Note 4 — 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’)

•	Benefits Delivery and Administration (‘BDA’)

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 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-bonus, pre-tax basis.

The Company experiences seasonal fluctuations of its revenue. Revenue is typically higher during the Company’s first and fourth quarters due to the timing of broking-related activities, and although the mix of quarterly income will change as a result of the adoption of ASC 606, our first and fourth quarters will continue to be the highest.

Beginning in 2018, we made certain changes that affect our segment results that are not material. These changes include the following:

•

To better align our business within our segments, we (1) moved portions of our Insurance, Consulting and Technology business from IRR to CRB; (2) moved certain resources that support our outsourced administration offerings from HCB to BDA; and (3) moved our CEEMEA-based strategy study business from our Health and Benefits business in HCB to CRB.

•

As part of the continued integration of our businesses, we have applied our 2018 corporate expense allocation methodology to our 2017 segment results in order to standardize our methodologies and allocate those expenses for period over period comparatives. Such methodology updates include (1) an increased allocation for Gras Savoye as it no longer benefits as a new acquisition; (2) adjustments relating to changes in segment and total headcount; and (3) the addition of certain allocable direct expenses, which lowers the corporate expense allocation.

In connection with our segment realignment, we reassigned a proportional amount of the carrying value of goodwill between the CRB and IRR segments. See Note 7 — Goodwill and Other Intangible Assets for further information.

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

The following table presents segment revenue and segment operating income for our reportable segments for the three months ended September 30, 2018 and 2017.

	Three Months Ended September 30,
	HCB				CRB				IRR				BDA					Total
	2018		2017		2018		2017		2018		2017		2018			2017		2018		2017
Segment revenue	$	778	$	733	$	622	$	600	$	317	$	321	$	127		$	181	$	1,844	$	1,835

Segment operating income/(loss)	$	194	$	143	$	66	$	48	$	29	$	32	$	(33	)	$	36	$	256	$	259

The following table presents segment revenue and segment operating income for our reportable segments for the nine months ended September 30, 2018 and 2017.

	Nine Months Ended September 30,
	HCB				CRB				IRR				BDA					Total
	2018		2017		2018		2017		2018		2017		2018			2017		2018		2017
Segment revenue	$	2,390	$	2,408	$	2,036	$	1,916	$	1,276	$	1,186	$	368		$	540	$	6,070	$	6,050

Segment operating income/(loss)	$	536	$	610	$	288	$	269	$	379	$	335	$	(96	)	$	109	$	1,107	$	1,323

The following tables present reconciliations of the information reported by segment to the Company’s consolidated amounts reported for the three and nine months ended September 30, 2018 and 2017.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenue:
Total segment revenue	$	1,844		$	1,835		$	6,070		$	6,050
Reimbursable expenses and other		15			17			71			74
Revenue	$	1,859		$	1,852		$	6,141		$	6,124

Total segment operating income	$	256		$	259		$	1,107		$	1,323
Amortization		(127	)		(141	)		(408	)		(441	)
Restructuring costs		—			(31	)		—			(85	)
Transaction and integration expenses		(50	)		(74	)		(148	)		(177	)
Unallocated, net ⁽ⁱ⁾		(62	)		(39	)		(212	)		(184	)
Income/(loss) from operations		17			(26	)		339			436
Interest expense		(51	)		(47	)		(154	)		(139	)
Other income, net		70			38			189			115
Income/(loss) from operations before income taxes	$	36		$	(35	)	$	374		$	412

(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.