What is Willis Towers Watson Probability of Financial Distress (%)?
Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, Willis Towers Watson's Probability of Financial Distress (%) is 0.03%.
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
Competitive Comparison of Willis Towers Watson's Probability of Financial Distress (%)
For the Insurance Brokers subindustry, Willis Towers Watson's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Willis Towers Watson's Probability of Financial Distress (%) Distribution in the Insurance Industry
For the Insurance industry and Financial Services sector, Willis Towers Watson's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Willis Towers Watson's Probability of Financial Distress (%) falls into.
Willis Towers Watson Probability of Financial Distress (%) Calculation
Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.
The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:
| LPFD | = | -20.12 * NIMTAAVG | + | 1.60 * TLMTA | - | 7.88 * EXRETAVG | + | 1.55 * SIGMA | - | 0.005 * RSIZE | - | 2.27 * CASHMTA | + | 0.070 * MB | - | 0.09 * PRICE | - | 8.87 |
| = | -8.01 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.03% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.
2. TLMTA = Total liabilities to Market Total Assets
3. CASHMTA = Cash to Market Total Assets
For non-financial companies, CASHMTA is measured as:
4. EXRETAVG = Excess Return compared to the S&P 500
EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.
5. SIGMA = Standard Deviation of Daily Returns
For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).
6. RSIZE = Relative Size
| RSIZE | = | log (Market Cap | / | Total Market Cap of S&P 500 companies) |
7. MB = Market to Adjusted Book Equity Ratio
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
Willis Towers Watson (Willis Towers Watson) Business Description
Traded in Other Exchanges
Address
C/o Willis Group Ltd, 51 Lime Street, London, GBR, EC3M 7DQ
In January 2016, Towers Watson and Willis Group merged to form Willis Towers Watson, a global advisory, insurance brokerage, and solutions company. The company operates in two business segments: health, wealth, and career (its consulting operations) and risk and brokering (its brokerage operations). It has about 47,000 employees.
Executives
| Pamela Thomson-hall |
officer: Head of International |
51 LIME STREET, LONDON X0 EC3M 7DQ |
| Anne Pullum |
officer: Head of Strategy and CAO |
C/O WILLIS TOWERS WATSON, 200 LIBERTY ST, 7TH FLOOR, NEW YORK NY 10281 |
| Julie Jarecke Gebauer |
officer: Head of Human Capital&Benefits |
JUPITER SATURN HOLDING CO, 875 THIRD AVENUE, NEW YORK NY 10022 |
| Fredric J Tomczyk |
director |
TORONTO DOMINION CENTRE, PO BOX 1, TORONTO A6 M5K IA2 |
| Stephen M. Chipman |
director |
3101 DREXEL DRIVE, DALLAS TX 75205 |
| Jacqueline Hunt |
director |
53 SOUTH GREEN, MATTISHALL, NORFOLK X0 N220 3JY |
| Anne Donovan Bodnar |
officer: Head of Human Resources |
901 N. GLEBE ROAD, ARLINGTON VA 22203 |
| Gene H Wickes |
officer: Head of Exchange Solutions |
901 N GLEBE ROAD, ARLINGTON VA 22203 |
| Brendan R Oneill |
director |
C/O IMPERIAL CHEMICAL INDUSTRIES PLC, 20 MANCHESTER SQUARE, LONDON X0 W1U 3AN |
| Paul C Reilly |
director |
880 CARILLON PARKWAY, ST. PETERSBURG FL 33716 |
| Alexis Faber |
officer: Chief Operating Officer |
3340 PLAYERS CLUB PARKWAY, SUITE 200, MEMPHIS TN 38125 |
| Andrew Jay Krasner |
officer: Chief Financial Officer |
1450 BRICKELL AVENUE, SUITE 1600, MIAMI FL 33131 |
| Fumbi F. Chima |
director |
44 THORNBURY CT., 36-38 CHEPSTOW VILLAS, LONDON X0 WII 2RE |
| Michelle R Swanback |
director |
7001 EAST BELLEVIEW AVENUE, DENVER CO 80237 |
| Inga K Beale |
director |
C/O CRAWFORD & COMPANY, 5335 TRIANGLE PARKWAY, PEACHTREE CORNERS GA 30092 |
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