The 2015 merger of Willis Group Holdings PLC with Towers Watson & Company, to form Willis Towers Watson PLC (NASDAQ: WLTW), made the new firm one of the largest multinational insurance advisory and brokerage firms. The company offers an array of professional services, including insurance and reinsurance, health care consulting, retirement planning and risk management.
As of July 2016, Willis Towers Watson has a market capitalization of $17.2 billion. Its price to book (P/B) value of 1.5 is attractively low compared to an industry average of 3.8. Its three-year average revenue growth of 3.2% is more than double the industry average of 1.4%. Towers Watson's debt to equity ratio of just 0.2 is one of the lowest in the industry. However, the company's return on equity (ROE) figure of 6% is substantially below the 15.5% industry average.
As of July 2016, the company's overall positive financial metrics are not reflected in its stock's performance, trading just above $124 a share and offering a dividend yield of 2.1%. The one-year return, as of July 2016, of 1.82% lags far behind the insurance brokerage industry average of 10.07%. The five-year average annualized return of 5.86% also underperforms a 15.98% industry average.
Marsh & McLennan Companies Inc.
Marsh & McLennan, founded in 1871 and headquartered in New York, is the dominant firm in the industry as measured by its trailing twelve month (TTM) revenue of $13 billion, compared to second-place AON with $11.6 billion and third-place Gallagher & Company at $5.4 billion. Towers Watson occupies fourth place with $4.9 billion in TTM revenues. Marsh & McLennan's market capitalization is $34.6 billion. Its P/B value of 5.2 is well above the 3.8 industry average. Its three-year average revenue growth of 2.6% is below Towers Watson's 3.2%. The company's debt to equity ratio matches the 0.7 industry average. Its return on equity (ROE) figure of 23.8% is the highest among the companies discussed here.
Marsh & McLennan stock trades at $66.40 as of July 2016, with a dividend yield of 1.91%. The one-year return of 15.85% is significantly better than the industry average of 10.07%, as is its five-year average annualized return of 19.37%.
London-based AON PLC has a market cap value of $29.1 billion. It has a P/B ratio on the higher end at 5.5. The company's three-year average revenue growth of 0.5% is well below that of either Towers Watson or Marsh & McLennan. It has a debt to equity ratio of 1.1, notably above the industry average of 0.7. The company's ROE figure of 23.6% is just barely behind Marsh & McLennan's 23.8%.
As of July 2016, AON stock stands at $110 a share, with a dividend yield of 1.12%. Its one-year return of 8.35% is significantly below Marsh & McLennan's 15,85% but well above Willis Towers Watson's 1.82%. The stock's five-year average annualized return of 18.38% is close to Marsh & McLennan's 19.37% and much better than Towers Watson's 5.86%.
Arthur J. Gallagher & Company
Arthur J. Gallagher & Company was founded in 1927 and is headquartered in Itasca, Illinois. Its July 2016 market capitalization is $8.7 billion, about half that of Willis Towers Watson. The stock has a P/B ratio of 2.8, attractively below the industry average of 3.8, although not as low as Towers Watson's 1.5 figure. The company's three-year average revenue growth at 28.9% dwarfs the performance of its competitors. It has a debt to equity ratio of 0.6, just below the industry average of 0.7. Its ROE of 11.3% lags the industry average of 15.5% but is still nearly twice Towers Watson's 6%.
Gallagher & Company stock hit a new 52-week high on July 8, 2016, at $48.76 a share. The stock offers an attractive dividend yield of 3.08%. Its one-year return of 4.11% is below the industry average of 10.07% but more than double the return of Towers Watson. Its five-year average annualized return of 15.65% is just slightly behind the industry average of 15.98%, underperforming as compared to AON and Marsh & McLennan but faring substantially better than Towers Watson's 5.86%.