☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No þ☑

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Ordinary Shares, nominal value $0.000304635 per share

WLTW

NASDAQ Global Select Market

As of ~~November 1, 2017,~~April 30, 2019, there were outstanding ~~132,038,819~~129,236,178 ordinary shares, nominal value $0.000304635 per share, of the registrant.

WILLIS TOWERS WATSON

INDEX TO FORM 10-Q

For theThree ~~and Nine~~ Months Ended ~~September 30, 2017~~

March 31, 2019

		Page
Certain Definitions		3
	~~Page~~
~~Certain Definitions~~	3
Disclaimer Regarding Forward-looking Statements		4

PART I. FINANCIAL INFORMATION		6
Item 1. Financial Statements (Unaudited)		6
Condensed Consolidated Statements of Comprehensive Income - Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018		6
Condensed Consolidated Balance Sheets - ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018		7
Condensed Consolidated Statements of Cash Flows - ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018		8
Condensed Consolidated Statements of Changes in Equity - ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018		9
Notes to the Condensed Consolidated Financial Statements		10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	66	38
Item 3. Quantitative and Qualitative Disclosures About Market Risk	84	51
Item 4. Controls and Procedures	84	51

PART II. OTHER INFORMATION	86	52
Item 1. Legal Proceedings	86	52
Item 1A. Risk Factors	86	52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	86	52
Item 3. Defaults Upon Senior Securities	86	52
Item 4. Mine Safety Disclosures	86	52
Item 5. Other Information	86	52
Item 6. Exhibits	88	53
Signatures	89	54

Certain Definitions

The following definitions apply throughout this quarterly report unless the context requires otherwise:



‘~~We,’ ‘Us,’ ‘Company,’~~We’, ‘Us’, ‘Company’, ‘Willis Towers ~~Watson,’ ‘Our,’~~Watson’, ‘Our’, ‘Willis Towers Watson plc’ or ‘WTW’		Willis Towers Watson Public Limited Company, a company organized under the laws of Ireland, and its subsidiaries

‘shares’		The ordinary shares of Willis Towers Watson Public Limited Company, nominal value $0.000304635 per share

‘Legacy Willis’ or ‘Willis’		Willis Group Holdings Public Limited Company and its subsidiaries, predecessor to Willis Towers Watson, prior to the Merger

‘Legacy Towers Watson’ or ‘Towers Watson’		Towers Watson & Co. and its subsidiaries

‘Merger’		Merger of Willis Group Holdings Public Limited Company and Towers Watson & Co. pursuant to the Agreement and Plan of Merger, dated June 29, 2015, as amended on November 19, 2015, and completed on January 4, 2016

‘~~Gras Savoye’~~Miller’		~~GS & Cie Groupe SAS~~ Miller Insurance Services LLP and its subsidiaries

‘TRANZACT’		CD&R TZ Holdings, Inc. and its subsidiaries, doing business as TRANZACT

‘U.S.’		United States

‘U.K.’		United Kingdom

‘Brexit’		The United Kingdom’s planned exit from the European Union on a date yet to be determined

‘E.U.’		European Union or European Union 27 (the number of member countries following the United Kingdom’s exit)

‘U.S. GAAP’		United States Generally Accepted Accounting Principles

‘FASB’		Financial Accounting Standards Board

‘ASU’		Accounting Standards Update

‘ASC’		Accounting Standards Codification

‘SEC’		Securities and Exchange Commission

Disclaimer Regarding Forward-looking Statements

We have included in this document ‘forward-looking statements’ within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, that address activities, events or developments that we expect or anticipate may occur in the future, including such things as our outlook, future capital expenditures, future share repurchases, growth in ~~commissions and fees,~~revenue, the impact of changes to tax laws on our financial results, business strategies and planned acquisitions, (including the pending acquisition of TRANZACT), competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, plans and references to future successes, ~~and the benefits of the Merger,~~ including our future financial and operating results, plans, objectives, expectations and intentions are forward-looking statements. Also, when we use words such as ‘may,’ ‘will,’ ‘would,’ ‘anticipate,’ ‘believe,’ ‘estimate,’ ‘expect,’ ‘intend,’ ‘plan,’ ‘probably,’ or similar expressions, we are making forward-looking statements. Such statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. All forward-looking disclosure is speculative by its nature.

There are important risks, uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including the following:

•

our ability to successfully establish, execute and achieve our global business strategy as it evolves;

~~changes in general economic, business and political conditions, including changes in the financial markets;~~

•

changes in demand for our services, including any decline in defined benefit pension plans or the purchasing of insurance;

~~consolidation in or conditions affecting the industries in which we operate;~~

•

changes in general economic, business and political conditions, including changes in the financial markets;

~~any changes in the regulatory environment in which the Company operates, including, among other risks, the impact of pending competition law and regulatory investigations;~~

•

significant competition that we face and the potential for loss of market share and/or profitability;

~~our ability to successfully manage ongoing organizational changes;~~

•

the impact of seasonality and differences in timing of renewals;

~~our ability to successfully integrate the Towers Watson, Gras Savoye and Legacy Willis businesses, operations and employees, and realize anticipated growth, synergies and cost savings;~~

•

the risk of increased liability or new legal claims arising from our new and existing products and services, and expectations, intentions and outcomes relating to outstanding litigation;

~~the potential impact of the Merger on relationships, including with employees, suppliers, clients and competitors;~~

•

the risk that the Stanford litigation settlement approval will be overturned on appeal, the risk that the bar order may be challenged in other jurisdictions, and the risk that the charge related to the settlement may not be tax deductible;

~~significant competition that we face and the potential for loss of market share and/or profitability;~~

•

the risk of material adverse outcomes on existing litigation or investigation matters;

~~compliance with extensive government regulation;~~

•

changes in the regulatory environment in which we operate, including, among other risks, the impact of pending competition law and regulatory investigations;

~~our ability to make divestitures or acquisitions and our ability to integrate or manage such acquired businesses;~~

•

various claims, government inquiries or investigations or the potential for regulatory action;

~~the risk that we may not be able to repurchase our intended number of outstanding shares due to M&A activity or investment opportunities, market or business conditions, or other factors;~~

•

our ability to make divestitures or acquisitions and our ability to integrate or manage such acquired businesses (including with respect to the pending acquisition of TRANZACT);

~~expectations, intentions and outcomes relating to outstanding litigation;~~

•

failure to protect client data or breaches of information systems;

~~the impact of seasonality and differences in timing of renewals;~~

•

the ability to comply with complex and evolving regulations related to data privacy and cyber security;

the risk that the Stanford litigation settlement will not be approved, the risk that the bar order may be challenged in other jurisdictions, and the deductibility of the charge relating to the settlement;

•

the potential impact of Brexit;

~~the risk of material adverse outcomes on existing litigation or investigation matters;~~

•

our ability to properly identify and manage conflicts of interest;

~~the diversion of time and attention of our management team while the Merger and other acquisitions are being integrated;~~

•

reputational damage;

~~doing business internationally, including the impact of exchange rates;~~

•

reliance on third-party services;

the potential impact of the United Kingdom’s (‘U.K.’) government triggering Article 50 of the Treaty of Lisbon, giving formal notice of the U.K.’s intention to withdraw from membership in the European Union (‘E.U.’), referred to as Brexit;

•

the loss of key employees;

the federal income tax consequences of the Merger and the enactment of additional, or the revision of existing, state, federal, and/or foreign regulatory and tax laws and regulations, including changes in tax rates;

•

our ability to successfully manage ongoing organizational changes;

our capital structure, including indebtedness amounts, the limitations imposed by the covenants in the documents governing such indebtedness and the maintenance of the financial and disclosure controls and procedures of each;

•

disasters or business continuity problems;

•

doing business internationally, including the impacts of foreign currency exchange rates;

•

compliance with extensive government regulation;

~~our ability to obtain financing on favorable terms or at all;~~

•

the risk of sanctions imposed by governments, or changes to associated sanction regulations;

~~adverse changes in our credit ratings;~~

•

technological changes;

~~the possibility that the anticipated benefits from the Merger cannot be fully realized or may take longer to realize than expected;~~

•

changes and developments in the insurance industry or the U.S. healthcare system;

•

the risk that we may not be able to repurchase our intended number of outstanding shares due to merger & acquisition activity or investment opportunities, market or business conditions, or other factors;

~~our ability to retain and hire key personnel;~~

•

the inability to protect the Company’s intellectual property rights, or the potential infringement upon the intellectual property rights of others;

~~a decline in the defined benefit pension plan market;~~

•

fluctuations in our pension assets and liabilities;

~~various claims, government inquiries or investigations or the potential for regulatory action;~~

•

our ability to meet our financial guidance;

~~failure to protect client data or breaches of information systems;~~

•

~~reputational damage;~~

•

our ability to obtain financing on favorable terms or at all;

~~disasters or business continuity problems;~~

•

adverse changes in our credit ratings;

~~clients choosing to reduce or terminate the services provided by us;~~

•

the impact of recent changes to U.S. tax laws, including on our effective tax rate, and the enactment of additional, or the revision of existing, state, federal, and/or foreign tax laws and regulations;

~~fluctuation in revenues against our relatively fixed expenses;~~

•

U.S. federal income tax consequences to U.S. persons owning at least 10% of our shares;

~~technological change;~~

•

changes in accounting principles, estimates and assumptions, including the impact of the adoption of the new leasing standard;

~~the inability to protect intellectual property rights, or the potential infringement upon the intellectual property rights of others;~~

•

fluctuation in revenue against our relatively fixed expenses;

~~fluctuations in our pension liabilities;~~

•

the laws of Ireland being different from the laws of the United States and potentially affording less protections to the holders of our securities; and

~~loss of, failure to maintain, or dependence on certain relationships with insurance carriers;~~

•

our holding company structure potentially preventing us from being able to receive dividends or other distributions in needed amounts from our subsidiaries.

~~changes and developments in the United States healthcare system;~~

~~reliance on third-party services;~~

~~our holding company structure could prevent us from being able to receive dividends or other distributions in needed amounts from our subsidiaries; and~~

~~changes in accounting estimates and assumptions.~~

The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For more information, please see Item 1A. Risk Factors in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K, and our subsequent filings with the ~~Securities and Exchange Commission.~~SEC. Copies are available online at http://www.sec.gov or www.willistowerswatson.com.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included in this document, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved.

Our forward-looking statements speak only as of the date made, and we will not update these forward-looking statements unless the securities laws require us to do so. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this document may not occur, and we caution you against relying on these forward-looking statements.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

WILLIS TOWERS WATSON

Condensed Consolidated Statements of Comprehensive Income

(In millions of U.S. dollars, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
Revenue	$	2,312		$	2,292
Costs of providing services
Salaries and benefits		1,348			1,377
Other operating expenses		418			423
Depreciation		54			49
Amortization		127			141
Transaction and integration expenses		6			43
Total costs of providing services		1,953			2,033
Income from operations		359			259
Interest expense		(54	)		(51	)
Other income, net		55			56
INCOME FROM OPERATIONS BEFORE INCOME TAXES		360			264
Provision for income taxes		(67	)		(43	)
NET INCOME		293			221
Income attributable to non-controlling interests		(6	)		(6	)
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON	$	287		$	215

EARNINGS PER SHARE
Basic earnings per share	$	2.21		$	1.62
Diluted earnings per share	$	2.20		$	1.61

Comprehensive income before non-controlling interests	$	315		$	305
Comprehensive income attributable to non-controlling interests		(5	)		(7	)
Comprehensive income attributable to Willis Towers Watson	$	310		$	298

~~(Unaudited)~~

Three Months Ended September 30, Nine Months Ended September 30,
2017
2016 2017 2016
Revenues
Commissions and fees $ 1,832
$ 1,761
$ 6,065
$ 5,874
Interest and other income 20
16
59
86
Total revenues 1,852
1,777
6,124
5,960
Costs of providing services
Salaries and benefits 1,145
1,119
3,484
3,519
Other operating expenses 366
370
1,158
1,171
Depreciation 54
45
151
132
Amortization 141
157
441
443
Restructuring costs 31
49
85
115
Transaction and integration expenses 74
36
177
117
Total costs of providing services 1,811
1,776
5,496
5,497
Income from operations 41
1
628

463
Interest expense 47
45
139
138
Other expense, net 29
14
79
26
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (35 ) (58 ) 410
299
Provision for/(benefit from) income taxes 19

(26 ) 73

11
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (54 ) (32 ) 337
288
Interest in earnings of associates, net of tax —
1
2
2
NET (LOSS)/INCOME (54 ) (31 ) 339
290
Income attributable to non-controlling interests —
(1 ) (16 ) (12 )
NET (LOSS)/INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ (54 ) $ (32 ) $ 323
$ 278

EARNINGS PER SHARE

Basic (loss)/earnings per share $ (0.40 ) $ (0.23 ) $ 2.38
$ 2.03
Diluted (loss)/earnings per share $ (0.40 ) $ (0.23 ) $ 2.36
$ 2.00

Cash dividends declared per share $ 0.53
$ 0.48
$ 1.59
$ 1.44

Comprehensive income/(loss) before non-controlling interests $ 34
$ (73 ) $ 546
$ 96
Comprehensive loss/(income) attributable to non-controlling interests 12
1
(15 ) (2 )
Comprehensive income/(loss) attributable to Willis Towers Watson $ 46
$ (72 ) $ 531
$ 94

See accompanying notes to the condensed consolidated financial statements

WILLIS TOWERS WATSON

Condensed Consolidated Balance Sheets

(In millions of U.S. dollars, except share data)

(Unaudited)

	March 31, 2019			December 31, 2018
ASSETS
Cash and cash equivalents	$	992		$	1,033
Fiduciary assets		15,129			12,604
Accounts receivable, net		2,490			2,379
Prepaid and other current assets		409			404
Total current assets		19,020			16,420
Fixed assets, net		957			942
Goodwill		10,456			10,465
Other intangible assets, net		3,187			3,318
Right-of-use assets		946			—
Pension benefits assets		833			773
Other non-current assets		494			467
Total non-current assets		16,873			15,965
TOTAL ASSETS	$	35,893		$	32,385
LIABILITIES AND EQUITY
Fiduciary liabilities	$	15,129		$	12,604
Deferred revenue and accrued expenses		1,240			1,647
Current debt		187			186
Current lease liabilities		158			—
Other current liabilities		940			864
Total current liabilities		17,654			15,301
Long-term debt		4,518			4,389
Liability for pension benefits		1,135			1,170
Deferred tax liabilities		544			559
Provision for liabilities		543			540
Long-term lease liabilities		961			—
Other non-current liabilities		296			429
Total non-current liabilities		7,997			7,087
TOTAL LIABILITIES		25,651			22,388
COMMITMENTS AND CONTINGENCIES
REDEEMABLE NON-CONTROLLING INTEREST		28			26
EQUITY ⁽ⁱ⁾
Additional paid-in capital		10,630			10,615
Retained earnings		1,439			1,201
Accumulated other comprehensive loss, net of tax		(1,974	)		(1,961	)
Treasury shares, at cost, 17,519 shares in 2019 and 2018, and 40,000 shares, €1 nominal value, in 2019 and 2018		(3	)		(3	)
Total Willis Towers Watson shareholders’ equity		10,092			9,852
Non-controlling interests		122			119
Total equity		10,214			9,971
TOTAL LIABILITIES AND EQUITY	$	35,893		$	32,385

~~(Unaudited)~~

September 30,
2017 December 31,
2016
ASSETS
Cash and cash equivalents $ 912
$ 870
Fiduciary assets 12,206
10,505
Accounts receivable, net 2,155
2,080
Prepaid and other current assets 418
337
Total current assets 15,691
13,792
Fixed assets, net 937
839
Goodwill 10,529
10,413
Other intangible assets, net 4,034
4,368
Pension benefits assets 649
488
Other non-current assets 432
353
Total non-current assets 16,581
16,461
TOTAL ASSETS $ 32,272
$ 30,253
LIABILITIES AND EQUITY
Fiduciary liabilities $ 12,206
$ 10,505
Deferred revenue and accrued expenses 1,472
1,481
Short-term debt and current portion of long-term debt 85
508
Other current liabilities 793
876
Total current liabilities 14,556
13,370
Long-term debt 4,493
3,357
Liability for pension benefits 1,207
1,321
Deferred tax liabilities 856
864
Provision for liabilities 603
575
Other non-current liabilities 476
532
Total non-current liabilities 7,635
6,649
TOTAL LIABILITIES 22,191
20,019
COMMITMENTS AND CONTINGENCIES

REDEEMABLE NON-CONTROLLING INTEREST 55
51
EQUITY ⁽ⁱ⁾

Additional paid-in capital 10,501
10,596
Retained earnings 1,130
1,452
Accumulated other comprehensive loss, net of tax (1,676 ) (1,884 )
Treasury shares, at cost, 263,899 shares in 2017 and 795,816 shares in 2016, and 40,000 shares, €1 nominal value, in 2017 and 2016 (40 ) (99 )
Total Willis Towers Watson shareholders’ equity 9,915
10,065
Non-controlling interests 111
118
Total equity 10,026
10,183
TOTAL LIABILITIES AND EQUITY $ 32,272
$ 30,253

(i)

Equity includes (a) Ordinary shares $0.000304635 nominal value; Authorized 1,510,003,775; Issued ~~132,529,824 (2017)~~129,211,111 (2019) and ~~137,075,068 (2016)~~128,921,530 (2018); Outstanding ~~132,283,444 (2017)~~129,211,111 (2019) and ~~136,296,771 (2016)~~128,921,530 (2018); (b) Ordinary shares, €1 nominal value; Authorized and Issued 40,000 shares in ~~2017~~2019 and ~~2016;~~2018; and (c) Preference shares, $0.000115 nominal value; Authorized 1,000,000,000 and Issued none in ~~2017~~2019 and ~~2016.~~

2018.

See accompanying notes to the condensed consolidated financial statements

WILLIS TOWERS WATSON

Condensed Consolidated Statements of Cash Flows

(In millions of U.S. dollars)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
CASH FLOWS (USED IN)/FROM OPERATING ACTIVITIES
NET INCOME	$	293		$	221
Adjustments to reconcile net income to total net cash from operating activities:
Depreciation		54			51
Amortization		127			141
Non-cash lease expense		36			—
Net periodic benefit of defined benefit pension plans		(32	)		(61	)
Provision for doubtful receivables from clients		8			7
Benefit from deferred income taxes		(28	)		(26	)
Share-based compensation		10			3
Net loss on disposal of operations		—			9
Non-cash foreign exchange loss		8			17
Other, net		4			(3	)
Changes in operating assets and liabilities, net of effects from purchase of subsidiaries:
Accounts receivable		(121	)		(43	)
Fiduciary assets		(2,490	)		(1,326	)
Fiduciary liabilities		2,490			1,326
Other assets		(37	)		46
Other liabilities		(379	)		(393	)
Provisions		10			49
Net cash (used in)/from operating activities		(47	)		18
CASH FLOWS USED IN INVESTING ACTIVITIES
Additions to fixed assets and software for internal use		(57	)		(65	)
Capitalized software costs		(17	)		(13	)
Acquisitions of operations, net of cash acquired		(1	)		(5	)
Net proceeds from sale of operations		—			4
Net cash used in investing activities		(75	)		(79	)
CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
Net borrowings on revolving credit facility		138			61
Repayments of debt		(1	)		(21	)
Proceeds from issuance of shares		22			11
Cash paid for employee taxes on withholding shares		—			(7	)
Dividends paid		(77	)		(68	)
Net cash from/(used in) financing activities		82			(24	)
DECREASE IN CASH AND CASH EQUIVALENTS		(40	)		(85	)
Effect of exchange rate changes on cash and cash equivalents		(1	)		9
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		1,033			1,030
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	992		$	954

~~(Unaudited)~~

Nine Months Ended September 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME $ 339
$ 290
Adjustments to reconcile net income to total net cash from operating activities:
Depreciation 169
132
Amortization 441
443
Net periodic benefit of defined benefit pension plans (106 ) (68 )
Provision for doubtful receivables from clients 15
25
Benefit from deferred income taxes (56 ) (120 )
Share-based compensation 48
94
Net loss on disposal of operations 10
—
Non-cash foreign exchange loss/(gain) 79
(23 )
Other, net (21 ) 15
Changes in operating assets and liabilities, net of effects from purchase of subsidiaries:
Accounts receivable 31
20
Fiduciary assets (1,233 ) (1,076 )
Fiduciary liabilities 1,233
1,076
Other assets (95 ) (211 )
Other liabilities (351 ) (48 )
Provisions 12
72
Net cash from operating activities 515
621
CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES
Additions to fixed assets and software for internal use (198 ) (151 )
Capitalized software costs (52 ) (64 )
Acquisitions of operations, net of cash acquired (13 ) 476
Other, net 1
22
Net cash (used in)/from investing activities (262 ) 283
CASH FLOWS USED IN FINANCING ACTIVITIES
Net borrowings/(payments) on revolving credit facility 675
(389 )
Senior notes issued 650
1,606
Proceeds from issuance of other debt 32
404
Debt issuance costs (9 ) (14 )
Repayments of debt (714 ) (1,861 )
Repurchase of shares (462 ) (222 )
Proceeds from issuance of shares 44
44
Payments related to share cancellation (177 ) —
Payments of deferred and contingent consideration related to acquisitions (43 ) (64 )
Cash paid for employee taxes on withholding shares (14 ) (13 )
Dividends paid (209 ) (133 )
Acquisitions of and dividends paid to non-controlling interests (19 ) (17 )
Net cash used in financing activities (246 ) (659 )
INCREASE IN CASH AND CASH EQUIVALENTS 7
245
Effect of exchange rate changes on cash and cash equivalents 35
(10 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 870
532
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 912
$ 767

See accompanying notes to the condensed consolidated financial statements

WILLIS TOWERS WATSON

Condensed Consolidated Statements of Changes in Equity

(In millions of U.S. dollars and number of shares in thousands)

(Unaudited)

~~(Unaudited)~~

Shares outstanding ⁽ⁱ⁾
Additional paid-in capital Retained earnings Treasury shares
AOCL ⁽ⁱⁱ⁾
Total WTW shareholders’ equity Non-controlling interests Total equity
Redeemable Non-controlling interest ⁽ⁱⁱⁱ⁾
Total
Balance as of December 31, 2015 68,625
$ 1,672
$ 1,597
$ (3 ) $ (1,037 ) $ 2,229
$ 131
$ 2,360
$ 53

Shares repurchased (1,791 ) —
(222 ) —
—
(222 ) —
(222 ) —

Net income —
—
278
—
—
278
6
284
6
$ 290
Dividends —
—
(198 ) —
—
(198 ) (8 ) (206 ) (4 )
Other comprehensive (loss)/income —
—
—
—
(184 ) (184 ) (8 ) (192 ) (2 ) $ (194 )
Issuance of shares under employee stock compensation plans 873
44
—
—
—
44
—
44
—

Issuance of shares for acquisitions 69,500
8,686
—
—
—
8,686
—
8,686
—

Replacement share-based compensation awards issued on acquisition —
37
—
—
—
37
—
37
—

Share-based compensation —
94
—
—
—
94
—
94
—

Additional non-controlling interests —
5
—
—
—
5
13
18
—

Foreign currency translation —
(2 ) —
—
—
(2 ) —
(2 ) —

Balance as of September 30, 2016 137,207
$ 10,536
$ 1,455
$ (3 ) $ (1,221 ) $ 10,767
$ 134
$ 10,901
$ 53

Balance as of December 31, 2016 136,297
$ 10,596
$ 1,452
$ (99 ) $ (1,884 ) $ 10,065
$ 118
$ 10,183
$ 51

Adoption of ASU 2016-16 (See Note 2) —
—
(3 ) —
—
(3 ) —
(3 ) —

Shares repurchased (3,354 ) —
(425 ) (37 ) —
(462 ) —
(462 ) —

Shares canceled (1,415 ) (177 ) —
96
—
(81 ) —
(81 ) —

Net income —
—
323
—
—
323
9
332
7
$ 339
Dividends —
—
(217 ) —
—
(217 ) (15 ) (232 ) (3 )
Other comprehensive income/(loss) —
—
—
—
208
208
(1 ) 207
—
$ 207
Issuance of shares under employee stock compensation plans 755
44
—
—
—
44
—
44
—

Share-based compensation —
48
—
—
—
48
—
48
—

Additional non-controlling interests —
(1 ) —
—
—
(1 ) —
(1 ) —

Foreign currency translation —
(9 ) —
—
—
(9 ) —
(9 ) —

Balance as of September 30, 2017 132,283
$ 10,501
$ 1,130
$ (40 ) $ (1,676 ) $ 9,915
$ 111
$ 10,026
$ 55

	Shares outstanding		Additional paid-in capital			Retained earnings			Treasury shares			AOCL ⁽ⁱ⁾			Total WTW shareholders’ equity			Non-controlling interests			Total equity			Redeemable non-controlling interest ⁽ⁱⁱ⁾		Total
Balance as of December 31, 2017		132,140	$	10,538		$	1,104		$	(3	)	$	(1,513	)	$	10,126		$	123		$	10,249		$	28
Adoption of ASC 606		—		—			317			—			—			317			—			317			—
Net income		—		—			215			—			—			215			6			221			—	$	221
Dividends declared ($0.60 per share)		—		—			(79	)		—			—			(79	)		—			(79	)		—
Other comprehensive income		—		—			—			—			83			83			1			84			—	$	84
Issuance of shares under employee stock compensation plans		277		11			—			—			—			11			—			11			—
Share-based compensation and net settlements		—		3			—			—			—			3			—			3			—
Foreign currency translation		—		(4	)		—			—			—			(4	)		—			(4	)		—
Balance as of March 31, 2018		132,417	$	10,548		$	1,557		$	(3	)	$	(1,430	)	$	10,672		$	130		$	10,802		$	28

Balance as of December 31, 2018		128,922	$	10,615		$	1,201		$	(3	)	$	(1,961	)	$	9,852		$	119		$	9,971		$	26
Adoption of ASU 2018-02		—		—			36			—			(36	)		—			—			—			—
Net income		—		—			287			—			—			287			4			291			2	$	293
Dividends declared ($0.65 per share)		—		—			(85	)		—			—			(85	)		—			(85	)		—
Other comprehensive income/(loss)		—		—			—			—			23			23			(1	)		22			—	$	22
Issuance of shares under employee stock compensation plans		289		22			—			—			—			22			—			22			—
Share-based compensation and net settlements		—		(7	)		—			—			—			(7	)		—			(7	)		—
Balance as of March 31, 2019		129,211	$	10,630		$	1,439		$	(3	)	$	(1,974	)	$	10,092		$	122		$	10,214		$	28

_________

(i)
i.	The nominal value of the ordinary shares and the number of ordinary shares issued in the balance as of December 31, 2015 have been retroactively adjusted to reflect the reverse stock split on January 4, 2016. See ~~Note 3~~ — ~~Merger~~ ~~for further details.~~


~~ii.~~	Accumulated other comprehensive loss, net of tax (‘AOCL’).

(ii)
~~iii.~~	The non-controlling interest is related to Max Matthiessen Holding AB.

See accompanying notes to the condensed consolidated financial statements

WILLIS TOWERS WATSON

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts in millions of U.S. dollars, except per share data)

(Unaudited)

Note 1 — Nature of Operations

Willis Towers Watson plc ~~was formed upon completion of the Merger on January 4, 2016, between Willis and Towers Watson. See Note 3 — Merger for additional information pertaining to this transaction.~~

~~Willis Towers Watson~~ is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. The Company has more than ~~41,000~~43,000 employees ~~and services~~servicing clients in more than 140 ~~countries and territories.~~

countries.

We offer our clients a broad range of services to help them to identify and control their risks, and to enhance business performance by improving their ability to attract, retain and engage a talented workforce. Our risk control services range from strategic risk consulting (including providing actuarial analysis), to a variety of due diligence services, to the provision of practical on-site risk control services (such as health and safety or property loss control consulting), as well as analytical and advisory services (such as hazard modeling and reinsurance optimization studies). We assist clients in planning how to manage incidents or crises when they occur. These services include contingency planning, security audits and product tampering plans. We help our clients enhance their business performance by delivering consulting services, technology and solutions that help ~~organizations~~them anticipate, identify and capitalize on emerging opportunities in human capital management, as well as offer investment advice to help ~~our clients~~them develop disciplined and efficient strategies to meet their investment goals.

As an insurance broker, we act as an intermediary between our clients and insurance carriers by advising our clients on their risk management requirements, helping ~~clients~~them to determine the best means of managing risk and negotiating and placing insurance with insurance carriers through our global distribution network. We operate ~~the largest~~a private Medicare exchange in the ~~United States (‘~~U.S.~~’).~~ Through this exchange and those for active employees, we help our clients move to a more sustainable economic model by capping and controlling the costs associated with healthcare benefits.

We are not an insurance company, and therefore we do not underwrite insurable risks for our own account.

We believe our broad perspective allows us to see the critical intersections between talent, assets and ideas - the dynamic formula that drives business performance.

Note 2—Basis of Presentation and Recent Accounting Pronouncements

Basis of Presentation

The accompanying unaudited quarterly condensed consolidated financial statements of Willis Towers Watson and our subsidiaries are presented in accordance with the rules and regulations of the ~~Securities and Exchange Commission (‘SEC’)~~SEC for quarterly reports on Form 10-Q and therefore do not include all of the information and footnotes required by U.S. generally accepted accounting principles (‘GAAP’). We have reclassified certain prior period amounts to conform to current period presentation due to the adoption of certain updated accounting standards (see below for further discussion).GAAP. In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting ~~only~~ of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial statements and results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements should be read together with the Company’s Annual Report on Form 10-K, filed with the SEC on ~~March 1, 2017,~~February 27, 2019, and may be accessed via EDGAR on the SEC’s web site at www.sec.gov.

The results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 are not necessarily indicative of the results that can be expected for the entire year. The Company experiences seasonal fluctuations of its ~~commissions and fees~~ revenue. ~~Commissions and fees are~~Revenue is typically higher during the Company’s first and fourth quarters due to the timing of broking-related activities. The results reflect certain estimates and assumptions made by management, including those estimates used in calculating acquisition consideration and fair value of tangible and intangible assets and liabilities, professional liability claims, estimated bonuses, valuation of billed and unbilled receivables, and anticipated tax liabilities that affect the amounts reported in the condensed consolidated financial statements and related notes.

Recent Accounting Pronouncements

Not ~~yet adopted~~

~~In May 2014, the Financial Accounting Standards Board (‘FASB’) issued Accounting Standard Update (‘ASU’) No. 2014-09,~~ ~~Revenue From Contracts With Customers~~. The new standard supersedes most current revenue recognition guidance and eliminates industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. Additional ASUs have since been issued which provide additional guidance, examples and technical corrections for the implementation of ASU No. 2014-09. The guidance is effective for the Company at the beginning of its 2018 fiscal year, with early adoption permitted.

While we are still in the process of analyzing our various revenue streams to determine the full impact this standard will have on our revenue recognition, cost deferral, systems and processes, the Company has determined the following:

~~The Company will adopt the standard using the modified retrospective approach on January 1, 2018.~~

We expect certain revenue streams to have accelerated revenue recognition timing. In particular, the revenue recognition for our Retiree Medicare Exchange is expected to move from monthly ratable recognition over the policy period, to the recognition upon placement of the policy during the Company’s fourth quarter of the preceding calendar year in the amount of one year of expected commissions. Therefore, upon adoption, we will reflect an adjustment to retained earnings for the revenue that would otherwise have been recognized during our 2018 calendar year since our earnings process will have been completed during the fourth quarter of 2017.

We expect our accounting for deferred costs will change. First, for those portions of the business that currently defer costs (related to system implementation activities), the length of time over which we amortize those costs is expected to extend to a longer estimated contract term. Currently these costs are amortized over a typical period of 3-5 years in accordance with the initial stated terms of the customer agreement. Second, we believe there will be other types of arrangements with associated costs that do not meet the criteria for cost deferral under current U.S. GAAP but do meet the criteria under the new standard. We are still evaluating the types of arrangements that might now have cost deferral impacts, however we expect this guidance to apply to our broking arrangements and certain consulting engagements.

To prepare for the additional disclosure requirements, we are currently implementing additional tools to support our revenue recognition and data collection processes, which will be in place and effective on January 1, 2018.

The Company continues to update its assessment of the impacts of the accounting standard, and related updates, to its condensed consolidated financial statements, and will note material impacts when known.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases~~, which requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The ASU becomes effective for the Company at the beginning of its 2019 fiscal year, at which time the Company will adopt it, although early adoption is permitted. In transition, the Company is required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients. While the Company continues to assess the impact of the ASU to its condensed consolidated financial statements, the majority of its leases are currently considered operating leases and will be capitalized as a lease asset on its balance sheet with a related lease liability for the obligated lease payments.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments~~, which amends guidance on presentation and classification of eight specific cash flow issues with the objective of reducing diversity in practice. The ASU becomes effective for the Company at the beginning of its 2018 fiscal year, at which time the Company will adopt it, although early adoption is permitted. Any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is still assessing the impact of this ASU, but it believes the impact on its financial statements will be immaterial as it is currently largely in compliance with its requirements.

Yet Adopted

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, current U.S. GAAP requires the performance of procedures to determine the fair value at the

impairment testing date of assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, the amendments under this ASU require the goodwill impairment test to be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge ~~should~~would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU becomes effective for the Company on January 1, ~~2020.~~2020, at which time the Company will adopt it, although earlier adoption is permitted. The amendments in this ASU should be applied on a prospective basis. ~~Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017, and the Company is still evaluating when to adopt this ASU.~~ The Company does not expect an immediate impact to its condensed consolidated

financial statements upon adopting this ASU since the most recent Step 1 goodwill impairment test resulted in fair values in excess of carrying values for all reporting units at October 1, ~~2016.~~

2018.

In ~~March 2017,~~August 2018, the FASB issued two ASU’s as part of its disclosure framework project. The focus of this project is to improve the effectiveness of disclosures in the notes to the financial statements by facilitating clear communication of the information required by U.S. GAAP that is most important to users of an entity’s financial statements. Both of these ASU’s remove certain disclosure requirements and add or modify other requirements. The two ASU’s are as follows:

•

ASU No. 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement – effective for the Company on January 1, 2020, although early adoption is permitted immediately. Additionally, companies are permitted to immediately adopt the removal or modifications of disclosures as provided in this ASU, and adopt the additional disclosures on the effective date of the ASU. Certain provisions of the ASU must be adopted retrospectively, while others must be adopted prospectively. The Company is still assessing when and how it will adopt this ASU, but does not expect there to be a material impact to the notes to the condensed consolidated financial statements.

•

ASU No. 2018-14, Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans – this ASU will impact certain 10-K disclosures and will be effective for the Company for its 2020 Annual Report on Form 10-K. Early adoption is permitted and must be applied on a retrospective basis. The Company is still assessing when it will adopt this ASU, but does not expect there to be a material impact to the notes to the condensed consolidated financial statements.

Adopted

In February 2016, the FASB issued ASU No. ~~2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~2016-02, Leases (‘ASU No. 2016-02’), which requires ~~entities~~a lessee to ~~(1) disaggregate the current service-cost component from the other components of net benefit cost (the ‘other components’) and present it~~recognize in the ~~income~~ statement ~~with other current compensation costs~~of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. Additional ASUs have since been issued which provide amended and additional guidance for the implementation of ASU No. 2016-02. All related ~~employees~~guidance has been codified into, and ~~(2) present the other components elsewhere in the income statement~~is now known as, ASC 842, Leases (‘ASC 842’). ASC 842 became effective, and outside of income from operations if that subtotal is presented. In addition, the ASU requires entities to disclose the income statement lines that contain the other components if they are not presented or included in appropriately described separate lines. The ASU becomes effective forwas adopted by the Company, on January 1, ~~2018,~~2019. See below and ~~should be applied retrospectively. Early adoption is permitted as~~Note 12 – Leases, for a full description of the ~~beginning of a financial year. The Company will adopt this standard on January 1, 2018,~~Company’s impact from adoption, adoption elections made and ~~is currently assessing~~ the ~~impact that this standard will have on its condensed consolidated financial statements.~~

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Stock Compensation - Scope of Modification Accounting~~, which provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The ASU requires that an entity should account for the effects of a modification unless the fair value (or calculated value or intrinsic value, if used), vesting conditions and classification (as equity or liability) of the modified award are all the same as for the original award immediately before the modification. The ASU becomes effective for the Company on January 1, 2018, and should be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted, including adoption in any interim period. The Company will adopt this standard on January 1, 2018, and is currently assessing the impact that this standard will have on any awards that are modified once this standard is adopted.

newly-required disclosures.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities, which provides amendments under six specific objectives to better align risk management activities and financial reporting, and to simplify disclosure, presentation, hedging and the testing and measurement of ineffectiveness. The ASU ~~becomes~~became effective for, and was adopted by, the Company on January 1, 2019. Early adoption is permitted, and any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently assessing when it will adopt this standard, and theThis ASU did not have a material impact ~~that this standard will have~~ on ~~its~~our condensed consolidated financial statements.

~~Adopted~~

In ~~March 2016,~~February 2018, the FASB issued ASU No. ~~2016-09,~~ ~~Compensation~~2018-02, Income Statement - ~~Stock Compensation~~Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (‘ASU 2018-02’), which ~~simplifies several aspects~~allows for a reclassification from accumulated other comprehensive income/(loss) to retained earnings for ‘stranded’ tax effects (those tax effects of items within accumulated other comprehensive income resulting from the ~~accounting for share-based payment transactions, including the~~historical corporate income tax ~~consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.~~rate reduction) resulting from U.S. Tax Reform. The amendments within this ASU also require certain disclosures about stranded tax effects. The ASU became effective for, and was adopted by, the Company on January 1, ~~2017. In accordance~~2019, at which time it recorded a reclassification between AOCL and retained earnings of $36 million. The reclassification of $36 million from AOCL includes the effect of the change in the U.S. federal corporate tax rate, however it does not include other income tax effects of U.S. Tax Reform. The stranded tax effect primarily relates to defined pension and post-retirement benefits. The Company’s policy is to use the portfolio approach for releasing disproportionate income tax effects from AOCL.

Changes to Accounting Policies

As a result of the adoption of ASC 842 on January 1, 2019, we have updated our accounting policies for leases. These policies govern the recognition and accounting for leases in tandem with the ~~prospective~~Company’s option to elect certain practical expedients offered by ASC 842. These policies are consistent with the modified retrospective approach guidance and with those practical expedients offered by ASC 842 that we have elected to apply. Our lease policies for 2018 and prior reporting periods are reflected in the notes to our annual consolidated financial statements as filed on February 27, 2019, in our Annual Report on Form 10-K.

Leases

As an advisory, broking and solutions company providing services to clients in more than 140 countries, we enter into lease agreements from time to time, primarily for the use of real estate for our office space. We determine if an arrangement is a lease at the inception of the contract, and the nature of our operations is such that it is generally clear whether an arrangement contains a lease and what underlying asset is being leased. The majority of the leases into which we enter are operating leases. Upon entering into leases, we obtain the right to control the use of an identified space for a lease term and recognize these right-of-use (‘ROU’) assets on our condensed consolidated balance sheets with corresponding lease liabilities reflecting our obligation to make the related lease payments. ROU assets are amortized over the term of the lease.

Our real estate leases are generally long-term in nature, with terms that typically range from 5 to 15 years. Our most significant lease supports our London market operations with a lease term through 2032. Our real estate leases often contain options to renew the lease, either through exercise of the option or through automatic renewal. Additionally, certain leases have options to cancel the lease with appropriate notice to the landlord prior to the end of the stated lease term. As we enter into new leases after the adoption of ASC 842, we will consider these options as we assess lease terms in our recognized ROU assets and lease liabilities. If we are reasonably certain to exercise an option to renew a lease, we include this period in our lease term. To the ~~recognition~~extent that we have the option to cancel a lease, we recognize our ROU assets and lease liabilities using the term that would result from using this earlier date. If a significant penalty is required to cancel the lease at an earlier date, we assess our lease term as ending at the point when no significant penalty would be due.

In addition to payments for previously-agreed base rent, many of ~~excess tax benefits~~our lease agreements are subject to variable and ~~deficiencies~~unknown future payments, typically in the ~~condensed consolidated statements~~form of ~~comprehensive income, we~~common area maintenance charges (a non-lease component as defined by ASC 842) or real estate taxes. These variable payments are excluded from our lease liabilities and ROU assets, and instead are recognized a $3 million and $5 million tax benefit in provision for income taxes during the three and nine months ended September 30, 2017, respectively. In addition, we elected to prospectively adopt the amendment to present excess tax benefitsas lease expense within other operating expenses on ~~share-based compensation as an operating activity, resulting in the recognition of a $5 million excess tax benefit as an operating activity in~~ the condensed consolidated statement of ~~cash flows~~comprehensive income as the amounts are incurred. To the extent that we have agreed to fixed charges for common area maintenance or other non-lease components, or our base rent increases by an index or rate (most commonly an inflation rate), these amounts are included in the ~~nine months ended September 30, 2017.~~measurement of our lease liabilities and ROU assets. We have elected the practical expedient under ASC 842 which allows the lease and non-lease components to ~~continue~~be combined in our measurement of lease liabilities and ROU assets.

From time to ~~estimate expected forfeitures. We also retrospectively adopted the amendment~~time we may enter into subleases if we are unable to ~~present cash payments~~cancel or fully occupy a space and are able to ~~tax authorities in connection with shares withheld to meet statutory tax withholding requirements as~~find an appropriate subtenant. However, entering subleases is not a ~~financing activity. As a result, this $13 millionuse~~primary objective of our business operations and these arrangements represent an immaterial amount of cash ~~was reclassified from net cash from operating activities~~flows.

Because the discount rates implicit in our leases are generally not readily determinable, we are required to ~~net cash used in financing activities~~use judgment in the ~~condensed consolidated statement of cash flows for the nine months ended September 30, 2016.~~

~~In October 2016, the FASB issued ASU No. 2016-16,~~ ~~Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory~~, which amends guidance regarding the recognition of current and deferred income taxes for intra-entity asset transfers. Current U.S. GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. The ASU states that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of

~~the beginning~~determination of the ~~period~~incremental borrowing rates to calculate the present values of ~~adoption. The Company elected~~our future lease payments. Since the majority of our debt is publicly-traded, our real estate function is centralized, and our treasury function is centralized and generally prohibits our subsidiaries from borrowing externally, we have determined it appropriate to ~~early adopt~~use the Company’s consolidated unsecured borrowing rate, and adjust for collateralization in accordance with ASC 842. Using the resulting interest rate curves from publicly-traded debt at this ~~standard on January 1, 2017, and recorded a cumulative reduction to retained earnings of $3 million.~~

~~Note 3 — Merger~~

~~On January 4, 2016, pursuant~~collateralized borrowing rate, we select the interest rate at lease inception by reference to the ~~Agreement~~lease term and ~~Plan~~lease currency. Over 90% of ~~Merger, dated June 29, 2015, as amended on November 19, 2015, between Willis, Towers Watson,~~our leases are denominated in U.S. dollars, Pounds sterling or Euros.

Our leases generally do not subject us to restrictive covenants and ~~Citadel Merger Sub, Inc.~~contain no residual value guarantees.

Note 3—Acquisitions

TRANZACT Acquisition

On March 30, 2019, the Company entered into an agreement to acquire TRANZACT, a ~~wholly-owned subsidiary~~U.S.-based provider of ~~Willis formed~~comprehensive, direct-to-consumer sales and marketing solutions for leading insurance carriers in the ~~purpose~~U.S. TRANZACT leverages digital, data and direct marketing solutions to deliver qualified leads, fully-provisioned sales and robust customer management systems to brands seeking to acquire and manage large numbers of ~~facilitating this transaction (‘Merger Sub’), Merger Sub merged with and into Towers Watson, with Towers Watson continuing as~~consumers. Subject to certain adjustments, the ~~surviving corporation and as a wholly-owned subsidiary~~consideration consists of ~~Willis.~~

At$1.2 billion payable upon the ~~effective time~~close of the ~~Merger (the ‘Effective Time’), each issued and outstanding share~~acquisition, of ~~Towers Watson common stock (the ‘Towers Watson shares’) was converted into the right to receive 2.6490 validly issued, fully paid and nonassessable~~which $100 million is payable at our option in cash or ordinary shares of ~~Willis (the ‘Willis ordinary shares’), $0.000115 nominal value per share, other than any Towers Watson shares owned by Towers Watson, Willis~~the Company. Additional contingent consideration in the form of a potential earn-out of up to $200 million is payable in either cash or ~~Merger Sub at the Effective Time and the Towers Watson shares held by stockholders who are entitled to, and who properly exercised, dissenter’s rights under Delaware law.~~

~~Immediately following the Merger, Willis effected (i) a consolidation (i.e., a reverse stock split under Irish law) of Willis~~in ordinary shares ~~whereby every 2.6490 Willis ordinary shares were consolidated into one Willis ordinary share ($0.000304635 nominal value per share)~~of the Company at our option in 2021 based on the achievement of certain financial targets. The Company has secured a term loan to finance the transaction (see Note 9 — Debt for further information). TRANZACT will operate as part of the Company’s Benefits Delivery and ~~(ii) an amendment~~Administration segment. The transaction is expected to ~~its Constitution and other organizational documents to change its name from Willis Group Holdings Public Limited Company to Willis Towers Watson Public Limited Company.~~

close during the third quarter of 2019.

