.A, a leading Italian insurer. The Azzurro Re II DAC Series 2020-1, settled on July 10, offers UnipolSai protection against earthquake risks for three and a half years. This transaction marks the first Solvency II compliant cat bond program, enhancing the ability of UnipolSai to issue future cat bonds. The firm aims to stabilize its reinsurance costs amid uncertain market conditions.
Willis Towers Watson (NASDAQ: WLTW) will announce its Q2 2020 financial results on July 30, 2020. A conference call is scheduled for 9:30 a.m. ET on the same day, which will be accessible online at their Investor Relations website. Investors can also find an online replay of the call shortly after its conclusion, with a telephonic replay available for 24 hours subsequently. The firm, established in 1828 and with 45,000 employees globally, focuses on helping clients manage risk and optimize benefits.
According to a Willis Towers Watson study, private equity investments are resilient amid the pandemic, with minimal forced exits. The survey, covering 36 funds, found that 87% of portfolio companies are unlikely to breach covenants. While 46% of companies reported medium-to-high impacts on demand, especially in sectors like consumer discretionary, 80% faced low supply chain concerns. Despite subdued exit activity, significant flexibility remains for deal timing and terms. The report highlights opportunities in technology, healthcare, and consumer staples as deal competition decreases.
The COVID-19 pandemic severely impacted M&A activity during the first half of 2020, particularly affecting North America, where deal completions fell to their lowest levels since 2009. This region underperformed its index by -7.2 percentage points with only 137 deals. In contrast, Europe saw a +10.2 percentage point increase in deal performance, while Asia Pacific outperformed by +3.1 percentage points. The average deal closure time increased by 8%, suggesting prolonged negotiations. Despite the slowdown, six mega deals were completed, highlighting resilience in select sectors.