S&P Raises Willis Group Counterparty Credit Rating

September 24, 2003

Standard & Poor’s Ratings Services said that it raised its counterparty credit rating on Willis Group Holdings Ltd. to ‘BBB-‘ from ‘BB+’ based on Willis’s consistent and improved operating performance across its main business segments, significantly improved operating fundamentals as measured by cash flow from operations and expense discipline, and continued improvement in coverage and leverage measures following the company’s IPO in June 2001. Offsetting, these strengths are the lack of earnings diversification outside of traditional insurance brokerage revenues and lack of a sustained track record throughout the underwriting cycle.

Standard & Poor’s also said that the outlook on Willis is stable.

“Though Willis has benefited from the current hard property/casualty market, the company has exhibited improved fundamentals that have materially contributed to its improved operating performance,” Standard & Poor’s credit analyst Donovan Fraser said. “This rating action moves the ratings to investment-grade level.”

Willis has generated strong top-line growth, both organically and as a beneficiary of the property/casualty hard market, while also paying attention to the bottom line. As the third-largest global and fourth-largest U.S. insurance broker, Willis has been able to grow its top-line across each of its three major business segments. Standard & Poor’s considers Willis’s business position to be strong, with more than $1.7 billion of total revenue in 2002. Willis has a true global presence, as demonstrated by a team of about 13,000 associates located in more than 100 countries worldwide.

As of June 30, 2003, its Global, North American, and International business segments generated 52 percent, 32 percent, and 16 percent of revenue, respectively. In 2003 and 2002, the company continued its strategic divestiture of noncore entities while increasing its concentration in insurance brokerage operations. Though Willis has true geographic diversification, Standard & Poor’s believes that the company’s primary focus on insurance brokerage could cause greater earnings volatility because of the company’s exposure to the vagaries of the property/casualty insurance underwriting cycle.

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