S&P: Willis Group Holdings Ltd. Ratings Removed from CreditWatch and Affirmed; Outlook Negative

April 8, 2005

Standard & Poor’s Rating Services said Friday that it affirmed its ratings on Willis Group Holdings Ltd., including the ‘BBB-‘ counterparty credit rating, and removed them from CreditWatch, where they had been placed on Oct. 21, 2004.

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

“The ratings were removed from CreditWatch in response to a comprehensive agreement among Willis, the New York Attorney General, and the Superintendent of Insurance for New York to resolve issues raised by the industry-wide investigation into contingent commissions and anti-competitive actions,” explained Standard & Poor’s credit analyst Jack Reichman. The investigation of Willis focused on its practices in the purchasing, renewal, placement, or servicing of insurance for its clients.

The agreement, which is called an Assurance of Discontinuance, requires that Willis provide $50 million of payments to policyholders and agrees to refrain from certain practices that could result in conflicts of interest.

“We affirmed the ratings because we believe the financial impact of the settlement and the adverse effects of the investigation are appropriately reflected in the current rating,” Reichman added.

Willis has also reached agreement with the Attorney General of Minnesota. This agreement is also titled an Assurance of Discontinuance and constitutes a full and final resolution of all claims brought by the Attorney General of Minnesota against Willis.

The negative outlook reflects some uncertainty regarding the effects of implementation of a new business model–both at Willis specifically and in the brokerage industry in general–that does not include volume-based and contingent commission revenues and income.

The agreements with New York and Minnesota remove a great deal of uncertainty about ultimate terms of settlement with states and jurisdictions other than New York that have initiated inquiries and legal actions against Willis.

However, the negative outlook partially reflects the fact that such settlements or cessation of investigations have not yet occurred.

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