Alston Gayler Acquisition

On December ~~29, 2015,~~21, 2018, the Company, through its majority-owned subsidiary, Miller, completed the transaction to acquire Alston Gayler, a U.K.-based insurance and reinsurance broker, for total consideration of $67 million. Cash consideration of $35 million was paid upon completion of the acquisition, with the remaining $32 million deferred consideration to be paid in equal installments on the first, second and third ~~business day immediately prior to~~anniversaries of the ~~closing~~ date of ~~the Merger, Towers Watson declared~~acquisition.

The Company has preliminarily recognized $36 million of intangible assets, primarily arising from client relationships, and ~~paid a pre-merger special dividend~~$24 million of ~~$10.00 per share of its common stock, and approximately $694 million in the aggregate based on approximately 69 million Towers Watson shares issued and outstanding at December 29, 2015.~~

~~On December 30, 2015, all Towers Watson treasury stock was canceled.~~

~~The Merger was accounted for using the acquisition method of accounting, with Willis considered the accounting acquirer of Towers Watson.~~

~~The table below presents the final calculation of aggregate Merger consideration~~.

January 4, 2016
Number of shares of Towers Watson common stock outstanding as of January 4, 2016 69 million
Exchange ratio 2.6490
Number of Willis Group Holdings shares issued (prior to reverse stock split) 184 million
Willis Group Holdings price per share on January 4, 2016 $ 47.18
Fair value of 184 million Willis ordinary shares $ 8,686
Value of equity awards assumed 37
Aggregate Merger consideration $ 8,723

~~A summary of the fair values of the identifiable assets acquired, and liabilities assumed, of Towers Watson at January 4, 2016 are summarized in the following table.~~

January 4, 2016
Cash and cash equivalents $ 476
Accounts receivable, net 825
Other current assets 82
Fixed assets, net 204
Goodwill 6,783
Intangible assets 3,991
Pension benefits assets 67
Other non-current assets 115
Deferred tax liabilities (1,151 )
Liability for pension benefits (923 )
Other current liabilities ⁽ⁱ⁾
(667 )
Other non-current liabilities ⁽ⁱⁱ⁾
(331 )
Long-term debt, including current portion ⁽ⁱⁱⁱ⁾
(740 )
Net assets acquired $ 8,731
Non-controlling interests acquired (8 )
Allocated aggregate Merger consideration $ 8,723

~~____________________~~


i.	~~Includes $348 million in accounts payable, accrued liabilities and deferred revenue, $308 million in employee-related liabilities and $11 million in other current liabilities.~~


~~ii.~~	~~Includes acquired contingent liabilities of $242 million. See Note 12 - Commitments and Contingencies for a discussion of our material acquired contingencies related to Legacy Towers Watson.~~

~~iii.~~

Represents both debt due upon change of control of $400 million borrowed under Towers Watson’s term loan ($188 million) and revolving credit facility ($212 million) and a draw down under a new term loan of $340 million. The $400 million debt was repaid by Willis borrowings under the 1-year term loan facility on January 4, 2016. The $340 million new term loan partially funded the $694 million Towers Watson pre-merger special dividend.

goodwill. The purchase price allocation as of the acquisition date ~~of acquisition was based on a valuation of~~and our accounting for the related deferred tax assets ~~acquired~~ and liabilities ~~assumed~~is not yet complete.

Note 4—Revenue

Disaggregation of Revenue

The Company reports revenue by segment in ~~the acquisition.~~Note 5 — Segment Information. The ~~purchase price allocation was complete~~following table presents revenue by service offering and segment, as ~~of December 31, 2016.~~

Goodwill is calculated as the difference between aggregate Merger consideration and the acquisition date fair value of the net assets acquired, and represents the value of the Legacy Towers Watson assembled workforce and the future economic benefits that we expect to realizewell as a ~~result of~~reconciliation to total revenue for the ~~Merger. None of the goodwill recognized on the transaction is tax deductible.~~three months ended March 31, 2019 and 2018. Along with reimbursable expenses and other, total revenue by service offering represents our revenue from customer contracts.

	Three Months Ended March 31,
	HCB				CRB				IRR				BDA				Corporate ⁽ⁱⁱ⁾				Total
	2019		2018		2019		2018		2019		2018		2019		2018		2019		2018		2019		2018
Broking	$	73	$	76	$	660	$	664	$	405	$	391	$	3	$	4	$	—	$	—	$	1,141	$	1,135
Consulting ⁽ⁱ⁾		580		577		31		44		114		117		—		—		3		3		728		741
Outsourced administration ⁽ⁱ⁾		123		132		27		23		2		—		132		118		—		—		284		273
Other ⁽ⁱ⁾		47		43		1		3		58		59		—		—		1		1		107		106
Total revenues by service offering		823		828		719		734		579		567		135		122		4		4		2,260		2,255
Reimbursable expenses and other ⁽ⁱⁱ⁾		14		14		—		—		2		2		3		2		7		1		26		19
Total revenue from customer contracts	$	837	$	842	$	719	$	734	$	581	$	569	$	138	$	124	$	11	$	5	$	2,286	$	2,274
Interest and other income ⁽ⁱⁱⁱ⁾		6		4		9		6		10		7		—		—		1		1		26		18
Total revenue	$	843	$	846	$	728	$	740	$	591	$	576	$	138	$	124	$	12	$	6	$	2,312	$	2,292

______________

~~The acquired intangible assets are attributable to the following categories:~~

Amortization basis Fair Value Expected life (years)
Customer relationships In line with underlying cash flows $ 2,221
15.0
Software - income approach In line with underlying cash flows or straight-line basis 567
6.4
Software - cost approach Straight-line basis 108
4.9
Product In line with underlying cash flows 42
17.5
IPR&D ⁽ⁱ⁾
n/a 39
n/a
Trade name Straight-line basis 1,003
25.0
Favorable lease agreements Straight-line basis 11
6.5
$ 3,991

~~____________________~~

(i)

~~Represents individual in-process research and development (‘IPR&D’) software components not placed into service~~

Amounts presented for HCB Outsourced administration revenue include a correction of approximately $58 million of revenue that was previously classified as ~~of the acquisition date. These assets were subsequently placed into service during~~HCB Consulting revenue or HCB Other revenue in our quarterly report on Form 10-Q for the three months ended March 31, ~~2017, were reclassified into finite-lived software intangible assets,~~2018.

(ii)	Reimbursable expenses and other, as well as Corporate revenue, are ~~being amortized~~excluded from segment revenue, but included in ~~line with underlying cash flows or~~total revenue on ~~a straight-line basis.~~the condensed consolidated statements of comprehensive income.

(iii)

Interest and other income is included in segment revenue and total revenue, however it has been presented separately in the above tables because it does not arise directly from contracts with customers.

~~Acquired Share-Based Compensation Plans~~

~~In connection with~~

Individual revenue streams aggregating to approximately 5% of total revenue from customer contracts for the ~~Merger, we assumed certain stock options~~three months ended March 31, 2019 and ~~restricted stock units (‘RSUs’) issued under~~2018, respectively, have been included within the ~~Towers Watson & Co. 2009 Long Term Incentive Plan (‘LTIP’), the Liazon Corporation 2011 Equity Incentive Plan, and the Extend Health, Inc. 2007 Equity Incentive Plan.~~

~~Stock Options.~~ ~~The outstanding unvested employee stock options were converted into 592,486 Willis Towers Watson stock options using the conversion ratios stated~~Other line in the ~~Merger agreement~~tables above.

The following table presents revenue by the geography where our work is performed for the ~~number~~three months ended March 31, 2019 and 2018. The reconciliation to total revenue on our condensed consolidated statements of ~~options.~~ comprehensive income and to segment revenue is shown in the table above.

	Three Months Ended March 31,
	HCB				CRB				IRR				BDA				Corporate				Total
	2019		2018		2019		2018		2019		2018		2019		2018		2019		2018		2019		2018
North America	$	471	$	462	$	220	$	215	$	164	$	153	$	135	$	122	$	4	$	4	$	994	$	956
Great Britain		118		129		142		148		300		295		—		—		—		—		560		572
Western Europe		155		154		239		239		69		71		—		—		—		—		463		464
International		79		83		118		132		46		48		—		—		—		—		243		263
Total revenue by geography	$	823	$	828	$	719	$	734	$	579	$	567	$	135	$	122	$	4	$	4	$	2,260	$	2,255

Contract Balances

The ~~fair value~~Company reports accounts receivable, net on the condensed consolidated balance sheet, which includes billed and unbilled receivables and current contract assets. In addition to accounts receivable, net, the Company had the following non-current contract assets and deferred revenue balances at March 31, 2019 and December 31, 2018:

	March 31, 2019		December 31, 2018
Billed receivables, net of allowance for doubtful accounts of $44 million and $40 million	$	1,847	$	1,702
Unbilled receivables		396		356
Current contract assets		247		321
Accounts receivable, net	$	2,490	$	2,379
Non-current accounts receivable, net	$	17	$	20
Non-current contract assets	$	6	$	3
Deferred revenue	$	483	$	448

During the three months ended March 31, 2019, revenue of approximately $242 million was recognized that was reflected as deferred revenue at December 31, 2018.

During the ~~stock options was calculated using~~three months ended March 31, 2019, the ~~Black-Scholes model with~~Company recognized no material revenue related to performance obligations satisfied in a ~~volatility and risk-free interest rate over~~prior period.

Performance Obligations

The Company has contracts for which performance obligations have not been satisfied as of March 31, 2019 or have been partially satisfied as of this date. The following table shows the expected ~~term of each group of options and Willis Towers Watson’s closing share price on~~timing for the date of acquisition. We determined the fair value of the portion of the outstanding options related to pre-acquisition employee service using the straight-line expense methodology from the date of grant to the acquisition date to be $7 million, which was added to the transaction consideration. The fair valuesatisfaction of the remaining ~~portion~~performance obligations. This table does not include contract renewals nor variable consideration, which was excluded from the transaction prices in accordance with the guidance on constraining estimates of ~~options related~~variable consideration.

In addition, in accordance with ASC 606, Revenue From Contracts With Customers (‘ASC 606’), the Company has elected not to disclose the ~~post-acquisition employee services was $13 million, and will be recognized over the future vesting periods.~~

~~Restricted Stock Units.~~ The outstanding unvested RSUs were converted into 597,307 Willis Towers Watson RSUs using the conversion ratios as stated in the Merger agreement. The fair value of these RSUs was calculated using Willis Towers Watson’s closing share price on the date of acquisition. We determined the fair valueremaining performance obligations when one or both of the ~~portion~~following circumstances apply:

•

Performance obligations which are part of a contract that has an original expected duration of less than one year, and

•

Performance obligations satisfied in accordance with ASC 606-10-55-18 (‘right to invoice’).

		Remainder of 2019				2020				2021 onward				Total
Revenue expected to be recognized on contracts as of March 31, 2019		$	314			$	341			$	432			$	1,087

Since most of the ~~outstanding RSUs related to pre-acquisition employee service using~~Company’s contracts are cancellable with less than one year’s notice, and have no substantive penalty for cancellation, the ~~straight-line expense methodology~~majority of the Company’s remaining performance obligations as of March 31, 2019 have been excluded from the date of grant to the acquisition date to be $30 million, which was added to the transaction consideration. The fair value of the remaining portion of RSUs related to the post-acquisition employee services was $32 million, and will be recognized over the future vesting periods.

table above.

Note 4 5—Segment Information

Willis Towers Watson has four reportable operating segments or business areas:

~~Human Capital and Benefits (‘HCB’)~~

~~Corporate Risk and Broking (‘CRB’)~~

~~Investment, Risk and Reinsurance (‘IRR’)~~

•

Human Capital and Benefits (‘HCB’)

•

Corporate Risk and Broking (‘CRB’)

•

Investment, Risk and Reinsurance (‘IRR’)

•

Benefits Delivery and Administration (‘BDA’) ~~- formerly known as Exchange Solutions~~ ⁽ⁱ⁾

~~____________________~~


i.	~~This segment and the businesses within the segment were renamed to better reflect the nature of the services we offer.~~

Willis Towers Watson’s chief operating decision maker is its chief executive officer. We determined that the operational data used by the chief operating decision maker is at the segment level. Management bases strategic goals and decisions on these segments and the data presented below is used to assess the adequacy of strategic decisions and the ~~method~~methods of achieving these strategies and related financial results.

Management evaluates the performance of its segments and allocates resources to them based on net operating income on a pre-tax basis.

The Company experiences seasonal fluctuations of its ~~commissions and fees~~ revenue. Revenue is typically higher during the Company’s first and fourth quarters due primarily to the timing of broking-related activities.

~~Beginning in 2017, we made certain changes that affect our segment results. These changes, which are detailed in the Form 8-K filed with the SEC on April 7, 2017, include the following:~~

First, to better align our business within our segments, we moved Max Matthiessen, which specializes in pension investment advice, to Investment, Risk and Reinsurance from Human Capital and Benefits; and moved Fine Art, Jewellery and Specie, which is a specialty broker, to Corporate Risk and Broking from Investment, Risk and Reinsurance.

Second, we recast operating income to better reflect the new segment reporting basis. As part of the further integration of our Willis Towers Watson businesses, we updated our corporate expense allocations to standardize our methodologies and allocate those expenses which are directly related to the business segment operations. Additionally, we revised the presentation of certain adjustments which arose from the purchase accounting for the Merger. Due to the long-term nature of these adjustments, which impact fixed asset and internally-developed software, we aligned the presentation within the respective segments and consolidated operating income, thereby eliminating a reconciling adjustment.

~~The prior period comparatives reflected in the tables below have been retrospectively adjusted to reflect our current segment presentation.~~

The following table presents segment ~~commissions and fees, segment interest and other income, segment revenues,~~revenue and segment operating income for our reportable segments for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016.~~2018.

	Three Months Ended March 31,
	HCB				CRB				IRR				BDA						Total
	2019		2018		2019		2018		2019		2018		2019			2018			2019		2018
Segment revenue	$	829	$	832	$	728	$	740	$	589	$	574	$	135		$	122		$	2,281	$	2,268

Segment operating income/(loss)	$	204	$	193	$	127	$	125	$	252	$	261	$	(21	)	$	(32	)	$	562	$	547

Three Months Ended September 30,
HCB CRB IRR BDA Total
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Segment commissions and fees $ 736
$ 720
$ 581
$ 553
$ 320
$ 312
$ 179
$ 161
$ 1,816
$ 1,746
Segment interest and other income —
—
5
8
14
7
—
—
19
15
Segment revenues $ 736
$ 720
$ 586
$ 561
$ 334
$ 319
$ 179
$ 161
$ 1,835
$ 1,761

Segment operating income $ 143
$ 127
$ 48
$ 46
$ 39
$ 38
$ 36
$ 23
$ 266
$ 234

The following table presents segment commissions and fees, segment interest and other income, segment revenues, and segment operating income for our reportable segments for the nine months ended September 30, 2017 and 2016.

Nine Months Ended September 30,
HCB CRB IRR BDA Total
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Segment commissions and fees $ 2,405
$ 2,377
$ 1,855
$ 1,821
$ 1,205
$ 1,190
$ 536
$ 478
$ 6,001
$ 5,866
Segment interest and other income 15
9
16
20
25
55
—
1
56
85
Segment revenues $ 2,420
$ 2,386
$ 1,871
$ 1,841
$ 1,230
$ 1,245
$ 536
$ 479
$ 6,057
$ 5,951

Segment operating income $ 615
$ 568
$ 270
$ 255
$ 358
$ 360
$ 108
$ 100
$ 1,351
$ 1,283

The following table presents a reconciliation of the information reported by segment to the Company’s condensed consolidated statement of comprehensive income amounts reported for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016.~~2018.

	Three Months Ended March 31,
	2019			2018
Revenue:
Total segment revenue	$	2,281		$	2,268
Reimbursable expenses and other		31			24
Revenue	$	2,312		$	2,292

Total segment operating income	$	562		$	547
Amortization		(127	)		(141	)
Transaction and integration expenses		(6	)		(43	)
Unallocated, net ⁽ⁱ⁾		(70	)		(104	)
Income from operations		359			259
Interest expense		(54	)		(51	)
Other income, net		55			56
Income from operations before income taxes	$	360		$	264

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Revenues:
Total segment revenues $ 1,835
$ 1,761
$ 6,057
$ 5,951
Fair value adjustment for deferred revenue —
—
—
(58 )
Reimbursable expenses and other 17
16
67
67
Total revenues $ 1,852
$ 1,777
$ 6,124
$ 5,960

Total segment operating income $ 266
$ 234
$ 1,351
$ 1,283
Fair value adjustment for deferred revenue —
—
—
(58 )
Amortization (141 ) (157 ) (441 ) (443 )
Restructuring costs (31 ) (49 ) (85 ) (115 )
Transaction and integration expenses (74 ) (36 ) (177 ) (117 )
Provision for the Stanford litigation —
—
—
(50 )
Unallocated, net ⁽ⁱ⁾
21
9
(20 ) (37 )
Income from operations 41
1
628
463
Interest expense 47
45
139
138
Other expense, net 29
14
79
26
(Loss)/income from operations before income taxes and interest in earnings of associates $ (35 ) $ (58 ) $ 410
$ 299

~~________________________~~

(i)
i.	Includes certain costs, primarily related to corporate functions which are not directly related to the segments, and certain differences between budgeted expenses determined at the beginning of the year and actual expenses that we report for U.S. GAAP purposes.

The Company does not currently provide asset information by reportable segment as it does not routinely evaluate the total asset position by segment.

~~Note 5 — Restructuring Costs~~

The Company has two major elements of the restructuring costs included in its condensed consolidated financial statements, which are the Operational Improvement Program, continuing through 2017, and the Business Restructure Program, which was fully accrued by the end of 2016.

~~Operational Improvement Program~~ - In April 2014, Legacy Willis announced a multi-year operational improvement program designed to strengthen its client service capabilities and to deliver future cost savings. The main elements of the program, which will be completed by the end of 2017, include: moving more than 3,500 support roles from higher cost locations to facilities in lower cost locations; net workforce reductions in support positions; lease consolidation in real estate; and information technology systems simplification and rationalization.

~~The Company recognized restructuring costs of $31 million~~and $85 million for the three and nine months ended September 30, 2017, respectively, and $36 million and $98 million for the three and nine months ended September 30, 2016, respectively, related to the Operational Improvement Program.

The Company expects to incur $130 million of restructuring costs related to the Operational Improvement Program during fiscal year 2017, bringing the cumulative restructuring charges for this program to approximately $440 million.

~~Business Restructure Program~~ - In the second quarter of 2016, we began planning targeted staffing reductions in certain portions of the business due to a reduction in business demand or change in business focus (hereinafter referred to as the Business Restructure Program). The main element of the program included workforce reductions, and was completed in 2016.

~~The Company recognized $13 million and $17 million of restructuring costs related to the Business Restructure Program for the three and nine months ended September 30, 2016, respectively.~~

~~An analysis of total restructuring costs recognized in the statements of comprehensive income for the three and nine months ended September 30, 2017 and 2016 by segment is as follows:~~

Three Months Ended September 30, 2017
HCB CRB IRR BDA Corporate Total
Termination benefits $ —
$ 5
$ —
$ —
$ 1
$ 6
Professional services and other 1
20
2
—
2
25
Total $ 1
$ 25
$ 2
$ —
$ 3
$ 31

Three Months Ended September 30, 2016
HCB CRB IRR BDA Corporate Total
Termination benefits $ 12
$ 3
$ —
$ —
$ 1
$ 16
Professional services and other —
23
1
—
9
33
Total $ 12
$ 26
$ 1
$ —
$ 10
$ 49

Nine Months Ended September 30, 2017
HCB CRB IRR BDA Corporate Total
Termination benefits $ —
$ 14
$ 3
$ —
$ 2
$ 19
Professional services and other 2
50
4
—
10
66
Total $ 2
$ 64
$ 7
$ —
$ 12
$ 85

Nine Months Ended September 30, 2016
HCB CRB IRR BDA Corporate Total
Termination benefits $ 14
$ 11
$ 3
$ —
$ 2
$ 30
Professional services and other —
60
2
—
23
85
Total $ 14
$ 71
$ 5
$ —
$ 25
$ 115

~~An analysis of the total cumulative restructuring costs recognized for the Operational Improvement Program from its commencement to September 30, 2017 by segment is as follows:~~

HCB CRB IRR BDA Corporate Total
2014
Termination benefits $ —
$ 15
$ 1
$ —
$ —
$ 16
Professional services and other ⁽ⁱ⁾
—
3
—
—
17
20
2015
Termination benefits 2
24
7
—
3
36
Professional services and other ⁽ⁱ⁾
1
57
2
—
30
90
2016
Termination benefits 1
18
3
—
1
23
Professional services and other ⁽ⁱ⁾
1
81
4
—
36
122
2017
Termination benefits —
14
3
—
2
19
Professional services and other ⁽ⁱ⁾
2
50
4
—
10
66
Total
Termination benefits 3
71
14
—
6
94
Professional services and other ⁽ⁱ⁾
4
191
10
—
93
298
Total $ 7
$ 262
$ 24
$ —
$ 99
$ 392

~~____________________~~


i.	~~Other includes salaries and benefits, premises, and other expenses incurred to support the ongoing management and facilitation of the program.~~

~~The changes in the Company’s liability under the Operational Improvement Program from its commencement to September 30, 2017 are as follows:~~

Termination Benefits Professional Services and Other Total
Balance at January 1, 2014 $ —
$ —
$ —
Charges incurred 16
20
36
Cash payments (11 ) (14 ) (25 )
Balance at December 31, 2014 5
6
11
Charges incurred 36
90
126
Cash payments (26 ) (85 ) (111 )
Balance at December 31, 2015 15
11
26
Charges incurred 23
122
145
Cash payments (31 ) (115 ) (146 )
Balance at December 31, 2016 7
18
25
Charges incurred 19
66
85
Cash payments (16 ) (78 ) (94 )
Balance at September 30, 2017 $ 10
$ 6
$ 16

~~The changes in the Company’s liability under the Business Restructure Program from its commencement to September 30, 2017 are as follows:~~

Termination Benefits Professional Services and Other Total
Balance at January 1, 2016 $ —
$ —
$ —
Charges incurred 45
3
48
Cash payments (19 ) (3 ) (22 )
Balance at December 31, 2016 26
—
26
Cash payments (21 ) —
(21 )
Balance at September 30, 2017 $ 5
$ —
$ 5

Note 6 — Income Taxes

Provision for income taxes for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 was ~~$19~~$67 million ~~and $73 million, respectively,~~ compared to ~~a benefit from income taxes of $26 million and a provision for income taxes of $11~~$43 million for the three ~~and nine~~ months ended ~~September 30, 2016, respectively.~~March 31, 2018. The effective tax rate was ~~(53.0)% and 17.7%~~18.8% for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019 and ~~45.9% and 3.5%~~16.3% for the three ~~and nine~~ months ended ~~September 30, 2016, respectively.~~March 31, 2018. These effective tax rates are calculated using extended values from our condensed consolidated statements of comprehensive income, and are therefore more precise tax rates than can be calculated from rounded values. Our effective tax rate is generally lower than the U.S. statutory rate of 35%. This is primarily due to our global mix of income which creates deductions in jurisdictions with high statutory income tax rates. The (53.0)% effective tax rate for the three months ended September 30, 2017 was the result of a discrete income tax charge for an internal reorganization. The increase in tax expense for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 was primarily due to an internal restructuring for certain legacy Towers Watson businesses. The increase in the effective tax rate for the ~~nine months~~period ended ~~September 30, 2017 as~~March 31, 2019 compared to the ~~nine months~~period ended ~~September 30, 2016~~March 31, 2018 was primarily due to additional taxes on global intangible low-taxed income (GILTI).

In 2017, as a ~~current year~~result of U.S. Tax Reform, we analyzed our global working capital and cash requirements and the potential tax ~~expense resulting from internal reorganizations for~~liabilities attributable to a repatriation, and changed our assertion with respect to certain legacy Towers Watson ~~businesses,~~subsidiaries. For those subsidiaries from which we were able to make a reasonable estimate of the tax effects of such repatriation, we recorded an estimate for foreign withholding and ~~a prior year tax benefit resulting from an enacted statutory tax rate reduction in the U.K.~~

~~Historically, we have not provided deferred taxes on cumulative earnings of our~~state income taxes. For all other subsidiaries, ~~that have been reinvested indefinitely. As a result of our plan to restructure or distribute accumulated earnings of certain acquired Towers Watson foreign operations,~~ we continue to ~~accrue deferred taxes on current year earnings of those subsidiaries. However, we~~ assert that the historical cumulative earnings ~~of our other subsidiaries are~~have been reinvested indefinitely, and therefore do not provide deferred ~~tax liabilities~~taxes on these amounts.

The Company records valuation allowances against net deferred tax assets based on whether it is more likely than not that the deferred tax assets will be realized.

We have liabilities for uncertain tax positions under ~~Accounting Standards Codification (‘ASC’)~~ASC 740 ~~Income Taxes~~of ~~$57~~$48 million, excluding interest and penalties. The Company believes the outcomes that are reasonably possible within the next 12 months may result in a reduction in the liability for uncertain tax positions of approximately $4$1 million to $7$3 million, excluding interest and penalties.

Note 7—Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost of businesses acquired over the fair market value of identifiable net assets at the dates of acquisition. Goodwill is not amortized but is subject to impairment testing annually and whenever facts or circumstances indicate that the carrying amounts may not be recoverable. Goodwill is allocated to our reporting units primarily based on the original purchase price allocation for acquisitions within the reporting units, or relative fair value when an acquisition covers multiple reporting units. When a business entity is sold, goodwill is allocated to the disposed entity based on the relative fair value of that entity compared with the fair value of the reporting unit in which it was included.

The components of goodwill are outlined below for the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2019:

	HCB			CRB			IRR		BDA		Total
Balance at December 31, 2018:
Goodwill, gross	$	4,300		$	2,308		$	1,792	$	2,557	$	10,957
Accumulated impairment losses		(130	)		(362	)		—		—		(492	)
Goodwill, net - December 31, 2018		4,170			1,946			1,792		2,557		10,465
Foreign exchange		(6	)		(7	)		4		—		(9	)
Balance at March 31, 2019:
Goodwill, gross		4,294			2,301			1,796		2,557		10,948
Accumulated impairment losses		(130	)		(362	)		—		—		(492	)
Goodwill, net - March 31, 2019	$	4,164		$	1,939		$	1,796	$	2,557	$	10,456

HCB CRB IRR BDA Total
Balance at December 31, 2016:
Goodwill, gross $ 4,412
$ 2,178
$ 1,758
$ 2,557
$ 10,905
Accumulated impairment losses (130 ) (362 ) —
—
(492 )
Goodwill, net - December 31, 2016 4,282
1,816
1,758
2,557
10,413
Goodwill reassigned in segment realignment⁽ⁱ⁾
(113 ) 13
100
—
—
Goodwill acquired during the period —
8
—
—
8
Goodwill disposed of during the period (31 ) —
—
—
(31 )
Foreign exchange 64
57
18
—
139
Balance at September 30, 2017:

Goodwill, gross 4,332
2,256
1,876
2,557
11,021
Accumulated impairment losses (130 ) (362 ) —
—
(492 )
Goodwill, net - September 30, 2017 $ 4,202
$ 1,894
$ 1,876
$ 2,557
$ 10,529

~~____________________~~


i.	~~Represents the preliminary reallocation of goodwill related to certain businesses which were realigned among the segments as of January 1, 2017. See~~ ~~Note 4~~ — ~~Segment Information~~ ~~for further information.~~

Other Intangible Assets

The following table reflects changes in the net carrying amounts of the components of finite-lived intangible assets for the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2019:

	Balance at December 31, 2018		Intangible assets acquired		Intangible assets disposed			ASC 842 reclassification ⁽ⁱ⁾			Amortization			Foreign exchange			Balance at March 31, 2019
Client relationships	$	1,986	$	3	$	(1	)	$	—		$	(82	)	$	3		$	1,909
Management contracts		48		—		—			—			(1	)		(2	)		45
Software		328		—		—			—			(32	)		2			298
Trademark and trade name		920		—		—			—			(11	)		—			909
Product		27		—		—			—			(1	)		—			26
Favorable agreements		9		—		—			(9	)		—			—			—
Total amortizable intangible assets	$	3,318	$	3	$	(1	)	$	(9	)	$	(127	)	$	3		$	3,187

Balance at December 31, 2016 Intangible assets acquired Intangible assets disposed
Amortization⁽ⁱⁱ⁾
Foreign Exchange Balance at September 30, 2017
Client relationships $ 2,655
$ 13
$ (22 ) $ (289 ) $ 89
$ 2,446
Management contracts 54
—
—
(3 ) 7
58
Software ⁽ⁱ⁾
570
36
—
(112 ) 14
508
Trademark and trade name 1,006
—
(1 ) (34 ) 5
976
Product 33
—
—
(2 ) 2
33
Favorable agreements 11
—
—
(1 ) 1
11
Other 3
—
—
(1 ) —
2
Total amortizable intangible assets $ 4,332
$ 49
$ (23 ) $ (442 ) $ 118
$ 4,034


i.	All in-process research and development intangible assets acquired as part of the Merger on January 4, 2016 of $39 million ($36 million at the date placed into service due to changes in foreign currency exchange rates) have been placed into service during the nine months ended September 30, 2017 and have been included as intangible assets acquired in this presentation.


~~ii.~~	~~Amortization associated with favorable lease agreements is recorded in Other operating expenses in the condensed consolidated statements of comprehensive income.~~

__________________

(i)On January 1, 2019, in accordance with ASC 842, we reclassified our favorable lease agreement assets to right-of-use assets within our condensed consolidated balance sheet.

We recorded amortization related to our finite-lived intangible assets of $127 million for the three months ended March 31, 2019; for the three months ended March 31, 2018, we recorded amortization related to our finite-lived intangible assets, exclusive of the amortization of our favorable lease agreements, of $141 ~~million and $441 million, for the three and nine months ended September 30, 2017, respectively, and $157 million and $443 million for the three and nine months ended September 30, 2016, respectively.~~

million.

Our acquired unfavorable lease agreement liabilities were ~~$27 million and $29~~$21 million at ~~September 30, 2017 and~~ December 31, ~~2016, respectively,~~2018 and are recorded in other non-current liabilities in the condensed consolidated balance sheet.

On January 1, 2019, in accordance with ASC 842, we reclassified our unfavorable lease liabilities as a reduction to our right-of-use assets within our condensed consolidated balance sheet.

The following table reflects the carrying value of finite-lived intangible assets and liabilities at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016:~~2018:

	March 31, 2019					December 31, 2018
	Gross carrying amount		Accumulated amortization			Gross carrying amount		Accumulated amortization
Client relationships	$	3,405	$	(1,496	)	$	3,401	$	(1,415	)
Management contracts		60		(15	)		63		(15	)
Software		754		(456	)		749		(421	)
Trademark and trade name		1,052		(143	)		1,052		(132	)
Product		36		(10	)		36		(9	)
Favorable agreements ⁽ⁱ⁾		—		—			14		(5	)
Other		2		(2	)		3		(3	)
Total finite-lived assets	$	5,309	$	(2,122	)	$	5,318	$	(2,000	)

Unfavorable agreements ⁽ⁱ⁾	$	—	$	—		$	34	$	(13	)
Total finite-lived intangible liabilities	$	—	$	—		$	34	$	(13	)

September 30, 2017 December 31, 2016
Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization
Client relationships $ 3,476
$ (1,030 ) $ 3,396
$ (741 )
Management contracts 69
(11 ) 62
(8 )
Software 762
(254 ) 711
(141 )
Trademark and trade name 1,054
(78 ) 1,051
(45 )
Product 38
(5 ) 36
(3 )
Favorable agreements 14
(3 ) 13
(2 )
Other 5
(3 ) 6
(3 )
Total finite-lived assets $ 5,418
$ (1,384 ) $ 5,275
$ (943 )

Unfavorable agreements $ 34
$ (7 ) $ 34
$ (5 )
Total finite-lived intangible liabilities $ 34
$ (7 ) $ 34
$ (5 )

__________________

(i)On January 1, 2019, in accordance with ASC 842, we reclassified our favorable lease agreement assets and unfavorable lease agreement liabilities to right-of-use assets and as reductions to right-of-use assets, respectively, within our condensed consolidated balance sheet.

The ~~weighted average~~weighted-average remaining life of amortizable intangible assets ~~and liabilities~~ at ~~September 30, 2017~~March 31, 2019 was ~~14.5~~13.8 years.

The table below reflects the future estimated amortization expense for amortizable intangible assets ~~and the rent offset resulting from amortization of the net lease intangible assets and liabilities~~ for the remainder of ~~2017~~2019 and for subsequent years:

	Amortization
Remainder of 2019	$	353
2020		424
2021		347
2022		288
2023		239
Thereafter		1,536
Total	$	3,187

Amortization Rent offset
Remainder of 2017 $ 142
$ (1 )
2018 536
(4 )
2019 478
(2 )
2020 427
(2 )
2021 348
(2 )
Thereafter 2,092
(5 )
Total $ 4,023
$ (16 )

Note 8—Derivative Financial Instruments

We are exposed to certain ~~interest rate and~~ foreign currency risks. Where possible, we identify exposures in our business that can be offset internally. Where no natural offset is identified, we may choose to enter into various derivative transactions. These instruments have the effect of reducing our exposure to unfavorable changes in ~~interest and~~ foreign currency rates. The Company’s board of directors reviews and approves policies for managing each of these risks as summarized below.

~~Interest Rate Risk - Investment Income~~

~~As a result of the Company’s operating activities, the Company holds fiduciary funds. The Company earns interest on these funds, which is included~~ Additional information regarding our derivative financial instruments can be found in ~~the Company’s condensed consolidated financial statements in interest~~Note 10 — Fair Value Measurements and ~~other income. These funds are regulated in terms of access as are the instruments in which they may be invested, most of which are short-term in nature.~~

During 2015, in order to manage interest rate risk arising from these financial assets, the Company entered into interest rate swaps to receive a fixed rate of interest and pay a variable rate of interest. These derivatives, with total notional amounts of $300 million, were designated as hedging instruments at September 30, 2017 and December 31, 2016, and had net fair value liabilities of $1 million and nil, respectively.

Note 15 — Accumulated Other Comprehensive Loss.

Foreign Currency Risk

Certain non-U.S. subsidiaries receive ~~revenues~~revenue and incur expenses in currencies other than their functional currency, and as a result, the foreign subsidiary’s functional currency ~~revenues~~revenue will fluctuate as the currency rates change. Additionally, the forecast Pounds sterling expenses of our London brokerage market operations may exceed their Pounds sterling ~~revenues,~~revenue, and

they may also hold a significant ~~net Pounds sterling~~foreign currency asset or liability ~~position~~positions in the condensed consolidated balance sheet. To reduce such variability, we use foreign exchange ~~forward~~ contracts to hedge against this currency risk.

These derivatives were designated as hedging instruments and at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 had total notional amounts of ~~$776~~$414 million and ~~$945~~$438 million, respectively, and had net fair value liabilities of ~~$34~~$3 million and ~~$110~~$15 million, respectively.

At ~~September 30, 2017,~~March 31, 2019, the Company estimates, based on current ~~interest and~~ exchange rates, there will be ~~$33~~$2 million of net derivative losses on forward exchange rates ~~interest rate swaps, and treasury locks~~ reclassified from accumulated other comprehensive ~~income/(loss)~~loss into earnings within the next twelve months as the forecast transactions affect earnings. At ~~September 30, 2017,~~March 31, 2019, our longest outstanding maturity was ~~2.7~~1.7 years.

The effects of the material derivative instruments that are designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 are ~~as follows:~~below. Amounts pertaining to the ineffective portion of hedging instruments and excluded from effectiveness testing were immaterial for the three months ended March 31, 2019 and 2018.

Three Months Ended March 31,	Gain recognized in OCI (effective element)
	2019		2018
Forward exchange contracts	$	8	$	15

Location of gain/(loss) reclassified from Accumulated OCL into income (effective element)	Gain/(loss) reclassified from Accumulated OCL into income (effective element)
	2019			2018
Revenue	$	1		$	—
Salaries and benefits		(5	)		—
Other income, net		—			(11	)
	$	(4	)	$	(11	)

Three Months Ended September 30,
Gain/(loss) recognized in OCI
(effective portion)
Location of loss reclassified from Accumulated OCI into income (effective element)
Loss reclassified from Accumulated OCI into income
(effective element)
Location of gain/(loss) recognized in income (ineffective portion and amount excluded from effectiveness testing) Gain/(loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)
2017 2016 2017 2016 2017 2016
Forward exchange contracts $ 12
$ (6 ) Other expense, net $ (10 ) $ (14 ) Interest expense $ —
$ —

Nine Months Ended September 30,
Gain/(loss) recognized in OCI
(effective portion)
Location of loss reclassified from Accumulated OCI into income (effective element)
Loss reclassified from Accumulated OCI into income
(effective element)
Location of gain/(loss) recognized in income (ineffective portion and amount excluded from effectiveness testing) Gain/(loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)
2017 2016 2017 2016 2017 2016
Forward exchange contracts $ 24
$ (81 ) Other expense, net $ (53 ) $ (28 ) Interest expense $ 1
$ (1 )

We also enter into foreign currency transactions, primarily to hedge certain intercompany loans. These derivatives are not generally designated as hedging instruments, and at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, we had notional amounts of ~~$569~~$890 million and ~~$630~~$909 million, respectively, and had a net fair value ~~liabilities~~liability of $1$7 million and $8a net fair value asset of $3 million, respectively.

The effects of derivatives that have not been designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 are as follows:

		Loss recognized in income
		Three Months Ended March 31,
Derivatives not designated as hedging instruments:	Location of loss recognized in income	2019			2018
Forward exchange contracts	Other income, net	$	(10	)	$	(5	)

(Loss)/gain recognized in income
Three Months Ended
September 30, Nine Months Ended
September 30,
Derivatives not designated as hedging instruments: Location of (loss)/gain
recognized in income 2017 2016 2017 2016
Forward exchange contracts Other expense, net $ (3 ) $ 4
$ 6
$ (6 )

Note 9—Debt

~~Short-term debt and current portion of long-term~~

Current debt consists of the following:

March 31,

2019

December 31,

2018

7.000% senior notes due 2019

187

186

September 30, 2017 December 31, 2016
6.200% senior notes due 2017 $ —
$ 394
Current portion of 7-year term loan facility —
22
Current portion of term loan due 2019 85
85
Short-term borrowing under bank overdraft arrangement —
5
Other debt —
2
$ 85
$ 508

Long-term debt consists of the following:

	March 31, 2019		December 31, 2018
Revolving $1.25 billion credit facility	$	269	$	130
5.750% senior notes due 2021		498		498
3.500% senior notes due 2021		448		448
2.125% senior notes due 2022⁽ⁱ⁾		604		615
4.625% senior notes due 2023		248		248
3.600% senior notes due 2024		646		645
4.400% senior notes due 2026		544		544
4.500% senior notes due 2028		595		595
6.125% senior notes due 2043		271		271
5.050% senior notes due 2048		395		395
	$	4,518	$	4,389

September 30, 2017 December 31, 2016
Revolving $1.25 billion credit facility $ 917
$ —
Revolving $800 million credit facility —
238
7-year term loan facility —
196
Term loan due 2019 105
169
7.000% senior notes due 2019 186
186
5.750% senior notes due 2021 496
496
3.500% senior notes due 2021 447
446
2.125% senior notes due 2022 ⁽ⁱ⁾
635
565
4.625% senior notes due 2023 248
247
3.600% senior notes due 2024 645
—
4.400% senior notes due 2026 543
543
6.125% senior notes due 2043 271
271
$ 4,493
$ 3,357

~~________________________~~

(i)
i.	Notes issued in Euro (€540 million)

~~Revolving credit facility~~

At March ~~7, 2017, the Company, together with its wholly-owned subsidiary, Trinity Acquisition plc (see~~ ~~Note 19~~ for further information), entered into a $1.25 billion amended and restated revolving credit facility (the ‘RCF’), that will mature on March 7, 2022. The RCF replaced the previous $800 million revolving credit facility. Amounts outstanding under the RCF shall bear interest at LIBOR plus a margin of 1.00% to 1.75%, or alternatively, the base rate plus a margin of 0.00% to 0.75%, based upon the Company’s guaranteed senior unsecured long-term debt rating.

~~Borrowings of $409 million and €45 million against the RCF were used to repay all outstanding borrowings against the previous $800 million credit facility and the 7-year term loan due July 23, 2018.~~

~~Additionally, on March 28, 2017, $407 million was used to repay the 6.200% senior notes due 2017, including accrued interest.~~

~~At September 30, 2017~~31, 2019 and December 31, ~~2016,~~2018, we were in compliance with all financial covenants.

~~Senior notes~~

~~On May 16, 2017,~~

One-Year Term Loan Commitment

As part of the pending acquisition of TRANZACT, the Company ~~together~~has secured financing of up to $1.1 billion in the form of a one-year unsecured term loan. Borrowing will occur in conjunction with ~~its wholly-owned subsidiary, Willis North America Inc. (see~~ ~~Note 17~~ ~~for further information), completed an offering of $650 million of 3.600% senior notes due 2024 (‘2024 senior notes’). The effective interest rate~~the closing of the ~~2024 senior notes~~acquisition, which is ~~3.614%, which includes~~expected during the ~~impact~~third quarter of the discount upon issuance. The 2024 senior notes will mature on May 15, 2024, and interest accrues on the 2024 senior notes from May 16, 2017 and will be paid in cash on May 15 and November 15 of each year. The net proceeds from this offering, after deducting underwriter discounts and commissions and estimated offering expenses, were $644 million, and were used to pay down amounts2019.

Amounts outstanding under the ~~RCF~~term loan shall bear interest, at the option of the borrowers, at a rate equal to (a) LIBOR plus 0.75% to 1.375% for Eurocurrency Rate Loans or (b) the highest of (i) the Federal Funds Rate plus 0.5%, (ii) the ‘prime rate’ quoted by Bank of America, N.A., and ~~for general corporate purposes.~~

(iii) LIBOR plus 1.00%, plus 0.00% to 0.375%, in each case, based upon the Company’s guaranteed senior-unsecured long-term debt rating. In addition, the Company will pay a commitment fee in an amount equal to 0.15% per annum on the undrawn portion of the commitments in respect of the term loan, which fee shall accrue from May 29, 2019 to, but excluding, the earlier to occur of the closing date of the acquisition or the termination of the term loan commitments.

The term loan is pre-payable in part or in full prior to the maturity date at the Company’s discretion. Covenants and events of default are substantively the same as in our existing revolving credit facility.

Note 10—Fair Value Measurements

The Company has categorized its assets and liabilities that are measured at fair value on a recurring and non-recurring basis into a three-level fair value hierarchy, based on the reliability of the inputs used to determine fair value as follows:

•

Level 1: refers to fair values determined based on quoted market prices in active markets for identical assets;

~~Level 1: refers to fair values determined based on quoted market prices in active markets for identical assets;~~

•

Level 2: refers to fair values estimated using observable market-based inputs or unobservable inputs that are corroborated by market data; and

~~Level 2: refers to fair values estimated using observable market based inputs or unobservable inputs that are corroborated by market data; and~~

•

Level 3: includes fair values estimated using unobservable inputs that are not corroborated by market data.

~~Level 3: includes fair values estimated using unobservable inputs that are not corroborated by market data.~~

The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments:

•

Available-for-sale securities are classified as Level 1 because we use quoted market prices in determining the fair value of these securities.

~~Available-for-sale securities are classified as Level 1 because we use quoted market prices in determining the fair value of these securities.~~

•

Market values for our derivative instruments have been used to determine the fair value of forward foreign exchange contracts based on estimated amounts the Company would receive or have to pay to terminate the agreements, taking into account observable information about the current foreign currency forward rates. Such financial instruments are classified as Level 2 in the fair value hierarchy.

Market values for our derivative instruments have been used to determine the fair value of interest rate swaps and forward foreign exchange contracts based on estimated amounts the Company would receive or have to pay to terminate the agreements, taking into account the current interest rate environment or current foreign currency forward rates. Such financial instruments are classified as Level 2 in the fair value hierarchy.

•

Contingent consideration payable is classified as Level 3, and we estimate fair value based on the likelihood and timing of achieving the relevant milestones of each arrangement, applying a probability assessment to each of the potential outcomes, and discounting the probability-weighted payout. Typically, milestones are based on revenue or Earnings Before Interest, Tax, Depreciation and Amortization (‘EBITDA’) growth for the acquired business.

