Willis Posts $89 Million Q3 Net Income

October 27, 2006

Global broker Willis Group Holdings Limited reported net income for the quarter ended September 30, 2006 of $89 million, or $0.56 per diluted share, compared with net income of $45 million, or $0.28 per diluted share, a year ago.

“The results for the quarter ended September 30, 2006 were significantly affected by the gain on the sale of the Company’s London headquarters and spending on Shaping our Future initiatives,” said the announcement. Excluding those items adjusted net income was $57 million or $0.36 per diluted share compared with reported (and adjusted) net income of $45 million, or $0.28 per diluted share, for the same period last year.

Commenting on the results, Joe Plumeri, Chairman and CEO stated: “We are extremely proud of our quarterly results and our performance through the first nine months of 2006. We remain committed to delivering profitable growth which we demonstrated again this quarter, with our strong organic growth in commissions and fees of 8 percent coupled with our continued margin expansion.”

Willis’ announcement, noted: “Total reported revenues for the quarter ended September 30, 2006 were $543 million, compared with $487 million for the same period last year, an increase of 11 percent. The effect of foreign currency translation increased reported revenues by 2 percent and net acquisitions by 1 percent.

“Organic growth in commissions and fees, which excludes market remuneration, was 8 percent in the third quarter 2006. Each business unit contributed to overall organic growth in commissions and fees in the quarter with Global at 9 percent, North America at 7 percent and International at 9 percent.

“Reported operating margin was 17.9 percent for the quarter ended September 30, 2006. Excluding the gain on the sale of the Company’s London headquarters and Shaping our Future initiative expenses, adjusted operating margin was 15.1 percent for the third quarter of 2006 compared with 13.6 percent for the same period last year.

“The reduction of market remuneration, as well as changes to the quarterly phasing of incentive compensation in 2006, negatively impacted the year-over-year comparison of adjusted operating margin by approximately 1.5 percentage points in the third quarter 2006 compared to the third quarter 2005. Excluding these items, adjusted operating margin improved by approximately 3 percentage points.

“Salaries and benefits expense as reported was $383 million or 70.5 percent of total revenues in the third quarter 2006; excluding Shaping our Future initiative expenses, they were $340 million or 62.6 percent of total revenues. This compares favorably with $319 million or 65.5 percent of total revenues in the third quarter 2005.

For the first nine months of 2006 Willis reported net income of $301 million, or $1.89 per diluted share, compared with a reported net income of $226 million, or $1.38 per diluted share, a year ago. Theses results were similarly impacted by the Company’s gain on the sale of its London headquarters and spending on Shaping our Future initiatives, as well as, “regulatory settlements and related expenses, severance costs and other provisions. Excluding those items adjusted net income was $269 million, or $1.69 per diluted share, compared with adjusted net income of $254 million, or $1.55 per diluted share, for the same period last year.” Total reported revenues for the nine months ended September 30, 2006 were $1.807 billion compared with $1.705 billion for the same period last year, an increase of 6 percent.”

Willis explained that in September 2006 it “completed the sale of its current London headquarters at Ten Trinity Square. The building has been leased back until the Company occupies its new London headquarters on Lime Street which is expected to be in early 2008. Gross proceeds of the sale were $191 million, of which 25 percent was received in cash upon completion of the transaction with the balance due in November 2006. The total pre-tax gain was $121 million: $99 million ($91 million or $0.57 per diluted share after tax) was recognized in the third quarter 2006 and the remainder will be recognized over the life of the lease.” The Shaping our Future Initiative Expenses totaled $84 million ($59 million or $0.37 per diluted share after tax) in the third quarter 2006 in connection with the launch of Shaping our Future initiatives for profitable growth.”

The complete report and a replay of the investors and analysts conference call is available on the Group’s Website at: www.willis.com. A replay of the conference is also available until November 9, 2006 by calling (800) 234-3897 (domestic) or +1 (402) 220-9689 (international) with no passcode.

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