Fair Value Measurements

3 Months Ended

Mar. 31, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 11 — 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 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.

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

•Mutual funds, exchange-traded funds and certificates of deposit are classified as Level 1 because we use quoted market prices in active markets in determining the fair value of these securities.

•Commingled funds are not leveled within the fair value hierarchy as the funds are valued at the net value of shares held as reported by the manager of the funds. These funds are not exchange-traded.

•Hedge funds are not leveled within the fair value hierarchy as the fair values for these investments are estimated based on the net asset values derived from the latest audited financial statements or most recent capital account statements provided by the funds’ investment manager or third-party administrator, as a practical expedient.

•Market values for our derivative instruments have been used to determine the fair values of forward and option 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.

•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, which at times includes the use of a Monte Carlo simulation and discounting the probability-weighted payout. Typically, milestones are based on revenue or earnings growth for the acquired business.

The following tables present our assets and liabilities measured at fair value on a recurring basis at March 31, 2025 and December 31, 2024:

		Fair Value Measurements on a Recurring Basis at March 31, 2025
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities:
Mutual funds/exchange traded funds (i)	Prepaid and other current assets and Other non-current assets	$	109	$	—	$	—	$	109
	Fiduciary assets		336		—		—		336
Commingled funds (i) (ii)	Other non-current assets		—		—		—		18
Hedge funds (i) (iii)	Other non-current assets		—		—		—		18
Short-term investment (held to maturity):
Certificates of deposit/term deposit (iv)	Prepaid and other current assets	$	30	$	—	$	—	$	30
Derivatives:
Derivative financial instruments (v)	Prepaid and other current assets and Other non-current assets	$	—	$	3	$	—	$	3
Liabilities:
Contingent consideration:
Contingent consideration (vi) (vii)	Other current liabilities and Other non-current liabilities	$	—	$	—	$	40	$	40
Derivatives:
Derivative financial instruments (v)	Other current liabilities and Other non-current liabilities	$	—	$	2	$	—	$	2

		Fair Value Measurements on a Recurring Basis at December 31, 2024
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities:
Mutual funds/exchange traded funds (i)	Prepaid and other current assets and Other non-current assets	$	108	$	—	$	—	$	108
	Fiduciary assets		337		—		—		337
Commingled funds (i) (ii)	Other non-current assets		—		—		—		18
Hedge funds (i) (iii)	Other non-current assets		—		—		—		17
Derivatives:
Derivative financial instruments (v)	Prepaid and other current assets and Other non-current assets	$	—	$	1	$	—	$	1
Liabilities:
Contingent consideration:
Contingent consideration (vi)	Other current liabilities and Other non-current liabilities	$	—	$	—	$	39	$	39
Derivatives:
Derivative financial instruments (v)	Other current liabilities and Other non-current liabilities	$	—	$	6	$	—	$	6

(i)With the exception of the funds included in fiduciary assets, the majority of these balances are held as part of deferred compensation plans with related liabilities in other current liabilities and other non-current liabilities on the condensed consolidated balance sheets.

(ii)Consists of the Towers Watson Global Equity Focus Fund, for which redemptions can occur on any business day, and require a minimum of one business day’s notice.

(iii)Consists of the Towers Watson Alternative Credit Fund, for which the redemption period is generally quarterly, however requires a 50-day notice.

(iv)Consists of investments with maturity dates of up to 90 days.

(v)See Note 9 — Derivative Financial Instruments for further information on our derivative investments.

(vi)Probability weightings are based on our knowledge of the past and planned performance of the acquired entity to which the contingent consideration applies. The fair value weighted-average discount rates used in our material contingent consideration calculations were 13.41% and 13.43% at March 31, 2025 and December 31, 2024, respectively. The range of these discount rates was 11.00% - 13.80% at March 31, 2025. Using different probability weightings and discount rates could result in an increase or decrease of the contingent consideration payable.

(vii)Consideration due to be paid across multiple years until 2029.

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, 2025
Balance at December 31, 2024	$	39
Obligations assumed		—
Payments		—
Realized and unrealized losses (i)		—
Foreign exchange		1
Balance at March 31, 2025	$	40

(i)Realized and unrealized losses include accretion and adjustments to contingent consideration liabilities, which are included within Interest expense and Other operating expenses, respectively, on the condensed consolidated statements of comprehensive income.

There were no significant transfers to or from Level 3 in the three months ended March 31, 2025

Non-recurring Fair Value Measurement

The Company has assets that may be required to be recorded at fair value on a non-recurring basis. These assets are evaluated when certain triggering events occur (including the planned disposal of a business or a decrease in estimated future cash flows) that indicate their carrying amounts may not be recoverable.

Fair Value Information about Financial Instruments Not Measured at Fair Value

The following tables present our assets and liabilities not measured at fair value on a recurring basis at March 31, 2025 and December 31, 2024:

	March 31, 2025				December 31, 2024
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Note receivable	$	78	$	75	$	74	$	70
Liabilities:
Current debt	$	549	$	548	$	—	$	—
Long-term debt	$	4,761	$	4,540	$	5,309	$	5,052

The carrying value of our revolving credit facility approximates its fair value. The fair values above, which exclude accrued interest, 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 instruments. The fair values of our respective senior notes and short-term note receivable are considered Level 2 financial instruments as they are corroborated by observable market data.