Global insurance broker Willis Group Holdings Limited posted strong results for the quarter and year ended December 31, 2006, reporting that commisions and fees increased by seven percent in 2006 up from zero percent in 2005.
Separately, the Board of Directors approved a 6.4 percent increase in the regular quarterly cash dividend on the Company’s common stock to $0.25 per share, an annual rate of $1.00 per share. The dividend is payable on April 16, 2007 to shareholders of record on March 31, 2007.
Commenting on today’s results, Chairman and CEO Joe Plumeri stated: “Our results for 2006 were just what we said they would be: our organic revenue growth was strong, our operating margin expanded and our salaries and benefits to revenues decreased. In addition, earnings per share grew more than 18 percent for the year (excluding certain adjustments). We remain committed to executing the Shaping Our Future strategy because this focus has already served us well.”
Willis noted: “Throughout 2006, the Company’s Shaping Our Future strategy has progressed in line with expectations. Willis has made significant progress in targeted growth areas including Employee Benefits, Energy, Construction and Financial Institutions. The Company continues to benefit from its focus on the Client Advocacy program, client profitability, remodeling the London platform, the rollout of the Willis Client Service Platform and the International efficiency review. In addition, reorganization within Global Operations, Willis UK and International, as well as in the US, is strengthening our structure and framework enabling the Company to drive forward.”
Fourth Quarter 2006 Financial Results
Net income for the fourth quarter was $148 million, or $0.94 per diluted share, compared with net income of $55 million, or $0.35 per diluted share in the same period of 2005. Total revenues for the period were $621 million, compared with $562 million for the same period last year, an increase of 10 percent.
Net income for the year ended December 31, 2006 was $449 million, or $2.84 per diluted share, compared with a reported net income of $281 million, or $1.72 per diluted share in 2005. Willis said the “results for the year ended December 31, 2006 were significantly affected by the gain on the sale of the Company’s London headquarters, spending on Shaping Our Future initiatives and, for the year ended December 31, 2005, by regulatory settlements and related expenses, severance costs, other provisions and net gain on the disposal of operations.”
Total reported revenues for 2006 were $2.428 billion compared with $2.267 billion for the same period last year, an increase of 7 percent.
Willis said it expects continued growth in 2007, as it continues “to grow organic revenue and expand adjusted operating margin modestly.” The Company also said it “expects to deliver breakout financial performance in the next few years. Specifically, by the full year 2010, the Company has set financial targets of salaries and benefits expense as a percentage of total revenues to be below 54 percent, adjusted operating margin of 28 percent or better and industry leading organic revenue growth.”
“As we continue to execute on the Shaping Our Future strategy, we are positioning ourselves for success in the next chapter,” Plumeri concluded. “We are well on our way to meeting our 2010 financial goals for continued profitable growth.”
The full report, including additional information and a replay of the investors conference call, may be accessed at: www.willis.com. The call will be available by replay until February 22, 2007 at 5:00 p.m. Eastern Time, by calling (800) 224-1285 (domestic) or +1 (402) 220-3691 (international) with no passcode, or by accessing the website.