Willis Q3 revenues up 5% but net income cut in half European Risk Insurance Management News Commercial Risk Europe

Thursday, 27 October 2011

Willis Q3 revenues up 5% but net income cut in half

Willis reported total revenues of $2.63bn for the first nine months of 2011, up 5% on the $2.5bn received in the same period last year.

Joe Plumeri, Chairman and Chief Executive Officer of Willis Group Holdings

Net income for the period was $179m, compared with $357m for the first three quarters of 2010.

This fall of almost 50% was partly the result of an anticipated $160m operational review charge along with the poor performance of its US loan protector business that witnessed a ‘greater than anticipated decline this quarter’.

“That is expected to continue in the fourth quarter, resulting in a greater than anticipated negative impact on our earnings and margins in 2011,” said Joe Plumeri, Chairman and Chief Executive Officer of Willis Group Holdings.

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Total commissions and fees in the first nine months of this year stood at $2.6bn, an increase of 5% from the $2.48bn reported on 30 September, 2010.

Organic growth in commissions and fees was 3% compared with the first nine months of 2010. This growth reflected net new business won of 4%, partially offset by a negative 1% impact from declining premium rates and other market factors, said Willis.

Reported operating margin was 18.4% compared with 23% for the same period last year.

Willis reported total revenues for the quarter ended September 30, 2011 of $762m, compared with $733m for the same period last year, an increase of 4%.

Total commissions and fees were $755m, an increase of 4% from $723m in the third quarter of 2010.

Organic growth in commissions and fees was 2% compared with the third quarter of 2010.

Net income for the third quarter of 2011 was $60m, compared with $64m in the same period a year ago. The figure was again negatively impacted by a $15m charge related to its 2011 operational review, said Willis.

Willis’ international segment reported 11% growth in commissions and fees compared with the same period in 2010, including a 6% favourable impact from foreign currency movements.

Organic growth in commissions and fees was 5%, including double-digit expansion in Latin America and Eastern Europe.

Continental Europe grew low-single digits, while the UK and Ireland retail market was down slightly. Operating margin was 1.9% compared with 4.3% in the third quarter of 2010.

Higher amortisation of retention awards and continued investment in future growth were the primary drivers of the margin decline, partially offset by the net effect of favourable foreign exchange movements, said Willis

The Global segment, which comprises the Reinsurance, Global Specialties, London Markets Wholesale, and Willis Capital Markets & Advisory business units, reported 12% growth in commissions and fees compared with the third quarter of 2010, including a 3% favourable benefit from foreign currency movements.

Organic growth in commissions and fees was 9%. Global Specialties grew mid-single digits, driven by Energy, Marine and Construction while London Markets Wholesale and Willis Capital Markets & Advisory each also had a positive quarter.

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