The following ~~table presents~~tables present our assets and liabilities measured at fair value on a recurring basis at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016:~~2018:

		Fair Value Measurements on a Recurring Basis at March 31, 2019
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities:
Mutual funds / exchange traded funds	Prepaid and other current assets and other non-current assets	$	19	$	—	$	—	$	19
Derivatives:
Derivative financial instruments ⁽ⁱ⁾	Prepaid and other current assets and other non-current assets	$	—	$	4	$	—	$	4
Liabilities:
Contingent consideration:
Contingent consideration ⁽ⁱⁱ⁾	Other current liabilities and other non-current liabilities	$	—	$	—	$	55	$	55
Derivatives:
Derivative financial instruments ⁽ⁱ⁾	Other current liabilities and other non-current liabilities	$	—	$	14	$	—	$	14

		Fair Value Measurements on a Recurring Basis at December 31, 2018
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities:
Mutual funds / exchange traded funds	Prepaid and other current assets and other non-current assets	$	18	$	—	$	—	$	18
Derivatives:
Derivative financial instruments ⁽ⁱ⁾	Prepaid and other current assets and other non-current assets	$	—	$	5	$	—	$	5
Liabilities:
Contingent consideration:
Contingent consideration ⁽ⁱⁱ⁾	Other current liabilities and other non-current liabilities	$	—	$	—	$	51	$	51
Derivatives:
Derivative financial instruments ⁽ⁱ⁾	Other current liabilities and other non-current liabilities	$	—	$	17	$	—	$	17

Fair Value Measurements on a Recurring Basis at
September 30, 2017
Balance Sheet Location Level 1 Level 2 Level 3 Total
Assets:
Available-for-sale securities:
Mutual funds / exchange traded funds Prepaid and other current assets and other non-current assets $ 40
$ —
$ —
$ 40
Derivatives:
Derivative financial instruments ⁽ⁱ⁾
Prepaid and other current assets and other non-current assets $ —
$ 11
$ —
$ 11
Liabilities:
Contingent consideration:
Contingent consideration ⁽ⁱⁱ⁾
Other current liabilities and other non-current liabilities $ —
$ —
$ 44
$ 44
Derivatives:
Derivative financial instruments ⁽ⁱ⁾
Other current liabilities and other non-current liabilities $ —
$ 47
$ —
$ 47

Fair Value Measurements on a Recurring Basis at December 31, 2016
Balance Sheet Location Level 1 Level 2 Level 3 Total
Assets:
Available-for-sale securities:

Mutual funds / exchange traded funds Prepaid and other current assets and other non-current assets $ 37
$ —
$ —
$ 37
Derivatives:
Derivative financial instruments ⁽ⁱ⁾
Prepaid and other current assets and other non-current assets $ —
$ 15
$ —
$ 15
Liabilities:
Contingent consideration:
Contingent consideration ⁽ⁱⁱ⁾
Other current liabilities and other non-current liabilities $ —
$ —
$ 55
$ 55
Derivatives:
Derivative financial instruments ⁽ⁱ⁾
Other current liabilities and other non-current liabilities $ —
$ 133
$ —
$ 133

~~_________________________~~

(i)
i.	See Note 8 — Derivative Financial Instruments for further information on our derivative investments.

(ii)

~~ii.~~

Probability weightings are based on our knowledge of the past and planned performance of the acquired entity to which the contingent consideration applies. The ~~weighted average~~weighted-average discount ~~rate~~rates used on our material contingent consideration calculations ~~was 9.39%~~were 9.90% and ~~10.76%~~9.92% at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, respectively. Using different probability weightings and discount rates could result in an increase or decrease of the contingent consideration payable.

The following table summarizes the change in fair value of the Level 3 liabilities:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)	March 31, 2019
Balance at December 31, 2018	$	51
Obligations assumed		4
Payments		(1	)
Realized and unrealized gains		—
Foreign exchange		1
Balance at March 31, 2019	$	55

Fair Value Measurements Using Significant Unobservable Inputs (Level 3) September 30, 2017
Balance at December 31, 2016 $ 55
Obligations assumed —
Payments (9 )
Realized and unrealized losses (6 )
Foreign exchange 4
Balance at September 30, 2017 $ 44

There were no significant transfers between Levels 1, 2 or 3 in the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively.

The following tables present our liabilities not measured at fair value on a recurring basis at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016:~~2018:

	March 31, 2019				December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
Liabilities:
Current debt	$	187	$	190	$	186	$	191
Long-term debt	$	4,518	$	4,721	$	4,389	$	4,458

September 30, 2017 December 31, 2016
Carrying Value Fair Value Carrying Value Fair Value
Liabilities:
Short-term debt and current portion of long-term debt $ 85
$ 85
$ 508
$ 513
Long-term debt $ 4,493
$ 4,332
$ 3,357
$ 3,504

The carrying ~~values~~value of our revolving ~~lines of~~ credit ~~and term loans approximate their~~facility approximates its fair ~~values.~~value. The fair values above are not necessarily indicative of the amounts that the Company would realize upon disposition nor do they indicate the Company’s intent or ability to dispose of the financial instrument.The fair value of our respective senior notes are considered level 2 financial instruments as they are corroborated by observable market data.

Note 11—Retirement Benefits

Defined Benefit Plans and Post-retirement Welfare ~~Plan~~

Plans

Willis Towers Watson sponsors both qualified and non-qualified defined benefit pension plans and other post-retirement welfare ~~plans~~ (‘PRW’) plans throughout the world. The majority of our plan assets and obligations are in the ~~United States~~U.S. and

the ~~United Kingdom.~~U.K. We have also included disclosures related to defined benefit plans in certain other countries, including Canada, France, Germany ~~Ireland~~ and ~~the Netherlands.~~Ireland. Together, these disclosed funded and unfunded plans represent 99% of Willis Towers Watson’s pension and PRW obligations and are disclosed herein.

Components of Net Periodic Benefit (Income)/Cost for Defined Benefit Pension and Post-retirement Welfare Plans

The following table sets forth the components of net periodic benefit (income)/cost for the Company’s defined benefit pension and PRW plans for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016:~~2018:


	Three Months Ended September 30,																						Three Months Ended March 31,
	2017											2016											2019												2018
	U.S.			U.K.			Other			PRW		U.S.			U.K.			Other			PRW		U.S.			U.K.			Other			PRW			U.S.			U.K.			Other			PRW
Service cost	$	16		$	8		$	6		$	—	$	15		$	6		$	5		$	—	$	16		$	4		$	5		$	—		$	16		$	5		$	5		$	—
Interest cost	34			23			4			1		34			26			6			1			40			24			4			1			35			24			5			1
Expected return on plan assets	(61		)	(72		)	(7		)	—		(61		)	(58		)	(8		)	—			(64	)		(63	)		(7	)		—			(68	)		(78	)		(8	)		—
Settlement	1			—			—			—		—			—			—			—
Amortization of net loss	4			13			—			—		3			10			—			—			5			5			1			—			3			12			—			—
Amortization of prior service credit	—			(4		)	—			—		—			(5		)	—			—			—			(4	)		—			(1	)		—			(5	)		—			—
Net periodic benefit (income)/cost	$	(6	)	$	(32	)	$	3		$	1	$	(9	)	$	(21	)	$	3		$	1	$	(3	)	$	(34	)	$	3		$	—		$	(14	)	$	(42	)	$	2		$	1

Nine Months Ended September 30,
2017 2016
U.S. U.K. Other PRW U.S. U.K. Other PRW
Service cost $ 49
$ 23
$ 15
$ —
$ 44
$ 19
$ 14
$ —
Interest cost 104
69
13
3
102
83
20
3
Expected return on plan assets (184 ) (211 ) (22 ) —
(180 ) (186 ) (26 ) —
Settlement 1
—
—
—
—
—
2
—
Amortization of net loss 10
39
1
—
8
32
1
—
Amortization of prior service credit —
(13 ) —
—
—
(15 ) —
—
Net periodic benefit (income)/cost $ (20 ) $ (93 ) $ 7
$ 3
$ (26 ) $ (67 ) $ 11
$ 3

Employer Contributions to Defined Benefit Pension Plans

The Company made ~~$50 million~~no contributions to its U.S. plans for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and anticipates making ~~no further~~$60 million in contributions ~~for~~over the remainder of the fiscal year. The Company made contributions of ~~$45~~$18 million to its U.K. plans for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and anticipates making additional contributions of ~~$18~~$58 million for the remainder of the fiscal year. The Company made contributions of ~~$11~~$15 million to its other plans for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and anticipates making additional contributions of $4$7 million for the remainder of the fiscal year.

Defined Contribution Plans

The Company made contributions to its defined contribution plans of ~~$39~~$41 million and ~~$118~~$48 million during the three months ended March 31, 2019 and 2018, respectively.

Note 12—Leases

On January 1, 2019, the Company adopted ASC 842. The adoption of this new guidance had a material impact to the amounts and classifications of certain lease-related balances within our condensed consolidated financial statements and accompanying note disclosures. The Company adopted the standard using the modified retrospective approach whereby it recognized a transition adjustment at the effective date of ASC 842, January 1, 2019, rather than at the beginning of the earliest comparative period presented. The adoption of ASC 842 resulted in an additional $1.2 billion of lease liabilities and $1.0 billion of ROU assets being recognized at January 1, 2019. Furthermore, we reflected additional deferred tax assets of $252 million and deferred tax liabilities of $252 million on the gross lease liabilities and gross ROU assets, respectively. There was no adjustment to retained earnings. Rather, all operating lease-related balances, such as deferred rent accruals and lease-related intangibles, reflected on our condensed consolidated balance sheet as of December 31, 2018 were reclassified as a reduction to the opening ROU asset balance in accordance with the new guidance on January 1, 2019. Likewise, existing deferred taxes on operating lease-related balances have been reclassified as a reduction to the deferred tax liabilities related to the ROU assets.

•

We assessed the transition practical expedients available under the guidance and, in addition to selecting the modified retrospective transition approach as noted above, we made the following elections:

Practical expedient package – We elected this package, and therefore did not reassess lease classifications for our existing or expired leases, whether any existing or expired contracts contain a lease, or our treatment of any initial direct costs.

Hindsight practical expedient – As permitted under the transition rules, the Company did not revisit its estimate of lease terms upon transition to ASC 842.

Short-term lease exemption – We elected this exemption, and therefore did not recognize any right-of-use assets or liabilities for short-term leases (generally defined as having a term of 12 months or less) on our condensed consolidated balance sheet.

Separation of lease and non-lease components – We elected the practical expedient to not separate the cash flows associated with lease and non-lease components in our lease accounting and resulting amounts recorded in our condensed consolidated financial statements.

The following table presents amounts recorded on our condensed consolidated balance sheet at March 31, 2019, classified as either operating or finance leases. Operating leases are presented separately on our condensed consolidated balance sheet. For the finance leases, the ROU assets are included in fixed assets, net, and the liabilities are classified within other current liabilities or other non-current liabilities.

	Operating Leases		Finance Leases		Total Leases
Right-of-use assets	$	946	$	14	$	960
Current lease liabilities		158		3		161
Long-term lease liabilities		961		25		986

The following table presents amounts recorded on our condensed consolidated statement of comprehensive income for the three ~~and nine~~ months ended ~~September 30, 2017, respectively, and $37~~March 31, 2019:

	Three Months Ended March 31, 2019
Finance lease cost:
Amortization of right-of-use assets	$	1
Interest on lease liabilities		1
Operating lease cost		48
Short-term lease cost		—
Variable lease cost		13
Sublease income		(4	)
Total lease cost, net	$	59

The total lease cost is recognized in different locations in our condensed consolidated statement of comprehensive income. Amortization of the finance lease ROU assets is included in depreciation, while the interest cost component of these finance leases is included in interest expense. All other costs are included in other operating expenses. The Company had rent expense of $64 million, ~~and $118 million~~net of sublease income, for the three ~~and nine~~ months ended ~~September 30, 2016, respectively.~~March 31, 2018 related to operating leases classified within other operating expenses on our condensed consolidated statement of comprehensive income.

Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2019, as well as their location in the condensed consolidated statement of cash flows, is as follows:

	Three Months Ended March 31, 2019
Cash flows from operating activities:
Operating leases	$	55
Finance leases		1
Cash flows from financing activities:
Finance leases		1
Total lease payments	$	57

There were immaterial ROU assets acquired during the three months ended March 31, 2019.

Our operating and finance leases have the following weighted-average terms and discount rates as of March 31, 2019:

	Operating Leases			Finance Leases
Weighted-average term		9.1			6.8
Weighted-discount rate		3.6	%		12.9	%

The maturity of our lease liabilities on an undiscounted basis, including a reconciliation to the total lease liabilities reported on the condensed consolidated balance sheet as of March 31, 2019, is as follows:

	Operating Leases			Finance Leases			Total Leases
Remainder of 2019	$	147		$	4		$	151
2020		180			6			186
2021		160			6			166
2022		142			6			148
2023		132			6			138
Thereafter		552			14			566
Total future lease payments		1,313			42			1,355
Interest		(194	)		(14	)		(208	)
Total lease liabilities	$	1,119		$	28		$	1,147

Prior to the adoption of ASC 842, on December 31, 2018, the maturity of our operating and finance leases on an undiscounted basis was as follows:

	Operating Leases			Finance Leases			Total Leases
2019	$	197		$	5		$	202
2020		180			6			186
2021		159			6			165
2022		142			6			148
2023		131			6			137
Thereafter		542			14			556
Total future lease payments		1,351			43			1,394
Interest		(202	)		(14	)		(216	)
Total lease liabilities	$	1,149		$	29		$	1,178

Note 12 13—Commitments and Contingencies

Indemnification Agreements

Willis Towers Watson has various agreements which provide that it may be obligated to indemnify the other party to the agreement with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business and in connection with the purchase and sale of certain businesses. Although it is not possible to predict the maximum potential amount of future payments that may become due under these indemnification agreements because of the conditional nature of ~~Willis Towers Watson’s~~the Company’s obligations and the unique facts of each particular agreement, ~~the Company does~~we do not believe that any potential liability that ~~might~~may arise from such indemnity provisions is probable or material. There are no provisions for recourse to third parties, nor are any assets held by any third parties that any guarantor can liquidate to recover amounts paid under such indemnities.

Legal Proceedings

In the ordinary course of business, the Company is subject to various actual and potential claims, lawsuits and other proceedings. Some of the claims, lawsuits and other proceedings seek damages in amounts which could, if assessed, be significant. We do not expect the impact of claims or demands not described below to be material to the Company’s condensed consolidated financial statements. The Company also receives subpoenas in the ordinary course of business and, from time to time, receives requests for information in connection with governmental investigations.

Errors and omissions claims, lawsuits, and other proceedings arising in the ordinary course of business are covered in part by professional indemnity or other appropriate insurance. The terms of this insurance vary by policy year. Regarding self-insured risks, the Company has established provisions which are believed to be adequate in light of current information and legal advice, or, in certain cases, where a range of loss exists, the Company accrues the minimum amount in the range if no amount within the range is a

better estimate than any other amount. The Company adjusts such provisions from time to time according to developments.

See Note 14 for the amounts accrued at March 31, 2019 and December 31, 2018 in the condensed consolidated balance sheets.

On the basis of current information, the Company does not expect that the actual claims, lawsuits and other proceedings to which ~~the Company~~it is subject, or potential claims, lawsuits, and other proceedings relating to matters of which it is aware, will ultimately have a material adverse effect on ~~the Company’s~~its financial condition, results of operations or liquidity. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation and disputes with insurance companies, it is possible that an adverse outcome or settlement in certain matters could, from time to time, have a material adverse effect on the Company’s results of operations or cash flows in particular quarterly or annual periods. In addition, given the early stages of some litigation or regulatory proceedings described below, it ismay not be possible to predict their ~~outcome~~outcomes or ~~resolution,~~resolutions, and it is possible that these events may have a material adverse effect on the Company.

The Company provides for contingent liabilities based on ASC 450, Contingencies, when it is determined that a liability, inclusive of defense costs, is probable and reasonably estimable. The contingent liabilities recorded are primarily developed actuarially. Litigation is subject to many factors which are difficult to predict so there can be no assurance that in the event of a material unfavorable result in one or more claims, we will not incur material costs.

~~Merger-related Appraisal Demands~~

~~Between~~

Merger-Related Securities Litigation

On November ~~12, 2015 and December 10, 2015, in connection with the then-proposed Merger,~~21, 2017, a purported former stockholder of Legacy Towers Watson ~~received demands for appraisal under Section 262 of the Delaware General Corporation Law~~filed a putative class action complaint on behalf of ~~ten purported beneficial owners~~a putative class consisting of ~~an aggregate~~all Legacy Towers Watson stockholders as of ~~approximately 2.4%~~October 2, 2015 against the Company, Legacy Towers Watson, Legacy Willis, ValueAct Capital Management (‘ValueAct’), and certain current and former directors and officers of Legacy Towers Watson and Legacy Willis (John Haley, Dominic Casserley, and Jeffrey Ubben), in the United States District Court for the Eastern District of Virginia. The complaint asserted claims against certain defendants under Section 14(a) of the ~~shares~~Securities Exchange Act of 1934 (the ‘Exchange Act’) for allegedly false and misleading statements in the proxy statement for the Merger; and against other defendants under Section 20(a) of the Exchange Act for alleged ‘control person’ liability with respect to such allegedly false and misleading statements. The complaint further contended that the allegedly false and misleading statements caused stockholders of Legacy Towers Watson ~~common stock outstanding at~~to accept inadequate Merger consideration. The complaint sought damages in an unspecified amount. On February 20, 2018, the ~~time~~court appointed the Regents of the ~~Merger. Between~~University of California (‘Regents’) as Lead Plaintiff and Bernstein Litowitz Berger & Grossman LLP (‘Bernstein’) as Lead Counsel for the putative class, consolidated all subsequently filed, removed, or transferred actions, and captioned the consolidated action ‘In re Willis Towers Watson plc Proxy Litigation,’ Master File No. 1:17-cv-1338-AJT-JFA. On March ~~3, 2016~~9, 2018, Lead Plaintiff filed an Amended Complaint. On April 13, 2018, the defendants filed motions to dismiss the Amended Complaint, and, on July 11, 2018, following briefing and argument, the court granted the motions and dismissed the Amended Complaint in its entirety. On July 30, 2018, Lead Plaintiff filed a notice of appeal from the court’s July 11, 2018 dismissal order to the United States Court of Appeals for the Fourth Circuit, and, on December 6, 2018, the parties completed briefing on the appeal. The appeal is scheduled to be argued on May 8, 2019.

On February 27, 2018 and March ~~23, 2016, three appraisal petitions were~~8, 2018, two additional purported former stockholders of Legacy Towers Watson, City of Fort Myers General Employees’ Pension Fund (‘Fort Myers’) and Alaska Laborers-Employers Retirement Trust (‘Alaska’), filed putative class action complaints on behalf of a putative class of Legacy Towers Watson stockholders against the former members of the Legacy Towers Watson board of directors, Legacy Towers Watson, Legacy Willis and ValueAct, in the Delaware Court of Chancery, ~~for the State~~captioned City of ~~Delaware on behalf of three purported beneficial owners of Towers Watson common stock, captioned~~ ~~Rangeley Capital LLC v. Towers Watson & Co.,~~ ~~C.A. No. 12063-CB,~~ ~~Merion Capital L.P. v. Towers Watson & Co.,~~ ~~C.A. No. 12064-CB,and~~ ~~College Retirement Equities~~Fort Myers General Employees’ Pension Fund v. Towers Watson & Co., et al., C.A. No. ~~12126-CB.~~2018-0132, and Alaska Laborers-Employers Retirement Trust v. Victor F. Ganzi, et al., C.A. No. 2018-0155, respectively. Based on similar allegations as the Eastern District of Virginia action described above, the complaints assert claims against the former directors of Legacy Towers Watson for breach of fiduciary duty and against Legacy Willis and ValueAct for aiding and abetting breach of fiduciary duty.

On March 9, 2018, Regents filed a putative class action complaint on behalf of a putative class of Legacy Towers Watson stockholders against the Company, Legacy Willis, ValueAct, and Messrs. Haley, Casserley, and Ubben, in the Delaware Court of Chancery, captioned The ~~appraisal petitions seek, among other things, a determination~~Regents of the ~~fair value~~University of California v. John J. Haley, et al., C.A. No. 2018-0166. Based on similar allegations as the ~~appraisal petitioners’ shares at~~Eastern District of Virginia action described above, the ~~time~~complaint asserts claims against Mr. Haley for breach of fiduciary duty and against all other defendants for aiding and abetting breach of fiduciary duty. Also on March 9, 2018, Regents filed a motion for consolidation of all pending and subsequently filed Delaware Court of Chancery actions, and for appointment as Lead Plaintiff and for the ~~Merger; an order that Towers Watson pay that value~~appointment of Bernstein as Lead Counsel for the putative class. On March 29, 2018, Fort Myers and Alaska responded to Regents’ motion and cross-moved for appointment as Co-Lead Plaintiffs and for the ~~appraisal petitioners, together with interest at the statutory rate;~~appointment of their counsel, Grant & Eisenhofer P.A. and ~~an award of costs, attorneys’ fees, and other expenses. Towers Watson answered the appraisal petitions between March 24, 2016 and~~Kessler Topaz Meltzer & Check, LLP as Co-Lead Counsel. On April ~~18, 2016. On May 9, 2016,~~2, 2018, the court consolidated the ~~three pending appraisal proceedings under~~Delaware Court of Chancery actions and all related actions subsequently filed in or transferred to the ~~caption~~ ~~In re Appraisal~~Delaware Court of Chancery. On June 5, 2018, the court denied Regents’ motion for appointment of Lead Plaintiff and Lead Counsel and granted Fort Myers’ and Alaska’s cross-motion. On June 20, 2018, Fort Myers and Alaska designated the complaint previously filed by Alaska (the ‘Alaska Complaint’) as the operative complaint in the consolidated action. On September 14, 2018, the defendants filed motions to dismiss the Alaska Complaint. On October 31, 2018, Fort Myers and Alaska filed an amended complaint, which, based on similar allegations, asserts claims against the former directors of legacy Towers Watson ~~& Co., Consolidated C.A. No. 12064-CB. A fourth owner~~for breach of fiduciary duty and against ValueAct and Mr. Ubben for aiding and abetting breach of fiduciary duty. On January 11, 2019, the defendants filed ~~an appraisal demand, but did not file an appraisal petition. The aggregate amount of shares subject~~motions to ~~appraisal from these four owners was 1,415,199.~~dismiss the amended complaint,

and on March 29, 2019, the parties completed briefing on the motions. The court ~~provisionally scheduled trial for~~heard argument on the motions on April 11, 2019 and reserved judgment.

On October ~~2, 2017. On September 15, 2017,~~18, 2018, three additional purported former stockholders of Legacy Towers Watson, Naya Master Fund LP, Naya 174 Fund Limited and Naya Lincoln Park Master Fund Limited (collectively, ‘Naya’), filed a complaint against the Company, ~~reached a settlement with all shareholders who made demands for appraisal, resolving all claims related to~~Legacy Towers Watson, Legacy Willis and John Haley, in the ~~appraised shares. Under the terms~~Supreme Court of the ~~settlement, these shareholders surrendered all rights~~State of New York, County of New York, captioned Naya Master Fund LP, et al. v. John J. Haley, et al., Index No. 654968/2018. Based on similar allegations as the Eastern District of Virginia and Delaware actions described above, the complaint asserts claims for common law fraud and negligent misrepresentation. On December 18, 2018, the defendants filed a motion to dismiss the ~~Towers Watson shares~~complaint, and ~~all potential Merger consideration issuable~~on March 21, 2019, the parties completed briefing on the motion. On April 23, 2019, the parties filed a Stipulation and Proposed Order Voluntarily Discontinuing Action providing for the ~~legacy shares. In exchange,~~dismissal of the action with prejudice, which the court entered on April 29, 2019.

The defendants dispute the allegations in these actions and intend to defend the lawsuits vigorously. Given the stage of the proceedings, the Company ~~made a payment~~is unable to ~~these shareholders of approximately $211 million, which represented $134.75 per share plus accrued interest at the statutory rate of interest. As a result~~provide an estimate of the ~~settlement, the Court, on September 18, 2017, dismissed all claims~~reasonably possible loss or range of loss in ~~the case with prejudice. The Company thereafter canceled all~~respect of the ~~Towers Watson common shares at issue in the appraisal proceeding.~~

complaints.

Stanford Financial Group

The Company has been named as a defendant in 15 similar lawsuits relating to the collapse of The Stanford Financial Group (‘Stanford’), for which Willis of Colorado, Inc. acted as broker of record on certain lines of insurance. The complaints in these actions generally allege that the defendants actively and materially aided Stanford’s alleged fraud by providing Stanford with certain letters regarding coverage that they knew would be used to help retain or attract actual or prospective Stanford client investors. The complaints further allege that these letters, which contain statements about Stanford and the insurance policies that the defendants placed for Stanford, contained untruths and omitted material facts and were drafted in this manner to help Stanford promote and sell its allegedly fraudulent certificates of deposit.

The 15 actions are as follows:

•

Troice, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:9-CV-1274-N, was filed on July 2, 2009 in the U.S. District Court for the Northern District of Texas against Willis Group Holdings plc, Willis of Colorado, Inc. and a Willis associate, among others. On April 1, 2011, plaintiffs filed the operative Third Amended Class Action Complaint individually and on behalf of a putative, worldwide class of Stanford investors, adding Willis Limited as a defendant and alleging claims under Texas statutory and common law and seeking damages in excess of $1 billion, punitive damages and costs. On May 2, 2011, the defendants filed motions to dismiss the Third Amended Class Action Complaint, arguing, inter alia, that the plaintiffs’ claims are precluded by the Securities Litigation Uniform Standards Act of 1998 (‘SLUSA’).

~~Troice, et al. v. Willis of Colorado, Inc., et al.~~, C.A. No. 3:9-CV-1274-N, was filed on July 2, 2009 in the U.S. District Court for the Northern District of Texas against Willis Group Holdings plc, Willis of Colorado, Inc. and a Willis associate, among others. On April 1, 2011, plaintiffs filed the operative Third Amended Class Action Complaint individually and on behalf of a putative, worldwide class of Stanford investors, adding Willis Limited as a defendant and alleging claims under Texas statutory and common law and seeking damages in excess of $1 billion, punitive damages and costs. On May 2, 2011, the defendants filed motions to dismiss the Third Amended Class Action Complaint, arguing, ~~inter alia, that the plaintiffs’ claims are precluded by the Securities Litigation Uniform Standards Act of 1998 (‘SLUSA’).~~

On May 10, 2011, the court presiding over the Stanford-related actions in the Northern District of Texas entered an order providing that it would consider the applicability of SLUSA to the Stanford-related actions based on the decision in a separate Stanford action not involving a Willis entity, Roland v. Green, Civil Action No. 3:10-CV-0224-N (‘Roland’). On August 31, 2011, the court issued its decision in Roland, dismissing that action with prejudice under SLUSA.

On October 27, 2011, the court in Troice entered an order (i) dismissing with prejudice those claims asserted in the Third Amended Class Action Complaint on a class basis on the grounds set forth in the Roland decision discussed above and (ii) dismissing without prejudice those claims asserted in the Third Amended Class Action Complaint on an individual basis. Also on October 27, 2011, the court entered a final judgment in the action.

On October 28, 2011, the plaintiffs in Troice filed a notice of appeal to the U.S. Court of Appeals for the Fifth Circuit. Subsequently, Troice, Roland and a third action captioned Troice, et al. v. Proskauer Rose LLP, Civil Action No. 3:09-CV-01600-N, which also was dismissed on the grounds set forth in the Roland decision discussed above and on appeal to the U.S. Court of Appeals for the Fifth Circuit, were consolidated for purposes of briefing and oral argument. Following the completion of briefing and oral argument, on March 19, 2012, the Fifth Circuit reversed and remanded the actions. On April 2, 2012, the defendants-appellees filed petitions for rehearingen banc. On April 19, 2012, the petitions for rehearing en banc were denied. On July 18, 2012, defendants-appellees filed a petition for writ of certiorari with the United States Supreme Court regarding the Fifth Circuit’s reversal in Troice. On January 18, 2013, the Supreme Court granted our petition. Opening briefs were filed on May 3, 2013 and the Supreme Court heard oral argument on October 7, 2013. On February 26, 2014, the Supreme Court affirmed the Fifth Circuit’s decision.

On March 19, 2014, the plaintiffs in Troice filed a Motion to Defer Resolution of Motions to Dismiss, to Compel Rule 26(f) Conference and For Entry of Scheduling Order.

On March 25, 2014, the parties in Troiceand theJanvey, et al. v. Willis of Colorado, Inc., et al. action discussed below stipulated to the consolidation of the two actions for pre-trial purposes under Rule 42(a) of the Federal Rules of Civil Procedure. On March 28, 2014, the Court ‘so ordered’ that stipulation and, thus, consolidated Troice and Janvey for pre-trial purposes under Rule 42(a).

On September 16, 2014, the court (a) denied the plaintiffs’ request to defer resolution of the defendants’ motions to dismiss, but granted the plaintiffs’ request to enter a scheduling order; (b) requested the submission of supplemental briefing by all parties on the defendants’ motions to dismiss, which the parties submitted on September 30, 2014; and (c) entered an order

setting a schedule for briefing and discovery regarding plaintiffs’ motion for class certification, which schedule, among other things, provided for the submission of the plaintiffs’ motion for class certification (following the completion of briefing and discovery) on April 20, 2015.

On December 15, 2014, the court granted in part and denied in part the defendants’ motions to dismiss. On January 30, 2015, the defendants except Willis Group Holdings plc answered the Third Amended Class Action Complaint.

On April 20, 2015, the plaintiffs filed their motion for class certification, the defendants filed their opposition to plaintiffs’ motion, and the plaintiffs filed their reply in further support of the motion. Pursuant to an agreed stipulation also filed with the court on April 20, 2015, the defendants on June 4, 2015 filed sur-replies in further opposition to the motion. The Court has not yet scheduled a hearing on the motion.

On June 19, 2015, Willis Group Holdings plc filed a motion to dismiss the complaint for lack of personal jurisdiction. On November 17, 2015, Willis Group Holdings plc withdrew the motion.

On March 31, 2016, the parties in the Troice and Janvey actions entered into a settlement in principle that is described in more detail below.

•

Ranni v. Willis of Colorado, Inc., et al., C.A. No. 9-22085, was filed on July 17, 2009 against Willis Group Holdings plc and Willis of Colorado, Inc. in the U.S. District Court for the Southern District of Florida. The complaint was filed on behalf of a putative class of Venezuelan and other South American Stanford investors and alleges claims under Section 10(b) of the Securities Exchange Act of 1934 (and Rule 10b-5 thereunder) and Florida statutory and common law and seeks damages in an amount to be determined at trial. On October 6, 2009, Ranni was transferred, for consolidation or coordination with other Stanford-related actions (including Troice), to the Northern District of Texas by the U.S. Judicial Panel on Multidistrict Litigation (the ‘JPML’). The defendants have not yet responded to the complaint in Ranni. On August 26, 2014, the plaintiff filed a notice of voluntary dismissal of the action without prejudice.

•

Canabal, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:9-CV-1474-D, was filed on August 6, 2009 against Willis Group Holdings plc, Willis of Colorado, Inc. and the same Willis associate named as a defendant in Troice, among others, also in the Northern District of Texas. The complaint was filed individually and on behalf of a putative class of Venezuelan Stanford investors, alleged claims under Texas statutory and common law and sought damages in excess of $1 billion, punitive damages, attorneys’ fees and costs. On December 18, 2009, the parties in Troice and Canabal stipulated to the consolidation of those actions (under the Troice civil action number), and, on December 31, 2009, the plaintiffs in Canabal filed a notice of dismissal, dismissing the action without prejudice.

•

Rupert, et al. v. Winter, et al., Case No. 2009C115137, was filed on September 14, 2009 on behalf of 97 Stanford investors against Willis Group Holdings plc, Willis of Colorado, Inc. and the same Willis associate, among others, in Texas state court (Bexar County). The complaint alleges claims under the Securities Act of 1933, Texas and Colorado statutory law and Texas common law and seeks special, consequential and treble damages of more than $300 million, attorneys’ fees and costs. On October 20, 2009, certain defendants, including Willis of Colorado, Inc., (i) removed Rupert to the U.S. District Court for the Western District of Texas, (ii) notified the JPML of the pendency of this related action and (iii) moved to stay the action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On April 1, 2010, the JPML issued a final transfer order for the transfer of Rupert to the Northern District of Texas. On January 24, 2012, the court remanded Rupert to Texas state court (Bexar County), but stayed the action until further order of the court. On August 13, 2012, the plaintiffs filed a motion to lift the stay, which motion was denied by the court on September 16, 2014. On October 10, 2014, the plaintiffs appealed the court’s denial of their motion to lift the stay to the U.S. Court of Appeals for the Fifth Circuit. On January 5, 2015, the Fifth Circuit consolidated the appeal with the appeal in the Rishmague, et ano. v. Winter, et al. action discussed below, and the consolidated appeal, was fully briefed as of March 24, 2015. Oral argument on the consolidated appeal was held on September 2, 2015. On September 16, 2015, the Fifth Circuit affirmed. The defendants have not yet responded to the complaint in Rupert.

~~Ranni v. Willis of Colorado, Inc., et al., C.A.~~ No. 9-22085, was filed on July 17, 2009 against Willis Group Holdings plc and Willis of Colorado, Inc. in the U.S. District Court for the Southern District of Florida. The complaint was filed on behalf of a putative class of Venezuelan and other South American Stanford investors and alleges claims under Section 10(b) of the Securities Exchange Act of 1934 (and Rule 10b-5 thereunder) and Florida statutory and common law and seeks damages in an amount to be determined at trial. On October 6, 2009, ~~Ranni~~ ~~was transferred, for consolidation or coordination with other Stanford-related actions (including~~ ~~Troice), to the Northern District of Texas by the U.S. Judicial Panel on Multidistrict Litigation (the ‘JPML’). The defendants have not yet responded to the complaint in~~ ~~Ranni. On August 26, 2014, the plaintiff filed a notice of voluntary dismissal of the action without prejudice.~~

•

Casanova, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:10-CV-1862-O, was filed on September 16, 2010 on behalf of seven Stanford investors against Willis Group Holdings plc, Willis Limited, Willis of Colorado, Inc. and the same Willis associate, among others, also in the Northern District of Texas. The complaint alleges claims under Texas statutory and common law and seeks actual damages in excess of $5 million, punitive damages, attorneys’ fees and costs. On February 13, 2015, the parties filed an Agreed Motion for Partial Dismissal pursuant to which they agreed to the dismissal of certain claims pursuant to the motion to dismiss decisions in the Troice action discussed above and the Janvey action discussed below. Also on February 13, 2015, the defendants except Willis Group Holdings plc answered the complaint in the Casanova action. On June 19, 2015, Willis Group Holdings plc filed a motion to dismiss the complaint for lack of personal jurisdiction. Plaintiffs have not opposed the motion.

•

Rishmague, et ano. v. Winter, et al., Case No. 2011CI2585, was filed on March 11, 2011 on behalf of two Stanford investors, individually and as representatives of certain trusts, against Willis Group Holdings plc, Willis of Colorado, Inc., Willis of Texas, Inc. and the same Willis associate, among others, in Texas state court (Bexar County). The complaint alleges claims under Texas and Colorado statutory law and Texas common law and seeks special, consequential and treble damages of more

~~Canabal, et al. v. Willis of Colorado, Inc., et al., C.A.~~ ~~No. 3:9-CV-1474-D, was filed on August 6, 2009 against Willis Group Holdings plc, Willis of Colorado, Inc. and the same Willis associate named as a defendant in~~ ~~Troice~~, among others, also in the Northern District of Texas. The complaint was filed individually and on behalf of a putative class of Venezuelan Stanford investors, alleged claims under Texas statutory and common law and sought damages in excess of $1 billion, punitive damages, attorneys’ fees and costs. On December 18, 2009, the parties in ~~Troice~~ ~~and~~ ~~Canabal~~ ~~stipulated to the consolidation of those actions (under the~~ ~~Troice~~ ~~civil action number), and, on December 31, 2009, the plaintiffs in~~ ~~Canabal~~ ~~filed a notice of dismissal, dismissing the action without prejudice.~~

than $37 million and attorneys’ fees and costs. On April 11, 2011, certain defendants, including Willis of Colorado, Inc., (i) removed Rishmague to the Western District of Texas, (ii) notified the JPML of the pendency of this related action and (iii) moved to stay the action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On August 8, 2011, the JPML issued a final transfer order for the transfer of Rishmague to the Northern District of Texas, where it is currently pending. On August 13, 2012, the plaintiffs joined with the plaintiffs in the Rupert action in their motion to lift the court’s stay of the Rupert action. On September 9, 2014, the court remanded Rishmague to Texas state court (Bexar County), but stayed the action until further order of the court and denied the plaintiffs’ motion to lift the stay. On October 10, 2014, the plaintiffs appealed the court’s denial of their motion to lift the stay to the Fifth Circuit. On January 5, 2015, the Fifth Circuit consolidated the appeal with the appeal in the Rupert action, and the consolidated appeal was fully briefed as of March 24, 2015. Oral argument on the consolidated appeal was held on September 2, 2015. On September 16, 2015, the Fifth Circuit affirmed. The defendants have not yet responded to the complaint in Rishmague.

~~Rupert, et al. v. Winter, et al.,~~ Case No. 2009C115137, was filed on September 14, 2009 on behalf of 97 Stanford investors against Willis Group Holdings plc, Willis of Colorado, Inc. and the same Willis associate, among others, in Texas state court (Bexar County). The complaint alleges claims under the Securities Act of 1933, Texas and Colorado statutory law and Texas common law and seeks special, consequential and treble damages of more than $300 million, attorneys’ fees and costs. On October 20, 2009, certain defendants, including Willis of Colorado, Inc., (i) removed ~~Rupert~~ to the U.S. District Court for the Western District of Texas, (ii) notified the JPML of the pendency of this related action and (iii) moved to stay the action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On April 1, 2010, the JPML issued a final transfer order for the transfer of ~~Rupert~~ ~~to the Northern District of Texas. On January 24, 2012, the court remanded~~ ~~Rupert~~ to Texas state court (Bexar County), but stayed the action until further order of the court. On August 13, 2012, the plaintiffs filed a motion to lift the stay, which motion was denied by the court on September 16, 2014. On October 10, 2014, the plaintiffs appealed the court’s denial of their motion to lift the stay to the U.S. Court of Appeals for the Fifth Circuit. On January 5, 2015, the Fifth Circuit consolidated the appeal with the appeal in the ~~Rishmague, et ano. v. Winter, et al.~~ action discussed below, and the consolidated appeal, was fully briefed as of March 24, 2015. Oral argument on the consolidated appeal was held on September 2, 2015. On September 16, 2015, the Fifth Circuit affirmed. The defendants have not yet responded to the complaint in ~~Rupert~~.

•

MacArthur v. Winter, et al., Case No. 2013-07840, was filed on February 8, 2013 on behalf of two Stanford investors against Willis Group Holdings plc, Willis of Colorado, Inc., Willis of Texas, Inc. and the same Willis associate, among others, in Texas state court (Harris County). The complaint alleges claims under Texas and Colorado statutory law and Texas common law and seeks actual, special, consequential and treble damages of approximately $4 million and attorneys’ fees and costs. On March 29, 2013, Willis of Colorado, Inc. and Willis of Texas, Inc. (i) removed MacArthur to the U.S. District Court for the Southern District of Texas and (ii) notified the JPML of the pendency of this related action. On April 2, 2013, Willis of Colorado, Inc. and Willis of Texas, Inc. filed a motion in the Southern District of Texas to stay the action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. Also on April 2, 2013, the court presiding over MacArthur in the Southern District of Texas transferred the action to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On September 29, 2014, the parties stipulated to the remand (to Texas state court (Harris County)) and stay of MacArthur until further order of the court (in accordance with the court’s September 9, 2014 decision in Rishmague (discussed above)), which stipulation was ‘so ordered’ by the court on October 14, 2014. The defendants have not yet responded to the complaint in MacArthur.

~~Casanova, et al. v. Willis of Colorado, Inc., et al.,~~ C.A. No. 3:10-CV-1862-O, was filed on September 16, 2010 on behalf of seven Stanford investors against Willis Group Holdings plc, Willis Limited, Willis of Colorado, Inc. and the same Willis associate, among others, also in the Northern District of Texas. The complaint alleges claims under Texas statutory and common law and seeks actual damages in excess of $5 million, punitive damages, attorneys’ fees and costs. On February 13, 2015, the parties filed an Agreed Motion for Partial Dismissal pursuant to which they agreed to the dismissal of certain claims pursuant to the motion to dismiss decisions in the ~~Troice~~ ~~action discussed above and the~~ ~~Janvey~~ ~~action discussed below. Also on February 13, 2015, the defendants except Willis Group Holdings plc answered the complaint in the~~ ~~Casanova~~ ~~action. On June 19, 2015, Willis Group Holdings plc filed a motion to dismiss the complaint for lack of personal jurisdiction. Plaintiffs have not opposed the motion.~~

•

Florida suits: On February 14, 2013, five lawsuits were filed against Willis Group Holdings plc, Willis Limited and Willis of Colorado, Inc. in Florida state court (Miami-Dade County), alleging violations of Florida common law. The five suits are: (1) Barbar, et al. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05666CA27, filed on behalf of 35 Stanford investors seeking compensatory damages in excess of $30 million; (2) de Gadala-Maria, et al. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05669CA30, filed on behalf of 64 Stanford investors seeking compensatory damages in excess of $83.5 million; (3) Ranni, et ano. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05673CA06, filed on behalf of two Stanford investors seeking compensatory damages in excess of $3 million; (4) Tisminesky, et al. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05676CA09, filed on behalf of 11 Stanford investors seeking compensatory damages in excess of $6.5 million; and (5) Zacarias, et al. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05678CA11, filed on behalf of 10 Stanford investors seeking compensatory damages in excess of $12.5 million. On June 3, 2013, Willis of Colorado, Inc. removed all five cases to the Southern District of Florida and, on June 4, 2013, notified the JPML of the pendency of these related actions. On June 10, 2013, the court in Tisminesky issued an order sua sponte staying and administratively closing that action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation and coordination with the other Stanford-related actions. On June 11, 2013, Willis of Colorado, Inc. moved to stay the other four actions pending the JPML’s transfer decision. On June 20, 2013, the JPML issued a conditional transfer order for the transfer of the five actions to the Northern District of Texas, the transmittal of which was stayed for seven days to allow for any opposition to be filed. On June 28, 2013, with no opposition having been filed, the JPML lifted the stay, enabling the transfer to go forward.

~~Rishmague, et ano. v. Winter, et al.,~~ Case No. 2011CI2585, was filed on March 11, 2011 on behalf of two Stanford investors, individually and as representatives of certain trusts, against Willis Group Holdings plc, Willis of Colorado, Inc., Willis of Texas, Inc. and the same Willis associate, among others, in Texas state court (Bexar County). The complaint alleges claims under Texas and Colorado statutory law and Texas common law and seeks special, consequential and treble damages of more than $37 million and attorneys’ fees and costs. On April 11, 2011, certain defendants, including Willis of Colorado, Inc., (i) removed ~~Rishmague~~ to the Western District of Texas, (ii) notified the JPML of the pendency of this related action and (iii) moved to stay the action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On August 8, 2011, the JPML issued a final transfer order for the transfer of ~~Rishmague~~ ~~to the Northern District of Texas, where it is currently pending. On August 13, 2012, the plaintiffs joined with the plaintiffs in the~~ ~~Rupert~~ ~~action in their motion to lift the court’s stay of the~~ ~~Rupert~~ ~~action. On September 9, 2014, the court remanded~~ ~~Rishmague~~ to Texas state court (Bexar County), but stayed the action until further order of the court and denied the plaintiffs’ motion to lift the stay. On October 10, 2014, the plaintiffs appealed the court’s denial of their motion to lift the stay to the Fifth Circuit. On January 5, 2015, the Fifth Circuit consolidated the appeal with the appeal in the ~~Rupert~~ ~~action, and the consolidated appeal was fully briefed as of March 24, 2015. Oral~~

~~argument on the consolidated appeal was held on September 2, 2015. On September 16, 2015, the Fifth Circuit affirmed. The defendants have not yet responded to the complaint in~~ ~~Rishmague~~.

~~MacArthur v. Winter, et al.,~~ Case No. 2013-07840, was filed on February 8, 2013 on behalf of two Stanford investors against Willis Group Holdings plc, Willis of Colorado, Inc., Willis of Texas, Inc. and the same Willis associate, among others, in Texas state court (Harris County). The complaint alleges claims under Texas and Colorado statutory law and Texas common law and seeks actual, special, consequential and treble damages of approximately $4 million and attorneys’ fees and costs. On March 29, 2013, Willis of Colorado, Inc. and Willis of Texas, Inc. (i) removed ~~MacArthur~~ to the U.S. District Court for the Southern District of Texas and (ii) notified the JPML of the pendency of this related action. On April 2, 2013, Willis of Colorado, Inc. and Willis of Texas, Inc. filed a motion in the Southern District of Texas to stay the action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. Also on April 2, 2013, the court presiding over ~~MacArthur~~ in the Southern District of Texas transferred the action to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On September 29, 2014, the parties stipulated to the remand (to Texas state court (Harris County)) and stay of ~~MacArthur~~ ~~until further order of the court (in accordance with the court’s September 9, 2014 decision in~~ ~~Rishmague~~ ~~(discussed above)), which stipulation was ‘so ordered’ by the court on October 14, 2014. The defendants have not yet responded to the complaint in~~ ~~MacArthur~~.

