Willis Q3 Results Show Declines; 9-Month Increase

October 28, 2004

Willis Group Holdings Limited reported that net income for the third quarter of 2004 was $75 million, or $0.45 per diluted share, compared with $99 million, or $0.59 per diluted share, a year ago. The international broker’s net income for the nine months ended September 30, 2004 was $319 million, or $1.89 per diluted share, compared to $296 million, or $1.75 per diluted share, a year ago.

Willis noted that in both cases the figures were affected by “non-cash compensation for performance-based stock options, a related one-time tax benefit arising from a change in UK tax legislation in 2003, and net gain on disposal of operations.” When these items are excluded Willis third quarter figures show adjusted net income increased 24 percent to $77 million for the quarter ended September 30, 2004 from $62 million in 2003.

“Total reported revenues for the quarter ended September 30, 2004 increased 8 percent to $490 million, from $452 million for the same period last year. Organic revenue growth was 4 percent, which excluded the effects of foreign currency translation (2 percent) and net acquisitions (2 percent),” said the announcement. “The adjusted operating margin was 23.1 percent for the third quarter of 2004 compared with 23.0 percent for the same period last year.

“Total reported revenues for the nine months ended September 30, 2004 increased 13 percent to $1,687 million, up from $1,499 million for the corresponding period in 2003, or 6 percent on an organic basis. The adjusted operating margin was 29.7 percent through the nine months to September 2004, compared with 29.0 percent for the same period last year.”

Chairman and CEO Joe Plumeri noted: “We saw continued success this quarter, despite a tough business environment. We continued to build a sales culture, grow revenues, maintain expense discipline, and enhance earnings, despite a continued decline in rates across most lines of insurance in the third quarter.”

He also stressed Willis’ commitment to reforming suspect business practices. Plumeri said the company had been the “first broker in the industry to abolish contingent commissions and is strongly committed to maintaining our leadership role in the industry as client advocates.”

“Our new Client Bill of Rights clearly describes for clients how we do business and complements our Client Advocate Program to ensure we effectively represent our clients’ needs. We are extremely pleased with how positively clients have responded to these measures,” Plumeri added.

The complete financial report is available on the company’s Web site at: http://www.willis.com.

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