Watson Wyatt Worldwide

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Watson Wyatt Worldwide, Inc.

Type	Public (NYSE: WW)
Founded	2005
Headquarters	Arlington, Virginia, United States
No. of locations	104 offices (2008)
Key people	John J. Haley – President, CEO, and Chairman of the Board
Industry	Consulting
Revenue	▲ US$1,49 million (2007)^[1]
Net income	▲ US$116 million (2007)^[1]
Employees	7,000 (2007)^[2]
Website	www.watsonwyatt.com

Watson Wyatt Worldwide, Inc. (NYSE: WW) is a global consulting firm. The firm's services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial service companies; and delivering related technology, outsourcing and data services. Its principal operating subsidiary, Watson Wyatt & Company, is a human capital consulting firm with operations in the Americas, Europe and Asia Pacific. Its corporate offices are in Arlington, Virginia.

As of April, 2008, Watson Wyatt Worldwide has 7,000 employees in 104 offices located in 32 countries around the world.^[2]

1 History
2 2007 Acquisitions & spin-Off
3 Independent Insurance
4 2007 Iron Workers pension fund settlement
5 Notes
6 References
7 See also
8 External links

[edit] History

Watson Wyatt Worldwide traces its roots back to the oldest actuarial firm in the world, formed in 1878. Watson Wyatt's first client is still a client 130 years later.

Reuben Watson formed the UK actuarial firm R. Watson & Sons in 1878. By the 1910s, the firm was the lead advisor to the government on social insurance programs. Over the years, the firm expanded throughout Europe, building on its long history of serving the UK’s largest companies.

In 1946, B. E. Wyatt and seven co-founders established The Wyatt Company as an actuarial consulting firm. Over the next several decades, the U.S.-based firm branched out into other service lines, including health care and compensation consulting. In the 1980s, the firm broadened its global reach, establishing offices throughout Canada, Europe, Latin America, and Asia.

In 1995, the two firms formed a global alliance under the brand Watson Wyatt Worldwide. The U.S.-based arm of the alliance was renamed Watson Wyatt & Company and the UK firm was called Watson Wyatt LLP. In 2000, Watson Wyatt & Company completed a successful initial public offering and began trading on the New York Stock Exchange. In August 2005, the two firms formally merged and the new company was named Watson Wyatt Worldwide.^[3]

[edit] 2007 Acquisitions & spin-Off

During 2007, Watson Wyatt acquired three companies in Europe. It acquired its Netherlands-based alliance partner, Watson Wyatt Brans & Co. in February. In July, Watson Wyatt bought a German human resources consulting firm, Heissmann GmbH. It purchased Oakbridge Consulting Group in Sweden in October.^[4]

Also during 2007, Watson Wyatt announced that it would spin off its multiemployer retirement practices in the United States and Canada.^[5] (A multiemployer retirement plan is set up under the terms of collective bargaining agreements involving more than one unrelated employer, generally in the same industry.) Watson Wyatt will not own any portion of the new companies — Horizon Actuarial Services in the U.S. and PBI Actuarial Consultants in Canada — but it will receive a portion of the new firms' revenue for the next five years.^[6]

[edit] Independent Insurance

In 1993, Independent Insurance Company Ltd. hired Watson Wyatt as an independent actuary to advise the rapidly-growing insurance company on technical matters and to calculate the company's reserves for claims incurred but not reported (IBNR). In order to perform its annual calculations, Watson Wyatt relied upon information provided by Independent Insurance about claims submitted and paid throughout the year. Since Watson Wyatt certified the adequacy of the company's IBNR reserves as part of the insurance company's financial statements, which were provided to the public, Watson Wyatt sought and received annual assurance from Independent Insurance that the information they had been provided was complete.^[7]

In fact, Independent Insurance had been withholding information about its claims from Watson Wyatt. By the end of 2000, the total value of those claims was in excess of £50 million.^[7] Watson Wyatt learned of the fraud in May 2001, and it warned the company's board of directors that its reserves were inadequate.^[8] Third-party actuaries later estimated that the reserves had been too low by £110 to £250 million.^[8]

In June 2001, trade in Independent Insurance stock was suspended, the company went into liquidation, and the Serious Fraud Office began an investigation.^[7]^[8] The company's founder and chief executive officer, Michael Bright, and its deputy managing director and director of finance were convicted of conspiracy to defraud in October 2007.^[9]

[edit] 2007 Iron Workers pension fund settlement

On 23 March 2007, Watson Wyatt settled a lawsuit by the pension fund trustees of the Iron Workers, Local No. 25, of Michigan. The lawsuit alleged that the pension plan was underfunded as a result of the company's actuarial work. Under the settlement, Watson Wyatt paid $110 million but did not admit any wrongdoing.^[10]