~~Florida suits~~: On February 14, 2013, five lawsuits were filed against Willis Group Holdings plc, Willis Limited and Willis of Colorado, Inc. in Florida state court (Miami-Dade County) alleging violations of Florida common law. The five suits are: (1) ~~Barbar, et al. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05666CA27, filed on behalf of 35 Stanford investors seeking compensatory damages in excess of $30 million; (2)~~ ~~de Gadala-Maria, et al. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05669CA30, filed on behalf of 64 Stanford investors seeking compensatory damages in excess of $83.5 million; (3)~~ ~~Ranni, et ano. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05673CA06, filed on behalf of two Stanford investors seeking compensatory damages in excess of $3 million; (4)~~ ~~Tisminesky, et al. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05676CA09, filed on behalf of 11 Stanford investors seeking compensatory damages in excess of $6.5 million; and (5)~~ ~~Zacarias, et al. v. Willis Group Holdings Public Limited Company, et al.~~, Case No. 13-05678CA11, filed on behalf of 10 Stanford investors seeking compensatory damages in excess of $12.5 million. On June 3, 2013, Willis of Colorado, Inc. removed all five cases to the Southern District of Florida and, on June 4, 2013, notified the JPML of the pendency of these related actions. On June 10, 2013, the court in ~~Tisminesky~~ ~~issued an order~~ ~~sua sponte~~ staying and administratively closing that action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation and coordination with the other Stanford-related actions. On June 11, 2013, Willis of Colorado, Inc. moved to stay the other four actions pending the JPML’s transfer decision. On June 20, 2013, the JPML issued a conditional transfer order for the transfer of the five actions to the Northern District of Texas, the transmittal of which was stayed for 7 days to allow for any opposition to be filed. On June 28, 2013, with no opposition having been filed, the JPML lifted the stay, enabling the transfer to go forward.

On September 30, 2014, the court denied the plaintiffs’ motion to remand in Zacarias, and, on October 3, 2014, the court denied the plaintiffs’ motions to remand in Tisminesky and de Gadala Maria. On December 3, 2014 and March 3, 2015, the court granted the plaintiffs’ motions to remand in Barbar and Ranni, respectively, remanded both actions to Florida state court (Miami-Dade County) and stayed both actions until further order of the court. On January 2, 2015 and April 1, 2015, the plaintiffs in Barbar and Ranni, respectively, appealed the court’s December 3, 2014 and March 3, 2015 decisions to the Fifth Circuit. On April 22, 2015 and July 22, 2015, respectively, the Fifth Circuit dismissed the Barbar and Ranni appealssua spontefor lack of jurisdiction. The defendants have not yet responded to the complaints in Ranni or Barbar.

On April 1, 2015, the defendants except Willis Group Holdings plc filed motions to dismiss the complaints in Zacarias, Tisminesky and de Gadala-Maria. On June 19, 2015, Willis Group Holdings plc filed motions to dismiss the complaints in Zacarias, Tisminesky and de Gadala-Maria for lack of personal jurisdiction. On July 15, 2015, the court dismissed the complaint in Zacarias in its entirety with leave to replead within 21 days. On July 21, 2015, the court dismissed the complaints in Tisminesky and de Gadala-Maria in their entirety with leave to replead within 21 days. On August 6, 2015, the plaintiffs in Zacarias, Tisminesky and de Gadala-Maria filed amended complaints (in which, among other things, Willis

Group Holdings plc was no longer named as a defendant). On September 11, 2015, the defendants filed motions to dismiss the amended complaints. The motions await disposition by the court.

•

Janvey, et al. v. Willis of Colorado, Inc., et al., Case No. 3:13-CV-03980-D, was filed on October 1, 2013 also in the Northern District of Texas against Willis Group Holdings plc, Willis Limited, Willis North America Inc., Willis of Colorado, Inc. and the same Willis associate. The complaint was filed (i) by Ralph S. Janvey, in his capacity as Court-Appointed Receiver for the Stanford Receivership Estate, and the Official Stanford Investors Committee (the ‘OSIC’) against all defendants and (ii) on behalf of a putative, worldwide class of Stanford investors against Willis North America Inc. Plaintiffs Janvey and the OSIC allege claims under Texas common law and the court’s Amended Order Appointing Receiver, and the putative class plaintiffs allege claims under Texas statutory and common law. Plaintiffs seek actual damages in excess of $1 billion, punitive damages and costs. As alleged by the Stanford Receiver, the total amount of collective losses allegedly sustained by all investors in Stanford certificates of deposit is approximately $4.6 billion.

~~Janvey, et al. v. Willis of Colorado, Inc., et al.~~, Case No. 3:13-CV-03980-D, was filed on October 1, 2013 also in the Northern District of Texas against Willis Group Holdings plc, Willis Limited, Willis North America Inc., Willis of Colorado, Inc. and the same Willis associate. The complaint was filed (i) by Ralph S. Janvey, in his capacity as Court-

Appointed Receiver for the Stanford Receivership Estate, and the Official Stanford Investors Committee (the ‘OSIC’) against all defendants and (ii) on behalf of a putative, worldwide class of Stanford investors against Willis North America Inc. Plaintiffs Janvey and the OSIC allege claims under Texas common law and the court’s Amended Order Appointing Receiver, and the putative class plaintiffs allege claims under Texas statutory and common law. Plaintiffs seek actual damages in excess of $1 billion, punitive damages and costs. As alleged by the Stanford Receiver, the total amount of collective losses allegedly sustained by all investors in Stanford certificates of deposit is approximately $4.6 billion.

On November 15, 2013, plaintiffs in Janveyfiled the operative First Amended Complaint, which added certain defendants unaffiliated with Willis. On February 28, 2014, the defendants filed motions to dismiss the First Amended Complaint, which motions, other than with respect to Willis Group Holding plc’s motion to dismiss for lack of personal jurisdiction, were granted in part and denied in part by the court on December 5, 2014. On December 22, 2014, Willis filed a motion to amend the court’s December 5 order to certify an interlocutory appeal to the Fifth Circuit, and, on December 23, 2014, Willis filed a motion to amend and, to the extent necessary, reconsider the court’s December 5 order. On January 16, 2015, the defendants answered the First Amended Complaint. On January 28, 2015, the court denied Willis’s motion to amend the court’s December 5 order to certify an interlocutory appeal to the Fifth Circuit. On February 4, 2015, the court granted Willis’s motion to amend and, to the extent necessary, reconsider the December 5 order.

As discussed above, on March 25, 2014, the parties in Troice and Janvey stipulated to the consolidation of the two actions for pre-trial purposes under Rule 42(a) of the Federal Rules of Civil Procedure. On March 28, 2014, the Court ‘so ordered’ that stipulation and, thus, consolidated Troice and Janvey for pre-trial purposes under Rule 42(a).

On January 26, 2015, the court entered an order setting a schedule for briefing and discovery regarding the plaintiffs’ motion for class certification, which schedule, among other things, provided for the submission of the plaintiffs’ motion for class certification (following the completion of briefing and discovery) on July 20, 2015. By letter dated March 4, 2015, the parties requested that the court consolidate the scheduling orders entered in Troice and Janvey to provide for a class certification submission date of April 20, 2015 in both cases. On March 6, 2015, the court entered an order consolidating the scheduling orders in Troice and Janvey, providing for a class certification submission date of April 20, 2015 in both cases, and vacating the July 20, 2015 class certification submission date in the original Janvey scheduling order.

On November 17, 2015, Willis Group Holdings plc withdrew its motion to dismiss for lack of personal jurisdiction.

On March 31, 2016, the parties in the Troice and Janvey actions entered into a settlement in principle that is described in more detail below.

•

Martin v. Willis of Colorado, Inc., et al., Case No. 201652115, was filed on August 5, 2016, on behalf of one Stanford investor against Willis Group Holdings plc, Willis Limited, Willis of Colorado, Inc. and the same Willis associate in Texas state court (Harris County). The complaint alleges claims under Texas statutory and common law and seeks actual damages of less than $100,000, exemplary damages, attorneys’ fees and costs. On September 12, 2016, the plaintiff filed an amended complaint, which added five more Stanford investors as plaintiffs and seeks damages in excess of $1 million. The defendants have not yet responded to the amended complaint in Martin.

~~Martin v. Willis of Colorado, Inc., et al.~~, Case No. 201652115, was filed on August 5, 2016, on behalf of one Stanford investor against Willis Group Holdings plc, Willis Limited, Willis of Colorado, Inc. and the same Willis associate in Texas state court (Harris County). The complaint alleges claims under Texas statutory and common law and seeks actual damages of less than $100,000, exemplary damages, attorneys’ fees and costs. On September 12, 2016, the plaintiff filed an amended complaint, which added five more Stanford investors as plaintiffs and seeks damages in excess of $1 million. The defendants have not yet responded to the amended complaint in ~~Martin~~.

•

Abel, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:16-cv-2601, was filed on September 12, 2016, on behalf of more than 300 Stanford investors against Willis Group Holdings plc, Willis Limited, Willis of Colorado, Inc. and the same Willis associate, also in the Northern District of Texas. The complaint alleges claims under Texas statutory and common law and seeks actual damages in excess of $135 million, exemplary damages, attorneys’ fees and costs. On November 10, 2016, the plaintiffs filed an amended complaint, which, among other things, added several more Stanford investors as plaintiffs. The defendants have not yet responded to the complaint in Abel.

~~Abel, et al. v. Willis of Colorado, Inc., et al~~., C.A. No. 3:16-cv-2601, was filed on September 12, 2016, on behalf of more than 300 Stanford investors against Willis Group Holdings plc, Willis Limited, Willis of Colorado, Inc. and the same Willis associate, also in the Northern District of Texas. The complaint alleges claims under Texas statutory and common law and seeks actual damages in excess of $135 million, exemplary damages, attorneys’ fees and costs. On November 10, 2016, the plaintiffs filed an amended complaint, which, among other things, added several more Stanford investors as plaintiffs. The defendants have not yet responded to the complaint in ~~Abel~~.

The plaintiffs in Janvey and Troice and the other actions above seek overlapping damages, representing either the entirety or a portion of the total alleged collective losses incurred by investors in Stanford certificates of deposit, notwithstanding the fact that Legacy Willis acted as broker of record for only a portion of time that Stanford issued certificates of deposit. In the fourth quarter of 2015, the Company recognized a $70 million litigation provision for loss contingencies relating to the Stanford matters based on its ongoing review of a variety of factors as required by accounting standards.

On March 31, 2016, the Company entered into a settlement in principle for $120 million relating to this litigation, and increased its provisions by $50 million during that quarter. Further details on this settlement in principle are given below.

The settlement is contingent on a number of conditions, including court approval of the settlement and a bar order prohibiting any continued or future litigation against Willis related to Stanford, which may not be given. Therefore, the ultimate resolution of these

matters may differ from the amount provided for. The Company continues to dispute the allegations and, to the extent litigation proceeds, to defend the lawsuits vigorously.

Settlement.On March 31, 2016, the Company entered into a settlement in principle, as reflected in a Settlement Term Sheet, relating to the Stanford litigation matter. The Company agreed to the Settlement Term Sheet to eliminate the distraction, burden, expense and uncertainty of further litigation. In particular, the settlement and the related bar orders described below, if upheld through any appeals, would enable the Company (a newly-combined firm) to conduct itself with the bar orders’ protection from the continued overhang of matters alleged to have occurred approximately a decade ago. Further, the Settlement Term Sheet provided that the parties understood and agreed that there is no admission of liability or wrongdoing by the Company. The Company expressly denies any liability or wrongdoing with respect to the matters alleged in the Stanford litigation.

On or about August 31, 2016, the parties to the settlement signed a formal Settlement Agreement memorializing the terms of the settlement as originally set forth in the Settlement Term Sheet. The parties to the Settlement Agreement are Ralph S. Janvey (in his capacity as the Court-appointed receiver (the ‘Receiver’) for The Stanford Financial Group and its affiliated entities in receivership (collectively, ‘Stanford’)), the Official Stanford Investors Committee, Samuel Troice, Martha Diaz, Paula Gilly-Flores, Punga Punga Financial, Ltd., Manuel Canabal, Daniel Gomez Ferreiro and Promotora Villa Marina, C.A. (collectively, ‘Plaintiffs’), on the one hand, and Willis Towers Watson Public Limited Company (formerly Willis Group Holdings Public Limited Company), Willis Limited, Willis North America Inc., Willis of Colorado, Inc. and the Willis associate referenced above (collectively, ‘Defendants’), on the other hand. Under the terms of the Settlement Agreement, the parties agreed to settle and dismiss the Janvey and Troice actions (collectively, the ‘Actions’) and all current or future claims arising from or related to Stanford in exchange for a one-time cash payment to the Receiver by the Company of $120 million to be distributed to all Stanford investors who have claims recognized by the Receiver pursuant to the distribution plan in place at the time the payment is made.

The Settlement Agreement also provides the parties’ agreement to seek the Court’s entry of bar orders prohibiting any continued or future litigation against the Defendants and their related parties of claims relating to Stanford, whether asserted to date or not. The terms of the bar orders therefore would prohibit all Stanford-related litigation described above, and not just the Actions, but including any pending matters and any actions that may be brought in the future. Final Court approval of these bar orders is a condition of the settlement.

On September 7, 2016, Plaintiffs filed with the Court a motion to approve the settlement. On October 19, 2016, the Court preliminarily approved the settlement. Several of the plaintiffs in the other actions above objected to the settlement, and a hearing to consider final approval of the settlement was held on January 20, 2017, after which the Court reserved decision. On August 23, 2017, the Court approved the settlement, including the bar orders. Several of the objectors ~~have since~~ appealed the settlement approval and bar orders to the Fifth Circuit. The briefing related to the appeals ~~are currently pending.~~ is now completed and oral argument on the appeals was heard on December 3, 2018. There is no date certain for when the appeals will be decided.

The Company will not make the $120 million settlement payment unless and until the appeals are decided in its favor and the settlement is not subject to any further appeal.

~~City of Houston~~

On August 1, 2014, the City of Houston (‘plaintiff’) filed suit against Legacy Towers Watson in the United States District Court for the Southern District of Texas, Houston Division. On March 8, 2016, plaintiff filed its First Amended Complaint.

In the amended complaint, plaintiff alleges various deficiencies in pension actuarial work-product and advice stated to have been provided by Legacy Towers Watson’s predecessor firm, Towers Perrin, in its capacity as principal actuary to the Houston Firefighters’ Relief and Retirement Fund (the ‘Fund’). Towers Perrin is stated to have acted in this capacity between “the early 1980s until 2003.”

In particular, the amended complaint alleges “misrepresentations and miscalculations” in valuation reports allegedly issued by Towers Perrin from 2000 through 2002 upon which plaintiff claims to have relied. Plaintiff asserts that Towers Perrin assigned a new team of actuaries to the Fund in 2002 “to correct Towers’ own earlier mistakes” and that the new team “altered” certain calculations which “increased the actuarial accrued liability by $163 million.” Plaintiff claims that the reports indicated that the City’s minimum contribution percentages to the Fund would remain in place through at least 2019 and that existing benefits under the Fund could be increased, and new benefits could be added, without increasing plaintiff’s financial burden, and without increasing plaintiff’s rate of annual contributions to the Fund. The amended complaint alleges that plaintiff relied on these reports when supporting a new benefits package for the Fund. These reports, and other advice, are alleged, among other things, to have been negligent, to have misrepresented the present and future financial condition of the Fund and the contributions required to be made by plaintiff to support those benefits. Plaintiff asserts that, but for Towers Perrin’s alleged

negligence and misrepresentations, plaintiff would not have supported the benefits increase, and that such increased benefits would not and could not have been approved or enacted. It is further asserted that Towers Perrin’s alleged “negligence and misrepresentations damaged the City to the tune of tens of millions of dollars in annual contributions.” The amended complaint seeks the award of punitive damages, actual damages, exemplary damages, special damages, attorney’s fees and expenses, costs of suit, pre- and post- judgment interest at the maximum legal rate, and other unspecified legal and equitable relief.

On October 10, 2014, Legacy Towers Watson filed a motion to dismiss plaintiff’s entire complaint on the basis that the complaint fails to state a claim upon which relief can be granted. On November 21, 2014, the City filed its response in opposition to Legacy Towers Watson’s motion to dismiss. On September 23, 2015, Legacy Towers Watson’s motion to dismiss was denied by the United States District Court for the Southern District of Texas, Houston Division. The court entered a Scheduling Order setting trial for May 30, 2017. On June 20, 2016, the Court entered a Second Amended Scheduling Order setting trial for October 31, 2017. On March 27, 2017, the Court entered a Third Amended Scheduling Order setting trial for January 16, 2018.

On May 8, 2017, Legacy Towers Watson received the City’s expert’s damages report, which asserted the City has incurred actual damages of approximately $430 million through July 1, 2017, and will incur future damages that have a present value of approximately $400 million as of July 1, 2017 if the Fund pension benefits remain unchanged. On June 30, 2017, Legacy Towers Watson served its expert reports in rebuttal to the City’s expert reports. Legacy Towers Watson’s experts concluded that Legacy Towers Watson’s work was reasonable and conformed with the actuarial standards of practice, and that Legacy Towers Watson did not cause any damages to the City. Legacy Towers Watson’s experts also concluded that the City’s damages model is flawed.

Given the stage of the proceedings, the Company is currently unable to provide an estimate of the reasonably possible loss or range of loss. The Company disputes the allegations, and intends to defend the lawsuit vigorously.

~~Meriter Health Services~~

On January 6, 2015, Meriter Health Services, Inc. (‘Meriter’), plan sponsor of the Meriter Health Services Employee Retirement Plan (the ‘Plan’) filed a complaint in Wisconsin state court against Towers Watson Delaware Inc. (‘TWDE’), a wholly-owned subsidiary of the Company, and against its former lawyers, individual actuaries, and insurers.

In the Third Amended Complaint, served on April 12, 2016, Meriter alleged that Towers, Perrin, Forster & Crosby, Inc. (‘TPFC’) and Davis, Conder, Enderle & Sloan, Inc. (‘DCES’), and other entities and individuals, including Meriter’s former lawyers, acted negligently concerning the benefits consulting advice provided to Meriter; these allegations concern matters including TPFC and the lawyers’ involvement in the Plan design and drafting of the Plan document in 1987 by TPFC, and DCES and the lawyers’ Plan review, Plan redesign, Plan amendment, and drafting of ERISA section 204(h) notices in the early 2000s. Additionally, Meriter asserted that TPFC, DCES, and the individual actuary defendants breached alleged fiduciary duties to advise Meriter regarding the competency of Meriter’s then ERISA counsel. Meriter has asserted causes of action for contribution, indemnity, and equitable subrogation related to amounts paid to settle a class action lawsuit related to the Plan that was filed by Plan participants against Meriter in 2010, alleging a number of ERISA violations and related claims. Meriter settled that lawsuit in 2015 for $82 million. In this litigation, Meriter sought damages in a revised amount of approximately $190 million which includes amounts it claims to have paid to settle and defend the class action litigation, and amounts it claims to have incurred as a result of improper plan design. Meriter sought to recover these alleged damages from TWDE and the other defendants.

On January 12, 2016, TWDE and the other defendants filed a motion for partial summary judgment seeking dismissal of Meriter’s negligence and breach of fiduciary duty claims. On April 18, 2016, TWDE and the other defendants filed a motion to dismiss the contribution, indemnification, and equitable subrogation claims. On May 4, 2016, the parties appeared for oral argument on the motion for partial summary judgment, which the court granted in part and denied in part. The court dismissed the fiduciary duty claims, but not the negligence claims. Meriter subsequently moved for reconsideration of the dismissal of its breach of fiduciary duty claims, which motion was denied as to TWDE on August 16, 2016. On June 22, 2016, the court granted in part TWDE’s motion to dismiss, and dismissed the contribution and equitable subrogation claims, but denied the motion as to Meriter’s indemnification claim without prejudice to the right of any defendant to raise the issue again by later motion. On February 28, 2017, TWDE and the other defendants filed a motion to amend the scheduling order. The motion was granted on March 9, 2017, and the trial was re-scheduled to begin on December 11, 2017.

On June 15, 2017, the Company and Meriter agreed to a settlement to resolve all claims in this case against the actuary defendants. The terms of the settlement are confidential. The settlement amount is not materially in excess of previously accrued amounts. As a result of the settlement, the Court, on July 27, 2017, dismissed all of Meriter’s claims in this case, in their entirety, with prejudice.

~~Elma Sanchez, et. al~~

On August 6, 2013, three individual plaintiffs filed a putative class action suit against the California Public Employees’ Retirement System (‘CalPERS’) in Los Angeles County Superior Court. On January 10, 2014, plaintiffs filed an amended complaint, which added as defendants several members of CalPERS’ Board of Administration and three Legacy Towers Watson entities, Towers Watson & Co., Towers Perrin, and Tillinghast-Towers Perrin (‘Towers Perrin’).

Plaintiffs’ claims all relate to a self-funded, non-profit Long Term Care Program that CalPERS established in 1995 (the ‘LTC Program’). Plaintiffs’ claims seek unspecified damages allegedly resulting from CalPERS’ 2012 decision to implement in 2015 and 2016 an 85 percent increase in the premium rates of certain of the long term care policies it issued between 1995 and 2004 (the ‘85% Increase’).

The amended complaint alleges claims against CalPERS for breach of contract and breach of fiduciary duty. It also includes a single cause of action against Towers Perrin for professional negligence relating to actuarial services Towers Perrin provided to CalPERS relating to the LTC Program between 1995 and 2004.

Plaintiffs principally allege that CalPERS mismanaged the LTC Program and its investment assets in multiple respects and breached its contractual and fiduciary duties to plaintiffs and other class members by impermissibly imposing the 85% Increase to make up for investment losses. Plaintiffs also allege that Towers Perrin recommended inadequate initial premium rates at the outset of the LTC Program and used unspecified inappropriate assumptions in its annual valuations for CalPERS. Plaintiffs claim that Towers Perrin’s allegedly negligent acts and omissions, prior to the end of its retainer in 2004, contributed to the need for the 85% Increase.

In May 2014, the court denied the motions to dismiss filed by CalPERS and Towers Perrin addressed to the sufficiency of the complaint. On January 28, 2016, the court granted plaintiffs’ motion for class certification. The certified class as currently defined includes those long term care policy holders whose policies were “subject to” the 85% Increase. The court thereafter set an October 2, 2017 trial date.

In May 2016, the case was reassigned to a different judge. The court agreed that Towers Perrin may file a motion for summary judgment which was initially scheduled to be heard on February 3, 2017. The motion was then fully briefed, and the hearing date was thereafter moved to March 8, 2017.

On March 1, 2017, Towers Perrin and Plaintiffs participated in a mediation and reached a settlement in principle. Pursuant to the settlement in principle, in exchange for a dismissal of the claims of all class members and a release of Towers Perrin by all class members, Towers Perrin would pay a total of $9.75 million into an interest-bearing settlement fund, to be used to reimburse class counsel's costs, and for later distribution to class members as approved by the Court. This proposed settlement amount was accrued during the three months ended March 31, 2017. A formal settlement agreement was submitted to the Court for its preliminary approval on May 18, 2017. On October 25, 2017, the Court preliminarily approved the settlement, and set a final fairness and final approval hearing on the settlement for January 26, 2018. The Court also granted the Company’s unopposed motion for a good faith settlement determination. Class members who properly object to the settlement have standing to appeal if the Court orders final approval of the settlement.

Based on the stage of the proceedings, in the event the settlement is not finally approved, the Company is unable to provide an estimate of the reasonably possible loss or range of loss in respect of the plaintiffs’ complaint.

~~European Commission and FCA Regulatory~~

Aviation Broking Competition Investigations

In April 2017, the Financial Conduct Authority (‘FCA’) informed Willis Limited, our U.K. broking subsidiary, that it had opened a formal investigation into possible agreements/concerted practices in the aviation broking sector.

In October 2017, the European Commission (‘Commission’) disclosed to us that it has initiated civil investigation proceedings in respect of a suspected infringement of E.U. competition rules involving several broking firms, including our principal U.K. broking subsidiary and one of its parent entities. In particular, the Commission has stated that the civil proceedings concern the exchange of commercially sensitive information between competitors in relation to aviation and aerospace insurance and reinsurance broking products and services in the European Economic Area, as well as possible coordination between competitors. The initiation of proceedings does not mean there has been a finding of infringement, merely that the Commission will investigate the case.

~~Now that~~ We are providing information to the Commission ~~has~~as requested.

When the Commission initiated these proceedings, the FCA ~~has informed us that it has~~ closed its related competition ~~act investigation. However, it retains its~~investigation, but still retained jurisdiction over broking regulatory matters arising from this conduct. In early 2018, the ~~conduct being investigated.~~

FCA advised that it will not be taking enforcement action against Willis Limited in connection with any such broking regulatory matters.

In May 2018, the Korea Fair Trade Commission (‘KFTC’) disclosed to us that it is investigating alleged cartels in the insurance broking industry. The KFTC has since requested information related to, among other topics, the aviation and aerospace insurance brokerage market and exchanges of information between brokers about insurance policies.

In January 2019, the Brazil Conselho Administrativo de Defesa Economica (‘CADE’) launched an administrative proceeding to investigate alleged sharing of competitive and commercially sensitive information in the insurance and reinsurance brokerage industry for aviation and aerospace and related ancillary services. The CADE identified 11 entities under investigation, including Willis Group Limited, one of our U.K. subsidiaries.

Given the status of ~~the investigation,~~these investigations, the Company is currently unable to assess the terms on which ~~this investigation,~~they will be resolved, or any other regulatory matter or civil claims emanating from the conduct being investigated, will be resolved, and thus is unable to provide an estimate of the reasonably possible loss or range of loss.

U.K. Investment Consulting Investigation

In September 2017, the FCA announced that it would make a ~~market investigation~~ referral with respect to the investment consulting industry to the U.K. Competition & Markets Authority (the ‘CMA’). The CMA then commenced a market investigation, and the Company is currently cooperating with the investigation.

The CMA ~~investigation~~released its final report on December 12, 2018, finding that there is an adverse effect on competition. To address these findings, the CMA has proposed certain remedies, including mandatory tendering when trustees first purchase fiduciary management services, the reporting of investment performance to customers using a set of common standards, transparency in reporting of fees in fiduciary management and the expansion of the FCA’s regulatory perimeter to include the main activities of investment ~~consulting market~~consultancy and fiduciary management providers. The Company is generally supportive of these proposed remedies. The CMA will implement the remedies by way of an order on pension scheme trustees and firms providing the relevant services. The remedies are expected to ~~take at least 18 months to conclude. Given the early stage of the investigation,~~be effective later in 2019, and the Company ~~is currently unable~~does not expect compliance costs associated with these remedies to ~~assess whether the CMA will find any adverse effects~~have a material impact on competition, and, if the CMA does find any adverse effects on competition, what remedies it may impose on the industry. Given this, the Company is unable to provide an estimate of the reasonably possible loss or range of loss.

its condensed consolidated financial statements.

Note 1314 — Supplementary Information for Certain Balance Sheet Accounts

~~Related Party Transaction -~~ During the three months ended September 30, 2017, the Company divested its Global Wealth Solutions business through a sale to an employee of the business. As part of that transaction, WTW financed a $50 million note payable from the employee to purchase the business. The note amortizes over 10 years, bears interest at 3% and is guaranteed by $3 million of assets. Following the sale, employees of this business are no longer employees of WTW, and the purchasing employee is no longer considered a related party. The current and non-current portions of the note receivable are included in the tables below as Other current assets and Other non-current assets.

Additional details of specific balance sheet accounts are detailed below.

~~Accounts receivable, net consists of the following:~~

September 30,
2017 December 31,
2016
Billed, net of allowance for doubtful debts of $47 million and $40 million $ 1,790
$ 1,789
Accrued and unbilled, at estimated net realizable value 365
291
Accounts receivable, net $ 2,155
$ 2,080

~~Prepaid~~

Deferred revenue and ~~other current assets~~accrued expenses consist of the following:

	March 31, 2019		December 31, 2018
Accounts payable, accrued liabilities and deferred income	$	688	$	691
Accrued discretionary and incentive compensation		327		758
Accrued vacation		143		111
Other employee-related liabilities		82		87
Total deferred revenue and accrued expenses	$	1,240	$	1,647

September 30,
2017 December 31,
2016
Prepayments and accrued income $ 162
$ 131
Derivatives and investments 24
32
Deferred compensation plan assets 18
15
Retention incentives 8
7
Corporate income and other taxes 139
97
Other current assets 67
55
Total prepaid and other current assets $ 418
$ 337

~~Other non-current assets consists of the following:~~

September 30,
2017 December 31,
2016
Prepayments and accrued income $ 15
$ 15
Deferred compensation plan assets 125
111
Deferred tax assets 50
50
Accounts receivable, net 33
27
Other investments 29
30
Other non-current assets 180
120
Total other non-current assets $ 432
$ 353

Provision for liabilities consists of the following:

	March 31, 2019		December 31, 2018
Claims, lawsuits and other proceedings	$	460	$	455
Other provisions		83		85
Total provision for liabilities	$	543	$	540

September 30,
2017 December 31,
2016
Claims, lawsuits and other proceedings $ 478
$ 456
Other provisions 125
119
Total provision for liabilities $ 603
$ 575

Other non-current liabilities ~~consist~~consists of the following:

	March 31, 2019		December 31, 2018
Incentives from lessors	$	—	$	120
Deferred compensation plan liability		132		125
Contingent and deferred consideration on acquisitions		25		22
Liabilities for uncertain tax positions		48		46
Finance leases		25		26
Other non-current liabilities		66		90
Total other non-current liabilities	$	296	$	429

September 30,
2017 December 31,
2016
Incentives from lessors $ 140
$ 133
Deferred compensation plan liability 127
111
Contingent and deferred consideration on acquisitions 36
89
Derivatives 7
51
Other non-current liabilities 166
148
Total other non-current liabilities $ 476
$ 532

Note 1415 — Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss, net of non-controlling interests, and net of tax are provided in the following ~~table~~tables for ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016. This table excludes~~2018. These tables exclude amounts attributable to non-controlling interests, which are not material for further disclosure. ~~Amounts related to available-for-sale securities are immaterial.~~

	Foreign currency translation ⁽ⁱ⁾						Cash flow hedges⁽ⁱ⁾						Defined pension and post-retirement benefit costs ⁽ⁱⁱ⁾						Total
	2019			2018			2019			2018			2019			2018			2019			2018
Balance at December 31, 2018 and 2017, respectively	$	(616	)	$	(365	)	$	(8	)	$	(10	)	$	(1,337	)	$	(1,138	)	$	(1,961	)	$	(1,513	)
Other comprehensive income/(loss) before reclassifications		9			58			6			9			1			(1	)		16			66
Loss reclassified from accumulated other comprehensive loss (net of income tax benefit of $4 and $1, respectively)		—			—			5			10			2			7			7			17
Reclassification of tax effects per ASU 2018-02 ⁽ⁱⁱⁱ⁾		—			—			—			—			(36	)		—			(36	)		—
Net current-period other comprehensive income/(loss)		9			58			11			19			(33	)		6			(13	)		83
Balance at March 31, 2019 and 2018, respectively	$	(607	)	$	(307	)	$	3		$	9		$	(1,370	)	$	(1,132	)	$	(1,974	)	$	(1,430	)

Foreign currency translation ⁽ⁱ⁾

Cash flow hedges ⁽ⁱ⁾

Defined pension and post-retirement benefit costs ⁽ⁱⁱ⁾
Total
2017 2016 2017 2016 2017 2016 2017 2016
Quarter-to-date activity:
Balance at June 30, 2017 and 2016, respectively $ (647 ) $ (398 ) $ (39 ) $ (73 ) $ (1,090 ) $ (710 ) $ (1,776 ) $ (1,181 )
Other comprehensive income/(loss) before reclassifications 78
(36 ) 6
(1 ) (5 ) (6 ) 79
(43 )
Loss/(income) reclassified from accumulated other comprehensive loss (net of income tax benefit of $4 and $1, respectively) —
—
11
(6 ) 10
9
21
3
Net current-period other comprehensive income/(loss) 78
(36 ) 17
(7 ) 5
3
100
(40 )
Balance at September 30, 2017 and 2016, respectively $ (569 ) $ (434 ) $ (22 ) $ (80 ) $ (1,085 ) $ (707 ) $ (1,676 ) $ (1,221 )

Year-to-date activity:
Balance at December 31, 2016 and 2015, respectively $ (650 ) $ (314 ) $ (82 ) $ (10 ) $ (1,152 ) $ (713 ) $ (1,884 ) $ (1,037 )
Other comprehensive income/(loss) before reclassifications 81
(120 ) 15
(56 ) 39
(26 ) 135
(202 )
Loss/(income) reclassified from accumulated other comprehensive loss (net of income tax benefit of $17 and income tax expense of $3, respectively) —
—
45
(14 ) 28
32
73
18
Net current-period other comprehensive income/(loss) 81
(120 ) 60
(70 ) 67
6
208
(184 )
Balance at September 30, 2017 and 2016, respectively $ (569 ) $ (434 ) $ (22 ) $ (80 ) $ (1,085 ) $ (707 ) $ (1,676 ) $ (1,221 )

~~________________________~~

(i)

Reclassification adjustments from accumulated other comprehensive loss related to foreign currency translation and cash flow hedges are included in Revenue, Salaries and benefits, and Other ~~expense,~~income, net in the accompanying condensed consolidated statements of comprehensive income. See Note 8 — Derivative Financial Instruments for additional details regarding the reclassification adjustments for the hedge settlements.

(ii)
ii	Reclassification adjustments from accumulated other comprehensive loss are included in the computation of net periodic pension cost (see Note 11 — Retirement ~~Benefits) which is~~Benefits). These components are included in ~~Salaries and benefits~~Other income, net in the accompanying condensed consolidated statements of comprehensive income.

(iii)

On January 1, 2019, in accordance with ASU 2018-02, we reclassified to Retained earnings $36 million of defined pension and postretirement costs, representing the ‘stranded’ tax effect of the change in the U.S. federal corporate tax rate resulting from U.S. Tax Reform. See Note 2 — Basis of Presentation and Recent Accounting Pronouncements for further information.

Note 1516 — Earnings Per Share

Basic and diluted earnings per share are calculated by dividing net income attributable to Willis Towers Watson by the average number of ordinary shares outstanding during each period. The computation of diluted earnings per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue shares were exercised or converted into shares or resulted in the issuance of shares that then shared in the net income of the Company.

At ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, there were ~~0.9~~0.3 million and ~~1.3~~0.7 million time-based share options; ~~1.0~~0.4 million and ~~1.2~~0.6 million performance-based options; ~~0.4 million~~ and ~~0.9 million restricted time-based stock units; and 0.6~~0.5 million and 0.7 million restricted performance-based stock units outstanding, respectively.

The Company’s restricted time-based stock units were immaterial at March 31, 2019; there were 0.1 million restricted time-based stock units outstanding at March 31, 2018. In addition, the Company had 0.3 million performance-based phantom units outstanding at March 31, 2019; there were no phantom units outstanding at March 31, 2018.

Basic and diluted earnings per share are as follows:

	Three Months Ended March 31,
	2019			2018
Net income attributable to Willis Towers Watson	$	287		$	215

Basic average number of shares outstanding		130			133
Dilutive effect of potentially issuable shares		—			—
Diluted average number of shares outstanding		130			133

Basic earnings per share	$	2.21		$	1.62
Dilutive effect of potentially issuable shares		(0.01	)		(0.01	)
Diluted earnings per share	$	2.20		$	1.61

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net (loss)/income attributable to Willis Towers Watson $ (54 ) $ (32 ) $ 323
$ 278

Basic average number of shares outstanding
134
138
136
137
Dilutive effect of potentially issuable shares
—
—
1
2
Diluted average number of shares outstanding
134
138
137
139

Basic (loss)/earnings per share
$ (0.40 ) $ (0.23 ) $ 2.38
$ 2.03
Dilutive effect of potentially issuable shares
—
—
(0.02 ) (0.03 )
Diluted (loss)/earnings per share
$ (0.40 ) $ (0.23 ) $ 2.36
$ 2.00

~~The dilutive effect of~~

There were no anti-dilutive options or restricted stock ~~options was not computed~~units for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016 as the Company reported a net loss within its condensed consolidated statements of comprehensive income. There were no anti-dilutive options for the nine months ended September~~ 2018.

30 2017. Options to purchase 0.6 million shares for the nine months ended September 30, 2016 were not included in the computation of the dilutive effect of stock options because their effect was anti-dilutive.

~~Note 16 — Subsequent Events~~

On November 1, 2017, the Company sold a portion of its programs business in North America. The revenue associated with the divested programs represents less than 2% of our IRR segment’s total revenues.

Note 17 — Financial Information for ~~Parent Guarantor,~~Issuers and Other Guarantor Subsidiaries ~~and Non-Guarantor Subsidiaries~~

~~Willis North America Inc. (‘Willis North America’) has $837 million senior notes outstanding~~

As of ~~which $187 million were issued on September 29, 2009, and $650 million were issued on May 16, 2017. Additionally, Willis North America had $394 million of senior notes issued on~~ March ~~28, 2007; these were subsequently repaid on March 28, 2017.~~

All direct obligations under the senior notes are jointly and severally, irrevocably and fully and unconditionally guaranteed by Willis Netherlands Holdings B.V., Willis Investment U.K. Holdings Limited, TA I Limited, Trinity Acquisition plc, Willis Group Limited,31, 2019 Willis Towers Watson ~~Sub Holdings Unlimited Company and Willis Towers Watson UK Holdings Limited, collectively~~has issued the ~~‘Other Guarantors’, and with Willis Towers Watson, the ‘Guarantor Companies’.~~

On August 11, 2017 a newly formed entity, Willis Towers Watson UK Holdings Limited, became the successor to, and assumed all guarantees of, WTW Bermuda Holdings Limited under the outstanding indentures for the senior notes described above. As both entities are direct subsidiaries of TA I Limited, and sub-consolidate within the ‘Other Guarantors’ columns of the financial statements presented herein, there is no significant impact on the condensed consolidated financial statements from what has previously been disclosed. Please refer to the Current Report on Form 8-K filed on August 16, 2017 for additional information regarding this change.

~~The guarantor structure described above differs from the guarantor structure associated with the senior notes issued by Willis Towers Watson described in~~ ~~Note 18~~ ~~and the guarantor structure associated with the senior notes and revolving credit facility issued by Trinity Acquisition plc described in~~ ~~Note 19~~.

