Willis Reports Record Q1 Results – $148 Million Net

April 29, 2004

Global insurance broker Willis Group Holdings Limited has reported record results for the quarter ended March 31, 2004. Net income was $148 million, or $0.87 per diluted share, compared with $117 million, or $0.69 per diluted share in the same period of 2003.

Other highlights included the following:
— Track record continued with seventeenth consecutive quarter of record results
— Reported revenues grew 20 percent (with 9 percent organic growth); margin expansion continued
— Capital deployed – 4 million shares repurchased, subordinated debt redeemed
— Global presence strengthened in Denmark, Italy and China

Chairman and CEO Joe Plumeri, commented: “We continue the steadfast execution of our model – build a sales culture, grow revenues, maintain expense discipline, expand margins and enhance earnings. With 17 consecutive quarters of record results, we are accumulating a strong track record and continue to build the Company for success in all market environments.”

The London-based broker said: “Total reported revenues for the quarter ended March 31, 2004 increased 20 percent to $665 million, from $555 million for the same period last year. Organic revenue growth was 9 percent, which excluded the effects of foreign currency translation (8 percent) and net acquisitions (3 percent).”

It also noted, however, as have many other insurers recently, that, “Rates continued to moderate during the quarter, with declines in some property lines and modest increases in casualty and professional liability lines. The adjusted operating margin was 35.5 percent for the first quarter of 2004 compared with 35.0 percent for the same period last year.”

Willis also reported that “At March 31, 2004, total long-term debt was $300 million, down 40 percent from $499 million a year ago. During the quarter, the Company redeemed the outstanding $370 million 9 percent senior subordinated debt (with a related premium of $17 million pre tax, or $0.06 per share after tax), and drew down $300 million against the new $450 million bank credit facility and $150 million line of credit.

“Total stockholders’ equity at the quarter end was approximately $1.3 billion, up 39 percent from a year ago. The capitalization ratio (total long-term debt to total long-term debt and stockholders’ equity) declined to 18 percent at quarter-end March 31, 2004 compared to 34 percent a year ago. During the quarter, the Company repurchased 4 million shares ($148 million) and repaid $70 million of debt at the time of the redemption. There was approximately $93 million of immediately available cash at March 31, 2004, providing significant financial flexibility to support the cash needs of the Company.

“Effective January 1, 2004, Willis acquired the remaining 70 percent interest in Willis A/S, Denmark’s largest insurance broker, with annualized revenues of approximately $50 million. Also during the quarter, the Company acquired reinsurance brokers in Denmark and Italy and received approval from the China Insurance Regulatory Commission to complete the purchase of a 50 percent equity stake in Shanghai Pudong Insurance Brokers Ltd.”

Plumeri concluded: “Willis is in great shape and we remain confident in our outlook for future growth. We reaffirm our long-term goal to grow adjusted net income per diluted share by 15 percent or better each year.”

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