Willis Group Reports (Pre-Merger) Q4 Loss of $24M, vs. Q4 2014 Earnings of $76M

February 12, 2016

Willis Group reported a net loss of $24 million, or $(0.35) per diluted share during the fourth quarter of 2015, compared to earnings of $76 million, or $1.12 per diluted share, in the prior year quarter.

During the 12 months ended Dec. 31, 2015, Wills Group’s reported net income was $373 million, or $5.41 per diluted share, up 3.0 percent from $362 million, or $5.32 per diluted share, in the same period in 2014. Underlying net income was $441 million for the 12-month period of 2015, up 11.1 percent compared with $397 million in 2014.

Willis Group Holdings merged with Towers Watson & Co. on Jan. 4, creating Willis Towers Watson plc. The companies have separately reported their pre-merger (legacy) financial results.

(Editor’s note: this article focuses on London-based Willis’ results. Towers Watson’s results are available via the Willis Towers Watson website).

Willis Towers Watson said the two companies’ results will be consolidated for the period ending March 31, but will use legacy reporting at a segment level until the report of the second quarter results for the period ending June 30.

Willis’ fourth quarter commissions and fees were $970 million, up 3.3 percent from $939 million reported in the fourth quarter of 2014. Last year’s fourth quarter included $53 million of unfavorable foreign currency movements. Total commissions and fees also includes $51 million from net acquisitions and disposals completed during the past 12 months. Underlying commissions and fees, which exclude the impact from foreign currency movements, grew 9.5 percent.

For the full year, total reported commissions and fees were up 1.1 percent to $3.81 billion, compared with $3.77 billion during the same period in 2014. Underlying commissions and fees were up 7.6 percent, while organic growth in commissions and fees was up 3.3 percent compared to the same period a year ago.

4th Quarter Expenses

During the fourth quarter, total expenses on a reported basis increased 18.7 percent to $972 million from $819 million in the fourth quarter of 2014. Expenses include $70 million from a litigation provision, $53 million of operating costs from net acquisitions and disposals, of which $10 million was amortization of intangibles, as well as $33 million of restructuring costs related to the Willis Operational Improvement Program and $48 million of M&A transaction-related expenses, partially offset by $41 million from favorable foreign currency movements.

Casserley Comments

“Our solid fourth quarter capped a landmark year of strategic execution. We met or exceeded all of our annual targets, generated mid-single digit organic revenue growth, completed a number of transformative M&A transactions, and generated a spread of organic revenue growth to organic expense growth of 240 basis points, exceeding our 200 basis point target, through the combination of revenue growth and successful implementation of our Operational Improvement Program,” according to Dominic Casserley, Willis Towers Watson president and deputy chief executive officer, in comments on the performance of Willis Group.

“As part of the new Willis Towers Watson, we enter 2016 with solid momentum, focused on fully integrating our combined strengths into a single platform that we believe will help our clients and employees and will generate value for our shareholders.”

Source: Willis Towers Watson

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