~~Presented below is condensed consolidating financial information for:~~


~~(i)~~	~~Willis Towers Watson, which is a guarantor, on a parent company only basis;~~


~~(ii)~~	~~the Other Guarantors, which are all 100 percent directly or indirectly owned subsidiaries of the parent and are all direct or indirect parents of the issuer;~~


~~(iii)~~	~~the Issuer, Willis North America;~~


~~(iv)~~	~~Other, which are the non-guarantor subsidiaries, on a combined basis;~~


~~(v)~~	~~Consolidating adjustments; and~~


~~(vi)~~	~~the Consolidated Company.~~

~~The equity method has been used for investments in subsidiaries in the condensed consolidating balance sheets of Willis Towers Watson, the Other Guarantors and the Issuer.~~

~~Unaudited Condensed Consolidating Statement of Comprehensive Income~~

Three Months Ended September 30, 2017
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
Revenues
Commissions and fees $ —
$ —
$ 3
$ 1,829
$ —
$ 1,832
Interest and other income —
—
—
20
—
20
Total revenues —
—
3
1,849
—
1,852
Costs of providing services
Salaries and benefits 2
—
20
1,123
—
1,145
Other operating expenses —
30
6
330
—
366
Depreciation —
2
—
52
—
54
Amortization —
1
—
143
(3 ) 141
Restructuring costs —
1
1
29
—
31
Transaction and integration expenses —
2
4
68
—
74
Total costs of providing services 2
36
31
1,745
(3 ) 1,811
(Loss)/income from operations (2 ) (36 ) (28 ) 104
3
41
Income from Group undertakings —
(136 ) (46 ) (39 ) 221
—
Expenses due to Group undertakings —
13
48
160
(221 ) —
Interest expense 8
25
9
5
—
47
Other (income)/expense, net —
(48 ) —
(120 ) 197
29
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (10 ) 110
(39 ) 98
(194 ) (35 )
(Benefit from)/provision for income taxes (1 ) 10
(4 ) 14
—
19
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (9 ) 100
(35 ) 84
(194 ) (54 )
Interest in earnings of associates, net of tax —
—
—
—
—
—
Equity account for subsidiaries (45 ) (142 ) (248 ) —
435
—
NET (LOSS)/INCOME (54 ) (42 ) (283 ) 84
241
(54 )
Income attributable to non-controlling interests —
—
—
—
—
—
NET (LOSS)/INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ (54 ) $ (42 ) $ (283 ) $ 84
$ 241
$ (54 )

Comprehensive income/(loss) before non-controlling interests $ 46
$ 62
$ (215 ) $ (4 ) $ 145
$ 34
Comprehensive loss attributable to non-controlling interest —
—
—
12
—
12
Comprehensive income/(loss) attributable to Willis Towers Watson $ 46
$ 62
$ (215 ) $ 8
$ 145
$ 46

~~Unaudited Condensed Consolidating Statement of Comprehensive Income~~

Three Months Ended September 30, 2016
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
Revenues
Commissions and fees $ —
$ —
$ 5
$ 1,756
$ —
$ 1,761
Interest and other income —
—
—
16
—
16
Total revenues —
—
5
1,772
—
1,777
Costs of providing services
Salaries and benefits —
—
14
1,105
—
1,119
Other operating expenses 1
27
10
332
—
370
Depreciation —
1
4
40
—
45
Amortization —
—
—
157
—
157
Restructuring costs —
7
7
35
—
49
Transaction and integration expenses —
1
5
30
—
36
Total costs of providing services 1
36
40
1,699
—
1,776
(Loss)/income from operations (1 ) (36 ) (35 ) 73
—
1
Income from Group undertakings —
(126 ) (61 ) (34 ) 221
—
Expenses due to Group undertakings —
13
48
160
(221 ) —
Interest expense 8
22
10
5
—
45
Other expense, net —
—
—
14
—
14
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (9 ) 55
(32 ) (72 ) —
(58 )
Benefit from income taxes —
(9 ) (10 ) (7 ) —
(26 )
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (9 ) 64
(22 ) (65 ) —
(32 )
Interest in earnings of associates, net of tax —
—
—
1
—
1
Equity account for subsidiaries (23 ) (82 ) (29 ) —
134
—
NET LOSS (32 ) (18 ) (51 ) (64 ) 134
(31 )
Income attributable to non-controlling interests —
—
—
(1 ) —
(1 )
NET LOSS ATTRIBUTABLE TO WILLIS TOWERS WATSON $ (32 ) $ (18 ) $ (51 ) $ (65 ) $ 134
$ (32 )

Comprehensive loss before non-controlling interests $ (72 ) $ (58 ) $ (77 ) $ (91 ) $ 225
$ (73 )
Comprehensive loss attributable to non-controlling interest —
—
—
1
—
1
Comprehensive loss attributable to Willis Towers Watson $ (72 ) $ (58 ) $ (77 ) $ (90 ) $ 225
$ (72 )

~~Unaudited Condensed Consolidating Statement of Comprehensive Income~~

Nine Months Ended September 30, 2017

Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
Revenues

Commissions and fees $ —
$ —
$ 14
$ 6,051
$ —
$ 6,065
Interest and other income —
—
—
59
—
59
Total revenues —
—
14
6,110
—
6,124
Costs of providing services

Salaries and benefits 4
—
40
3,440
—
3,484
Other operating expenses 2
74
16
1,066
—
1,158
Depreciation —
5
—
146
—
151
Amortization —
3
—
441
(3 ) 441
Restructuring costs —
5
1
79
—
85
Transaction and integration expenses —
32
6
139
—
177
Total costs of providing services 6
119
63
5,311
(3 ) 5,496
(Loss)/income from operations (6 ) (119 ) (49 ) 799
3
628
Income from Group undertakings —
(402 ) (160 ) (112 ) 674
—
Expenses due to Group undertakings —
52
144
478
(674 ) —
Interest expense 23
75
25
16
—
139
Other (income)/expense, net —
(48 ) —
(70 ) 197
79
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (29 ) 204
(58 ) 487
(194 ) 410
(Benefit from)/provision for income taxes (2 ) 19
(7 ) 63
—
73
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (27 ) 185
(51 ) 424
(194 ) 337
Interest in earnings of associates, net of tax —
—
—
2
—
2
Equity account for subsidiaries 350
158
(23 ) —
(485 ) —
NET INCOME/(LOSS) 323
343
(74 ) 426
(679 ) 339
Income attributable to non-controlling interests —
—
—
(16 ) —
(16 )
NET INCOME/(LOSS) ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 323
$ 343
$ (74 ) $ 410
$ (679 ) $ 323

Comprehensive income before non-controlling interests $ 531
$ 552
$ 68
$ 434
$ (1,039 ) $ 546
Comprehensive income attributable to non-controlling interests —
—
—
(15 ) —
(15 )
Comprehensive income attributable to Willis Towers Watson $ 531
$ 552
$ 68
$ 419
$ (1,039 ) $ 531

~~Unaudited Condensed Consolidating Statement of Comprehensive Income~~

Nine Months Ended September 30, 2016

Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
Revenues

Commissions and fees $ —
$ —
$ 16
$ 5,858
$ —
$ 5,874
Interest and other income —
1
—
85
—
86
Total revenues —
1
16
5,943
—
5,960
Costs of providing services

Salaries and benefits 1
1
38
3,479
—
3,519
Other operating expenses 4
84
82
1,001
—
1,171
Depreciation —
3
11
118
—
132
Amortization —
—
—
443
—
443
Restructuring costs —
18
23
74
—
115
Transaction and integration expenses —
13
15
89
—
117
Total costs of providing services 5
119
169
5,204
—
5,497
(Loss)/income from operations (5 ) (118 ) (153 ) 739
—
463
Income from Group undertakings —
(367 ) (177 ) (104 ) 648
—
Expenses due to Group undertakings —
53
134
461
(648 ) —
Interest expense 25
65
29
19
—
138
Other expense/(income), net 1
(2 ) —
27
—
26
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (31 ) 133
(139 ) 336
—
299
(Benefit from)/provision for income taxes —
(32 ) (41 ) 84
—
11
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (31 ) 165
(98 ) 252
—
288
Interest in earnings of associates, net of tax —
—
—
2
—
2
Equity account for subsidiaries 309
124
92
—
(525 ) —
NET INCOME/(LOSS) 278
289
(6 ) 254
(525 ) 290
Income attributable to non-controlling interests —
—
—
(12 ) —
(12 )
NET INCOME/(LOSS) ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 278
$ 289
$ (6 ) $ 242
$ (525 ) $ 278

Comprehensive income/(loss) before non-controlling interests $ 94
$ 104
$ (107 ) $ 88
$ (83 ) $ 96
Comprehensive income attributable to non-controlling interest —
—
—
(2 ) —
(2 )
Comprehensive income/(loss) attributable to Willis Towers Watson $ 94
$ 104
$ (107 ) $ 86
$ (83 ) $ 94

~~Unaudited Condensed Consolidating Balance Sheet~~

As of September 30, 2017
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
ASSETS
Cash and cash equivalents $ —
$ 5
$ —
$ 907
$ —
$ 912
Fiduciary assets —
—
—
12,206
—
12,206
Accounts receivable, net —
—
5
2,150
—
2,155
Prepaid and other current assets 2
26
143
298
(51 ) 418
Amounts due from group undertakings 6,131
1,478
1,360
2,576
(11,545 ) —
Total current assets 6,133
1,509
1,508
18,137
(11,596 ) 15,691
Investments in subsidiaries 4,357
8,895
6,209
—
(19,461 ) —
Fixed assets, net —
35
—
902
—
937
Goodwill —
—
—
10,529
—
10,529
Other intangible assets, net —
61
—
4,034
(61 ) 4,034
Pension benefits assets —
—
—
649
—
649
Other non-current assets —
14
246
373
(201 ) 432
Non-current amounts due from group undertakings —
4,918
861
48
(5,827 ) —
Total non-current assets 4,357
13,923
7,316
16,535
(25,550 ) 16,581
TOTAL ASSETS $ 10,490
$ 15,432
$ 8,824
$ 34,672
$ (37,146 ) $ 32,272
LIABILITIES AND EQUITY
Fiduciary liabilities $ —
$ —
$ —
$ 12,206
$ —
$ 12,206
Deferred revenue and accrued expenses 1
9
82
1,380
—
1,472
Short-term debt and current portion of long-term debt —
—
—
85
—
85
Other current liabilities 78
43
117
546
9
793
Amounts due to group undertakings —
7,537
2,402
1,607
(11,546 ) —
Total current liabilities 79
7,589
2,601
15,824
(11,537 ) 14,556
Long-term debt 496
2,945
946
106
—
4,493
Liability for pension benefits —
—
—
1,207
—
1,207
Deferred tax liabilities —
—
—
1,057
(201 ) 856
Provision for liabilities —
—
120
483
—
603
Other non-current liabilities —
7
59
410
—
476
Non-current amounts due to group undertakings —
—
519
5,308
(5,827 ) —
Total non-current liabilities 496
2,952
1,644
8,571
(6,028 ) 7,635
TOTAL LIABILITIES 575
10,541
4,245
24,395
(17,565 ) 22,191
REDEEMABLE NON-CONTROLLING INTEREST —
—
—
55
—
55
EQUITY
Total Willis Towers Watson shareholders’ equity 9,915
4,891
4,579
10,111
(19,581 ) 9,915
Non-controlling interests —
—
—
111
—
111
Total equity 9,915
4,891
4,579
10,222
(19,581 ) 10,026
TOTAL LIABILITIES AND EQUITY $ 10,490
$ 15,432
$ 8,824
$ 34,672
$ (37,146 ) $ 32,272

~~Unaudited Condensed Consolidating Balance Sheet~~

As of December 31, 2016
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
ASSETS
Cash and cash equivalents $ —
$ —
$ —
$ 870
$ —
$ 870
Fiduciary assets —
—
—
10,505
—
10,505
Accounts receivable, net —
—
7
2,073
—
2,080
Prepaid and other current assets —
49
23
324
(59 ) 337
Amounts due from group undertakings 7,229
1,706
1,190
2,370
(12,495 ) —
Total current assets 7,229
1,755
1,220
16,142
(12,554 ) 13,792
Investments in subsidiaries 3,409
7,733
5,480
—
(16,622 ) —
Fixed assets, net —
34
—
805
—
839
Goodwill —
—
—
10,413
—
10,413
Other intangible assets, net —
64
—
4,368
(64 ) 4,368
Pension benefits assets —
—
—
488
—
488
Other non-current assets —
10
80
310
(47 ) 353
Non-current amounts due from group undertakings —
4,655
836
—
(5,491 ) —
Total non-current assets 3,409
12,496
6,396
16,384
(22,224 ) 16,461
TOTAL ASSETS $ 10,638
$ 14,251
$ 7,616
$ 32,526
$ (34,778 ) $ 30,253
LIABILITIES AND EQUITY
Fiduciary liabilities $ —
$ —
$ —
$ 10,505
$ —
$ 10,505
Deferred revenue and accrued expenses —
15
27
1,488
(49 ) 1,481
Short-term debt and current portion of long-term debt —
22
394
92
—
508
Other current liabilities 77
94
23
684
(2 ) 876
Amounts due to group undertakings —
8,323
2,075
2,097
(12,495 ) —
Total current liabilities 77
8,454
2,519
14,866
(12,546 ) 13,370
Long-term debt 496
2,506
186
169
—
3,357
Liability for pension benefits —
—
—
1,321
—
1,321
Deferred tax liabilities —
—
—
1,013
(149 ) 864
Provision for liabilities —
—
120
455
—
575
Other non-current liabilities —
48
15
483
(14 ) 532
Non-current amounts due to group undertakings —
—
518
4,973
(5,491 ) —
Total non-current liabilities 496
2,554
839
8,414
(5,654 ) 6,649
TOTAL LIABILITIES 573
11,008
3,358
23,280
(18,200 ) 20,019
REDEEMABLE NON-CONTROLLING INTEREST —
—
—
51
—
51
EQUITY
Total Willis Towers Watson shareholders’ equity 10,065
3,243
4,258
9,077
(16,578 ) 10,065
Non-controlling interests —
—
—
118
—
118
Total equity 10,065
3,243
4,258
9,195
(16,578 ) 10,183
TOTAL LIABILITIES AND EQUITY $ 10,638
$ 14,251
$ 7,616
$ 32,526
$ (34,778 ) $ 30,253

~~Unaudited Condensed Consolidating Statement of Cash Flows~~

Nine Months Ended September 30, 2017
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
NET CASH FROM/(USED IN) OPERATING ACTIVITIES $ 525
$ (498 ) $ (99 ) $ 774
$ (187 ) $ 515
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Additions to fixed assets and software for internal use —
(6 ) —
(192 ) —
(198 )
Capitalized software costs —
—
—
(52 ) —
(52 )
Acquisitions of operations, net of cash acquired —
—
—
(13 ) —
(13 )
Other, net —
—
—
1
—
1
Proceeds from intercompany investing activities 1,102
336
10
223
(1,671 ) —
Repayments of intercompany investing activities —
(195 ) —
(311 ) 506
—
Reduction in investment in subsidiaries —
1,148
—
59
(1,207 ) —
Additional investment in subsidiaries (1,000 ) (207 ) —
—
1,207
—
Net cash from/(used in) investing activities $ 102
$ 1,076
$ 10
$ (285 ) $ (1,165 ) $ (262 )
CASH FLOWS USED IN FINANCING ACTIVITIES
Net borrowings on revolving credit facility —
560
115
—
—
675
Senior notes issued —
—
650
—
—
650
Proceeds from issuance of other debt —
—
—
32
—
32
Debt issuance costs —
(4 ) (5 ) —
—
(9 )
Repayments of debt —
(219 ) (400 ) (95 ) —
(714 )
Repurchase of shares (462 ) —
—
—
—
(462 )
Proceeds from issuance of shares 44
—
—
—
—
44
Payments related to share cancellation —
—
—
(177 ) —
(177 )
Payments of deferred and contingent consideration related to acquisitions —
—
—
(43 ) —
(43 )
Cash paid for employee taxes on withholding shares —
—
—
(14 ) —
(14 )
Dividends paid (209 ) —
(58 ) (129 ) 187
(209 )
Acquisitions of and dividends paid to non-controlling interests —
—
—
(19 ) —
(19 )
Proceeds from intercompany financing activities —
163
148
195
(506 ) —
Repayments of intercompany financing activities —
(1,073 ) (361 ) (237 ) 1,671
—
Net cash (used in)/from financing activities $ (627 ) $ (573 ) $ 89
$ (487 ) $ 1,352
$ (246 )
INCREASE IN CASH AND CASH EQUIVALENTS —
5
—
2
—
7
Effect of exchange rate changes on cash and cash equivalents —
—
—
35
—
35
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD —
—
—
870
—
870
CASH AND CASH EQUIVALENTS, END OF PERIOD $ —
$ 5
$ —
$ 907
$ —
$ 912

~~Unaudited Condensed Consolidating Statement of Cash Flows~~

Nine Months Ended September 30, 2016
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
NET CASH FROM/(USED IN) OPERATING ACTIVITIES $ 6
$ (130 ) $ (175 ) $ 989
$ (69 ) $ 621
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Additions to fixed assets and software for internal use —
(76 ) (8 ) (131 ) 64
(151 )
Capitalized software costs —
—
—
(64 ) —
(64 )
Acquisitions of operations, net of cash acquired —
—
—
476
—
476
Other, net —
—
1
16
5
22
Proceeds from intercompany investing activities 47
47
—
18
(112 ) —
Repayments of intercompany investing activities (4,015 ) (3,953 ) —
(805 ) 8,773
—
Reduction in investment in subsidiaries 4,600
3,600
—
—
(8,200 ) —
Additional investment in subsidiaries —
(4,600 ) —
(3,600 ) 8,200
—
Net cash from/(used in) investing activities $ 632
$ (4,982 ) $ (7 ) $ (4,090 ) $ 8,730
$ 283
CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES
Net payments on revolving credit facility —
(389 ) —
—
—
(389 )
Senior notes issued —
1,606
—
—
—
1,606
Proceeds from issuance of other debt —
400
—
4
—
404
Debt issuance costs —
(14 ) —
—
—
(14 )
Repayments of debt (300 ) (1,032 ) —
(529 ) —
(1,861 )
Repurchase of shares (222 ) —
—
—
—
(222 )
Proceeds from issuance of shares 44
—
—
—
—
44
Payments of deferred and contingent consideration related to acquisitions —
—
—
(64 ) —
(64 )
Dividends paid (133 ) —
—
—
—
(133 )
Cash paid for employee taxes on withholding shares —
—
—
(13 ) —
(13 )
Acquisitions of and dividends paid to non-controlling interests —
—
—
(17 ) —
(17 )
Proceeds from intercompany financing activities —
4,557
199
4,017
(8,773 ) —
Repayments of intercompany financing activities (30 ) (18 ) (17 ) (47 ) 112
—
Net cash (used in)/from financing activities $ (641 ) $ 5,110
$ 182
$ 3,351
$ (8,661 ) $ (659 )
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (3 ) (2 ) —
250
—
245
Effect of exchange rate changes on cash and cash equivalents —
—
—
(10 ) —
(10 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3
2
—
527
—
532
CASH AND CASH EQUIVALENTS, END OF PERIOD $ —
$ —
$ —
$ 767
$ —
$ 767

~~Note 18 — Financial Information for Parent Issuer, Guarantor Subsidiaries and Non-Guarantor Subsidiaries~~

On March 17, 2011, the Company issued senior notes totaling $800 million in a registered public offering. On March 15, 2016, $300 million of these senior notes was repaid, leaving $500 million outstanding. Thesefollowing debt securities ~~were issued by Willis Towers Watson~~ (‘WTW Debt Securities’):

Willis Towers Watson plc (the parent company) has $500 million senior notes outstanding, which were issued on March 17, 2011;

Willis North America Inc. (‘Willis North America’) has approximately $1.8 billion senior notes outstanding, of which $187 million were issued on September 29, 2009, $650 million were issued on May 16, 2017, and $1.0 billion were issued on September 10, 2018; and

Trinity Acquisition plc has approximately $2.1 billion senior notes outstanding, of which $525 million were issued on August 15, 2013, $1.0 billion were issued on March 22, 2016 and €540 million ($609 million) were issued on May 26, 2016, and $269 million currently outstanding on a consolidated basis under the $1.25 billion revolving credit facility issued on March 7, 2017.

The notes issued by the Company are guaranteed by ~~certain of~~ the ~~Company’s subsidiaries. Therefore, the Company is providing the condensed consolidating financial information below. The~~ following additional wholly owned subsidiaries ~~(directly or indirectly) fully and unconditionally guarantee the WTW Debt Securities~~ on a joint and several basis: Willis Netherlands Holdings B.V., Willis Investment U.K. Holdings Limited, TA I Limited, Trinity Acquisition plc, Willis Group Limited, Willis North America, ~~Inc.,~~ Willis Towers Watson Sub Holdings Unlimited Company and Willis Towers Watson UKU.K. Holdings ~~Limited (the ‘Guarantors’).~~

~~On August 11, 2017~~Limited.

As a ~~newly formed entity,~~result of an internal tax reorganization, certain subsidiaries that were previously indirectly owned by Willis North America and Trinity Acquisition plc are no longer subsidiaries of these issuer and guarantor companies, however the subsidiaries remain indirect subsidiaries of both Willis Towers Watson ~~UK Holdings Limited, became~~plc and collectively the ~~successor to,~~other guarantor companies, since the subsidiaries in question are now direct and ~~assumed all guarantees of, WTW Bermuda Holdings Limited under the outstanding indentures for the senior notes described above. As both entities are direct~~indirect subsidiaries of TA I ~~Limited, and sub-consolidate within~~Limited. This reorganization did not change the ‘Other Guarantors’ columns of the financial statements presented herein, there is no significant impact on the condensed consolidated financial statements from what has previously been disclosed. Please refer to the Current Report on Form 8-K filed on August 16, 2017 for additional information regarding this change.

~~The~~Company’s guarantor structure ~~described above differs from the guarantor structure associated with the senior~~and will only result in less equity income being recorded by both issuers going forward.

The notes issued by Willis North America ~~described in~~ ~~Note 17~~are guaranteed on a joint and several basis by the ~~guarantor structure associated with~~Company and each of the ~~senior~~subsidiaries that guarantees the Company notes, ~~and revolving credit facility~~except for Willis North America itself.

The notes issued by Trinity Acquisition plc ~~described~~are guaranteed on a joint and several basis by the Company and each of the subsidiaries that guarantees the Company notes, except for Trinity Acquisition plc itself.

For the purposes of this footnote, the companies that guarantee the Company notes, the Willis North America notes and the Trinity Acquisition plc notes, other than Willis North America and Trinity Acquisition plc, are referred to as the ‘other guarantors.’

The presentation of the financial information for issuers and other guarantor subsidiaries has been changed from that included in ~~Note 19~~.

~~Presented below is~~our Form 10-Q for the quarterly period ended March 31, 2018, in that the three previously disclosed separate notes that presented the three different issuer and related guarantor scenarios have been combined into one note. This new presentation retains all of the financial information of the appropriate issuing and guarantor entities, with some immaterial reclassifications from what had been previously disclosed for each entity. We believe that this presentation will help to reduce the complexity of the information and offer a more meaningful analysis for the reader.

All intercompany receivables/payables have been presented in the condensed consolidating financial ~~information for:~~


~~(i)~~	~~Willis Towers Watson, which is the Parent Issuer;~~


~~(ii)~~	~~the Guarantors, which are all 100 percent directly or indirectly owned subsidiaries of the parent;~~


~~(iii)~~	~~Other, which are the non-guarantor subsidiaries, on a combined basis;~~


~~(iv)~~	~~Consolidating adjustments; and~~


~~(v)~~	~~the Consolidated Company.~~

statements as non-current on a net presentation basis, rather than a gross basis, as this better reflects the nature of the intercompany positions and presents the funding or funded position that is due or owed. The equity method has been used for investments in subsidiaries in the condensed consolidating balance sheets of Willis Towers Watson plc, Willis North America, Trinity Acquisition plc and the ~~Guarantors.~~

other guarantors.

Presented below is condensed financial information for:

(i)

Willis Towers Watson plc, which is both an issuer and guarantor, on a parent company only basis;

(ii)

Willis North America, which is both an issuer and guarantor, on a company only basis;

(iii)

Trinity Acquisition plc, which is both an issuer and guarantor, on a company only basis;

(iv)

Other guarantors, which are all wholly owned direct or indirect subsidiaries of the parent, on a combined basis;

(v)

Non-guarantors, which are all wholly owned direct or indirect subsidiaries of the parent, on a combined basis;

(vi)

Eliminations, which are consolidating adjustments on a combined basis; and

(vii)

The consolidated Company.

Unaudited Condensed Consolidating Statement of Comprehensive Income

	Three months ended March 31, 2019
	Willis Towers Watson plc			Willis North America			Trinity Acquisition plc			Other guarantors			Non-guarantors			Eliminations			Consolidated
Revenue	$	—		$	22		$	—		$	—		$	2,290		$	—		$	2,312
Costs of providing services
Salaries and benefits		1			15			—			—			1,332			—			1,348
Other operating expenses		1			7			—			37			373			—			418
Depreciation		—			—			—			1			53			—			54
Amortization		—			—			—			1			126			—			127
Transaction and integration expenses		—			—			—			—			6			—			6
Total costs of providing services		2			22			—			39			1,890			—			1,953
(Loss)/income from operations		(2	)		—			—			(39	)		400			—			359
Intercompany (expense)/income		—			(12	)		23			66			(77	)		—			—
Interest expense		(7	)		(21	)		(22	)		—			(4	)		—			(54	)
Other income, net		—			—			—			—			55			—			55
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES		(9	)		(33	)		1			27			374			—			360
Benefit from/(provision for) income taxes		—			7			(1	)		(4	)		(69	)		—			(67	)
Equity account for subsidiaries		296			67			221			270			—			(854	)		—
NET INCOME		287			41			221			293			305			(854	)		293
Income attributable to non-controlling interests		—			—			—			—			(6	)		—			(6	)
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON	$	287		$	41		$	221		$	293		$	299		$	(854	)	$	287

Comprehensive income before non- controlling interests	$	311		$	19		$	204		$	317		$	298		$	(834	)	$	315
Comprehensive income attributable to non- controlling interests		—			—			—			—			(5	)		—			(5	)
Comprehensive income attributable to Willis Towers Watson	$	311		$	19		$	204		$	317		$	293		$	(834	)	$	310

Three Months Ended September 30, 2017
Willis
Towers
Watson —
the Parent
Issuer The
Guarantors Other Consolidating
adjustments Consolidated
Revenues
Commissions and fees $ —
$ 3
$ 1,829
$ —
$ 1,832
Interest and other income —
—
20
—
20
Total revenues —
3
1,849
—
1,852
Costs of providing services
Salaries and benefits 2
20
1,123
—
1,145
Other operating expenses —
36
330

366
Depreciation —
2
52
—
54
Amortization —
1
143
(3 ) 141
Restructuring costs —
2
29
—
31
Transaction and integration expenses —
6
68
—
74
Total costs of providing services 2
67
1,745
(3 ) 1,811
(Loss)/income from operations (2 ) (64 ) 104
3
41
Income from Group undertakings —
(155 ) (39 ) 194
—
Expenses due to Group undertakings —
34
160
(194 ) —
Interest expense 8
34
5
—
47
Other (income)/expense, net —
(48 ) (120 ) 197
29
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (10 ) 71
98
(194 ) (35 )
(Benefit from)/provision for income taxes (1 ) 6
14
—
19
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (9 ) 65
84
(194 ) (54 )
Interest in earnings of associates, net of tax —
—
—
—
—
Equity account for subsidiaries (45 ) (107 ) —
152
—
NET (LOSS)/INCOME (54 ) (42 ) 84
(42 ) (54 )
Income attributable to non-controlling interests —
—
—
—
—
NET (LOSS)/INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ (54 ) $ (42 ) $ 84
$ (42 ) $ (54 )

Comprehensive income before non-controlling interests $ 46
$ 62
$ (4 ) $ (70 ) $ 34
Comprehensive loss attributable to non-controlling interests —
—
12
—
12
Comprehensive income attributable to Willis Towers Watson $ 46
$ 62
$ 8
$ (70 ) $ 46

Unaudited Condensed Consolidating Statement of Comprehensive Income

	Three months ended March 31, 2018
	Willis Towers Watson plc			Willis North America			Trinity Acquisition plc			Other guarantors			Non-guarantors			Eliminations			Consolidated
Revenue	$	—		$	6		$	—		$	—		$	2,286		$	—		$	2,292
Costs of providing services
Salaries and benefits		1			15			—			—			1,361			—			1,377
Other operating expenses		—			5			—			42			376			—			423
Depreciation		—			—			—			1			48			—			49
Amortization		—			—			—			1			140			—			141
Transaction and integration expenses		—			5			—			1			37			—			43
Total costs of providing services		1			25			—			45			1,962			—			2,033
(Loss)/income from operations		(1	)		(19	)		—			(45	)		324			—			259
Intercompany (expense)/income		—			(5	)		30			92			(117	)		—			—
Interest expense		(7	)		(11	)		(27	)		—			(6	)		—			(51	)
Other income, net		—			—			—			1			55			—			56
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES		(8	)		(35	)		3			48			256			—			264
Benefit from/(provision for) income taxes		—			5			(1	)		(8	)		(39	)		—			(43	)
Equity account for subsidiaries		223			(7	)		142			181			—			(539	)		—
NET INCOME/(LOSS)		215			(37	)		144			221			217			(539	)		221
Income attributable to non-controlling interests		—			—			—			—			(6	)		—			(6	)
NET INCOME/(LOSS) ATTRIBUTABLE TO WILLIS TOWERS WATSON	$	215		$	(37	)	$	144		$	221		$	211		$	(539	)	$	215

Comprehensive income/(loss) before non- controlling interests	$	298		$	(22	)	$	226		$	303		$	338		$	(838	)	$	305
Comprehensive income attributable to non- controlling interests		—			—			—			—			(7	)		—			(7	)
Comprehensive income/(loss) attributable to Willis Towers Watson	$	298		$	(22	)	$	226		$	303		$	331		$	(838	)	$	298

Three Months Ended September 30, 2016
Willis
Towers
Watson —
the Parent
Issuer The
Guarantors Other Consolidating
adjustments Consolidated
Revenues
Commissions and fees $ —
$ 5
$ 1,756
$ —
$ 1,761
Interest and other income —
—
16
—
16
Total revenues —
5
1,772
—
1,777
Costs of providing services
Salaries and benefits —
14
1,105
—
1,119
Other operating expenses 1
37
332
—
370
Depreciation —
5
40
—
45
Amortization —
—
157
—
157
Restructuring costs —
14
35
—
49
Transaction and integration expenses —
6
30
—
36
Total costs of providing services 1
76
1,699
—
1,776
(Loss)/income from operations (1 ) (71 ) 73
—
1
Income from Group undertakings —
(159 ) (34 ) 193
—
Expenses due to Group undertakings —
33
160
(193 ) —
Interest expense 8
32
5
—
45
Other expense, net —
—
14
—
14
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (9 ) 23
(72 ) —
(58 )
Benefit from income taxes —
(19 ) (7 ) —
(26 )
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (9 ) 42
(65 ) —
(32 )
Interest in earnings of associates, net of tax —
—
1
—
1
Equity account for subsidiaries (23 ) (60 ) —
83
—
NET LOSS (32 ) (18 ) (64 ) 83
(31 )
Income attributable to non-controlling interests —
—
(1 ) —
(1 )
NET LOSS ATTRIBUTABLE TO WILLIS TOWERS WATSON $ (32 ) $ (18 ) $ (65 ) $ 83
$ (32 )

Comprehensive loss before non-controlling interests $ (72 ) $ (58 ) $ (91 ) $ 148
$ (73 )
Comprehensive loss attributable to non-controlling interests —
—
1
—
1
Comprehensive loss attributable to Willis Towers Watson $ (72 ) $ (58 ) $ (90 ) $ 148
$ (72 )

~~Unaudited Condensed Consolidating Statement of Comprehensive Income~~

Nine Months Ended September 30, 2017

Willis
Towers
Watson —
the Parent
Issuer The
Guarantors Other Consolidating
adjustments Consolidated
Revenues

Commissions and fees $ —
$ 14
$ 6,051
$ —
$ 6,065
Interest and other income —
—
59
—
59
Total revenues —
14
6,110
—
6,124
Costs of providing services

Salaries and benefits 4
40
3,440
—
3,484
Other operating expenses 2
90
1,066
—
1,158
Depreciation —
5
146
—
151
Amortization —
3
441
(3 ) 441
Restructuring costs —
6
79
—
85
Transaction and integration expenses —
38
139
—
177
Total costs of providing services 6
182
5,311
(3 ) 5,496
(Loss)/income from operations (6 ) (168 ) 799
3
628
Income from Group undertakings —
(478 ) (112 ) 590
—
Expenses due to Group undertakings —
112
478
(590 ) —
Interest expense 23
100
16
—
139
Other (income)/expense, net —
(48 ) (70 ) 197
79
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (29 ) 146
487
(194 ) 410
(Benefit from)/provision for income taxes (2 ) 12
63
—
73
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (27 ) 134
424
(194 ) 337
Interest in earnings of associates, net of tax —
—
2
—
2
Equity account for subsidiaries 350
209
—
(559 ) —
NET INCOME 323
343
426
(753 ) 339
Income attributable to non-controlling interests —
—
(16 ) —
(16 )
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 323
$ 343
$ 410
$ (753 ) $ 323

Comprehensive income before non-controlling interests $ 531
$ 552
$ 434
$ (971 ) $ 546
Comprehensive income attributable to non-controlling interests —
—
(15 ) —
(15 )
Comprehensive income attributable to Willis Towers Watson $ 531
$ 552
$ 419
$ (971 ) $ 531

~~Unaudited Condensed Consolidating Statement of Comprehensive Income~~

Nine Months Ended September 30, 2016

Willis
Towers
Watson —
the Parent
Issuer The
Guarantors Other Consolidating
adjustments Consolidated
Revenues

Commissions and fees $ —
$ 16
$ 5,858
$ —
$ 5,874
Interest and other income —
1
85
—
86
Total revenues —
17
5,943
—
5,960
Costs of providing services

Salaries and benefits 1
39
3,479
—
3,519
Other operating expenses 4
166
1,001
—
1,171
Depreciation —
14
118
—
132
Amortization —
—
443
—
443
Restructuring costs —
41
74
—
115
Transaction and integration expenses —
28
89
—
117
Total costs of providing services 5
288
5,204
—
5,497
(Loss)/income from operations (5 ) (271 ) 739
—
463
Income from Group undertakings —
(461 ) (104 ) 565
—
Expenses due to Group undertakings —
104
461
(565 ) —
Interest expense 25
94
19
—
138
Other expense/(income), net 1
(2 ) 27
—
26
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (31 ) (6 ) 336
—
299
(Benefit from)/provision for income taxes —
(73 ) 84
—
11
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (31 ) 67
252
—
288
Interest in earnings of associates, net of tax —
—
2
—
2
Equity account for subsidiaries 309
222
—
(531 ) —
NET INCOME 278
289
254
(531 ) 290
Income attributable to non-controlling interests —
—
(12 ) —
(12 )
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 278
$ 289
$ 242
$ (531 ) $ 278

Comprehensive income before non-controlling interests $ 94
$ 104
$ 88
$ (190 ) $ 96
Comprehensive income attributable to non-controlling interests —
—
(2 ) —
(2 )
Comprehensive income attributable to Willis Towers Watson $ 94
$ 104
$ 86
$ (190 ) $ 94

Unaudited Condensed Consolidating Balance Sheet

	As of March 31, 2019
	Willis Towers Watson plc		Willis North America		Trinity Acquisition plc		Other guarantors		Non-guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	992	$	—		$	992
Fiduciary assets		—		—		—		—		15,129		—			15,129
Accounts receivable, net		—		28		—		—		2,462		—			2,490
Prepaid and other current assets		—		371		1		30		338		(331	)		409
Total current assets		—		399		1		30		18,921		(331	)		19,020
Intercompany receivables, net		4,733		—		1,452		—		—		(6,185	)		—
Fixed assets, net		—		—		—		17		940		—			957
Goodwill		—		—		—		—		10,456		—			10,456
Other intangible assets, net		—		—		—		57		3,187		(57	)		3,187
Right-of-use assets		—		—		—		—		946		—			946
Pension benefits assets		—		—		—		—		833		—			833
Other non-current assets		—		142		2		48		420		(118	)		494
Total non-current assets		4,733		142		1,454		122		16,782		(6,360	)		16,873
Investments in subsidiaries		5,952		6,401		2,526		7,947		—		(22,826	)		—
TOTAL ASSETS	$	10,685	$	6,942	$	3,981	$	8,099	$	35,703	$	(29,517	)	$	35,893
LIABILITIES AND EQUITY
Fiduciary liabilities	$	—	$	—	$	—	$	—	$	15,129	$	—		$	15,129
Deferred revenue and accrued expenses		—		—		—		3		1,237		—			1,240
Current debt		—		187		—		—		—		—			187
Current lease liabilities		—		—		—		—		158		—			158
Other current liabilities		97		28		19		5		1,070		(279	)		940
Total current liabilities		97		215		19		8		17,594		(279	)		17,654
Intercompany payables, net		—		748		—		4,709		728		(6,185	)		—
Long-term debt		498		1,655		2,364		—		1		—			4,518
Liability for pension benefits		—		—		—		—		1,135		—			1,135
Deferred tax liabilities		—		—		—		—		662		(118	)		544
Provision for liabilities		—		120		—		—		423		—			543
Long-term lease liabilities		—		—		—		—		961		—			961
Other non-current liabilities		—		16		—		2		278		—			296
Total non-current liabilities		498		2,539	��	2,364		4,711		4,188		(6,303	)		7,997
TOTAL LIABILITIES		595		2,754		2,383		4,719		21,782		(6,582	)		25,651
REDEEMABLE NON-CONTROLLING INTEREST		—		—		—		—		28		—			28
EQUITY
Total Willis Towers Watson shareholders’ equity		10,090		4,188		1,598		3,380		13,771		(22,935	)		10,092
Non-controlling interests		—		—		—		—		122		—			122
Total equity		10,090		4,188		1,598		3,380		13,893		(22,935	)		10,214
TOTAL LIABILITIES AND EQUITY	$	10,685	$	6,942	$	3,981	$	8,099	$	35,703	$	(29,517	)	$	35,893

As of September 30, 2017
Willis
Towers
Watson —
the Parent
Issuer The
Guarantors Other Consolidating
adjustments Consolidated
ASSETS
Cash and cash equivalents $ —
$ 5
$ 907
$ —
$ 912
Fiduciary assets —
—
12,206
—
12,206
Accounts receivable, net —
5
2,150
—
2,155
Prepaid and other current assets 2
169
298
(51 ) 418
Amounts due from group undertakings 6,131
1,728
2,576
(10,435 ) —
Total current assets 6,133
1,907
18,137
(10,486 ) 15,691
Investments in subsidiaries 4,357
10,524
—
(14,881 ) —
Fixed assets, net —
35
902
—
937
Goodwill —
—
10,529
—
10,529
Other intangible assets, net —
61
4,034
(61 ) 4,034
Pension benefits assets —
—
649
—
649
Other non-current assets —
261
373
(202 ) 432
Non-current amounts due from group undertakings —
5,260
48
(5,308 ) —
Total non-current assets 4,357
16,141
16,535
(20,452 ) 16,581
TOTAL ASSETS $ 10,490
$ 18,048
$ 34,672
$ (30,938 ) $ 32,272
LIABILITIES AND EQUITY
Fiduciary liabilities $ —
$ —
$ 12,206
$ —
$ 12,206
Deferred revenue and accrued expenses 1
91
1,380
—
1,472
Short-term debt and current portion of long-term debt —
—
85
—
85
Other current liabilities 78
160
546
9
793
Amounts due to group undertakings —
8,829
1,607
(10,436 ) —
Total current liabilities 79
9,080
15,824
(10,427 ) 14,556
Long-term debt 496
3,891
106
—
4,493
Liability for pension benefits —
—
1,207
—
1,207
Deferred tax liabilities —
—
1,057
(201 ) 856
Provision for liabilities —
120
483
—
603
Other non-current liabilities —
66
410
—
476
Non-current amounts due to group undertakings —
—
5,308
(5,308 ) —
Total non-current liabilities 496
4,077
8,571
(5,509 ) 7,635
TOTAL LIABILITIES 575
13,157
24,395
(15,936 ) 22,191
REDEEMABLE NON-CONTROLLING INTEREST —
—
55
—
55
EQUITY
Total Willis Towers Watson shareholders’ equity 9,915
4,891
10,111
(15,002 ) 9,915
Non-controlling interests —
—
111
—
111
Total equity 9,915
4,891
10,222
(15,002 ) 10,026
TOTAL LIABILITIES AND EQUITY $ 10,490
$ 18,048
$ 34,672
$ (30,938 ) $ 32,272

Unaudited Condensed Consolidating Balance Sheet

	As of December 31, 2018
	Willis Towers Watson plc		Willis North America		Trinity Acquisition plc		Other guarantors		Non-guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	1,033	$	—		$	1,033
Fiduciary assets		—		—		—		—		12,604		—			12,604
Accounts receivable, net		—		24		—		—		2,355		—			2,379
Prepaid and other current assets		—		311		1		33		357		(298	)		404
Total current assets		—		335		1		33		16,349		(298	)		16,420
Intercompany receivables, net		4,755		—		1,355		—		—		(6,110	)		—
Fixed assets, net		—		—		—		16		926		—			942
Goodwill		—		—		—		—		10,465		—			10,465
Other intangible assets, net		—		—		—		58		3,318		(58	)		3,318
Pension benefits assets		—		—		—		—		773		—			773
Other non-current assets		—		92		2		49		452		(128	)		467
Total non-current assets		4,755		92		1,357		123		15,934		(6,296	)		15,965
Investments in subsidiaries		5,691		6,649		2,677		8,108		—		(23,125	)		—
TOTAL ASSETS	$	10,446	$	7,076	$	4,035	$	8,264	$	32,283	$	(29,719	)	$	32,385
LIABILITIES AND EQUITY
Fiduciary liabilities	$	—	$	—	$	—	$	—	$	12,604	$	—		$	12,604
Deferred revenue and accrued expenses		1		2		—		3		1,641		—			1,647
Current debt		—		186		—		—		—		—			186
Other current liabilities		95		38		33		13		935		(250	)		864
Total current liabilities		96		226		33		16		15,180		(250	)		15,301
Intercompany payables, net		—		902		—		4,691		517		(6,110	)		—
Long-term debt		498		1,635		2,256		—		—		—			4,389
Liability for pension benefits		—		—		—		—		1,170		—			1,170
Deferred tax liabilities		—		—		—		—		688		(129	)		559
Provision for liabilities		—		120		—		—		420		—			540
Other non-current liabilities		—		13		—		5		411		—			429
Total non-current liabilities		498		2,670		2,256		4,696		3,206		(6,239	)		7,087
TOTAL LIABILITIES		594		2,896		2,289		4,712		18,386		(6,489	)		22,388
REDEEMABLE NON-CONTROLLING INTEREST		—		—		—		—		26		—			26
EQUITY
Total Willis Towers Watson shareholders’ equity		9,852		4,180		1,746		3,552		13,752		(23,230	)		9,852
Non-controlling interests		—		—		—		—		119		—			119
Total equity		9,852		4,180		1,746		3,552		13,871		(23,230	)		9,971
TOTAL LIABILITIES AND EQUITY	$	10,446	$	7,076	$	4,035	$	8,264	$	32,283	$	(29,719	)	$	32,385

As of December 31, 2016

Willis
Towers
Watson —
the Parent
Issuer

The
Guarantors
Other
Consolidating
adjustments
Consolidated
ASSETS
Cash and cash equivalents $ —
$ —
$ 870
$ —
$ 870
Fiduciary assets —
—
10,505
—
10,505
Accounts receivable, net —
7
2,073
—
2,080
Prepaid and other current assets —
72
324
(59 ) 337
Amounts due from group undertakings 7,229
1,648
2,370
(11,247 ) —
Total current assets 7,229
1,727
16,142
(11,306 ) 13,792
Investments in subsidiaries 3,409
8,955
—
(12,364 ) —
Fixed assets, net —
34
805
—
839
Goodwill —
—
10,413
—
10,413
Other intangible assets, net —
64
4,368
(64 ) 4,368
Pension benefits assets —
—
488
—
488
Other non-current assets —
90
310
(47 ) 353
Non-current amounts due from group undertakings —
4,973
—
(4,973 ) —
Total non-current assets 3,409
14,116
16,384
(17,448 ) 16,461
TOTAL ASSETS $ 10,638
$ 15,843
$ 32,526
$ (28,754 ) $ 30,253
LIABILITIES AND EQUITY
Fiduciary liabilities $ —
$ —
$ 10,505
$ —
$ 10,505
Deferred revenue and accrued expenses —
42
1,488
(49 ) 1,481
Short-term debt and current portion of long-term debt —
416
92
—
508
Other current liabilities 77
117
684
(2 ) 876
Amounts due to group undertakings —
9,150
2,097
(11,247 ) —
Total current liabilities 77
9,725
14,866
(11,298 ) 13,370
Long-term debt 496
2,692
169
—
3,357
Liability for pension benefits —
—
1,321
—
1,321
Deferred tax liabilities —
—
1,013
(149 ) 864
Provision for liabilities —
120
455
—
575
Other non-current liabilities —
63
483
(14 ) 532
Non-current amounts due to group undertakings —
—
4,973
(4,973 ) —
Total non-current liabilities 496
2,875
8,414
(5,136 ) 6,649
TOTAL LIABILITIES 573
12,600
23,280
(16,434 ) 20,019
REDEEMABLE NON-CONTROLLING INTEREST —
—
51
—
51
EQUITY
Total Willis Towers Watson shareholders’ equity 10,065
3,243
9,077
(12,320 ) 10,065
Non-controlling interests —
—
118
—
118
Total equity 10,065
3,243
9,195
(12,320 ) 10,183
TOTAL LIABILITIES AND EQUITY $ 10,638
$ 15,843
$ 32,526
$ (28,754 ) $ 30,253

Unaudited Condensed Consolidating Statement of Cash Flows

	Three months ended March 31, 2019
	Willis Towers Watson plc			Willis North America			Trinity Acquisition plc			Other guarantors			Non-guarantors			Eliminations			Consolidated
NET CASH FROM/(USED IN) OPERATING ACTIVITIES	$	38		$	(130	)	$	(31	)	$	(82	)	$	158		$	—		$	(47	)
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Additions to fixed assets and software for internal use		—			—			—			(1	)		(56	)		—			(57	)
Capitalized software costs		—			—			—			—			(17	)		—			(17	)
Acquisitions of operations, net of cash acquired		—			—			—			—			(1	)		—			(1	)
Proceeds from/(repayments of) intercompany investing activities, net		17			111			(137	)		78			(34	)		(35	)		—
Net cash from/(used in) investing activities	$	17		$	111		$	(137	)	$	77		$	(108	)	$	(35	)	$	(75	)
CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES
Net payments on revolving credit facility		—			20			118			—			—			—			138
Repayments of debt		—			—			—			—			(1	)		—			(1	)
Proceeds from issuance of shares		22			—			—			—			—			—			22
Dividends paid		(77	)		—			—			—			—			—			(77	)
(Repayments of)/proceeds from intercompany financing activities, net		—			(1	)		50			5			(89	)		35			—
Net cash (used in)/from financing activities	$	(55	)	$	19		$	168		$	5		$	(90	)	$	35		$	82
DECREASE IN CASH AND CASH EQUIVALENTS		—			—			—			—			(40	)		—			(40	)
Effect of exchange rate changes on cash and cash equivalents		—			—			—			—			(1	)		—			(1	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		—			—			—			—			1,033			—			1,033
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—		$	—		$	—		$	—		$	992		$	—		$	992

Nine Months Ended September 30, 2017
Willis
Towers
Watson —
the Parent
Issuer The
Guarantors Other Consolidating
adjustments Consolidated
NET CASH FROM/(USED IN) OPERATING ACTIVITIES $ 525
$ (655 ) $ 774
$ (129 ) $ 515
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Additions to fixed assets and software for internal use —
(6 ) (192 ) —
(198 )
Capitalized software costs —
—
(52 ) —
(52 )
Acquisitions of operations, net of cash acquired —
—
(13 ) —
(13 )
Other, net —
—
1
—
1
Proceeds from intercompany investing activities 1,102
143
223
(1,468 ) —
Repayments of intercompany investing activities —
(195 ) (311 ) 506
—
Reduction in investment in subsidiaries —
1,148
59
(1,207 ) —
Additional investment in subsidiaries (1,000 ) (207 ) —
1,207
—
Net cash from/(used in) investing activities $ 102
$ 883
$ (285 ) $ (962 ) $ (262 )
CASH FLOWS USED IN FINANCING ACTIVITIES
Net borrowings on revolving credit facility —
675
—
—
675
Senior notes issued —
650
—
—
650
Proceeds from issuance of other debt —
—
32
—
32
Debt issuance costs —
(9 ) —
—
(9 )
Repayments of debt —
(619 ) (95 ) ��
(714 )
Repurchase of shares (462 ) —
—
—
(462 )
Proceeds from issuance of shares 44
—
—
—
44
Payments related to share cancellation —
—
(177 ) —
(177 )
Payments of deferred and contingent consideration related to acquisitions —
—
(43 ) —
(43 )
Cash paid for employee taxes on withholding shares —
—
(14 ) —
(14 )
Dividends paid (209 ) —
(129 ) 129
(209 )
Acquisitions of and dividends paid to non-controlling interests —
—
(19 ) —
(19 )
Proceeds from intercompany financing activities —
311
195
(506 ) —
Repayments of intercompany financing activities —
(1,231 ) (237 ) 1,468
—
Net cash used in financing activities $ (627 ) $ (223 ) $ (487 ) $ 1,091
$ (246 )
INCREASE IN CASH AND CASH EQUIVALENTS —
5
2
—
7
Effect of exchange rate changes on cash and cash equivalents —
—
35
—
35
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD —
—
870
—
870
CASH AND CASH EQUIVALENTS, END OF PERIOD $ —
$ 5
$ 907
$ —
$ 912

Unaudited Condensed Consolidating Statement of Cash Flows

	Three months ended March 31, 2018
	Willis Towers Watson plc			Willis North America			Trinity Acquisition plc			Other guarantors			Non-guarantors			Eliminations			Consolidated
NET CASH FROM/(USED IN) OPERATING ACTIVITIES	$	72		$	(98	)	$	(196	)	$	245		$	328		$	(333	)	$	18
CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES
Additions to fixed assets and software for internal use		—			—			—			(1	)		(64	)		—			(65	)
Capitalized software costs		—			—			—			—			(13	)		—			(13	)
Acquisitions of operations, net of cash acquired		—			—			—			—			(5	)		—			(5	)
Net proceeds from sale of operations		—			—			—			—			4			—			4
(Repayments of)/proceeds from intercompany investing activities, net		(17	)		67			326			63			(195	)		(244	)		—
Net cash (used in)/from investing activities	$	(17	)	$	67		$	326		$	62		$	(273	)	$	(244	)	$	(79	)
CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES
Net borrowings on revolving credit facility		—			55			6			—			—			—			61
Repayments of debt		—			—			—			—			(21	)		—			(21	)
Proceeds from issuance of shares		11			—			—			—			—			—			11
Cash paid for employee taxes on withholding shares		—			—			—			—			(7	)		—			(7	)
Dividends paid		(68	)		—			(332	)		(1	)		—			333			(68	)
(Repayments of)/proceeds from intercompany financing activities, net		—			(24	)		196			(306	)		(110	)		244			—
Net cash (used in)/from financing activities	$	(57	)	$	31		$	(130	)	$	(307	)	$	(138	)	$	577		$	(24	)
DECREASE IN CASH AND CASH EQUIVALENTS		(2	)		—			—			—			(83	)		—			(85	)
Effect of exchange rate changes on cash and cash equivalents		—			—			—			—			9			—			9
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		2			—			—			1			1,027			—			1,030
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—		$	—		$	—		$	1		$	953		$	—		$	954

Nine Months Ended September 30, 2016
Willis
Towers
Watson —
the Parent
Issuer The
Guarantors Other Consolidating
adjustments Consolidated
NET CASH FROM/(USED IN) OPERATING ACTIVITIES $ 6
$ (305 ) $ 989
$ (69 ) $ 621
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Additions to fixed assets and software for internal use —
(84 ) (131 ) 64
(151 )
Capitalized software costs —
—
(64 ) —
(64 )
Acquisitions of operations, net of cash acquired —
—
476
—
476
Other, net —
1
16
5
22
Proceeds from intercompany investing activities 47
30
18
(95 ) —
Repayments of intercompany investing activities (4,015 ) (3,953 ) (805 ) 8,773
—
Reduction in investment in subsidiaries 4,600
3,600
—
(8,200 ) —
Additional investment in subsidiaries —
(4,600 ) (3,600 ) 8,200
—
Net cash from/(used in) investing activities $ 632
$ (5,006 ) $ (4,090 ) $ 8,747
$ 283
CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES
Net payments on revolving credit facility —
(389 ) —
—
(389 )
Senior notes issued —
1,606
—
—
1,606
Proceeds from issuance of other debt —
400
4
—
404
Debt issuance costs —
(14 ) —
—
(14 )
Repayments of debt (300 ) (1,032 ) (529 ) —
(1,861 )
Repurchase of shares (222 ) —
—
—
(222 )
Proceeds from issuance of shares 44
—
—
—
44
Payments of deferred and contingent consideration related to acquisitions —
—
(64 ) —
(64 )
Dividends paid (133 ) —
—
—
(133 )
Cash paid for employee taxes on withholding shares —
—
(13 ) —
(13 )
Acquisitions of and dividends paid to non-controlling interests —
—
(17 ) —
(17 )
Proceeds from intercompany financing activities —
4,756
4,017
(8,773 ) —
Repayments of intercompany financing activities (30 ) (18 ) (47 ) 95
—
Net cash (used in)/from financing activities $ (641 ) $ 5,309
$ 3,351
$ (8,678 ) $ (659 )
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (3 ) (2 ) 250
—
245
Effect of exchange rate changes on cash and cash equivalents —
—
(10 ) —
(10 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3
2
527
—
532
CASH AND CASH EQUIVALENTS, END OF PERIOD $ —
$ —
$ 767
$ —
$ 767

~~Note 19 — Financial Information for Issuer, Parent Guarantor, Other Guarantor Subsidiaries and Non-Guarantor Subsidiaries~~

Trinity Acquisition plc has $2.1 billion senior notes outstanding of which $525 million were issued on August 15, 2013, $1.0 billion were issued on March 22, 2016, €540 million ($609 million) were issued on May 26, 2016, and $917 million outstanding under the $1.25 billion revolving credit facility issued March 7, 2017.

