Willis Towers Watson (WLTW) Enters Settlement Agreement with Stanford Financial Group

Willis Towers Watson (NASDAQ: WLTW)

Item 8.01 Other Events.

On March 31, 2016, Willis Towers Watson Public Limited Company (the “Company” and, together with its subsidiaries, “Willis Towers Watson”) and a number of its subsidiaries entered into a settlement in principle, as reflected in a Settlement Term Sheet, relating to litigation involving Stanford Financial Group described in the Company’s most recent Form 10-K (the “Settlement”).

The Company has agreed to the Settlement Term Sheet to eliminate the distraction, burden, expense and uncertainty of further litigation. In particular, if the Settlement and the related bar orders described below are approved by the Court and become effective, Willis Towers Watson (a newly-combined company) would be able 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 provides that the parties understand and agree that there is no admission of liability or wrongdoing by Willis Towers Watson. Willis Towers Watson expressly denies any liability or wrongdoing with respect to the matters alleged in the Stanford litigation.

Specifically, the parties to the Settlement Term Sheet 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. and Willis of Colorado, Inc. (collectively, “WTW” or “Defendants”), on the other hand.

Under the terms of the Settlement Term Sheet, the parties have agreed in principle to settle and dismiss Troice, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:09-cv-01274-L (N.D. Tex.) (the “Troice Action”) and Janvey, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:13-cv-03980-N-BG (N.D. Tex.) (the “Janvey Action” and, together with the Troice Action, the “Actions”) and all current or future claims arising from or related to Stanford. If the Settlement, including the bar orders described below, is approved by the Court and is not subject to further appeal, Willis North America Inc. will make a one-time cash payment of $120 million to the Receiver 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 Company expects the Actions to be stayed pending final approval of the settlement agreement and bar orders. The timing of any final decision is subject to the discretion of the Court and any appeal, and the Court may decide not to approve the Settlement.

The Settlement Term Sheet 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 bar orders therefore would prohibit all litigation relating to Stanford described in the Company’s Annual Report on Form 10-K, and not just the Actions, 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.

The Settlement is also subject to the execution of a definitive settlement agreement and other related documentation, notice to Stanford’s investor claimants, and approval by U.S. District Court for the Northern District of Texas.

In the fourth quarter of 2015, the Company recognized a $70 million provision, before tax, in connection with the Stanford litigation. In connection with the Settlement Term Sheet, the Company will add a further provision for $50 million, before tax. The Company expects that the Settlement will be tax deductible and therefore the additional charge will impact first quarter net income.

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