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Willis Reports First-Quarter Organic Commission and Fee Growth of 4.1%


Posted on 01 May 2013 by Neilson

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WillisWillis Group Holdings plc, the global risk advisor, insurance and reinsurance broker, today reported results for the three months ended March 31, 2013. Willis Group recorded first quarter organic commissions and fees growth of 4.1%. The Group's solid performance was consistent across its three business units, with Willis North America contributing growth of 4.3%, Willis International contributing growth of 3.8% and Willis Global contributing growth of 4.1%.

Financial highlights: Three months ended March 31,
  2013 2012 Change
Reported net income per diluted share $1.24 $1.28 (3.1)%
Adjusted net income per diluted share $1.46 $1.32 10.6%
Reported operating margin 27.3% 31.3% (400) bps
Adjusted operating margin 31.7% 32.6% (90) bps
Reported commissions and fees growth 4.1% 0.6%  
Organic commissionsions and fees growth 4.1% 2.1%  

 

As previously announced, Willis Group incurred a charge during the first quarter primarily related to headcount reduction and property and systems rationalization costs. The charge amounted to $46 million and is expected to drive future savings, starting in the second quarter.

"We are very pleased with our solid results in the first quarter, spread evenly throughout our business," said Dominic Casserley, CEO of Willis Group Holdings. "We will continue working to build on the positive trajectory of our organic growth over the last two quarters. As shown by our first quarter charge, our efforts are also focused on tempering expense growth and delivering strong, sustainable results over the long term."

First Quarter 2013 Financial Results

Willis Group reported net income of $219 million, or $1.24 per diluted share, for the quarter ended March 31, 2013. These results compared with reported net income of $225 million, or $1.28 per diluted share, in the comparable period a year ago.

The tax rate in the first quarter 2013 was approximately 19%, down from approximately 24% in the comparable prior year period due to the impact from recording a valuation allowance against the Company's U.S. deferred tax assets in 2012.

Notable items, in comparing reported net income between the two periods, include the $46 million charge in the first quarter of 2013 mentioned above and, in the first quarter of 2012, $13 million related to the write-off of uncollectible accounts receivable and associated legal fees.

Excluding the after-tax impact of these two items, adjusted net income for the first quarter 2013 was $257 million, or $1.46 per diluted share, compared with $233 million, or $1.32 per diluted share, in the same period a year ago. Adjusted net income per diluted share in the first quarter of 2012 does not reflect the $0.01 negative impact of the previously disclosed change in remuneration policy.

The impact of the lower tax rate in first quarter 2013 relative to first quarter 2012, on an adjusted net income basis, was $0.10 per share. Additionally, foreign currency movements increased earnings by $0.01 per diluted share in the first quarter of 2013 compared with the first quarter of 2012.

Commissions and fees for Willis Group improved to $1,046 million in the first quarter of 2013, up from $1,005 million in the prior year quarter. Organic commissions and fees grew 4.1% excluding the net impact of acquisitions and disposals and foreign currency movements.

Investment income for Willis Group declined to $4 million in the first quarter of 2013 from $5 million in the first quarter of 2012.

Willis North America Segment

The North America segment reported 4.9% commissions and fees growth in the first quarter of 2013 compared to the first quarter of 2012. The change reflects 4.3% organic commissions and fees growth, a positive 0.4% impact from acquisitions and disposals, and a positive 0.2% impact from foreign currency movements.

Growth in commissions and fees was recorded across most of Willis North America's geographic regions. All of the major industry practices recorded positive growth. Notable among these results was the Human Capital business, which grew mid-single digits.

Willis International Segment

The International segment reported a 3.8% increase in commissions and fees compared with the same period in 2012. The change reflects 3.8% organic growth, a negative 0.1% impact from foreign currency movements, and a positive 0.1% impact from acquisitions and disposals.

Operations in Western Europe declined low-single digits in the quarter while Eastern Europe recorded mid-single digit growth. Operations in the UK recorded low single-digit growth. Latin America delivered double-digit growth, with strong growth across a number of the larger countries in the region. Asia recorded double-digit growth and Australasia grew mid-single digits.

Willis Global Segment

The Global segment, which comprises Willis Re, Specialty, Placement and Willis Capital Markets and Advisory, reported 3.5% growth in commissions and fees in the first quarter of 2013, compared with the first quarter of 2012. The change reflects 4.1% organic growth, a negative 0.4% impact from foreign currency movements, and a negative 0.2% impact from acquisitions and disposals.

Global segment growth in the quarter was led by Willis Re, which delivered high single-digit growth in the seasonally largest quarter for the business. North America reinsurance business grew double-digits, driven primarily by new business wins and International reinsurance business was up mid-single digits.

Global Specialty grew low-single digits as double-digit growth in Faber Global and the Energy unit was tempered by a decline in Financial and Executive Risk.


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