All direct obligations under the senior notes are jointly and severally, irrevocably and fully and unconditionally guaranteed by Willis Netherlands Holdings B.V., Willis Investment U.K. Holdings Limited, TA I Limited, Willis Group Limited, Willis North America Inc., Willis Towers Watson Sub Holdings Unlimited Company and Willis Towers Watson UK Holdings Limited, collectively the ‘Other Guarantors’, and with Willis Towers Watson, the ‘Guarantor Companies’.

~~The guarantor structure described above differs from the guarantor structure associated with the senior notes issued by Willis North America described in~~ ~~Note 17~~ ~~and the guarantor structure associated with the senior notes issued by Willis Towers Watson described in~~ ~~Note 18~~.

~~Presented below is condensed consolidating financial information for:~~


~~(i)~~	~~Willis Towers Watson, which is a guarantor, on a parent company only basis;~~

~~(ii)~~

the Other Guarantors, which are all wholly owned subsidiaries (directly or indirectly) of the parent. Willis Towers Watson Sub Holdings Unlimited Company, Willis Netherlands Holdings B.V, Willis Investment U.K. Holdings Limited, TA I Limited and WTW Bermuda Holdings Ltd. are all direct or indirect parents of the issuer and Willis Group Limited and Willis North America Inc., are direct or indirect wholly owned subsidiaries of the issuer;


~~(iii)~~	~~Trinity Acquisition plc, which is the issuer and is a 100 percent indirectly owned subsidiary of the parent;~~


~~(iv)~~	~~Other, which are the non-guarantor subsidiaries, on a combined basis;~~


~~(v)~~	~~Consolidating adjustments; and~~


~~(vi)~~	~~the Consolidated Company.~~

~~The equity method has been used for investments in subsidiaries in the condensed consolidating balance sheets of Willis Towers Watson, the Other Guarantors and the Issuer.~~

~~Unaudited Condensed Consolidating Statement of Comprehensive Income~~

Three Months Ended September 30, 2017
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
Revenues
Commissions and fees $ —
$ 3
$ —
$ 1,829
$ —
$ 1,832
Interest and other income —
—
—
20
—
20
Total revenues —
3
—
1,849
—
1,852
Costs of providing services
Salaries and benefits 2
20
—
1,123
—
1,145
Other operating expenses —
35
1
330
—
366
Depreciation —
2
—
52
—
54
Amortization —
1
—
143
(3 ) 141
Restructuring costs —
2
—
29
—
31
Transaction and integration expenses —
6
—
68
—
74
Total costs of providing services 2
66
1
1,745
(3 ) 1,811
(Loss)/income from operations (2 ) (63 ) (1 ) 104
3
41
Income from Group undertakings —
(148 ) (36 ) (39 ) 223
—
Expenses due to Group undertakings —
57
6
160
(223 ) —
Interest expense 8
9
25
5
—
47
Other (income)/expense, net —
(48 ) —
(120 ) 197
29
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (10 ) 67
4
98
(194 ) (35 )
(Benefit from)/provision for income taxes (1 ) 6
—
14
—
19
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (9 ) 61
4
84
(194 ) (54 )
Interest in earnings of associates, net of tax —
—
—
—
—
—
Equity account for subsidiaries (45 ) (103 ) (108 ) —
256
—
NET (LOSS)/INCOME (54 ) (42 ) (104 ) 84
62
(54 )
Income attributable to non-controlling interests —
—
—
—
—
—
NET (LOSS)/INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ (54 ) $ (42 ) $ (104 ) $ 84
$ 62
$ (54 )

Comprehensive income before non-controlling interests $ 46
$ 62
$ 2
$ (4 ) $ (72 ) $ 34
Comprehensive loss attributable to non-controlling interests —
—
—
12
—
12
Comprehensive income attributable to Willis Towers Watson $ 46
$ 62
$ 2
$ 8
$ (72 ) $ 46

~~Unaudited Condensed Consolidating Statement of Comprehensive Income~~

Three Months Ended September 30, 2016
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
Revenues
Commissions and fees $ —
$ 5
$ —
$ 1,756
$ —
$ 1,761
Interest and other income —
—
—
16
—
16
Total revenues —
5
—
1,772
—
1,777
Costs of providing services
Salaries and benefits —
14
—
1,105
—
1,119
Other operating expenses 1
37
—
332
—
370
Depreciation —
5
—
40
—
45
Amortization —
—
—
157
—
157
Restructuring costs —
14
—
35
—
49
Transaction and integration expenses —
6
—
30
—
36
Total costs of providing services 1
76
—
1,699
—
1,776
(Loss)/income from operations (1 ) (71 ) —
73
—
1
Income from Group undertakings —
(155 ) (34 ) (34 ) 223
—
Expenses due to Group undertakings —
57
6
160
(223 ) —
Interest expense 8
10
22
5
—
45
Other expense, net —
—
—
14
—
14
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (9 ) 17
6
(72 ) —
(58 )
Benefit from income taxes —
(19 ) —
(7 ) —
(26 )
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (9 ) 36
6
(65 ) —
(32 )
Interest in earnings of associates, net of tax —
—
—
1
—
1
Equity account for subsidiaries (23 ) (54 ) (55 ) —
132
—
NET LOSS (32 ) (18 ) (49 ) (64 ) 132
(31 )
Income attributable to non-controlling interests —
—
—
(1 ) —
(1 )
NET LOSS ATTRIBUTABLE TO WILLIS TOWERS WATSON $ (32 ) $ (18 ) $ (49 ) $ (65 ) $ 132
$ (32 )

Comprehensive loss before non-controlling interests $ (72 ) $ (58 ) $ (59 ) $ (91 ) $ 207
$ (73 )
Comprehensive loss attributable to non-controlling interests —
—
—
1
—
1
Comprehensive loss attributable to Willis Towers Watson $ (72 ) $ (58 ) $ (59 ) $ (90 ) $ 207
$ (72 )

~~Unaudited Condensed Consolidating Statement of Comprehensive Income~~

Nine Months Ended September 30, 2017

Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
Revenues

Commissions and fees $ —
$ 14
$ —
$ 6,051
$ —
$ 6,065
Interest and other income —
—
—
59
—
59
Total revenues —
14
—
6,110
—
6,124
Costs of providing services

Salaries and benefits 4
40
—
3,440
—
3,484
Other operating expenses 2
89
1
1,066
—
1,158
Depreciation —
5
—
146
—
151
Amortization —
3
—
441
(3 ) 441
Restructuring costs —
6
—
79
—
85
Transaction and integration expenses —
38
—
139
—
177
Total costs of providing services 6
181
1
5,311
(3 ) 5,496
(Loss)/income from operations (6 ) (167 ) (1 ) 799
3
628
Income from Group undertakings —
(457 ) (108 ) (112 ) 677
—
Expenses due to Group undertakings —
180
19
478
(677 ) —
Interest expense 23
24
76
16
—
139
Other (income)/expense, net —
(48 ) —
(70 ) 197
79
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (29 ) 134
12
487
(194 ) 410
(Benefit from)/provision for income taxes (2 ) 11
1
63
—
73
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (27 ) 123
11
424
(194 ) 337
Interest in earnings of associates, net of tax —
—
—
2
—
2
Equity account for subsidiaries 350
220
117
—
(687 ) —
NET INCOME 323
343
128
426
(881 ) 339
Income attributable to non-controlling interests —
—
—
(16 ) —
(16 )
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 323
$ 343
$ 128
$ 410
$ (881 ) $ 323

Comprehensive income before non-controlling interests $ 531
$ 552
$ 336
$ 434
$ (1,307 ) $ 546
Comprehensive income attributable to non-controlling interests —
—
—
(15 ) —
(15 )
Comprehensive income attributable to Willis Towers Watson $ 531
$ 552
$ 336
$ 419
$ (1,307 ) $ 531

~~Unaudited Condensed Consolidating Statement of Comprehensive Income~~

Nine Months Ended September 30, 2016

Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
Revenues

Commissions and fees $ —
$ 16
$ —
$ 5,858
$ —
$ 5,874
Interest and other income —
1
—
85
—
86
Total revenues —
17
—
5,943
—
5,960
Costs of providing services

Salaries and benefits 1
39
—
3,479
—
3,519
Other operating expenses 4
166
—
1,001
—
1,171
Depreciation —
14
—
118
—
132
Amortization —
—
—
443
—
443
Restructuring costs —
41
—
74
—
115
Transaction and integration expenses —
28
—
89
—
117
Total costs of providing services 5
288
—
5,204
—
5,497
(Loss)/income from operations (5 ) (271 ) —
739
—
463
Income from Group undertakings —
(451 ) (98 ) (104 ) 653
—
Expenses due to Group undertakings —
173
19
461
(653 ) —
Interest expense 25
28
66
19
—
138
Other expense/(income), net 1
(2 ) —
27
—
26
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES (31 ) (19 ) 13
336
—
299
(Benefit from)/provision for income taxes —
(74 ) 1
84
—
11
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES (31 ) 55
12
252
—
288
Interest in earnings of associates, net of tax —
—
—
2
—
2
Equity account for subsidiaries 309
234
57
—
(600 ) —
NET INCOME 278
289
69
254
(600 ) 290
Income attributable to non-controlling interests —
—
—
(12 ) —
(12 )
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 278
$ 289
$ 69
$ 242
$ (600 ) $ 278

Comprehensive income/(loss) before non-controlling interests $ 94
$ 104
$ (3 ) $ 88
$ (187 ) $ 96
Comprehensive income attributable to non-controlling interests —
—
—
(2 ) —
(2 )
Comprehensive income/(loss) attributable to Willis Towers Watson $ 94
$ 104
$ (3 ) $ 86
$ (187 ) $ 94

~~Unaudited Condensed Consolidating Balance Sheet~~

As of September 30, 2017
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
ASSETS
Cash and cash equivalents $ —
$ 5
$ —
$ 907
$ —
$ 912
Fiduciary assets —
—
—
12,206
—
12,206
Accounts receivable, net —
5
—
2,150
—
2,155
Prepaid and other current assets 2
172
1
298
(55 ) 418
Amounts due from group undertakings 6,131
1,449
1,655
2,576
(11,811 ) —
Total current assets 6,133
1,631
1,656
18,137
(11,866 ) 15,691
Investments in subsidiaries 4,357
10,112
2,143
—
(16,612 ) —
Fixed assets, net —
35
—
902
—
937
Goodwill —
—
—
10,529
—
10,529
Other intangible assets, net —
61
—
4,034
(61 ) 4,034
Pension benefits assets —
—
—
649
—
649
Other non-current assets —
259
1
373
(201 ) 432
Non-current amounts due from group undertakings —
4,461
1,318
48
(5,827 ) —
Total non-current assets 4,357
14,928
3,462
16,535
(22,701 ) 16,581
TOTAL ASSETS $ 10,490
$ 16,559
$ 5,118
$ 34,672
$ (34,567 ) $ 32,272
LIABILITIES AND EQUITY
Fiduciary liabilities $ —
$ —
$ —
$ 12,206
$ —
$ 12,206
Deferred revenue and accrued expenses 1
91
—
1,380
—
1,472
Short-term debt and current portion of long-term debt —
—
—
85
—
85
Other current liabilities 78
150
14
546
5
793
Amounts due to group undertakings —
9,775
7
1,607
(11,389 ) —
Total current liabilities 79
10,016
21
15,824
(11,384 ) 14,556
Long-term debt 496
946
2,945
106
—
4,493
Liability for pension benefits —
—
—
1,207
—
1,207
Deferred tax liabilities —
—
—
1,057
(201 ) 856
Provision for liabilities —
120
—
483
—
603
Other non-current liabilities —
66
—
410
—
476
Non-current amounts due to group undertakings —
519
423
5,308
(6,250 ) —
Total non-current liabilities 496
1,651
3,368
8,571
(6,451 ) 7,635
TOTAL LIABILITIES 575
11,667
3,389
24,395
(17,835 ) 22,191
REDEEMABLE NON-CONTROLLING INTEREST —
—
—
55
—
55
EQUITY
Total Willis Towers Watson shareholders’ equity 9,915
4,892
1,729
10,111
(16,732 ) 9,915
Non-controlling interests —
—
—
111
—
111
Total equity 9,915
4,892
1,729
10,222
(16,732 ) 10,026
TOTAL LIABILITIES AND EQUITY $ 10,490
$ 16,559
$ 5,118
$ 34,672
$ (34,567 ) $ 32,272

~~Unaudited Condensed Consolidating Balance Sheet~~

As of December 31, 2016
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
ASSETS
Cash and cash equivalents $ —
$ —
$ —
$ 870
$ —
$ 870
Fiduciary assets —
—
—
10,505
—
10,505
Accounts receivable, net —
7
—
2,073
—
2,080
Prepaid and other current assets —
74
1
324
(62 ) 337
Amounts due from group undertakings 7,229
849
1,595
2,370
(12,043 ) —
Total current assets 7,229
930
1,596
16,142
(12,105 ) 13,792
Investments in subsidiaries 3,409
8,621
7,309
—
(19,339 ) —
Fixed assets, net —
34
—
805
—
839
Goodwill —
—
—
10,413
—
10,413
Other intangible assets, net —
64
—
4,368
(64 ) 4,368
Pension benefits assets —
—
—
488
—
488
Other non-current assets —
90
—
310
(47 ) 353
Non-current amounts due from group undertakings —
4,859
1,055
—
(5,914 ) —
Total non-current assets 3,409
13,668
8,364
16,384
(25,364 ) 16,461
TOTAL ASSETS $ 10,638
$ 14,598
$ 9,960
$ 32,526
$ (37,469 ) $ 30,253
LIABILITIES AND EQUITY
Fiduciary liabilities $ —
$ —
$ —
$ 10,505
$ —
$ 10,505
Deferred revenue and accrued expenses —
41
1
1,488
(49 ) 1,481
Short-term debt and current portion of long-term debt —
394
22
92
—
508
Other current liabilities 77
87
33
684
(5 ) 876
Amounts due to group undertakings —
9,946
—
2,097
(12,043 ) —
Total current liabilities 77
10,468
56
14,866
(12,097 ) 13,370
Long-term debt 496
186
2,506
169
—
3,357
Liability for pension benefits —
—
—
1,321
—
1,321
Deferred tax liabilities —
—
—
1,013
(149 ) 864
Provision for liabilities —
120
—
455
—
575
Other non-current liabilities —
63
—
483
(14 ) 532
Non-current amounts due to group undertakings —
518
423
4,973
(5,914 ) —
Total non-current liabilities 496
887
2,929
8,414
(6,077 ) 6,649
TOTAL LIABILITIES 573
11,355
2,985
23,280
(18,174 ) 20,019
REDEEMABLE NON-CONTROLLING INTEREST —
—
—
51
—
51
EQUITY
Total Willis Towers Watson shareholders’ equity 10,065
3,243
6,975
9,077
(19,295 ) 10,065
Non-controlling interests —
—
—
118
—
118
Total equity 10,065
3,243
6,975
9,195
(19,295 ) 10,183
TOTAL LIABILITIES AND EQUITY $ 10,638
$ 14,598
$ 9,960
$ 32,526
$ (37,469 ) $ 30,253

~~Unaudited Condensed Consolidating Statement of Cash Flows~~

Nine Months Ended September 30, 2017
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
NET CASH FROM/(USED IN) OPERATING ACTIVITIES $ 525
$ (649 ) $ 50
$ 774
$ (185 ) $ 515
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Additions to fixed assets and software for internal use —
(6 ) —
(192 ) —
(198 )
Capitalized software costs —
—
—
(52 ) —
(52 )
Acquisitions of operations, net of cash acquired —
—
—
(13 ) —
(13 )
Other, net —
—
—
1
—
1
Proceeds from intercompany investing activities 1,102
137
212
223
(1,674 ) —
Repayments of intercompany investing activities —
(48 ) (438 ) (311 ) 797
—
Reduction in investment in subsidiaries —
1,148
—
59
(1,207 ) —
Additional investment in subsidiaries (1,000 ) (59 ) (148 ) —
1,207
—
Net cash from/(used in) investing activities $ 102
$ 1,172
$ (374 ) $ (285 ) $ (877 ) $ (262 )
CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES
Net borrowings on revolving credit facility —
115
560
—
—
675
Senior notes issued —
650
—
—
—
650
Proceeds from issuance of other debt —
—
—
32
—
32
Debt issuance costs —
(5 ) (4 ) —
—
(9 )
Repayments of debt —
(400 ) (219 ) (95 ) —
(714 )
Repurchase of shares (462 ) —
—
—
—
(462 )
Proceeds from issuance of shares 44
—
—
—
—
44
Payments related to share cancellation —
—
—
(177 ) —
(177 )
Payments of deferred and contingent consideration related to acquisitions —
—
—
(43 ) —
(43 )
Cash paid for employee taxes on withholding shares —
—
—
(14 ) —
(14 )
Dividends paid (209 ) (56 ) —
(129 ) 185
(209 )
Acquisitions of and dividends paid to non-controlling interests —
—
—
(19 ) —
(19 )
Proceeds from intercompany financing activities —
602
—
195
(797 ) —
Repayments of intercompany financing activities —
(1,424 ) (13 ) (237 ) 1,674
—
Net cash (used in)/from financing activities $ (627 ) $ (518 ) $ 324
$ (487 ) $ 1,062
$ (246 )
INCREASE IN CASH AND CASH EQUIVALENTS —
5
—
2
—
7
Effect of exchange rate changes on cash and cash equivalents —
—
—
35
—
35
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD —
—
—
870
—
870
CASH AND CASH EQUIVALENTS, END OF PERIOD $ —
$ 5
$ —
$ 907
$ —
$ 912

~~Unaudited Condensed Consolidating Statement of Cash Flows~~

Nine Months Ended September 30, 2016
Willis
Towers
Watson The Other
Guarantors The
Issuer Other Consolidating
adjustments Consolidated
NET CASH FROM/(USED IN) OPERATING ACTIVITIES $ 6
$ (314 ) $ 9
$ 989
$ (69 ) $ 621
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Additions to fixed assets and software for internal use —
(84 ) —
(131 ) 64
(151 )
Capitalized software costs —
—
—
(64 ) —
(64 )
Acquisitions of operations, net of cash acquired —
—
—
476
—
476
Other, net —
1
—
16
5
22
Proceeds from intercompany investing activities 47
42
17
18
(124 ) —
Repayments of intercompany investing activities (4,015 ) (3,386 ) (567 ) (805 ) 8,773
—
Reduction in investment subsidiaries 4,600
3,600
—
—
(8,200 ) —
Additional investment in subsidiaries —
(4,600 ) —
(3,600 ) 8,200
—
Net cash from/(used in) investing activities $ 632
$ (4,427 ) $ (550 ) $ (4,090 ) $ 8,718
$ 283
CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES
Net payments on revolving credit facility —
—
(389 ) —
—
(389 )
Senior notes issued —
—
1,606
—
—
1,606
Proceeds from issuance of other debt —
—
400
4
—
404
Debt issuance costs —
—
(14 ) —
—
(14 )
Repayments of debt (300 ) —
(1,032 ) (529 ) —
(1,861 )
Repurchase of shares (222 ) —
—
—
—
(222 )
Proceeds from issuance of shares 44
—
—
—
—
44
Payments of deferred and contingent consideration related to acquisitions —
—
—
(64 ) —
(64 )
Dividends paid (133 ) —
—
—
—
(133 )
Cash paid for employee taxes on withholding shares —
—
—
(13 ) —
(13 )
Acquisitions of and dividends paid to non-controlling interests —
—
—
(17 ) —
(17 )
Proceeds from intercompany financing activities —
4,756
—
4,017
(8,773 ) —
Repayments of intercompany financing activities (30 ) (17 ) (30 ) (47 ) 124
—
Net cash (used in)/from financing activities $ (641 ) $ 4,739
$ 541
$ 3,351
$ (8,649 ) $ (659 )
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (3 ) (2 ) —
250
—
245
Effect of exchange rate changes on cash and cash equivalents —
—
—
(10 ) —
(10 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3
2
—
527
—
532
CASH AND CASH EQUIVALENTS, END OF PERIOD $ —
$ —
$ —
$ 767
$ —
$ 767

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion includes forward-looking statements. See ‘Disclaimer Regarding Forward-looking Statements’ for certain cautionary information regarding forward-looking statements and a list of factors that could cause actual results to differ materially from those predicted in those statements.

This discussion includes references to non-GAAP financial measures as defined in the rules of the ~~Securities and Exchange Commission (‘SEC’).~~SEC. We present such non-GAAP financial measures, specifically, adjusted, constant currency and organic non-GAAP financial measures, as we believe such information is of interest to the investment community because it provides additional meaningful methods of evaluating certain aspects of the Company’s operating performance from period to period on a basis that may not be otherwise apparent under U.S. GAAP, and these provide a measure against which our businesses may be assessed in the future.

See ‘Non-GAAP Financial Measures’ below for further discussion of our adjusted, constant currency and organic non-GAAP financial measures.

Executive Overview

Market Conditions

Due to the cyclical nature of the insurance market and the impact of other market conditions on insurance premiums, commission revenues may vary widely between accounting periods. A period of low or declining premium rates, generally known as a ‘soft’ or ‘softening’ market, generally leads to downward pressure on commission revenues and can have a material adverse impact on our commission revenues and operating margin. A ‘hard’ or ‘firming’ market, during which premium rates rise, generally has a favorable impact on our commission revenues and operating margin. Rates, however, vary by geography, industry and client segment. As a result, and due to the global and diverse nature of our business, we view rates in the aggregate.

Market conditions in ~~our~~the broking industry in which we operate are generally defined by factors such as the strength of the economies in the various geographic regions in which we serve around the world, insurance rate movements, and insurance and reinsurance buying patterns of our clients.

~~Management has considered the U.K. referendum vote on June 23, 2016 to depart from the E.U., the triggering of Article 50 of the Treaty of Lisbon (providing the right to~~

Insurance market rates vary by geography, industry and ~~procedures for~~client segment. As a ~~member to leave the E.U.) on March 29, 2017, the early general election held on June 8, 2017,~~result, and ~~the uncertainties about the near-term and longer-term effects of Brexit on the Company. The terms of Brexit, and its impact, are highly uncertain. For a further discussion of the risks of Brexit~~due to the ~~Company, see Part I, Item 1A. Risk Factors~~global and diverse nature of our business, we view rates in ~~our Annual Report on Form 10-K, filed with~~ the ~~SEC on March 1, 2017.~~

aggregate. Overall, we are currently seeing a modest increase in pricing across most insurance lines.

Typically, our business benefits from regulatory change, political risk or economic uncertainty. Insurance broking generally tracks the economy, but demand for both insurance broking and consulting services usually remains steady during times of uncertainty. We believe that the U.K. has good long-term growth opportunities and, given that, we believe the impact to Willis Towers Watson will be neutral to slightly positive over the next few years, with some periods of increase and decrease in that time frame. We have some businesses, such as our health and benefits and administration businesses, which can be ~~counter cyclical~~counter-cyclical during the early period of a significant economic change.

Management has considered the uncertainties about the near-term and longer-term effects of Brexit on the Company. The terms of Brexit, the date and manner of its occurrence, and its impact, remain uncertain, and the Company is currently in the process of establishing appropriate arrangements for the continued servicing of client business. For a further discussion of the risks of Brexit to the Company, see Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K, filed with the SEC on February 27, 2019.

On an annual basis for ~~2017,~~2019, although we expect that approximately 22% of our ~~revenues~~revenue will be generated in the U.K., we expect that ~~only about 13%~~approximately 12% of ~~revenues~~revenue will be denominated in Pounds sterling, as much of the insurance business is transacted in U.S. dollars. We expect that approximately ~~19%~~21% of our expenses will be denominated in Pounds ~~sterling; thus, we generally benefit from a weakening Pound sterling in our income from operations. However, we~~sterling. We have a Company hedging strategy for this aspect of our business, which is designed to mitigate significant fluctuations in currency.

The markets for our consulting, technology and solutions, and ~~private exchange~~marketplace services are subject to changes as a result of economic, regulatory and legislative changes, technological developments, and increased competition from established and new competitors. We believe that the primary factors in selecting a human resources or risk management consulting firm include reputation, the ability to provide measurable increases to shareholder value and return on investment, global scale, quality of service and the ability to tailor services to clients’ unique needs. With regard to the market for exchanges, we believe that clients base their decisions on a variety of factors that include the ability of the provider to deliver measurable cost savings for clients, a strong reputation for efficient execution and an innovative service delivery model and platform. Part of the ~~employer sponsored~~employer-sponsored insurance market has matured and become more fragmented while other segments remain in the entry phase. As

these market segments continue to evolve, we may experience growth in intervals, with periods of accelerated expansion balanced by periods of modest growth.

In recent years, growth in the market for exchanges has slowed, and we expect this trend may continue during 2019.

See Part II, Item 1A. Risk Factors elsewhere within this Form 10-Q, and Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K, filed with the SEC on ~~March 1, 2017~~February 27, 2019 for a discussion of risks that may affect our ability to compete.

Financial Statement Overview

The table below sets forth our summarized condensed consolidated statements of comprehensive income and data as a percentage of revenue for the periods indicated.

	Three Months Ended March 31,
	2019					2018
	($ in millions, except per share data)
Revenue	$	2,312		100	%	$	2,292		100	%
Costs of providing services
Salaries and benefits		1,348		58	%		1,377		60	%
Other operating expenses		418		18	%		423		18	%
Depreciation		54		2	%		49		2	%
Amortization		127		5	%		141		6	%
Transaction and integration expenses		6		—	%		43		2	%
Total costs of providing services		1,953					2,033
Income from operations		359		16	%		259		11	%
Interest expense		(54	)	(2	)%		(51	)	(2	)%
Other income, net		55		2	%		56		2	%
Provision for income taxes		(67	)	(3	)%		(43	)	(2	)%
Income attributable to non-controlling interests		(6	)	—	%		(6	)	—	%
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON	$	287		12	%	$	215		9	%
Diluted earnings per share	$	2.20				$	1.61

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
($ in millions, except per share data)
Total revenues $ 1,852
100 % $ 1,777
100 % $ 6,124
100 % $ 5,960
100 %
Costs of providing services
Salaries and benefits 1,145
62 % 1,119
63 % 3,484
57 % 3,519
59 %
Other operating expenses 366
20 % 370
21 % 1,158
19 % 1,171
20 %
Depreciation 54
3 % 45
3 % 151
2 % 132
2 %
Amortization 141
8 % 157
9 % 441
7 % 443
7 %
Restructuring costs 31
2 % 49
3 % 85
1 % 115
2 %
Transaction and integration expenses 74
4 % 36
2 % 177
3 % 117
2 %
Total costs of providing services 1,811

1,776

5,496
5,497

Income from operations 41
2 % 1
— % 628
10 % 463
8 %
Interest expense 47
3 % 45
3 % 139
2 % 138
2 %
Other expense, net 29
2 % 14
1 % 79
1 % 26
— %
Provision for/(benefit from) income taxes 19
1 % (26 ) (1 )% 73
1 % 11
— %
Interest in earnings of associates, net of tax —
— % 1
— % 2
— % 2
— %
Income attributable to non-controlling interests —
— % (1 ) — % (16 ) — % (12 ) — %
NET (LOSS)/INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ (54 ) (3 )% $ (32 ) (2 )% $ 323
5 % $ 278
5 %
Diluted (loss)/earnings per share $ (0.40 ) $ (0.23 ) $ 2.36
$ 2.00

Consolidated ~~Revenues~~

~~Revenues~~Revenue

Revenue was approximately $2.3 billion, for both the three months ended ~~September 30, 2017 were $1.9 billion, compared to $1.8 billion for the three months ended September 30, 2016, an~~March 31, 2019 and 2018, with a current year increase of ~~$75~~$20 million, or 4% on both an as reported and constant currency basis. Revenues for the nine months ended September 30, 2017 were $6.1 billion, compared to $6.0 billion for the nine months ended September 30, 2016, an increase of $164 million or 3%1%. Adjusting for the impact of foreign currency, our organic revenue ~~grew by 4%~~growth was 5% for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2019. The ~~quarterly and year-to-date increases~~organic increase in ~~revenues were~~revenue was driven by strong performances in all segments.

Our ~~revenues~~revenue can be materially impacted by changes in currency conversions, which can fluctuate significantly over the course of a calendar year. For the three months ended ~~September 30, 2017, currency translation increased our consolidated revenues by $12 million; for the nine months ended September 30, 2017,~~March 31, 2019, currency translation decreased our consolidated ~~revenues~~revenue by ~~$81~~$84 million. The primary currencies driving ~~these changes~~this change were the Euro and Pound ~~sterling, the Canadian dollar, and the Euro.~~

sterling.

The following table details our top five markets based on the percentage of consolidated ~~revenues~~revenue (in U.S. dollars) from the countries where work iswas performed for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2019. These figures do not represent the currency of the related revenue, which is presented in the next table.

Geographic Region		% of Revenue
United States			41	%
~~Geographic Region~~ United Kingdom			25	% ~~of Revenues~~
~~United States~~ France	49		7	%
~~United Kingdom~~ Germany	22		3	%
~~France~~ Canada	5	%
~~Germany~~	3 2	%
~~Canada~~	3	%

The table below details the percentage of our ~~revenues~~revenue and expenses by transactional currency for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2019.


Transactional Currency	Revenues		Expenses ⁽ⁱ⁾		Revenue			Expenses ⁽ⁱ⁾
U.S. dollars	55	%	51	%		51	%		47	%
Pounds sterling	13	%	19	%		13	%		21	%
Euro	15	%	12	%		21	%		14	%
Other currencies	17	%	18	%		15	%		18	%

~~____________________~~

(i)
i.	These percentages exclude certain expenses for significant items which will not be settled in cash, or which we believe to be items that are not core to our current or future operations. These items include Merger-related amortization of intangible assets ~~restructuring costs,~~ and transaction and integration expenses.

The following table sets forth the total revenue for the three months ended March 31, 2019 and 2018 and the components of the change in ~~revenues generated~~total revenue for the three ~~month and nine~~ months ended ~~September 30, 2017 and 2016 are~~March 31, 2019, as ~~follows:~~compared to the respective prior year period:

						Components of Revenue Change ⁽ⁱ⁾
					As		Constant
	Three Months Ended March 31,				Reported	Currency	Currency	Acquisitions/	Organic
	2019		2018		Change	Impact	Change	Divestitures	Change
	($ in millions)
Revenue	$	2,312	$	2,292	1%	(4)%	5%	—%	5%

Three Months Ended September 30,
Components of Revenue Change⁽ⁱ⁾
2017 2016 As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
($ in millions)
Total revenues $ 1,852
$ 1,777
4% 1% 4% —% 4%

Nine Months Ended September 30,
Components of Revenue Change⁽ⁱ⁾
2017 2016 As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
($ in millions)
Total revenues $ 6,124
$ 5,960
3% (1)% 4% —% 4%

~~____________________~~

(i)
i.	Components of revenue change may not add due to rounding.

Definitions of Constant Currency Change and Organic Change are included under the section entitled ~~Non-GAAP~~‘Non-GAAP Financial ~~Measures~~Measures’ elsewhere within Item 2 of this Form 10-Q.

Segment ~~Revenues~~

Beginning in 2017, we made certain changes that affect our segment results. These changes, which are detailed in the Current Report on Form 8-K filed with the SEC on April 7, 2017, include the realignment of certain businesses within our segments, as well as changes to certain allocation methodologies to better reflect the ongoing nature of our businesses. The prior period comparatives reflected in the tables below have been retrospectively adjusted to reflect our current segment presentation. See Part I, Item 1. ~~Note 4~~ — ~~Segment Information~~ ~~of this Form 10-Q report for a further discussion of these changes.~~

Revenue

The segment descriptions below should be read in conjunction with the full descriptions of our businesses contained in Part I, Item 1. Business, ~~contained in~~within our Annual Report on Form 10-K, filed with the SEC on ~~March 1, 2017, as updated by the Form 8-K filed with the SEC on April 7, 2017.~~

February 27, 2019.

The Company experiences seasonal fluctuations ofin its ~~commissions and fees~~ revenue. Revenue is typically higher during the Company’s first and fourth quarters due primarily to the timing of broking-related activities.

Human Capital and Benefits (‘HCB’)

The HCB segment provides an array of advice, broking, solutions and software for our clients. HCB is the largest segment of the ~~Company. The segment~~Company, and is focused on addressing our clients’ ~~employee~~people and risk needs ~~so that they can deliver sustainable employee experiences.~~to help them take on the challenges of operating in a global marketplace. This segment also delivers full outsourcing ~~solutions~~services to employers outside of the ~~United States.~~

U.S.

The following table sets forth ~~the components of~~ HCB ~~revenues~~segment revenue for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016, respectively,~~2018, and the components of the change in ~~commissions and fees~~revenue for the three months ended ~~September 30, 2017~~March 31, 2019 from the three months ended ~~September 30, 2016.~~March 31, 2018.

						Components of Revenue Change ⁽ⁱ⁾
					As		Constant
	Three Months Ended March 31,				Reported	Currency	Currency	Acquisitions/	Organic
	2019		2018		Change	Impact	Change	Divestitures	Change
	($ in millions)
Segment revenue	$	829	$	832	—%	(3)%	3%	—%	3%

Components of Revenue Change ⁽ⁱ⁾
Three Months Ended September 30, As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
2017 2016
($ in millions)
Commissions and fees $ 736
$ 720
2% 1% 2% (1)% 3%
Interest and other income —
—

Total segment revenues $ 736
$ 720

~~____________________~~

(i)
i.	Components of revenue change may not add due to rounding.

HCB ~~commissions and fees, and total~~ segment ~~revenues,~~revenue for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016 were $736~~2018 was $829 million and ~~$720~~$832 million, respectively. ~~As expected, Retirement commissions~~On an organic basis, Health and ~~fees declined slightly~~Benefits delivered significant revenue growth, driven by increased consulting and brokerage services, growth in specialty products, and expansion of our client portfolio for both local and global appointments. Health and Benefits’ revenue growth was bolstered further by revenue reductions in the ~~third quarter due to~~prior year resulting from the ~~expected decrease in bulk lump sum work in~~initial adoption of the U.S. as compared to the third quarter of 2016. Great Britain’s commissions and fees increase was primarily related to pension legislation in the U.K., and International’s commissions and fees increase was due to higher demand for consulting work.new revenue standard, ASC 606. Our Talent and Rewards ~~commissions~~business generated moderate revenue growth, resulting from increased product revenue and ~~fees were up slightly as a result of our product offerings and higher demand for change management consulting, offset by a slight decline in rewards~~ advisory projects. Health and Benefits commissions and fees growth was moderate, as we experienced strong growth in Great Britain and Western Europe, with low growth in North America, and a decline in International due primarily to the sale of our Global Wealth Solutions business. Commissions and fees in the Technology and Administration Solutions business experienced strong growth in all regions as a result of new administration clients and project activity.

The following table sets forth the components of HCB revenues for the nine months ended September 30, 2017 and 2016, respectively, and the components of the change in commissions and fees for the nine months ended September 30, 2017 from the nine months ended September 30, 2016.

Components of Revenue Change⁽ⁱ⁾
Nine Months Ended September 30, As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
2017 2016
($ in millions)
Commissions and fees $ 2,405
$ 2,377
1% (1)% 2% —% 3%
Interest and other income 15
9

Total segment revenues $ 2,420
$ 2,386

~~____________________~~


i.	~~Components of revenue change may not add due to rounding.~~

HCB commissions and fees, and total segment revenues, for both the nine months ended September 30, 2017 and 2016 were $2.4 billion. Retirement revenues decreased for the nine months ended September 30, 2017 compared to the same period last year. The decrease occurredwork in North America and Western ~~Europe and was partially offset by growth~~Europe. Retirement revenue declined somewhat compared to the prior year first quarter primarily as a result of a timing difference in ~~International~~the current quarter along with the impact of being an ‘off year’ in the triennial valuation cycle in both Canada and Great Britain. The decline in North America was expected as bulk lump sum projects declined year over year. Actuarial consulting projects in Great Britain were strong due to regulation changes. Talent and Rewards experienced a large drop in revenues, primarily in the Rewards, Talent and Communication consulting business in North America. The restructuring program impacted this region the hardest, and as expected, external marketing efforts were impacted during this initiative, which resulted in a lower pipeline for the nine months ended September 30, 2017 compared to the same period last year. Healthcare consulting revenues were up significantly for all markets globally. Revenue in the Technology and Administration Solutions ~~business~~revenue also declined slightly due to decreased project demand in Great ~~Britain experienced strong growth as a result of new administration clients and project activity.~~

Britain.

Corporate Risk and Broking (‘CRB’)

The CRB segment provides a broad range of risk advice, insurance broking and consulting services to clients worldwide ranging from small businesses to multinational corporations. The segment delivers ~~innovative,~~ integrated global solutions tailored to client needs and underpinned by data and analytics. CRB operates as an integrated global team comprising both functional and geographic leadership. In these operations, we have extensive specialized experience handling diverse lines of insurance coverage, including complex risk management programs. A key objective is to assist clients in reducing their overall cost of risk.

The following table sets forth ~~the components of~~ CRB ~~revenues~~revenue for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016, respectively,~~2018, and the components of the change in ~~commissions and fees~~revenue for the three months ended ~~September 30, 2017~~March 31, 2019 from the three months ended ~~September 30, 2016.~~March 31, 2018.

						Components of Revenue Change ⁽ⁱ⁾
					As		Constant
	Three Months Ended March 31,				Reported	Currency	Currency	Acquisitions/	Organic
	2019		2018		Change	Impact	Change	Divestitures	Change
	($ in millions)
Segment revenue	$	728	$	740	(2)%	(5)%	3%	—%	4%

Components of Revenue Change ⁽ⁱ⁾
Three Months Ended September 30, As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
2017 2016
($ in millions)
Commissions and fees $ 581
$ 553
5% 1% 4% —% 4%
Interest and other income 5
8

Total segment revenues $ 586
$ 561

~~____________________~~

(i)
i.	Components of revenue change may not add due to rounding.

CRB ~~total~~ segment ~~revenues~~revenue for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016 were $586~~2018 was $728 million and ~~$561~~$740 million, respectively. ~~Commissions and fees for the three months ended September 30, 2017 and 2016 were $581 million and $553 million, respectively. As expected,~~On an organic basis, North America ~~commissions and fees produced strong growth, with all sub-regions showing commissions and fees growth. International~~ continued to ~~have strong commissions and fees growth primarily from Russia, South Africa and Asia.~~lead the segment, followed by Western Europe ~~had solid growth led by Sweden~~ and ~~Benelux. Great Britain commissions and fees declined slightly as a result of declines in Transport and a~~International, primarily with new business generation along with strong ~~comparable in the prior-year third quarter.~~

~~The following table sets forth the components of CRB revenues for the nine months ended September 30, 2017 and 2016, respectively, and the components~~management of the ~~change in commissions and fees for the nine months ended September 30, 2017 from the nine months ended September 30, 2016.~~

Components of Revenue Change ⁽ⁱ⁾
Nine Months Ended September 30, As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
2017 2016
($ in millions)
Commissions and fees $ 1,855
$ 1,821
2% (1)% 3% —% 3%
Interest and other income 16
20

Total segment revenues $ 1,871
$ 1,841

~~____________________~~


i.	~~Components of revenue change may not add due to rounding.~~

~~CRB commissions and fees, and total segment revenues, for the nine months ended September 30, 2017 and 2016, were $1.9 billion and $1.8 billion, respectively.~~renewal book portfolio. Revenue ~~growth was led by International with additional growth~~ in Great Britain and Western Europe. International’s and Great Britain’s growth was fueled by solid client retention and strong new business. Western Europe had strong client retention and modest new business growth.

decreased nominally.

Investment, Risk and Reinsurance (‘IRR’)

The IRR segment uses a sophisticated approach to risk, which helps clients free up capital and manage investment complexity. ~~The~~This segment works closely with investors, reinsurers and insurers to manage the equation between risk and return. Blending advanced analytics with deep institutional knowledge, IRR identifies new opportunities to maximize performance. ~~IRR~~This segment provides investment consulting and discretionary management services and insurance specific services and solutions through reserves opinions, software, ratemaking, ~~usage-based insurance,~~ risk underwriting and reinsurance broking.

The following table sets forth ~~the components of~~ IRR ~~revenues~~revenue for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016, respectively,~~2018, and the components of the change in ~~commissions and fees~~revenue for the three months ended ~~September 30, 2017~~March 31, 2019 from the three months ended ~~September 30, 2016.~~March 31, 2018.

						Components of Revenue Change ⁽ⁱ⁾
					As		Constant
	Three Months Ended March 31,				Reported	Currency	Currency	Acquisitions/	Organic
	2019		2018		Change	Impact	Change	Divestitures	Change
	($ in millions)
Segment revenue	$	589	$	574	3%	(4)%	6%	1%	5%

Components of Revenue Change⁽ⁱ⁾
Three Months Ended September 30, As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
2017 2016
($ in millions)
Commissions and fees $ 320
$ 312
3% —% 2% —% 2%
Interest and other income 14
7

Total segment revenues $ 334
$ 319

~~____________________~~

(i)
i.	Components of revenue change may not add due to rounding.

