Willis Posts $225 Million Q1 Net Income; Strong Growth

April 27, 2012

Willis Group Holdings reported net income from continuing operations for the quarter ended March 31, 2012 of $225 million, or $1.28 per diluted share, compared with $35 million, or $0.20 per diluted share, in the same period a year ago.

Willis noted that the Q1 result was “impacted by a $13 million charge for write-off of uncollectible accounts receivable together with associated legal fees related to previously disclosed fraudulent activity in a stand-alone North American business.”

 It also reported that Q1 net income in 2011 “was impacted by a $97 million charge related to the 2011 operational review, $171 million make-whole amounts related to the repurchase and redemption of Senior Notes and write-off of unamortized debt issuance costs, and a $4 million gain on disposal of operations. 

“Adjusted net income from continuing operations (which excludes the after-tax impact of those items discussed above) for the quarter ended March 31, 2012 was $233 million, or $1.32 per diluted share, compared with $224 million, or $1.29 per diluted share, in the same period a year ago.  Foreign currency movements decreased earnings by $0.02 per diluted share in the first quarter of 2012 compared with the first quarter of 2011.”

Other highlights were listed as follows: 
• Reported commissions and fees increased 1 percent compared with the first quarter of 2011;
• Organic growth in commissions and fees of 2 percent; 3 percent excluding Loan Protector results;
• Reported operating margin of 31.3 percent compared to 23.7 percent in first quarter of 2011; adjusted operating margin of 32.6 percent compared to 33.0 percent in year ago quarter;
• Launched $100 million share repurchase plan.

Chairman and CEO Joe Plumeri commented: “Across Willis Group, we generated two percent organic growth in the quarter with only minimal rate tailwind. Growth at Willis this quarter was led by the Global segment, which continues to do very well. The International segment reported strong results despite uneven economic conditions in many of the larger markets in which we operate.”

He added that the North America segment “also provided positive organic growth, excluding the results from our Loan Protector unit, helped by retention that is returning to normal levels. Across the board, our associates around the world are squarely focused on growing the business – and their efforts are reflected in this quarter’s results.”

Willis reported that total reported that Q1 total revenues reached $1.013 billion compared with $1.007 billion for the same period last year, an increase of 1 percent. “Total commissions and fees were $1.005 billion in the first quarter of 2012, up from $999 million in the prior year quarter. 

“Foreign currency movements negatively impacted reported commissions and fees by 1 percent compared with the prior year period.  Organic commissions and fees increased 2 percent in the first quarter of 2012 compared with the first quarter of 2011. Loan Protector (a non-core business within the North America segment) had a negative impact on organic growth in the first quarter of 2012. Excluding the impact of Loan Protector, organic commissions and fees grew 3 percent.

“Investment income was $5 million in the first quarter of 2012, compared to $8 million in the first quarter of 2011 primarily due to declining net yields on cash and cash equivalents.” 

Plumeri noted: “The results we are posting today are encouraging and are the result of significant effort across all segments of the Company.  We have seen, however, that unexpected events, such as Loan Protector’s decline and operational or economic disruptions can significantly affect our business results. With that kind of uncertainty, it does not make sense to offer guidance on future financial results.

“We are therefore withdrawing the guidance we offered previously and will not provide it going forward.  Everyone at the Company will, nonetheless, stay squarely focused on producing the best possible results for our shareholders for the remaining three quarters of the year, and beyond.
 
Willis gave details of the earnings conference call and webcast as follows: A conference call to discuss the first quarter 2012 results will be held on Friday, April 27, 2012, at 8:00 AM Eastern Time.  To participate in the live teleconference, please dial (866) 803-2143 (domestic) or +1 (210) 795-1098 (international) with a pass code of “Willis”.  The live audio web cast (which will be listen-only) may be accessed on the company’s web site. The call will be available by replay starting at approximately 10:00 AM Eastern Time, and through May 28, 2012 at 5:00 PM Eastern Time, by calling (800) 944-3451 (domestic) or + 1 (203) 369-3877 (international) with no pass code, or by accessing the website.

Source: Willis Group Holdings (Willis Plc)

 

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