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Willis Reports Rise in Revenues and Profits for 4Q


Posted on 10 Feb 2011

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Global insurance broker Willis Group Holdings plc on Wednesday reported results for the quarter and year ended December 31, 2010, with reported revenues of $3.34 billion for 2010, up 2.5% over the prior year.

“We delivered strong organic growth of 4 percent in the fourth quarter, consistent with the organic growth that we achieved for the full year 2010. Adjusted earnings per share grew 21 percent in the fourth quarter, while adjusted operating margin remained solid as we continued to support our growth. Our Willis associates around the globe have done a great job in winning new business and supporting our clients through another year of rate and economic challenges,” said Joe Plumeri, Chairman and Chief Executive Officer, Willis Group Holdings.

Fourth Quarter 2010 Financial Results

Reported net income from continuing operations for the quarter ended December 31, 2010 was $98 million, or $0.57 per diluted share, compared with $79 million, or $0.47 per diluted share, in the same period a year ago.  Adjusted net income from continuing operations for the quarter ended December 31, 2010 was $98 million, or $0.57 per diluted share, compared with $80 million, or $0.47 per diluted share, in the same period a year ago.  Foreign currency movements reduced earnings by $0.07 per diluted share in the fourth quarter of 2010 compared with the fourth quarter of 2009.

Total reported revenues for the quarter ended December 31, 2010 were $835 million compared with $824 million for the same period last year, an increase of 1 percent.  Total commissions and fees rose 2 percent to $825 million from the fourth quarter of 2009. Investment income was $9 million in the fourth quarter of 2010, compared with $15 million in the fourth quarter of 2009, largely due to lower interest rates.

Organic growth in commissions and fees was 4 percent in the fourth quarter of 2010 compared with the fourth quarter of 2009, of which 1 percent was attributable to a change in accounting at an acquired specialty business in North America to conform to current Company accounting policy. Net new business growth of 7 percent reflected strong new business generation of 13 percent and improved client retention.  Partially offsetting this net new business growth was a 3 percent negative impact from declining premium rates and other market factors.

In the North America segment, reported and organic growth in commissions and fees were flat in the fourth quarter of 2010 compared with the fourth quarter of 2009.  The change in accounting described above resulted in a $5 million favorable impact to commissions and fees, with a corresponding 1 percent favorable impact to organic growth in commissions and fees in the fourth quarter of 2010.

The North America segment continued to record double digit new business generation, with increased client retention.  There was good growth in the Employee Benefits and Healthcare practices, and other specialty businesses. Soft insurance market conditions and ongoing weakness in the US economy continue to impact North America.  Operating margin was 25.1 percent in the fourth quarter of 2010, compared with 25.6 percent in the fourth quarter of 2009 as the benefit from new business generation was more than offset by higher incentive compensation.

The International business segment reported a 2 percent increase in commissions and fees compared with the same period in 2009, including a 5 percent unfavorable impact from foreign currency movements.  Organic growth in commissions and fees was 8 percent in the fourth quarter of 2010, led by continued double digit contributions from Latin America and Asia.  Continental Europe reported high single digit growth and the UK and Ireland retail market grew in the mid single digits.  Operating margin was 32.8 percent in the fourth quarter of 2010 compared with 31.3 percent in the year ago period, as the positive benefit from continued strong organic growth was partially offset by investments to support growth, and unfavorable foreign currency movements.

The Global segment, which comprises the Reinsurance, Global Specialties, Faber & Dumas, and Willis Capital Markets & Advisory divisions, reported 6 percent growth in commissions and fees and 6 percent organic growth in commissions and fees in the fourth quarter of 2010 compared with the fourth quarter of 2009.  Growth was primarily driven by Energy, Aerospace and Marine within the Global Specialties divisions, together with Faber & Dumas and Willis Capital Markets & Advisory. Reinsurance continued to generate strong double-digit new business growth against a challenging rate environment.  Global segment operating margin was 10.7 percent in the fourth quarter of 2010, compared with 12.2 percent in the year ago quarter. Strong growth in commissions and fees was more than offset by unfavorable foreign currency movements and lower investment income.


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