IRR ~~total~~ segment ~~revenues~~revenue for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016 were $334~~2018 was $589 million and ~~$319~~$574 million, respectively. ~~Commissions and fees for the three months ended September 30, 2017 and 2016 were $320 million and $312 million, respectively.~~On an organic basis, Reinsurance, Insurance Consulting and Technology, ~~formerly Risk~~Underwriting and Capital Management, and Max Matthiessen drove the segment’s strong performance. Reinsurance and Underwriting and Capital Management growth was driven by net new business growth and favorable renewal factors while Insurance Consulting and ~~Software, led the growth for the segment~~Technology revenue grew from strong technology sales. Max Matthiessen revenue increased as a result of ~~increased project work~~overall growth in ~~Great Britain~~net commissions. The segment’s revenue growth was partially offset by a decline in our Wholesale business due to decreased net new business and a ~~soft comparable~~decline in ~~Western Europe. Max Matthiessen, Wholesale~~Investment revenue, resulting from lower asset-based fees and ~~the Securities business showed commissions and fees growth, primarily as a result of strong sales and increased performance fees. Reinsurance and Investment both experienced~~one-time revenue growth, but commissions and fees were flat for both groups. The reduction in Portfolio and Underwriting Services commissions and fees was driven by a loss of profit commissions following the Atlantic hurricanes, the cancellation of a key contract, and the divestiture of small programsitems in the ~~portfolio.~~

The following table sets forth the components of IRR revenues for the nine months ended September 30, 2017 and 2016, respectively, and the components of the change in commissions and fees for the nine months ended September 30, 2017 from the nine months ended September 30, 2016.

Components of Revenue Change⁽ⁱ⁾
Nine Months Ended September 30, As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
2017 2016
($ in millions)
Commissions and fees $ 1,205
$ 1,190
1% (2)% 3% —% 3%
Interest and other income 25
55

Total segment revenues $ 1,230
$ 1,245

~~____________________~~


i.	~~Components of revenue change may not add due to rounding.~~

~~IRR total segment revenues for both the nine months ended September 30, 2017 and 2016 were $1.2 billion. Total segment revenues for the nine months ended September 30, 2016 included £28 million ($~~prior year.

41 million) received for a settlement related to the Fine Arts, Jewellery and Specie Team. Commissions and fees for both the nine months ended September 30, 2017 and 2016 were $1.2 billion. Wholesale, Investment, Insurance Consulting and Technology, Max Matthiessen, Securities and Reinsurance all posted commissions and fees revenue growth, primarily as a result of strong sales and increased performance fees. The reduction in Portfolio and Underwriting Services commissions and fees was driven by a loss of profit commissions following the Atlantic hurricanes, the cancellation of a key contract, and the divestiture of small programs in the portfolio.

Benefits Delivery and Administration (‘BDA’)

The BDA segment ~~formerly known as Exchange Solutions,~~ provides primary medical and ancillary benefit exchange and outsourcing services to active employees and retirees across both the group and individual markets. BDA services individual populations via its ‘group to individual’ technology platform, which tightly integrates patented call routing technology, an efficient quoting and enrollment engine, a ~~custom-developed~~ Customer Relationship Management system and comprehensive insurance carrier connectivity. This segment also delivers group benefit exchanges and full outsourcing solutions serving the active employees of employers across the ~~United States.~~U.S. BDA uses Software as a Service (‘SaaS’)-based technology and related services to deliver consumer-driven healthcare and reimbursement accounts, including health savings accounts, health reimbursement arrangements, flexible spending accounts and other consumer-directed accounts.

The following table sets forth ~~the components of~~ BDA ~~revenues~~revenue for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016, respectively,~~2018, and the components of the change in ~~commissions and fees~~revenue for the three months ended ~~September 30, 2017~~March 31, 2019 from the three months ended ~~September 30, 2016.~~March 31, 2018.

						Components of Revenue Change ⁽ⁱ⁾
					As		Constant
	Three Months Ended March 31,				Reported	Currency	Currency	Acquisitions/	Organic
	2019		2018		Change	Impact	Change	Divestitures	Change
	($ in millions)
Segment revenue	$	135	$	122	10%	—%	10%	—%	10%

Components of Revenue Change⁽ⁱ⁾
Three Months Ended September 30, As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
2017 2016
($ in millions)
Commissions and fees $ 179
$ 161
11% —% 11% —% 11%
Interest and other income —
—

Total segment revenues $ 179
$ 161

~~____________________~~

(i)
i.	Components of revenue change may not add due to rounding.

BDA ~~total~~ segment ~~revenues~~revenue for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016 were $179~~2018 was $135 million and ~~$161~~$122 million, respectively. ~~Individual Marketplace, formerly Retiree and Access Exchanges, commissions and fees increased by 9% and the rest of the segment grew by 15%,~~BDA’s growth was primarily led by ~~Group Marketplace, formerly Active Exchanges,~~the continued expansion of its client base and ~~Benefits Outsourcing, formerly Technology and Administration Solutions. Growth~~increased demand for project work in the ~~Individual~~mid-market and ~~Group Marketplaces was a result of the additional 2017 enrollments, and Benefit Outsourcing’s growth was a result of new client wins.~~

The following table sets forth the components of BDA revenues for the nine months ended September 30, 2017 and 2016, respectively, and the components of the change in commissions and fees for the nine months ended September 30, 2017 from the nine months ended September 30, 2016.

Components of Revenue Change⁽ⁱ⁾
Nine Months Ended September 30, As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
2017 2016
($ in millions)
Commissions and fees $ 536
$ 478
12% —% 12% —% 12%
Interest and other income —
1

Total segment revenues $ 536
$ 479

~~____________________~~


i.	~~Components of revenue change may not add due to rounding.~~

BDA total segment revenues for the nine months ended September 30, 2017 and 2016 were $536 million and $479 million, respectively. Individual Marketplace revenues increased by 10%, and the rest of the segment grew by 16%, led by Group Marketplace and Benefits Outsourcing.

~~BDA revenue growth~~ ~~is expected~~ ~~to slow to around 10% in 2017 due to the stabilization of the retiree enrollments. We continue to expect the Group Marketplace growth to be strong.~~

large-market spaces.

Costs of Providing Services

Total costs of providing services were ~~$1.8~~approximately $2.0 billion for both the three months ended ~~September 30, 2017, compared to $1.8 billion for the three months ended September 30, 2016, an increase~~March 31, 2019 and 2018, with a current year decrease of ~~$35~~$80 million, or 2%4%. ~~Total costs of providing services were $5.5 billion for the nine months ended September 30, 2017, compared to $5.5 billion for the nine months ended September 30, 2016, a decrease of $1 million.~~ See the ~~analysis below~~following discussion for further ~~information.~~

details.

Salaries and benefits

Salaries and benefits for the three months ended ~~September 30, 2017~~March 31, 2019 were ~~$1.1~~$1.3 billion, compared to ~~$1.1~~$1.4 billion for the three months ended ~~September 30, 2016, an increase~~March 31, 2018, a decrease of ~~$26 million. This increase~~$29 million, or 2%, from the prior year. The decrease was primarily a result of ~~higher~~lower incentive accruals as ~~compared to the prior year.~~

~~Salaries~~well as slight decreases in salaries and ~~benefits for the nine months ended September 30, 2017 were $3.5 billion, compared to $3.5 billion for the nine months ended September 30, 2016,~~benefits. As a decrease of $35 million. Salaries and benefits costs decreased during the year-to-date periods due to savings associated with our integration and restructuring plans, stemming from reduced headcount and shifting work to lower-cost locations.

~~Salaries~~result, salaries and benefits as a ~~percentage~~percent of revenue decreased ~~from 63%~~ to ~~62%~~58% for the ~~quarter and~~three months ended March 31, 2019 from ~~59% to 57% year-to-date.~~

60% for the three months ended March 31, 2018.

Other operating expenses

Other operating expenses for the three months ended ~~September 30, 2017~~March 31, 2019 were ~~$366~~$418 million, compared to ~~$370~~$423 million for the three months ended ~~September 30, 2016,~~March 31, 2018, a decrease of $4$5 million, or 1%. This ~~$4 million~~ decrease was primarily due ~~primarily~~ to lower professional liability, travel and occupancy costs, partially offset by ~~increased professional services expenses. As a result of this cost decrease, other operating expenses as a percentage of revenue decreased from 21% to 20%.~~

Other operating expenses for the nine months ended September 30, 2017 were $1.2 billion, compared to $1.2 billion for the nine months ended September 30, 2016, a decrease of $13 million, or 1%. This $13 million decrease was due primarily to the Stanford litigation provision of $50 million in the first half of 2016, partially offset by reserves for the CalPERS litigation and increases in other litigation reserves and professional services. Other operating expenses as a percentage of revenue decreased from 20% to 19%.

higher business taxes.

Depreciation

Depreciation for the three months ended ~~September 30, 2017~~March 31, 2019 was $54 million, compared to ~~$45~~$49 million for the three months ended ~~September 30, 2016,~~March 31, 2018, an increase of $9$5 million, or ~~20%~~10%. ~~Depreciation for the nine months ended September 30, 2017~~This increase was ~~$151 million, compared to $132 million for the nine months ended September 30, 2016, an increase of $19 million, or 14%. These increases were~~primarily due ~~primarily~~ to a higher depreciable base of assets resulting from additional assets placed in service during ~~2016.~~

2018.

Amortization

Amortization for the three months ended ~~September 30, 2017~~March 31, 2019 was ~~$141~~$127 million, compared to ~~$157~~$141 million for the three months ended ~~September 30, 2016,~~March 31, 2018, a decrease of ~~$16~~$14 million, or 10%. ~~Amortization for the nine months ended September 30, 2017 was $441 million, compared to $443 million for the nine months ended September 30, 2016, a decrease of $2 million.~~ Our intangible amortization is more heavily weighted to the initial years of the useful lives of the related intangibles, and therefore amortization will continue to decrease over time.

~~Restructuring costs~~

Restructuring costs for the three months ended September 30, 2017 were $31 million, compared to $49 million for the three months ended September 30, 2016, a decrease of $18 million, or 37%. Restructuring costs for the nine months ended September 30, 2017 were $85 million, compared to $115 million for the nine months ended September 30, 2016, a decrease of $30 million, or 26%.

These costs were incurred primarily in connection with the Operational Improvement Program, for which the Company expects to incur $130 million of restructuring costs during 2017, the final year of the program, bringing the cumulative restructuring charges for this program to approximately $440 million. Refer to Part 1, Item 1. ~~Note 5~~ — ~~Restructuring Costs~~ ~~for additional information regarding these costs.~~

Transaction and integration expenses

Transaction and integration expenses for the three months ended ~~September 30, 2017~~March 31, 2019 is comprised of $6 million of transaction costs related to the pending acquisition of TRANZACT, compared to $43 million of integration costs for the three months ended March 31, 2018. There were ~~$74~~no integration costs incurred during 2019 due to the completion of all integration activities in 2018 in connection with the Merger.

Income from Operations

Income from operations for the three months ended March 31, 2019 was $359 million, compared to ~~$36~~$259 million for the three months ended ~~September 30, 2016,~~March 31, 2018, an increase of $38 million, or 106%. Transaction and integration expenses for the nine months ended September 30, 2017 were $177 million, compared to $117 million for the nine months ended September 30, 2016, an increase of $60 million, or 51%. The increase in expenses primarily related to costs associated with the settlement of the Merger-related appraisal demand lawsuit (see Part I, Item 1. Note 12 - Commitments and Contingencies - Legal Proceedings for additional information), along with costs associated with our other integration activities.

~~Income from Operations~~

~~Income from operationsfor the three months ended September 30, 2017 was $41 million, compared to $1 million for the three months ended September 30, 2016, an increase of $40~~$100 million. This increase resulted mostly from ~~an increase to total~~lower operating expenses of $80 million, primarily driven by the absence of integration expenses of $43 million, along with higher revenue of ~~$75 million, partially offset by increased costs of providing services of $35~~$20 million.

~~Income from operations~~for the nine months ended September 30, 2017 was $628 million, compared to $463 million for the nine months ended September 30, 2016, an increase of $165 million, or 36%. This increase resulted primarily from additional revenue of $164 million.

Interest Expense

Interest expense for the three months ended ~~September 30, 2017~~March 31, 2019 was ~~$47~~$54 million, compared to ~~$45~~$51 million for the three months ended ~~September 30, 2016,~~March 31, 2018, an increase of $2$3 million, or 4%6%. ~~Interest expense for the nine months ended September 30, 2017 was $139 million, compared to $138 million for the nine months ended September 30, 2016, an~~This increase ~~of $1 million, or 1%. The increase in interest expense~~ resulted from higher interest rates associated with our additional ~~levels~~senior notes offering during the second half of ~~indebtedness.~~

2018, combined with slightly higher outstanding debt balances between the periods.

Other ~~Expense,~~Income, Net

Other ~~expense,~~income, net for the three months ended ~~September 30, 2017~~March 31, 2019 was ~~$29~~$55 million, compared to ~~$14~~$56 million for the three months ended ~~September 30, 2016, an increase~~March 31, 2018, a decrease of ~~$15 million. Other expense, net for~~$1 million, primarily resulting from decreased pension income, partially offset by the ~~nine months ended September 30, 2017 was $79 million, compared to $26 million for~~absence of the ~~nine months ended September 30, 2016, an increase~~loss on disposal of ~~$53 million. The additional expense in 2017 as compared to~~operations from the prior year ~~related to the impact of~~and favorable foreign exchange ~~hedging contracts, unfavorable balance sheet remeasurement and further devaluation of~~activity for the ~~Venezuelan currency. Additionally, during the three months ended September 30, 2017, the Company recorded a loss of $10 million associated with the disposal of the Global Wealth Solutions business.~~

current quarter.

Provision ~~for/(Benefit from)~~for Income Taxes

Provision ~~for/(benefit from)~~for income taxes for the three months ended ~~September 30, 2017~~March 31, 2019 was ~~a provision of $19~~$67 million, compared to ~~an income tax benefit of $26~~$43 million for the three months ended ~~September 30, 2016,~~March 31, 2018, an increase to income tax expense of ~~$45~~$24 million. The effective tax rate was ~~(53.0)%~~18.8% for the three months ended ~~September 30, 2017,~~March 31, 2019, and ~~45.9%~~16.3% for the three months ended ~~September 30, 2016. The (53.0)%~~March 31, 2018. These effective tax ~~rate for the three months ended September 30, 2017 was the result~~rates are calculated using extended values from our condensed consolidated statements of ~~a discrete~~comprehensive income, and are therefore more precise tax ~~charge for an internal reorganization. Our effective tax rate is generally lower~~rates than ~~the U.S. statutory rate of 35%. This is primarily due to our global mix of income, which results in deductions in jurisdictions with high statutory income tax rates.~~

Provision for income taxes for the nine months ended September 30, 2017 was $73 million, compared to $11 million for the nine months ended September 30, 2016, an increase of $62 million. The effective tax rate was 17.7% for the nine months ended September 30, 2017, and 3.5% for the nine months ended September 30, 2016.can be calculated from rounded values. The increase in the effective tax rate for the ~~nine months~~period ended ~~September 30, 2017 as~~March 31, 2019 compared to the ~~nine months~~period ended ~~September 30, 2016~~March 31, 2018 was primarily due to a current year U.S. tax expense resulting from internal reorganizations for certain legacy Towers Watson businesses, compared with a prior year tax benefit resulting from an enacted statutory tax rate reduction in the U.K.

additional taxes on global intangible low-taxed income (GILTI).

Net ~~(Loss)/~~Income Attributable to Willis Towers Watson

Net ~~loss~~income attributable to Willis Towers Watson for the three months ended ~~September 30, 2017~~March 31, 2019 was ~~$54~~$287 million, compared to ~~$32~~$215 million for the three months ended September 30, 2016, a net loss increase of $22 million, or 69%. This additional loss resulted from increases in revenues for the quarter being more than offset by increases in the total costs of providing services, provision for income taxes, and other expenses, net.

~~Net income attributable to Willis Towers Watson for the nine months ended September 30, 2017 was $323 million, compared to $278 million for the nine months ended September 30, 2016,~~March 31, 2018, an increase of ~~$45~~$72 million, or ~~16%~~33%. This ~~$45 million~~ increase ~~resulted from additional income from operations of $165 million, partially offset by increases in provision for income taxes~~was primarily due to lower operating expenses and ~~other expenses, net.~~

organic revenue growth across all segments.

Liquidity and Capital Resources

Executive Summary

Our principal sources of liquidity are funds generated by operating activities, available cash and cash equivalents and amounts available under our revolving credit facilities or new debt offerings.

Based on our current balance ~~sheets, combined~~sheet and cash flows, current market conditions and information available to us at this time, we believe that Willis Towers Watson has access to sufficient liquidity, which includes our undrawn revolving credit facilities, to meet our cash needs for the next twelve months, including investing in the business for growth, ~~creating value through the integration of Willis, Towers Watson and Gras Savoye,~~ scheduled debt repayments and dividend ~~payments, and contemplated share repurchases, subject to market conditions and other factors.~~

~~Historically,~~payments. Additionally, we have ~~not provided deferred~~secured term loan financing to complete our pending acquisition of TRANZACT.

The Company accrues taxes ~~on cumulative~~related to its undistributed earnings of subsidiaries when it expects that it will recover those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of our ~~subsidiaries that have been reinvested indefinitely. As~~subsidiaries. In 2017, as a result of U.S. Tax Reform, we analyzed our ~~plan~~global working capital and cash requirements and the potential tax liabilities attributable to ~~restructure or distribute accumulated earnings of~~a repatriation, and changed our assertion with respect to certain ~~acquired~~legacy Towers Watson subsidiaries. For those subsidiaries for which we were able to make a reasonable estimate of the tax effects of such repatriation, we recorded an estimate for foreign ~~operations,~~withholding and state income taxes. For all other subsidiaries, we continue to ~~accrue deferred taxes on current year earnings of those subsidiaries. However, we~~ assert that the

historical cumulative earnings ~~of our other subsidiaries are~~have been reinvested indefinitely, and therefore do not provide deferred ~~tax liabilities~~taxes on these amounts. If future events, including material changes in estimates of cash, working capital, long-term investment requirements or additional guidance relating to U.S. ~~tax reform~~Tax Reform, necessitate that ~~additional~~these earnings be distributed, an ~~incremental~~additional provision for income and foreign withholding taxes, net of credits, may be necessary. Other potential sources of cash may be through the settlement of intercompany loans or return of capital distributions in a tax-efficient manner.

Events that could change the historical cash flow dynamics discussed above include significant changes in operating results, potential future acquisitions or divestitures, material changes in geographic sources of cash, unexpected adverse impacts from litigation or regulatory matters, or future pension funding during periods of severe downturn in the capital markets.

In May 2017, we completed an offering of $650 million of 3.600% Senior Notes due 2024. Net proceeds of $644 million were used to pay down amounts outstanding under our revolving credit facility and for general corporate purposes.

In March 2017, we entered into a $1.25 billion revolving credit facility replacing our previous $800 million revolving credit facility. Borrowings against the $1.25 billion facility of $409 million and €45 million were used to repay all outstanding borrowings against the $800 million facility and the 7-year term loan due July 23, 2018.

~~Additionally in March 2017, the Company repaid the 6.200% senior notes due 2017 totaling $407 million, including accrued interest.~~

Assets and liabilities associated with non-U.S. entities have been translated into U.S. dollars as of ~~September 30, 2017~~March 31, 2019 at U.S. dollar rates that fluctuate compared to historical periods. As a result, cash flows derived from changes in the condensed consolidated balance sheets include the impact of the change in foreign exchange translation rates.

Cash and Cash Equivalents

Our cash and cash equivalents at ~~September 30, 2017~~March 31, 2019 totaled ~~$912~~$992 million, compared to ~~$870 million~~$1.0 billion at December 31, ~~2016.~~2018. The ~~increase~~decrease in cash from December 31, ~~2016~~2018 to ~~September 30, 2017~~March 31, 2019 was primarily due ~~primarily~~ to ~~foreign currency translation, as~~negative cash flows from our operating activities ~~were offset by our investing~~resulting from a shift in the timing of income tax payments and ~~financing activities.~~

pension contributions and higher bonus payments in the first quarter of 2019 following the positive operating performance in 2018.

Additionally, at ~~September 30, 2017, $329~~March 31, 2019, $977 million was available to draw against our $1.25 billion revolving credit facility as compared to ~~$557 million,~~$1.1 billion, which was available to draw against ~~our previous $800 million revolving credit~~the facility at December 31, ~~2016.~~

2018.

Included within cash and cash equivalents at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 are amounts held for regulatory capital adequacy requirements, including ~~$89~~$83 million and ~~$87~~$90 million, respectively, held within our regulated U.K. ~~entities for regulatory capital adequacy requirements.~~

entities.

Summarized Condensed Consolidated Cash Flows

The following table presents the summarized condensed consolidated cash flow information for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016:~~2018:

	Three Months Ended March 31,
	2019			2018
	(in millions)
Net cash (used in)/from:
Operating activities	$	(47	)	$	18
Investing activities		(75	)		(79	)
Financing activities		82			(24	)
DECREASE IN CASH AND CASH EQUIVALENTS		(40	)		(85	)
Effect of exchange rate changes on cash and cash equivalents		(1	)		9
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		1,033			1,030
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	992		$	954

Nine Months Ended September 30,
2017 2016
(in millions)
Net cash from/(used in):
     Operating activities $ 515
$ 621
     Investing activities (262 ) 283
     Financing activities (246 ) (659 )
INCREASE IN CASH AND CASH EQUIVALENTS 7
245
Effect of exchange rate changes on cash and cash equivalents 35
(10 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 870
532
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 912
$ 767

Cash Flows (Used In)/From Operating Activities

Cash flows ~~from~~used in operating activities were ~~$515~~$47 million for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, compared to cash flows from operating activities of ~~$621~~$18 million for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2018. The ~~$515~~$47 million of net cash ~~from~~used in operating activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 included net income of ~~$339~~$293 million ~~adjusted for $579~~

and $187 million of non-cash adjustments, partially offset by changes in operating assets and liabilities of ~~$403~~$527 million. ~~The~~This decrease in cash flows from operations ~~in 2017~~as compared to the prior year primarily resulted from ~~changes~~a shift in working capital and higher discretionary compensation payments made in 2017 for the 2016 compensation cycle. These discretionary compensation payments were lower in 2016 because they included only a partial payment to Legacy Towers Watson colleagues due to the timing of income tax payments and pension contributions and higher bonus payments in the ~~Merger.~~

first quarter of 2019.

The ~~$621~~$18 million of net cash ~~flows~~ from operating activities for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2018 included net income of ~~$290~~$221 million, ~~and $498~~adjusted for $138 million of non-cash adjustments, ~~to reconcile net income to cash provided by operating activities, partially~~largely offset by changes in operating assets and liabilities of ~~$167~~$341 million.

Cash Flows ~~(Used In)/From~~Used In Investing Activities

Cash flows used in investing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and 2018 were ~~$262~~$75 million and $79 million, respectively, primarily driven ~~primarily~~ by capital expenditures and capitalized software ~~costs.~~

additions.

Cash Flows From/(Used In) Financing Activities

Cash flows from ~~investing~~financing activities for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2019 were ~~$283~~$82 million. The significant financing activities included net borrowings of $137 million ~~driven primarily by $476 million of cash acquired as a result of the Merger, which was a non-cash transaction as it was consummated through~~and proceeds from the issuance of ~~shares. Fixed asset purchases and capitalized costs~~shares of ~~developing software for internal use totaled $215~~$22 million, partially offset by dividend payments of $77 million.

~~Cash Flows Used In Financing Activities~~

Cash flows used in financing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 were ~~$246~~$24 million. The significant financing activities included the payment of $177 million related to the cancellation of Towers Watson shares in connection with the settlement of the Merger-related appraisal demand lawsuit (consisting of the portion of the settlement equal to the value of consideration that would have been due to the shareholders at the closing of the Merger if they had exchanged their shares; see Part I, Item 1. Note 12 - Commitments and Contingencies - Legal Proceedings for additional information), share repurchases of $462 million and dividend payments of ~~$209~~$68 million, which were partially offset by net borrowings of ~~$634~~$40 million.

Cash flows used in financing activities for the nine months ended September 30, 2016 were $659 million, driven primarily by debt issuance of $2.0 billion, debt repayments of $1.9 billion, net payments on the revolving credit facility of $389 million, dividend payments of $133 million, and share repurchases of $222 million.

Indebtedness

Total debt, total equity, and the capitalization ~~ratio~~ratios at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 were as follows:

	March 31, 2019			December 31, 2018
	($ in millions)
Long-term debt	$	4,518		$	4,389
Current debt		187			186
Total debt	$	4,705		$	4,575

Total Willis Towers Watson shareholders’ equity	$	10,092		$	9,852

Capitalization ratio		31.8	%		31.7	%

September 30,
2017 December 31, 2016
($ in millions)
Long-term debt $ 4,493
$ 3,357
Short-term debt and current portion of long-term debt 85
508
Total debt $ 4,578
$ 3,865

Total Willis Towers Watson shareholders’ equity $ 9,915
$ 10,065

Capitalization ratio 31.6 % 27.7 %

At ~~September 30, 2017,~~March 31, 2019, our ~~material~~ mandatory debt ~~repayments~~repayment over the next twelve months ~~include~~is a scheduled ~~repayments~~repayment of ~~$85~~$187 million on our ~~term loan maturing~~outstanding 7.000% senior notes due in 2019.

As part of the pending acquisition of TRANZACT, the Company has secured financing of up to $1.1 billion in the form of a one-year unsecured term loan. Borrowing will occur in conjunction with the closing of the acquisition, which is expected during the third quarter of 2019.

At ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, we were in compliance with all financial covenants.

Fiduciary Funds

As an intermediary, we hold funds, generally in a fiduciary capacity, for the account of third parties, typically as the result of premiums received from clients that are in transit to insurers and claims due to clients that are in transit from insurers. We report premiums, which are held on account of, or due from, clients as assets with a corresponding liability due to the insurers. Claims held by, or due to us, which are due to clients, are also shown as both Fiduciary assets and Fiduciary liabilities on our condensed consolidated balance sheets.

Fiduciary funds are generally required to be kept in regulated bank accounts subject to guidelines which emphasize capital preservation and liquidity; such funds are not available to service the Company’s debt or for other corporate purposes. Notwithstanding the legal relationships with clients and insurers, the Company is entitled to retain investment income earned on fiduciary funds in accordance with industry custom and practice and, in some cases, as supported by agreements with insureds.

At ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, we had fiduciary funds of ~~$3.1~~$3.5 billion and ~~$2.5 billion,~~$3.3 billion, respectively.

Share Repurchase Program

The Company is authorized to repurchase shares, by way of redemption, and will consider whether to do so from time to time, based on many factors, including market conditions. There are no expiration dates for our repurchase plans or programs. At ~~September 30, 2017,~~March 31, 2019, approximately ~~$671~~$399 million remained on the current repurchase authority. The maximum number of shares that could be repurchased based on the closing price of our ordinary shares on ~~September 30, 2017~~March 29, 2019 of ~~$154.23~~$175.65 was ~~4,351,419.~~

2,271,829.

There are no expiration dates for the repurchase plans or programs. During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, the Company had ~~the following~~no share repurchase ~~activity:~~

Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
Shares repurchased 1,116,645
3,354,482
Average price per share $148.83 $137.72
Aggregate repurchase cost (excluding broker costs) $166 million $462 million

In addition to the shares reported in the table above, the Company canceled 1,415,199 Towers Watson common shares at issue in the settlement of the Merger-related appraisal demand lawsuit (see Part I, Item 1. Note 12 - Commitments and Contingencies - Legal Proceedings for additional information) and an equivalent number of ordinary shares represented in the Company’s issued and outstanding share count up until the settlement date.activity. As a result of our pending acquisition of TRANZACT, in the ~~litigation settlement and related share cancellation had a similar impact~~near term, we expect to ~~a share~~ repurchase ~~in that it reduced the number of outstanding~~ shares ~~of the Company. However, it did not impact the remaining authority under the share repurchase program.~~

primarily to offset dilution from our share-based compensation.

Capital Commitments

Capital expenditures for fixed assets and software for internal use were ~~$198~~$57 million during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2019. The Company estimates that there will be additional such expenditures of approximately ~~$75~~$190 million during the remainder of ~~2017.~~2019. We expect cash from operations to adequately provide for these cash needs. There have been no material changes to our capital commitments since December 31, ~~2016.~~

2018.

Dividends

Total cash dividends of ~~$209~~$77 million were paid during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2019. In ~~September 2017,~~February 2019, the board of directors ~~declared~~approved a quarterly cash dividend of ~~$0.53~~$0.65 per share ($~~2.12~~2.60 per share annualized rate), which was paid on ~~October 16, 2017~~April 15, 2019 to shareholders of record as of ~~September 30, 2017.~~

March 31, 2019.

Off-Balance Sheet Arrangements and Contractual Obligations

Off-Balance Sheet Transactions

~~See~~

As of January 1, 2019, in accordance with ASC 842, we recognized operating lease commitments on the condensed consolidated balance sheet, which were previously an off-balance sheet arrangement (see Note 12 — Leases for further information). Other than this change, see Part II, Item 7. ‘Off-Balance Sheet Arrangements and Contractual Obligations’ in our Annual Report on Form 10-K, filed with the SEC on ~~March 1, 2017,~~February 27, 2019, for a discussion pertaining to off-balance sheet transactions.

Contractual Obligations

~~Operating Leases.~~ We lease office space and furniture under operating lease agreements with terms typically ranging from three to twenty years. We have determined that there is not a large concentration of leases that will expire in any one fiscal year. Consequently, management anticipates that any increase in future rent expense on leases will be mainly market-driven. We also lease cars and selected computer equipment under operating lease agreements. For acquired operating leases, intangible assets or liabilities have been recognized for the differences between the contractual cash obligations and the estimated market rates at the time of acquisition. These intangibles are amortized to rent expense but do not affect our contractual cash obligations.~~There have been no material changes to our operating lease obligations since we filed our Annual Report on Form 10-K with the SEC on March 1, 2017.~~

Material changes to our ~~other~~ contractual obligations since we filed our Annual Report on Form 10-K with the SEC on ~~March 1, 2017,~~February 27, 2019 are discussed in Note 9 — ~~Debt and Note 11 — Retirement Benefits.~~

Debt.

Non-GAAP Financial Measures

In order to assist readers of our condensed consolidated financial statements in understanding the core operating results that Willis Towers Watson’s management uses to evaluate the business and for financial planning purposes, we present the following non-GAAP measures and their most directly comparable U.S. GAAP measure:



Most Directly Comparable U.S. GAAP Measure		Non-GAAP Measure
~~Total revenues~~	~~Adjusted revenues~~
As reported change		Constant currency change
As reported change		Organic change
Income from operations		Adjusted operating income
Net income		Adjusted EBITDA
Net income attributable to Willis Towers Watson		Adjusted net income
Diluted earnings per share		Adjusted diluted earnings per share
Income from operations before income taxes ~~and interest in earnings of associates~~		Adjusted income before taxes
Provision for income taxes/U.S. GAAP tax rate		Adjusted income taxes/tax rate
Net cash from operating activities		Free cash flow

The Company believes that these measures are relevant and provide useful information widely used by analysts, investors and other interested parties in our industry to provide a baseline for evaluating and comparing our operating performance, and in the case of free cash flow, our liquidity results.

Within ~~these~~the measures referred to as ‘adjusted’, we ~~have adjusted~~adjust for significant items which will not be settled in cash, or which we believe to be items that are not core to our current or future operations. Some of these items may not be applicable for the current quarter, however they are expected to be part of our full-year results. These items include the following:

•

Transaction and integration expenses - Management believes it is appropriate to adjust for transaction and integration expenses when they relate to a specific significant program with a defined set of activities and costs that are not expected to continue beyond a defined period of time, or significant acquisition-related transaction expenses. We believe the adjustment is necessary to present how the Company is performing, both now and in the future when the incurrence of these costs will have concluded.

Restructuring costs and transaction and integration expenses - Management believes it is appropriate to adjust for restructuring costs and transaction and integration expenses when they relate to a specific significant program with a defined set of activities and costs that are not expected to continue beyond a defined period of time, or one-time Merger-related transaction expenses. We believe the adjustment is necessary to present how the Company is performing, both now and in the future when these programs will have concluded.

•

Gains and losses on disposals of operations - Adjustment to remove the gain or loss resulting from disposed operations.

•

Pension settlement and curtailment gains and losses - Adjustment to remove significant pension settlement and curtailment gains and losses to better present how the Company is performing.

•

Provisions for significant litigation - We will include provisions for litigation matters which we believe are not representative of our core business operations.

~~Fair value adjustment to deferred revenue - Adjustment in 2016 to normalize for the deferred revenue written down as part of the purchase accounting for the Merger.~~

•

Tax effects of internal reorganization - Relates to the U.S. income tax expense resulting from the completion of internal reorganizations of the ownership of certain businesses that reduced the investments held by our U.S.-controlled subsidiaries.

~~Gains and losses on disposals of operations - Adjustment to remove the gain or loss resulting from disposed operations.~~

~~Provision for Stanford litigation - The 2016 provision for the Stanford litigation matter, which we consider to be a non-ordinary course litigation matter.~~

~~Venezuelan currency devaluation - Foreign exchange losses incurred as a consequence of the Venezuelan government’s enforced changes to exchange rate mechanisms.~~

Tax effects of internal reorganization - Relates to the U.S. income tax expense resulting from the completion of an internal reorganization of the ownership of certain businesses that reduced the investments held by our U.S.-controlled subsidiaries.

These non-GAAP measures are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP measures should be considered in addition to, and not as a substitute for, the information contained within our condensed consolidated financial statements.

~~Adjusted Revenues~~

~~We consider adjusted revenues to be an important financial measure, which is used to internally evaluate and assess our core operations and to benchmark our operating results against our competitors.~~

Adjusted revenues is defined as total revenues adjusted for the fair value adjustment for deferred revenues that would otherwise have been recognized but for the purchase accounting treatment of these transactions. U.S. GAAP accounting requires the elimination of this revenue.

~~We have included the reconciliation of total revenues to adjusted revenues in the table below, together with our reconciliation of the revenues change to the constant currency and organic changes.~~

Constant Currency Change and Organic Change

We evaluate our ~~revenues~~revenue on an as reported (U.S. GAAP), constant currency and organic basis. We believe ~~providing~~presenting constant currency and organic information provides valuable supplemental information regarding our comparable results, consistent with how we evaluate our performance internally.

•

Constant currency change - Represents the year-over-year change in revenue excluding the impact of foreign currency fluctuations. To calculate this impact, the prior year local currency results are first translated using the current year monthly average exchange rates. The change is calculated by comparing the prior year revenue, translated at the current year monthly average exchange rates, to the current year as reported revenue, for the same period. We believe constant currency measures provide useful information to investors because they provide transparency to performance by excluding the effects that foreign currency exchange rate fluctuations have on period-over-period comparability given volatility in foreign currency exchange markets.

~~Constant currency change -~~ ~~Represents~~the year over year change in revenues excluding the impact of foreign currency fluctuations. To calculate this impact, the prior year local currency results are first translated using the current year monthly average exchange rates. The change is calculated by comparing the prior year revenues, translated at the current year monthly average exchange rates, to the current year as reported revenues, for the same period. We believe constant currency measures provide useful information to investors because they provide transparency to performance by excluding the effect that foreign currency exchange rate fluctuations have on period-over-period comparability given volatility in foreign currency exchange markets.

•

Organic change - Excludes the impact of fluctuations in foreign currency exchange rates as described above and the period-over-period impact of acquisitions and divestitures on current-year revenue. We believe that excluding transaction-related items from our U.S. GAAP financial measures provides useful supplemental information to our investors, and it is important in illustrating what our core operating results would have been had we not included these transaction-related items, since the nature, size and number of these transaction-related items can vary from period to period.

~~Organic change -~~ ~~The~~organic presentation excludes both the impact of fluctuations in foreign currency exchange rates, as described above, as well as the period-over-period impact of acquisitions and divestitures. We believe that excluding transaction-related items from our U.S. GAAP financial measures provides useful supplemental information to our investors, and it is important in illustrating what our core operating results would have been had we not incurred these transaction-related items, since the nature, size and number of these transaction-related items can vary from period to period.

The constant currency and organic change results, and a reconciliation from the reported results for consolidated ~~revenues~~revenue are included in the Consolidated ~~Revenues~~Revenue section within this Form 10-Q. These measures are also reported by segment in the Segment ~~Revenues~~Revenue section within this Form 10-Q.

~~Reconciliations of total revenues to adjusted revenues for the three and nine months ended September 30, 2017 and 2016, and reconciliations~~

A reconciliation of the reported changes to the constant currency and organic changes for the three ~~and nine~~ months ended ~~September 30, 2017 are~~March 31, 2019 from the three months ended March 31, 2018 is as follows:

						Components of Revenue Change ⁽ⁱ⁾
					As		Constant
	Three Months Ended March 31,				Reported	Currency	Currency	Acquisitions/	Organic
	2019		2018		Change	Impact	Change	Divestitures	Change
	($ in millions)
Revenue	$	2,312	$	2,292	1%	(4)%	5%	—%	5%

Components of Revenue Change⁽ⁱ⁾
Three Months Ended September 30, As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
2017 2016
($ in millions)
Total revenues $ 1,852
$ 1,777
4% 1% 4% —% 4%

~~____________________~~

(i)
i.	Components of revenue change may not add due to rounding.

Components of Revenue Change
Nine Months Ended September 30, As Reported Change Currency Impact Constant Currency Change Acquisitions/Divestitures Organic Change
2017 2016
($ in millions)
Total revenues $ 6,124
$ 5,960
3% (1)% 4% —% 4%
Fair value adjustment for deferred revenue —
58

Adjusted revenues $ 6,124
$ 6,018
2% (1)% 3% —% 3%

Adjusting for the impacts of foreign currency and acquisitions and disposals in the calculation of our organic activity, our revenue grew by 5% for the three months ended March 31, 2019. This organic increase in revenue was driven by strong performances in all segments.

Adjusted Operating Income

We consider adjusted operating income to be an important financial measure, which is used to internally evaluate and assess our core operations and to benchmark our operating results against our competitors.

Adjusted operating income is defined as income from operations adjusted for amortization, ~~restructuring costs,~~ transaction and integration expenses ~~the fair value adjustment for deferred revenue~~ and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results.

Reconciliations of income from operations to adjusted operating income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 are as follows:

	Three Months Ended March 31,
	2019		2018
	(in millions)
Income from operations	$	359	$	259
Adjusted for certain items:
Amortization		127		141
Transaction and integration expenses		6		43
Adjusted operating income	$	492	$	443

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Income from operations $ 41
$ 1
$ 628
$ 463
Adjusted for certain items:
Amortization 141
157
441
443
Restructuring costs 31
49
85
115
Transaction and integration expenses 74
36
177
117
Provision for the Stanford litigation —
—
—
50
Fair value adjustment for deferred revenue —
—
—
58
Adjusted operating income $ 287
$ 243
$ 1,331
$ 1,246

Adjusted operating income increased for the three months ended ~~September 30, 2017~~March 31, 2019 to ~~$287~~$492 million, ~~compared to $243~~from $443 million for the three months ended ~~September 30, 2016, as a result of strong~~March 31, 2018. This increase was primarily due to lower operating expenses and organic revenue growth ~~during the quarter from increased client demand.~~

Adjusted operating income increased for the nine months ended September 30, 2017 to $1.3 billion from $1.2 billion for the prior year period, an increase of $85 million, or 7%. Income from operations increased by $165 million, largely due to additional client demand and lower salaries and benefits expense resulting from savings associated with our integration and restructuring plans, partially offset by an increase in depreciation expense due to a higher depreciable base of assets.

across all segments.

Adjusted EBITDA

We consider adjusted EBITDA to be an important financial measure, which is used internally to evaluate and assess our core operations, to benchmark our operating results against our competitors and to evaluate and measure our performance-based compensation plans.

Adjusted EBITDA is defined as net ~~income/(loss)~~income adjusted for provision for income taxes, interest expense, depreciation and amortization, ~~restructuring costs,~~ transaction and integration expenses, ~~the fair value adjustment for deferred revenue,~~ (gain)/loss on disposal of operations and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results.

Reconciliations of net ~~(loss)/~~income to adjusted EBITDA for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 are as follows:

	Three Months Ended March 31,
	2019		2018
	(in millions)
NET INCOME	$	293	$	221
Provision for income taxes		67		43
Interest expense		54		51
Depreciation		54		49
Amortization		127		141
Transaction and integration expenses		6		43
Loss on disposal of operations		—		9
Adjusted EBITDA	$	601	$	557

Three Months Ended September 30, Nine Months Ended September 30,
2017
2016 2017 2016
(in millions)
NET (LOSS)/INCOME $ (54 ) $ (31 ) $ 339
$ 290
Provision for/(benefit from) income taxes 19
(26 ) 73
11
Interest expense 47
45
139
138
Depreciation 54
45
151
132
Amortization 141
157
441
443
Restructuring costs 31
49
85
115
Transaction and integration expenses 74
36
177
117
Provision for the Stanford litigation —
—
—
50
Fair value adjustment for deferred revenue —
—
—
58
Loss/(gain) on disposal of operations 10
—
10
(2 )
Venezuela currency devaluation —
—
2
—
Adjusted EBITDA $ 322
$ 275
$ 1,417
$ 1,352

Adjusted EBITDA for the three months ended ~~September 30, 2017~~March 31, 2019 was ~~$322~~$601 million, compared to ~~$275~~$557 million for the three months ended ~~September 30, 2016. Revenue~~March 31, 2018. This increase was primarily due to lower operating expenses and organic revenue growth ~~from increased client demand, driven by~~across all ~~segments, was partially offset by adverse foreign currency movements.~~

Adjusted EBITDA for the nine months ended September 30, 2017 and 2016 was $1.4 billion, an increase of $65 million, or 5%. The prior year included settlement income of £28 million ($41 million) related to the Fine Arts, Jewellery and Specie team.

segments.

Adjusted Net Income and Adjusted Diluted Earnings Per Share

Adjusted net income is defined as net ~~income/(loss)~~income attributable to Willis Towers Watson adjusted for amortization, ~~restructuring costs,~~ transaction and integration expenses, ~~the fair value adjustment for deferred revenue,~~ (gain)/loss on disposal of operations and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results, ~~and~~ the related tax effect of those ~~adjustments.~~adjustments and the tax effects of internal reorganizations. This measure is used solely for the purpose of calculating adjusted diluted earnings per share.

Adjusted diluted earnings per share is defined as adjusted net income divided by the ~~weighted average~~weighted-average number of shares of common stock, diluted. Adjusted diluted earnings per share is used to internally evaluate and assess our core operations and to benchmark our operating results against our competitors.

~~Reconciliations of net loss attributable to Willis Towers Watson to adjusted diluted earnings per share for the three months ended September 30, 2017 and 2016, respectively, are as follows:~~

Three Months Ended September 30,
2017 2016
($ in millions)
NET LOSS ATTRIBUTABLE TO WILLIS TOWERS WATSON $ (54 ) $ (32 )
Adjusted for certain items:

Amortization 141
157
Restructuring costs 31
49
Transaction and integration expenses 74
36
Loss on disposal of operations 10
—
Tax effect on certain items listed above ⁽ⁱ⁾
(74 ) (67 )
Tax effects of internal reorganization 22
—
Adjusted net income $ 150
$ 143

Weighted average shares of common stock — diluted 134
138

Diluted loss per share $ (0.40 ) $ (0.23 )
Adjusted for certain items:
Amortization 1.05
1.14
Restructuring costs 0.23
0.36
Transaction and integration expenses 0.55
0.26
Loss on disposal of operations 0.08
—
Tax effect on certain items listed above ⁽ⁱ⁾
(0.55 ) (0.49 )
Tax effects of internal reorganization 0.16
—
Adjusted diluted earnings per share $ 1.12
$ 1.04

~~__________________________~~


i.	~~The tax effect was calculated using an effective tax rate for each item.~~

~~Our adjusted diluted earnings per share increased for the three months ended September 30, 2017 as compared to the prior year primarily due to revenue growth from increased client demand.~~

Reconciliations of net income attributable to Willis Towers Watson to adjusted diluted earnings per share for the ~~nine~~three months ended ~~September 30, 2017~~ March 31, 2019and ~~2016, respectively,~~2018 are as follows:

	Three Months Ended March 31,
	2019			2018
	($ in millions)
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON	$	287		$	215
Adjusted for certain items:
Amortization		127			141
Transaction and integration expenses		6			43
Loss on disposal of operations		—			9
Tax effect on certain items listed above ⁽ⁱ⁾		(32	)		(47	)
Adjusted net income	$	388		$	361

Weighted-average shares of common stock — diluted		130			133

Diluted earnings per share	$	2.20		$	1.61
Adjusted for certain items ⁽ⁱⁱ⁾ :
Amortization		0.97			1.06
Transaction and integration expenses		0.05			0.32
Loss on disposal of operations		—			0.07
Tax effect on certain items listed above ⁽ⁱ⁾		(0.25	)		(0.35	)
Adjusted diluted earnings per share	$	2.98		$	2.71

Nine Months Ended September 30,
2017 2016
($ in millions)
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 323
$ 278
Adjusted for certain items:

Amortization 441
443
Restructuring costs 85
115
Transaction and integration expenses 177
117
Provision for the Stanford litigation —
50
Fair value adjustment for deferred revenue —
58
Loss/(gain) on disposal of operations 10
(2 )
Venezuela currency devaluation 2
—
Tax effect on certain items listed above ⁽ⁱ⁾
(219 ) (221 )
Tax effects of internal reorganization 41
—
Adjusted net income $ 860
$ 838

Weighted average shares of common stock — diluted 137
139

Diluted earnings per share $ 2.36
$ 2.00
Adjusted for certain items:
Amortization 3.23
3.19
Restructuring costs 0.62
0.83
Transaction and integration expenses 1.30
0.84
Provision for the Stanford litigation —
0.36
Fair value adjustment for deferred revenue —
0.42
Loss/(gain) on disposal of operations 0.07
(0.02 )
Venezuela currency devaluation 0.02
—
Tax effect on certain items listed above ⁽ⁱ⁾
(1.60 ) (1.59 )
Tax effects of internal reorganization 0.30
—
Adjusted diluted earnings per share $ 6.30
$ 6.03

~~__________________________~~

(i)
i.	The tax effect was calculated using an effective tax rate for each item.

