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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Willis Towers Watson Public Limited Company    WLTW   IE00BDB6Q211

WILLIS TOWERS WATSON PUBLIC LIMITED COMPANY

(WLTW)
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Despite strong investment gains, financial health of largest U.S. corporate pension plans showed little improvement in 2019

01/02/2020 | 11:06am EST

ARLINGTON, Va., Jan. 02, 2020 (GLOBE NEWSWIRE) -- The funded status of the nation’s largest corporate pension plans edged up slightly in 2019 as historically low interest rate levels mostly offset the strongest investments gains witnessed by plan sponsors since 2003, according to an analysis by Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company. The analysis also found employer contributions to pension plans plunged in 2019. 

Willis Towers Watson examined pension plan data for 376 Fortune 1000 companies that sponsor U.S. defined benefit pension plans and have a December fiscal-year-end date. Results indicate that the aggregate pension funded status is estimated to be 87% at the end of 2019, compared with 86% at the end of 2018. The analysis also found the pension deficit is projected to be $216 billion at the end of 2019, slightly lower than the $222 billion deficit at the end of 2018. Pension obligations increased 9% from $1.58 trillion in 2018 to an estimated $1.72 trillion in 2019.

Fortune 1000 aggregate pension plan funding levels

Year2007200820092010201120122013201420152016201720182019*
Aggregate
level
106%77%81%84%78%77%89%81%81%81%85%86%87%

*Estimated

“Significant gains experienced in both the stock and bond markets should have bolstered the financial health of corporate pension plans in 2019,” said Joseph Gamzon, senior director, Retirement, Willis Towers Watson. “However, interest rates were at historically low levels and experienced the largest one-year drop in two decades, resulting in a huge increase in plan obligations and little overall change in the plans’ funded status.”

According to the analysis, pension plan assets increased in 2019 from $1.36 trillion at the end of 2018 to an estimated $1.50 trillion at the end of 2019. Overall investment returns are estimated to have averaged 19.8% in 2019, although returns varied significantly by asset class. Domestic large capitalization equities grew 32%, while domestic small/mid-capitalization equities realized gains of 28%. Aggregate bonds recognized gains of 9%, while long corporate and long government bonds, typically used in liability-driven investing strategies, realized gains of 23% and 15%, respectively.

The analysis estimates these companies contributed $26.3 billion to their plans in 2019 — roughly half of what they contributed in 2018, when many plan sponsors took advantage of the higher tax deductions for pension contributions that existed before the Tax Cuts and Jobs Act of 2017. The larger deduction is no longer available to plan sponsors.

“2019 was a year of extremes, with historically low interest rates and high investment returns,” said Jennifer Lewis, senior director, Retirement, Willis Towers Watson. “As we move into 2020, these conditions will cause employers to face growing pressure on their plans’ expected rate of return assumptions at the same time as they prepare for higher required cash contributions due to the upcoming expiration of pension funding relief. Sponsors will want to keep an eye on interest rates as increases from their current low levels could create opportunities to reevaluate their investment strategies and consider a range of risk reduction options.”

About the analysis

Willis Towers Watson analyzed 376 Fortune 1000 companies with December fiscal-year-end dates for which complete data were available. The 2019 figures are estimates of U.S. plan assets and liabilities. The earlier figures are actual. Actual year-end 2019 results will be publicly available in a few months.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees 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 unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

Media contact

Ed Emerman: +1 609 275 5162
eemerman@eaglepr.com

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© GlobeNewswire 2020
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Financials (USD)
Sales 2020 9 312 M - -
Net income 2020 1 094 M - -
Net Debt 2020 3 842 M - -
P/E ratio 2020 24,2x
Yield 2020 1,31%
Capitalization 26 551 M 26 551 M -
EV / Sales 2020 3,26x
EV / Sales 2021 3,12x
Nbr of Employees 45 000
Free-Float 99,7%
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Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 228,57 $
Last Close Price 205,97 $
Spread / Highest target 27,2%
Spread / Average Target 11,0%
Spread / Lowest Target -2,90%
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Managers and Directors
NameTitle
John J. Haley Chief Executive Officer & Executive Director
Victor F. Ganzi Non-Executive Chairman
Alexis Faber COO-Corporate Risk & Broking Segment
Michael J. Burwell Chief Financial Officer
Anna Cheng Catalano Independent Director
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