As noted above, in analyzing both our adjusted operating income and adjusted EBITDA, the Company experienced additional client demand and lower salaries and benefits expense, partially offset by an increase in depreciation expense.

(ii)	Per share values and totals may differ due to rounding.

Our adjusted diluted earnings per share ~~benefited from this~~increased for the three months ended March 31, 2019 as compared to the prior year primarily due to lower operating expenses and organic revenue ~~growth.~~

growth across all segments.

Adjusted Income Before Taxes and Adjusted Income Taxes/Tax Rate

Adjusted income before taxes is defined as income from operations before income taxes ~~and interest in earnings of associates~~ adjusted for amortization, ~~restructuring costs,~~ transaction and integration expenses, ~~the fair value adjustment for deferred revenue,~~ (gain)/loss on disposal of operations and non-recurring items that, in management’s judgment, significantly affect the period-over-period assessment of operating results. Adjusted income before taxes is used solely for the purpose of calculating the adjusted income tax rate.

Adjusted income taxes/tax rate is defined as the provision ~~for/(benefit from)~~for income taxes adjusted for taxes on certain items of amortization, ~~restructuring costs,~~ transaction and integration expenses, ~~the fair value adjustment for deferred revenue,~~ (gain)/loss on disposal of operations, the tax effects of internal ~~reorganization~~reorganizations and non-recurring items that, in management’s judgment,

significantly affect the period-over-period assessment of operating results, divided by adjusted income before taxes. Adjusted income taxes is used solely for the purpose of calculating the adjusted income tax rate.

Management believes that the adjusted income tax rate presents a rate that is more closely aligned to the rate that we would incur if not for the reduction of pre-tax income for the adjusted items and the tax effects of our internal reorganization, which are not core to our current and future operations.

Reconciliations of ~~income/(loss)~~income from operations before income taxes ~~and interest in earnings of associates~~ to adjusted income before taxes and provision ~~for/(benefit from)~~for income taxes to adjusted income taxes for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016, respectively,~~2018 are as follows:

	Three Months Ended March 31,
	2019			2018
	($ in millions)
INCOME FROM OPERATIONS BEFORE INCOME TAXES	$	360		$	264
Adjusted for certain items:
Amortization		127			141
Transaction and integration expenses		6			43
Loss on disposal of operations		—			9
Adjusted income before taxes	$	493		$	457

Provision for income taxes	$	67		$	43
Tax effect on certain items listed above ⁽ⁱ⁾		32			47
Adjusted income taxes	$	99		$	90

U.S. GAAP tax rate		18.8	%		16.3	%
Adjusted income tax rate		20.1	%		19.7	%

Three Months Ended September 30, Nine Months Ended September 30,
2017
2016 2017 2016
($ in millions)
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES $ (35 ) $ (58 ) $ 410
$ 299
Adjusted for certain items:
Amortization 141
157
441
443
Restructuring costs 31
49
85
115
Transaction and integration expenses 74
36
177
117
Provision for the Stanford litigation —
—
—
50
Fair value adjustment for deferred revenue —
—
—
58
Loss/(gain) on disposal of operations 10
—
10
(2 )
Venezuela currency devaluation —
—
2
—
Adjusted income before taxes $ 221
$ 184
$ 1,125
$ 1,080

Provision for/(benefit from) income taxes $ 19
$ (26 ) $ 73
$ 11
Tax effect on certain items listed above⁽ⁱ⁾
74
67
219
221
Tax effects of internal reorganization (22 ) —
(41 ) —
Adjusted income taxes $ 71
$ 41
$ 251
$ 232

U.S. GAAP tax rate (53.0 )% 45.9 % 17.7 % 3.5 %
Adjusted income tax rate 32.1 % 22.2 % 22.3 % 21.4 %

~~__________________________~~

(i)
i.	The tax effect was calculated using an effective tax rate for each item.

Our U.S. GAAP tax rate is generally lower than the U.S. statutory tax rate of 35%. This is primarily due to our global mix of income, which results in deductions in jurisdictions with high statutory income tax rates. Our U.S. GAAP tax rate was (53.0)%rates were 18.8% and ~~45.9%~~16.3% for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016, respectively, and 17.7% and 3.5%~~2018, respectively. The increase in the U.S. GAAP tax rate for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~

March 31, 2019 compared to the three months ended March 31, 2018 was primarily due to additional taxes on global intangible low-taxed income (GILTI).

Our adjusted income tax rates were ~~32.1%~~20.1% and ~~22.2%~~19.7% for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016, respectively, and 22.3% and 21.4% for the nine months ended September 30, 2017 and 2016,~~2018, respectively. The increase in the adjusted tax rate for the three and nine months ended September 30, 2017 was primarily due to a prior year tax benefit resulting from an enacted statutory tax rate reduction in the U.K.

Free Cash Flow

Free cash flow is defined as cash flows (used in)/from operating activities less cash used to purchase fixed assets and software for internal ~~use~~use. Free cash flow is a liquidity measure and is ~~used~~not meant to ~~evaluate~~represent residual cash flow available for discretionary expenditures.Management believes that free cash flow presents the core operating performance and cash generating capabilities of our ~~liquidity.~~

business operations.

Reconciliations of cash flows (used in)/from operating activities to free cash flow for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 are as follows:

	Three Months Ended March 31,
	2019			2018
	(in millions)
Cash flows (used in)/from operating activities	$	(47	)	$	18
Less: Additions to fixed assets and software for internal use		(57	)		(65	)
Free cash flow	$	(104	)	$	(47	)

Nine Months Ended September 30,
2017
2016⁽ⁱ⁾
(in millions)
Cash flows from operating activities $ 515
$ 621
Less: Additions to fixed assets and software for internal use (198 ) (151 )
Free cash flow $ 317
$ 470

~~__________________________~~


i.	As a result of the adoption of ASU 2016-09, cash flows from operating activities for the nine months ended September 30, 2016 increased by $13 million, increasing free cash flow by the same amount. See Part I, Item 1. Note 2 - Basis of Presentation and Recent Accounting Pronouncements of this Form 10-Q report for a further discussion of this change.

The decrease in free cash flows in ~~2017 as compared to 2016~~2019 primarily resulted from ~~higher capital expenditures, unfavorable changes~~a shift in working capital and higher discretionary compensation payments made in 2017 for the 2016 compensation cycle. These discretionary compensation payments were lower in 2016 because they included only a partial payment to Legacy Towers Watson colleagues due to the timing of income tax payments and pension contributions and higher bonus payments in the ~~Merger.~~

first quarter of 2019.

Critical Accounting Policies and Estimates

There were no material changes from the Critical Accounting Policies and Estimates disclosed in our ~~2016~~2018 Annual Report on Form 10-K, filed with the SEC on ~~March 1, 2017.~~

February 27, 2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have considered changes in our exposure to market risks during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and have determined that there have been no material changes to our exposure to market risks from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2018, filed with the SEC on February 27, 2019.

However, as described in our Form 10-K, we are exposed to interest rate risk. Specifically, as a result of our operating activities, we receive cash for premiums and claims which we deposit in short-term investments denominated in U.S. dollars and other currencies. We earn interest on these funds, which is included in our condensed consolidated financial statements as interest income. These funds are regulated in terms of access and the instruments in which they may be invested, most of which are short-term in maturity. At March ~~1, 2017.~~

31, 2019, we held $1.8 billion of fiduciary funds invested in interest-bearing accounts. If short-term interest rates increased or decreased by 25 basis points, interest earned on these invested fiduciary funds, and therefore our interest income recognized, would increase or decrease by approximately $4 million on an annualized basis.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of ~~September 30, 2017,~~March 31, 2019, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (‘CEO’) and the Chief Financial Officer (‘CFO’), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined by Exchange Act Rule 13a-15(e). Based upon that evaluation, the CEO and the CFO concluded that the Company’s disclosure controls and procedures are effective in ensuring that the information required to be included in the Company’s periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the CEO and the CFO, as appropriate, to allow for timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the nine months ended September 30, 2017, we began to consolidate our legacy enterprise resource planning accounting systems in certain geographies. During this time, the Legacy Willis operations of our North American, U.K., Irish, Australian and New Zealand businesses were migrated to the Legacy Towers Watson global system. The U.K. and Irish businesses were migrated during the three months ended September 30, 2017 and such implementation changes were material. All other migrations noted above occurred during the two previous quarters of 2017. Transition to the global information system includes a significant effort in testing prior to system launch, training of colleagues who will be using the system, updating of our internal control process and procedures that will be impacted by the implementation and monitoring of the system's results. As a result of this implementation, our management has updated the system of internal controls over the impacted areas for adequacy of design and operating effectiveness. Subsequent geography deployments will be incorporated into existing controls.

There have been no ~~other~~ changes in ~~our~~the Company’s internal ~~control~~controls over financial reporting during the quarter ended ~~September 30, 2017~~March 31, 2019 that have materially affected, or are reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting.

Limitations on the Effectiveness of Controls

Management, including the CEO and CFO, does not expect that our disclosure controls and procedures will necessarily prevent all errors and all fraud. However, management does expect that the control system provides reasonable assurance that its objectives will be met. A control system, no matter how well designed and operated, cannot provide absolute assurance that the control system’s objectives will be met. In addition, the design of such internal controls must take into account the costs of designing and maintaining such a control system. Certain inherent limitations exist in control systems to make absolute assurances difficult, including the realities that judgments in decision-making can be faulty, that breakdowns can occur because of a simple error or mistake, and that individuals can circumvent controls. The design of any control system is based in part upon existing business conditions and risk assessments. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in business conditions or deterioration in the degree of compliance with policies or procedures. As a result, they may require change or revision. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and may not be detected. Nevertheless, the disclosure controls and procedures are designed to provide reasonable assurance of achieving their stated objectives, and the CEO and CFO have concluded that the disclosure controls and procedures are effective at a reasonable assurance level.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to various lawsuits, arbitrations or mediations that arise in the ordinary course of business. The disclosure called for by Part II, Item 1. regarding our legal proceedings is incorporated by reference herein from Part I, Item 1. 1 Note 1213 — Commitments and Contingencies - Legal Proceedings of the notes to the condensed consolidated financial statements in this Form 10-Q for the quarter ended ~~September 30, 2017.~~

March 31, 2019.

ITEM 1A. RISK FACTORS

~~There~~

Except as described below, there are no material changes from risk factors as previously disclosed in our Annual Report on Form 10-K, filed with the SEC on ~~March 1, 2017.~~February 27, 2019. We urge you to read the risk factors contained in our Annual Report.

Our pending acquisition of TRANZACT may create incremental business, regulatory and reputational risks.

On March 30, 2019, the Company entered into an agreement to acquire TRANZACT, a U.S.-based direct-to-consumer health care organization that links individuals to US insurance carriers. The TRANZACT acquisition entails important risks, including the following, among others: the risk that we are unable to obtain requisite regulatory approvals or the satisfaction of other conditions to the consummation of the proposed transaction on the proposed terms and schedule, if at all; the risk that we are unable to successfully integrate TRANZACT’S operations and employees and realize its benefits, including the acceleration of our direct-to-consumer strategy at the times and to the extent anticipated; the potential impact of the consummation of the proposed transaction on relationships, including with employees, suppliers, clients and competitors; the risk of material changes in U.S. health care regulation; changes in general economic, business and political conditions, including changes in the financial markets; significant competition in the marketplace; and compliance with extensive government regulation. For a further discussion of risks relating to our Benefits and Delivery Administration segment, and with respect to acquisitions generally, see Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K, filed with the SEC on February 27, 2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, no shares were issued by the Company without registration under the Securities Act of 1933, as amended.

The Company is authorized to repurchase shares, by way of redemption, and will consider whether to do so from time to time, based on many factors, including market conditions.

~~The following table presents specified information about~~ There are no expiration dates for these repurchase plans or programs.

There was no share repurchase activity during the ~~Company’s repurchases of ordinary shares in the third quarter of 2017 and the Company’s repurchase authority.~~

Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs
July 1, 2017 through July 31, 2017 407,175
$ 146.74
407,175
5,060,889
August 1, 2017 through August 31, 2017 403,880
$ 149.24
403,880
4,657,009
September 1, 2017 through September 30, 2017 305,590
$ 151.07
305,590
4,351,419
1,116,645
$ 148.83
1,116,645

three months ended March 31, 2019.

The maximum number of shares that may yet be purchased under the existing stock repurchase plan is ~~4,351,419.~~2,271,829. At ~~September 30, 2017,~~March 31, 2019, approximately ~~$671~~$399 million remained on the current open-ended repurchase ~~authorities~~authority granted by the board. An estimate of the maximum number of shares under the existing ~~authority~~authorities was determined using the closing price of our ordinary shares on ~~September 30, 2017~~March 29, 2019 of ~~$154.23.~~

In addition to the shares reported in the table above, the Company canceled 1,415,199 Towers Watson common shares at issue in the settlement of the Merger-related appraisal demand lawsuit (see Part I, Item 1. Note 12 - Commitments and Contingencies - Legal Proceedings for additional information) and an equivalent number of ordinary shares represented in the Company’s issued and outstanding share count up until the settlement date.$175.65. As a result of our pending acquisition of TRANZACT, in the ~~litigation settlement and related share cancellation had a similar impact~~near term, we expect to ~~a share~~ repurchase ~~in that it reduced the number of outstanding~~ shares ~~of the Company. However, it did not impact the remaining authority under the share repurchase program.~~

primarily to offset dilution from our share-based compensation.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

~~Disclosure under Section 13(r) of the Securities Exchange Act of 1934~~

Set forth below is a description of a matter reported pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (‘ITRA’) and Section 13(r) of the Exchange Act. Concurrently with this quarterly report, we are filing a notice pursuant to Section 13(r) of the Exchange Act that the matter has been disclosed in this quarterly report.

Gras Savoye, a non-U.S. affiliate of Willis Towers Watson, acts as a broker for the Iranian Embassy in Paris, placing health insurance for the diplomatic staff and handling the related claims administration. The policy was placed with GBG Insurance Limited on December 27, 2016 for the 2017 policy year. Premium payments are made quarterly, and a premium payment of

€61,848 was received by Gras Savoye for the third quarter on September 27, 2017 for the policy. Gras Savoye will retain a commission of €7,422 from this payment. Health benefits of approximately €78,719 were paid to beneficiaries during the third quarter of 2017. Gras Savoye will not renew this policy at the end of 2017.

None.

ITEM 6. EXHIBITS

EXHIBIT INDEX


Exhibit Number
~~Exhibit~~ ~~Number~~		Description of Exhibit
4.1		~~Eighth Supplemental~~Form of Indenture ~~dated~~among Willis Towers Watson Public Limited Company, as ~~of August 11, 2017, to the Indenture, dated~~issuer, Willis Towers Watson Sub Holdings Unlimited Company, Willis Netherlands Holdings B.V., Willis Investment UK Holdings Limited, TA I Limited, Willis Towers Watson UK Holdings Limited, Trinity Acquisition plc and Willis Group Limited and Willis North America Inc., as ~~of July 1, 2005~~guarantors, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit ~~4.1~~4.6 to the Registration Statement on Form ~~8-K~~S-3 filed by the Company on ~~August 16, 2017)~~March 11, 2019).
~~4.2~~ 10.1		Third Supplemental Indenture, dated as of August 11, 2017, to the Indenture, dated as of March 17, 2011 (incorporated by reference to Exhibit 4.2 to the Form 8-K filed by the Company on August 16, 2017).
~~4.3~~		Fifth Supplemental Indenture, dated as of August 11, 2017, to the Indenture, dated as of August 15, 2013 (incorporated by reference to Exhibit 4.3 to the Form 8-K filed by the Company on August 16, 2017).
~~4.4~~		Second Supplemental Indenture, dated as of August 11, 2017, to the Indenture, dated as of May 16, 2017 (incorporated by reference to Exhibit 4.4 to the Form 8-K filed by the Company on August 16, 2017).
~~10.1~~		~~Offer Letter, dated August 17, 2017, from John J. Haley to Michael J. Burwell (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on August 21, 2017).†~~
~~10.2~~		~~Letter~~Performance-Based Restricted Share Unit Award Agreement, dated ~~September 18, 2017,~~February 26, 2019, by and between ~~the~~Willis Towers Watson Public Limited Company and ~~Roger F. Millay.†~~John J. Haley†*
31.1		Certification of the Registrant’s Chief Executive Officer, John J. Haley, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.*
31.2		Certification of the Registrant’s Chief Financial Officer, Michael J. Burwell, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.*
32.1		Certification of the Registrant’s Chief Executive Officer, John J. Haley, and Chief Financial Officer, Michael J. Burwell, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS		XBRL Instance Document*Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		XBRL Taxonomy Extension Schema Document*
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB		XBRL Taxonomy Extension Label Linkbase Document*
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*

*	Filed or furnished herewith.

~~_________________________~~

†	Management contract or compensatory plan or arrangement.

* Filed or furnished herewith.

~~† Management contract or compensatory plan or arrangement.~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Willis Towers Watson Public Limited Company
(Registrant)

/s/ John J. Haley		~~November 6, 2017~~ May 3, 2019
Name:	John J. Haley	Date
Title:	Chief Executive Officer

/s/ Michael J. Burwell		~~November 6, 2017~~ May 3, 2019
Name:	Michael J. Burwell	Date
Title:	Chief Financial Officer

/s/ Susan D. Davies		~~November 6, 2017~~ May 3, 2019
Name:	Susan D. Davies	Date
Title:	Principal Accounting Officer and Controller



Ireland (Jurisdiction of incorporation or organization)		98-0352587 (I.R.S. Employer Identification No.)

c/o Willis Group Limited 51 Lime Street, London EC3M 7DQ, England (Address of principal executive offices)		(011) 44-20-3124-6000 (Registrant’s telephone number, including area code)



Large accelerated filer þ	☑	Accelerated filer ¨	☐	Non-accelerated filer ¨	☐	Smaller reporting company ¨	☐
		~~(Do not check if a smaller reporting company)~~
Emerging growth company ¨	☐


☒
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues
Commissions and fees	$	1,832		$	1,761		$	6,065		$	5,874
Interest and other income	20			16			59			86
Total revenues	1,852			1,777			6,124			5,960
Costs of providing services
Salaries and benefits	1,145			1,119			3,484			3,519
Other operating expenses	366			370			1,158			1,171
Depreciation	54			45			151			132
Amortization	141			157			441			443
Restructuring costs	31			49			85			115
Transaction and integration expenses	74			36			177			117
Total costs of providing services	1,811			1,776			5,496			5,497
Income from operations	41			1			628			463
Interest expense	47			45			139			138
Other expense, net	29			14			79			26
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES	(35		)	(58		)	410			299
Provision for/(benefit from) income taxes	19			(26		)	73			11
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES	(54		)	(32		)	337			288
Interest in earnings of associates, net of tax	—			1			2			2
NET (LOSS)/INCOME	(54		)	(31		)	339			290
Income attributable to non-controlling interests	—			(1		)	(16		)	(12		)
NET (LOSS)/INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON	$	(54	)	$	(32	)	$	323		$	278

EARNINGS PER SHARE
Basic (loss)/earnings per share	$	(0.40	)	$	(0.23	)	$	2.38		$	2.03
Diluted (loss)/earnings per share	$	(0.40	)	$	(0.23	)	$	2.36		$	2.00

Cash dividends declared per share	$	0.53		$	0.48		$	1.59		$	1.44

Comprehensive income/(loss) before non-controlling interests	$	34		$	(73	)	$	546		$	96
Comprehensive loss/(income) attributable to non-controlling interests	12			1			(15		)	(2		)
Comprehensive income/(loss) attributable to Willis Towers Watson	$	46		$	(72	)	$	531		$	94



	September 30, 2017			December 31, 2016
ASSETS
Cash and cash equivalents	$	912		$	870
Fiduciary assets	12,206			10,505
Accounts receivable, net	2,155			2,080
Prepaid and other current assets	418			337
Total current assets	15,691			13,792
Fixed assets, net	937			839
Goodwill	10,529			10,413
Other intangible assets, net	4,034			4,368
Pension benefits assets	649			488
Other non-current assets	432			353
Total non-current assets	16,581			16,461
TOTAL ASSETS	$	32,272		$	30,253
LIABILITIES AND EQUITY
Fiduciary liabilities	$	12,206		$	10,505
Deferred revenue and accrued expenses	1,472			1,481
Short-term debt and current portion of long-term debt	85			508
Other current liabilities	793			876
Total current liabilities	14,556			13,370
Long-term debt	4,493			3,357
Liability for pension benefits	1,207			1,321
Deferred tax liabilities	856			864
Provision for liabilities	603			575
Other non-current liabilities	476			532
Total non-current liabilities	7,635			6,649
TOTAL LIABILITIES	22,191			20,019
COMMITMENTS AND CONTINGENCIES
REDEEMABLE NON-CONTROLLING INTEREST	55			51
EQUITY ⁽ⁱ⁾
Additional paid-in capital	10,501			10,596
Retained earnings	1,130			1,452
Accumulated other comprehensive loss, net of tax	(1,676		)	(1,884		)
Treasury shares, at cost, 263,899 shares in 2017 and 795,816 shares in 2016, and 40,000 shares, €1 nominal value, in 2017 and 2016	(40		)	(99		)
Total Willis Towers Watson shareholders’ equity	9,915			10,065
Non-controlling interests	111			118
Total equity	10,026			10,183
TOTAL LIABILITIES AND EQUITY	$	32,272		$	30,253



	Shares outstanding ⁽ⁱ⁾		Additional paid-in capital			Retained earnings			Treasury shares			AOCL ⁽ⁱⁱ⁾			Total WTW shareholders’ equity			Non-controlling interests			Total equity			Redeemable Non-controlling interest ⁽ⁱⁱⁱ⁾			Total
Balance as of December 31, 2015	68,625		$	1,672		$	1,597		$	(3	)	$	(1,037	)	$	2,229		$	131		$	2,360		$	53
Shares repurchased	(1,791	)	—			(222		)	—			—			(222		)	—			(222		)	—
Net income	—		—			278			—			—			278			6			284			6			$	290
Dividends	—		—			(198		)	—			—			(198		)	(8		)	(206		)	(4		)
Other comprehensive (loss)/income	—		—			—			—			(184		)	(184		)	(8		)	(192		)	(2		)	$	(194	)
Issuance of shares under employee stock compensation plans	873		44			—			—			—			44			—			44			—
Issuance of shares for acquisitions	69,500		8,686			—			—			—			8,686			—			8,686			—
Replacement share-based compensation awards issued on acquisition	—		37			—			—			—			37			—			37			—
Share-based compensation	—		94			—			—			—			94			—			94			—
Additional non-controlling interests	—		5			—			—			—			5			13			18			—
Foreign currency translation	—		(2		)	—			—			—			(2		)	—			(2		)	—
Balance as of September 30, 2016	137,207		$	10,536		$	1,455		$	(3	)	$	(1,221	)	$	10,767		$	134		$	10,901		$	53

Balance as of December 31, 2016	136,297		$	10,596		$	1,452		$	(99	)	$	(1,884	)	$	10,065		$	118		$	10,183		$	51
Adoption of ASU 2016-16 (See Note 2)	—		—			(3		)	—			—			(3		)	—			(3		)	—
Shares repurchased	(3,354	)	—			(425		)	(37		)	—			(462		)	—			(462		)	—
Shares canceled	(1,415	)	(177		)	—			96			—			(81		)	—			(81		)	—
Net income	—		—			323			—			—			323			9			332			7			$	339
Dividends	—		—			(217		)	—			—			(217		)	(15		)	(232		)	(3		)
Other comprehensive income/(loss)	—		—			—			—			208			208			(1		)	207			—			$	207
Issuance of shares under employee stock compensation plans	755		44			—			—			—			44			—			44			—
Share-based compensation	—		48			—			—			—			48			—			48			—
Additional non-controlling interests	—		(1		)	—			—			—			(1		)	—			(1		)	—
Foreign currency translation	—		(9		)	—			—			—			(9		)	—			(9		)	—
Balance as of September 30, 2017	132,283		$	10,501		$	1,130		$	(40	)	$	(1,676	)	$	9,915		$	111		$	10,026		$	55



	January 4, 2016
Number of shares of Towers Watson common stock outstanding as of January 4, 2016	69 million
Exchange ratio	2.6490
Number of Willis Group Holdings shares issued (prior to reverse stock split)	184 million
Willis Group Holdings price per share on January 4, 2016	$	47.18
Fair value of 184 million Willis ordinary shares	$	8,686
Value of equity awards assumed	37
Aggregate Merger consideration	$	8,723



	Amortization basis	Fair Value		Expected life (years)
Customer relationships	In line with underlying cash flows	$	2,221	15.0
Software - income approach	In line with underlying cash flows or straight-line basis	567		6.4
Software - cost approach	Straight-line basis	108		4.9
Product	In line with underlying cash flows	42		17.5
IPR&D ⁽ⁱ⁾	n/a	39		n/a
Trade name	Straight-line basis	1,003		25.0
Favorable lease agreements	Straight-line basis	11		6.5
		$	3,991



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Total segment revenues	$	1,835		$	1,761		$	6,057		$	5,951
Fair value adjustment for deferred revenue	—			—			—			(58		)
Reimbursable expenses and other	17			16			67			67
Total revenues	$	1,852		$	1,777		$	6,124		$	5,960

Total segment operating income	$	266		$	234		$	1,351		$	1,283
Fair value adjustment for deferred revenue	—			—			—			(58		)
Amortization	(141		)	(157		)	(441		)	(443		)
Restructuring costs	(31		)	(49		)	(85		)	(115		)
Transaction and integration expenses	(74		)	(36		)	(177		)	(117		)
Provision for the Stanford litigation	—			—			—			(50		)
Unallocated, net ⁽ⁱ⁾	21			9			(20		)	(37		)
Income from operations	41			1			628			463
Interest expense	47			45			139			138
Other expense, net	29			14			79			26
(Loss)/income from operations before income taxes and interest in earnings of associates	$	(35	)	$	(58	)	$	410		$	299



	Three Months Ended September 30, 2017
	HCB		CRB		IRR		BDA		Corporate		Total
Termination benefits	$	—	$	5	$	—	$	—	$	1	$	6
Professional services and other	1		20		2		—		2		25
Total	$	1	$	25	$	2	$	—	$	3	$	31



	Three Months Ended September 30, 2016
	HCB		CRB		IRR		BDA		Corporate		Total
Termination benefits	$	12	$	3	$	—	$	—	$	1	$	16
Professional services and other	—		23		1		—		9		33
Total	$	12	$	26	$	1	$	—	$	10	$	49



	Nine Months Ended September 30, 2017
	HCB		CRB		IRR		BDA		Corporate		Total
Termination benefits	$	—	$	14	$	3	$	—	$	2	$	19
Professional services and other	2		50		4		—		10		66
Total	$	2	$	64	$	7	$	—	$	12	$	85



	Nine Months Ended September 30, 2016
	HCB		CRB		IRR		BDA		Corporate		Total
Termination benefits	$	14	$	11	$	3	$	—	$	2	$	30
Professional services and other	—		60		2		—		23		85
Total	$	14	$	71	$	5	$	—	$	25	$	115



	HCB		CRB		IRR		BDA		Corporate		Total
2014
Termination benefits	$	—	$	15	$	1	$	—	$	—	$	16
Professional services and other ⁽ⁱ⁾	—		3		—		—		17		20
2015
Termination benefits	2		24		7		—		3		36
Professional services and other ⁽ⁱ⁾	1		57		2		—		30		90
2016
Termination benefits	1		18		3		—		1		23
Professional services and other ⁽ⁱ⁾	1		81		4		—		36		122
2017
Termination benefits	—		14		3		—		2		19
Professional services and other ⁽ⁱ⁾	2		50		4		—		10		66
Total
Termination benefits	3		71		14		—		6		94
Professional services and other ⁽ⁱ⁾	4		191		10		—		93		298
Total	$	7	$	262	$	24	$	—	$	99	$	392



	HCB			CRB			IRR		BDA		Total
Balance at December 31, 2016:
Goodwill, gross	$	4,412		$	2,178		$	1,758	$	2,557	$	10,905
Accumulated impairment losses	(130		)	(362		)	—		—		(492		)
Goodwill, net - December 31, 2016	4,282			1,816			1,758		2,557		10,413
Goodwill reassigned in segment realignment⁽ⁱ⁾	(113		)	13			100		—		—
Goodwill acquired during the period	—			8			—		—		8
Goodwill disposed of during the period	(31		)	—			—		—		(31		)
Foreign exchange	64			57			18		—		139
Balance at September 30, 2017:
Goodwill, gross	4,332			2,256			1,876		2,557		11,021
Accumulated impairment losses	(130		)	(362		)	—		—		(492		)
Goodwill, net - September 30, 2017	$	4,202		$	1,894		$	1,876	$	2,557	$	10,529



	Balance at December 31, 2016		Intangible assets acquired		Intangible assets disposed			Amortization⁽ⁱⁱ⁾			Foreign Exchange		Balance at September 30, 2017
Client relationships	$	2,655	$	13	$	(22	)	$	(289	)	$	89	$	2,446
Management contracts	54		—		—			(3		)	7		58
Software ⁽ⁱ⁾	570		36		—			(112		)	14		508
Trademark and trade name	1,006		—		(1		)	(34		)	5		976
Product	33		—		—			(2		)	2		33
Favorable agreements	11		—		—			(1		)	1		11
Other	3		—		—			(1		)	—		2
Total amortizable intangible assets	$	4,332	$	49	$	(23	)	$	(442	)	$	118	$	4,034



	September 30, 2017					December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Client relationships	$	3,476	$	(1,030	)	$	3,396	$	(741	)
Management contracts	69		(11		)	62		(8		)
Software	762		(254		)	711		(141		)
Trademark and trade name	1,054		(78		)	1,051		(45		)
Product	38		(5		)	36		(3		)
Favorable agreements	14		(3		)	13		(2		)
Other	5		(3		)	6		(3		)
Total finite-lived assets	$	5,418	$	(1,384	)	$	5,275	$	(943	)

Unfavorable agreements	$	34	$	(7	)	$	34	$	(5	)
Total finite-lived intangible liabilities	$	34	$	(7	)	$	34	$	(5	)



	Amortization		Rent offset
Remainder of 2017	$	142	$	(1	)
2018	536		(4		)
2019	478		(2		)
2020	427		(2		)
2021	348		(2		)
Thereafter	2,092		(5		)
Total	$	4,023	$	(16	)



Three Months Ended September 30,	Gain/(loss) recognized in OCI (effective portion)					Location of loss reclassified from Accumulated OCI into income (effective element)	Loss reclassified from Accumulated OCI into income (effective element)						Location of gain/(loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	Gain/(loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)
	2017		2016				2017			2016				2017		2016
Forward exchange contracts	$	12	$	(6	)	Other expense, net	$	(10	)	$	(14	)	Interest expense	$	—	$	—



		(Loss)/gain recognized in income
		Three Months Ended September 30,					Nine Months Ended September 30,
Derivatives not designated as hedging instruments:	Location of (loss)/gain recognized in income	2017			2016		2017		2016
Forward exchange contracts	Other expense, net	$	(3	)	$	4	$	6	$	(6	)



	September 30, 2017		December 31, 2016
6.200% senior notes due 2017	$	—	$	394
Current portion of 7-year term loan facility	—		22
Current portion of term loan due 2019	85		85
Short-term borrowing under bank overdraft arrangement	—		5
Other debt	—		2
	$	85	$	508



	September 30, 2017		December 31, 2016
Billed, net of allowance for doubtful debts of $47 million and $40 million	$	1,790	$	1,789
Accrued and unbilled, at estimated net realizable value	365		291
Accounts receivable, net	$	2,155	$	2,080



	September 30, 2017		December 31, 2016
Prepayments and accrued income	$	162	$	131
Derivatives and investments	24		32
Deferred compensation plan assets	18		15
Retention incentives	8		7
Corporate income and other taxes	139		97
Other current assets	67		55
Total prepaid and other current assets	$	418	$	337



	Foreign currency translation ⁽ⁱ⁾						Cash flow hedges ⁽ⁱ⁾						Defined pension and post-retirement benefit costs ⁽ⁱⁱ⁾						Total
	2017			2016			2017			2016			2017			2016			2017			2016
Quarter-to-date activity:
Balance at June 30, 2017 and 2016, respectively	$	(647	)	$	(398	)	$	(39	)	$	(73	)	$	(1,090	)	$	(710	)	$	(1,776	)	$	(1,181	)
Other comprehensive income/(loss) before reclassifications	78			(36		)	6			(1		)	(5		)	(6		)	79			(43		)
Loss/(income) reclassified from accumulated other comprehensive loss (net of income tax benefit of $4 and $1, respectively)	—			—			11			(6		)	10			9			21			3
Net current-period other comprehensive income/(loss)	78			(36		)	17			(7		)	5			3			100			(40		)
Balance at September 30, 2017 and 2016, respectively	$	(569	)	$	(434	)	$	(22	)	$	(80	)	$	(1,085	)	$	(707	)	$	(1,676	)	$	(1,221	)

Year-to-date activity:
Balance at December 31, 2016 and 2015, respectively	$	(650	)	$	(314	)	$	(82	)	$	(10	)	$	(1,152	)	$	(713	)	$	(1,884	)	$	(1,037	)
Other comprehensive income/(loss) before reclassifications	81			(120		)	15			(56		)	39			(26		)	135			(202		)
Loss/(income) reclassified from accumulated other comprehensive loss (net of income tax benefit of $17 and income tax expense of $3, respectively)	—			—			45			(14		)	28			32			73			18
Net current-period other comprehensive income/(loss)	81			(120		)	60			(70		)	67			6			208			(184		)
Balance at September 30, 2017 and 2016, respectively	$	(569	)	$	(434	)	$	(22	)	$	(80	)	$	(1,085	)	$	(707	)	$	(1,676	)	$	(1,221	)



	Three Months Ended September 30, 2017
	Willis Towers Watson			The Other Guarantors			The Issuer			Other			Consolidating adjustments			Consolidated
Revenues
Commissions and fees	$	—		$	—		$	3		$	1,829		$	—		$	1,832
Interest and other income	—			—			—			20			—			20
Total revenues	—			—			3			1,849			—			1,852
Costs of providing services
Salaries and benefits	2			—			20			1,123			—			1,145
Other operating expenses	—			30			6			330			—			366
Depreciation	—			2			—			52			—			54
Amortization	—			1			—			143			(3		)	141
Restructuring costs	—			1			1			29			—			31
Transaction and integration expenses	—			2			4			68			—			74
Total costs of providing services	2			36			31			1,745			(3		)	1,811
(Loss)/income from operations	(2		)	(36		)	(28		)	104			3			41
Income from Group undertakings	—			(136		)	(46		)	(39		)	221			—
Expenses due to Group undertakings	—			13			48			160			(221		)	—
Interest expense	8			25			9			5			—			47
Other (income)/expense, net	—			(48		)	—			(120		)	197			29
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES	(10		)	110			(39		)	98			(194		)	(35		)
(Benefit from)/provision for income taxes	(1		)	10			(4		)	14			—			19
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES	(9		)	100			(35		)	84			(194		)	(54		)
Interest in earnings of associates, net of tax	—			—			—			—			—			—
Equity account for subsidiaries	(45		)	(142		)	(248		)	—			435			—
NET (LOSS)/INCOME	(54		)	(42		)	(283		)	84			241			(54		)
Income attributable to non-controlling interests	—			—			—			—			—			—
NET (LOSS)/INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON	$	(54	)	$	(42	)	$	(283	)	$	84		$	241		$	(54	)

Comprehensive income/(loss) before non-controlling interests	$	46		$	62		$	(215	)	$	(4	)	$	145		$	34
Comprehensive loss attributable to non-controlling interest	—			—			—			12			—			12
Comprehensive income/(loss) attributable to Willis Towers Watson	$	46		$	62		$	(215	)	$	8		$	145		$	46



	As of September 30, 2017
	Willis Towers Watson		The Other Guarantors		The Issuer		Other		Consolidating adjustments			Consolidated
ASSETS
Cash and cash equivalents	$	—	$	5	$	—	$	907	$	—		$	912
Fiduciary assets	—		—		—		12,206		—			12,206
Accounts receivable, net	—		—		5		2,150		—			2,155
Prepaid and other current assets	2		26		143		298		(51		)	418
Amounts due from group undertakings	6,131		1,478		1,360		2,576		(11,545		)	—
Total current assets	6,133		1,509		1,508		18,137		(11,596		)	15,691
Investments in subsidiaries	4,357		8,895		6,209		—		(19,461		)	—
Fixed assets, net	—		35		—		902		—			937
Goodwill	—		—		—		10,529		—			10,529
Other intangible assets, net	—		61		—		4,034		(61		)	4,034
Pension benefits assets	—		—		—		649		—			649
Other non-current assets	—		14		246		373		(201		)	432
Non-current amounts due from group undertakings	—		4,918		861		48		(5,827		)	—
Total non-current assets	4,357		13,923		7,316		16,535		(25,550		)	16,581
TOTAL ASSETS	$	10,490	$	15,432	$	8,824	$	34,672	$	(37,146	)	$	32,272
LIABILITIES AND EQUITY
Fiduciary liabilities	$	—	$	—	$	—	$	12,206	$	—		$	12,206
Deferred revenue and accrued expenses	1		9		82		1,380		—			1,472
Short-term debt and current portion of long-term debt	—		—		—		85		—			85
Other current liabilities	78		43		117		546		9			793
Amounts due to group undertakings	—		7,537		2,402		1,607		(11,546		)	—
Total current liabilities	79		7,589		2,601		15,824		(11,537		)	14,556
Long-term debt	496		2,945		946		106		—			4,493
Liability for pension benefits	—		—		—		1,207		—			1,207
Deferred tax liabilities	—		—		—		1,057		(201		)	856
Provision for liabilities	—		—		120		483		—			603
Other non-current liabilities	—		7		59		410		—			476
Non-current amounts due to group undertakings	—		—		519		5,308		(5,827		)	—
Total non-current liabilities	496		2,952		1,644		8,571		(6,028		)	7,635
TOTAL LIABILITIES	575		10,541		4,245		24,395		(17,565		)	22,191
REDEEMABLE NON-CONTROLLING INTEREST	—		—		—		55		—			55
EQUITY
Total Willis Towers Watson shareholders’ equity	9,915		4,891		4,579		10,111		(19,581		)	9,915
Non-controlling interests	—		—		—		111		—			111
Total equity	9,915		4,891		4,579		10,222		(19,581		)	10,026
TOTAL LIABILITIES AND EQUITY	$	10,490	$	15,432	$	8,824	$	34,672	$	(37,146	)	$	32,272



	As of December 31, 2016
	Willis Towers Watson		The Other Guarantors		The Issuer		Other		Consolidating adjustments			Consolidated
ASSETS
Cash and cash equivalents	$	—	$	—	$	—	$	870	$	—		$	870
Fiduciary assets	—		—		—		10,505		—			10,505
Accounts receivable, net	—		—		7		2,073		—			2,080
Prepaid and other current assets	—		49		23		324		(59		)	337
Amounts due from group undertakings	7,229		1,706		1,190		2,370		(12,495		)	—
Total current assets	7,229		1,755		1,220		16,142		(12,554		)	13,792
Investments in subsidiaries	3,409		7,733		5,480		—		(16,622		)	—
Fixed assets, net	—		34		—		805		—			839
Goodwill	—		—		—		10,413		—			10,413
Other intangible assets, net	—		64		—		4,368		(64		)	4,368
Pension benefits assets	—		—		—		488		—			488
Other non-current assets	—		10		80		310		(47		)	353
Non-current amounts due from group undertakings	—		4,655		836		—		(5,491		)	—
Total non-current assets	3,409		12,496		6,396		16,384		(22,224		)	16,461
TOTAL ASSETS	$	10,638	$	14,251	$	7,616	$	32,526	$	(34,778	)	$	30,253
LIABILITIES AND EQUITY
Fiduciary liabilities	$	—	$	—	$	—	$	10,505	$	—		$	10,505
Deferred revenue and accrued expenses	—		15		27		1,488		(49		)	1,481
Short-term debt and current portion of long-term debt	—		22		394		92		—			508
Other current liabilities	77		94		23		684		(2		)	876
Amounts due to group undertakings	—		8,323		2,075		2,097		(12,495		)	—
Total current liabilities	77		8,454		2,519		14,866		(12,546		)	13,370
Long-term debt	496		2,506		186		169		—			3,357
Liability for pension benefits	—		—		—		1,321		—			1,321
Deferred tax liabilities	—		—		—		1,013		(149		)	864
Provision for liabilities	—		—		120		455		—			575
Other non-current liabilities	—		48		15		483		(14		)	532
Non-current amounts due to group undertakings	—		—		518		4,973		(5,491		)	—
Total non-current liabilities	496		2,554		839		8,414		(5,654		)	6,649
TOTAL LIABILITIES	573		11,008		3,358		23,280		(18,200		)	20,019
REDEEMABLE NON-CONTROLLING INTEREST	—		—		—		51		—			51
EQUITY
Total Willis Towers Watson shareholders’ equity	10,065		3,243		4,258		9,077		(16,578		)	10,065
Non-controlling interests	—		—		—		118		—			118
Total equity	10,065		3,243		4,258		9,195		(16,578		)	10,183
TOTAL LIABILITIES AND EQUITY	$	10,638	$	14,251	$	7,616	$	32,526	$	(34,778	)	$	30,253



	Three Months Ended September 30, 2017
	Willis Towers Watson — the Parent Issuer			The Guarantors			Other			Consolidating adjustments			Consolidated
Revenues
Commissions and fees	$	—		$	3		$	1,829		$	—		$	1,832
Interest and other income	—			—			20			—			20
Total revenues	—			3			1,849			—			1,852
Costs of providing services
Salaries and benefits	2			20			1,123			—			1,145
Other operating expenses	—			36			330						366
Depreciation	—			2			52			—			54
Amortization	—			1			143			(3		)	141
Restructuring costs	—			2			29			—			31
Transaction and integration expenses	—			6			68			—			74
Total costs of providing services	2			67			1,745			(3		)	1,811
(Loss)/income from operations	(2		)	(64		)	104			3			41
Income from Group undertakings	—			(155		)	(39		)	194			—
Expenses due to Group undertakings	—			34			160			(194		)	—
Interest expense	8			34			5			—			47
Other (income)/expense, net	—			(48		)	(120		)	197			29
(LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES	(10		)	71			98			(194		)	(35		)
(Benefit from)/provision for income taxes	(1		)	6			14			—			19
(LOSS)/INCOME FROM OPERATIONS BEFORE INTEREST IN EARNINGS OF ASSOCIATES	(9		)	65			84			(194		)	(54		)
Interest in earnings of associates, net of tax	—			—			—			—			—
Equity account for subsidiaries	(45		)	(107		)	—			152			—
NET (LOSS)/INCOME	(54		)	(42		)	84			(42		)	(54		)
Income attributable to non-controlling interests	—			—			—			—			—
NET (LOSS)/INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON	$	(54	)	$	(42	)	$	84		$	(42	)	$	(54	)

Comprehensive income before non-controlling interests	$	46		$	62		$	(4	)	$	(70	)	$	34
Comprehensive loss attributable to non-controlling interests	—			—			12			—			12
Comprehensive income attributable to Willis Towers Watson	$	46		$	62		$	8		$	(70	)	$	46



	Three Months Ended September 30,					Components of Revenue Change⁽ⁱ⁾
	2017		2016		As Reported Change	Currency Impact	Constant Currency Change	Acquisitions/Divestitures	Organic Change
	($ in millions)				As Reported Change	Currency Impact	Constant Currency Change	Acquisitions/Divestitures	Organic Change
Total revenues	$	1,852	$	1,777	4%	1%	4%	—%	4%



						Components of Revenue Change
	Nine Months Ended September 30,				As Reported Change	Currency Impact	Constant Currency Change	Acquisitions/Divestitures	Organic Change
	2017		2016		As Reported Change	Currency Impact	Constant Currency Change	Acquisitions/Divestitures	Organic Change
	($ in millions)
Total revenues	$	6,124	$	5,960	3%	(1)%	4%	—%	4%
Fair value adjustment for deferred revenue	—		58
Adjusted revenues	$	6,124	$	6,018	2%	(1)%	3%	—%	3%



	Nine Months Ended September 30,
	2017			2016⁽ⁱ⁾
	(in millions)
Cash flows from operating activities	$	515		$	621
Less: Additions to fixed assets and software for internal use	(198		)	(151		)
Free cash flow	$	317		$	470