Willis Group Reports Fourth Quarter and Full Year 2009 Results
New York, NY, February 3, 2010 — Willis Group Holdings plc (NYSE: WSH), the global insurance broker,
today reported results for the quarter and year ended December 31, 2009.
“2009 was a momentous year.” said Joe Plumeri, Chairman and Chief Executive Officer, Willis Group Holdings. “We
began in the midst of integrating our transformational HRH acquisition, facing a difficult global economy and
soft insurance market. We responded with 2 percent organic growth in commissions and fees, disciplined expense
management, successful merger integration, completion of the Gras Savoye transaction and a much stronger balance sheet.”
Highlights of the quarter ended December 31, 2009 include:
- Reported earnings per diluted share from continuing operations of $0.47; adjusted earnings per diluted share from continuing
operations of $0.47
- 4 percent reported growth in commissions and fees compared with fourth quarter
- 2 percent organic growth in commissions and fees compared with fourth quarter of
- North America segment organic growth in commissions and fees of 1 percent, sequential improvement
from third quarter of 2009
- North America segment operating margin expansion of 670 basis points
over year ago period; integration of HRH substantially completed
- Completed the reorganization of the capital
of Gras Savoye
Highlights of the year ended December 31, 2009 include:
- Reported earnings per diluted share from continuing operations of $2.58; adjusted earnings per diluted share from
continuing operations of $2.67
- 17 percent reported growth in commissions and fees compared with 2008
- 2 percent organic growth in commissions and fees compared with 2008
- Reported operating margin
of 21 percent; adjusted operating margin of 22 percent
- North America segment operating margin expansion
of 830 basis points over prior year
- Delivered North America merger integration synergies and other cost
savings of $205 million
- Delivered Shaping our Future net benefits of approximately $60 million
remaining $750 million on bridge financing
- Outlook raised to Stable by both Moody’s and Standard
- Issued $300 million of senior unsecured notes due 2019 at 7.0 percent; repurchased $160
million of 5.125 percent senior notes due July 2010
- Total debt outstanding reduced to $2.4
Fourth Quarter 2009 Financial Results
Reported net income from continuing operations for the fourth quarter of 2009 was $79 million, or $0.47
per diluted share, compared with $61 million, or $0.37 per diluted share, in the same period
a year ago. Reported net income for the fourth quarters of 2009 and 2008 was affected
by certain items which are reviewed in detail in this release, including the acquisition of Hilb
Rogal & Hobbs Company (HRH).
Excluding these items, adjusted earnings per diluted share from continuing operations were $0.47 in the fourth quarter
of 2009 compared with $0.36 in the fourth quarter of 2008. Foreign currency movements had a
negative $0.03 impact on earnings per diluted share in the fourth quarter of 2009.
Total reported revenues for the fourth quarter of 2009 were $824 million compared with $792 million for
the same period of 2008, an increase of 4 percent. Foreign currency movements increased reported revenues
by 3 percent compared with the year ago period.
Organic growth in commissions and fees was 2 percent in the fourth quarter of 2009 compared with
the fourth quarter of 2008. This growth reflected net new business won of 7 percent, partially
offset by a negative 5 percent impact from declining premium rates and other market factors. Continued
strong client retention levels and momentum from Shaping our Future growth initiatives, such as Global Placement
and Client Profitability, also contributed to organic growth in commissions and fees.
The North America segment reported 1 percent growth in organic commissions and fees in the fourth quarter
of 2009 compared with the same period of 2008, and improved sequentially from the third quarter
of 2009. With the integration of HRH substantially complete, a renewed focus on top line growth
generated a significant increase in the amount of new business in the fourth quarter compared to
a year ago. The segment results also continue to reflect headwinds from the soft insurance market
conditions and ongoing weakness in the US economy. As a result of top line growth, merger
synergies and other cost savings, operating margin expanded 670 basis points to 25.6 percent in the
fourth quarter of 2009 compared to the prior year period.
The International business segment recorded 3 percent organic growth in commissions and fees in the fourth quarter
of 2009 compared with the same period of 2008. This growth came from strong new business
and continued traction from Shaping our Future growth initiatives, which more than offset the soft rate
environment and weakness in the UK and Ireland retail market. Outside of the UK and Ireland,
the International business segment organic growth was 7 percent, primarily driven by strong growth in the
Latin America and Asia regions. Operating margin remained high at 31.3 percent, although lower than the
fourth quarter of 2008 partially due to the impact of foreign exchange and the weakness in
the UK and Ireland retail market. For the year ended December 31, 2009, operating margin remained
strong at 26.5 percent.
The Global segment, which comprises the Global Specialties, Faber & Dumas and Reinsurance divisions, recorded 1 percent
organic growth in commissions and fees in the fourth quarter of 2009 compared with the fourth
quarter of 2008. Growth was primarily driven by the Reinsurance and Global Specialties divisions, led by
continued strong performance in North America reinsurance, marine, aerospace and financial and executive risks specialties. Operating
margin was expanded 50 basis points to 12.2 percent in a seasonally light quarter, compared with
the fourth quarter of 2008.
Reported operating margin was 21.0 percent for the fourth quarter of 2009 compared with 17.0 percent for
the same period of 2008. Excluding certain items, which are reviewed in detail in this release,
adjusted operating margin was 21.1 percent for the fourth quarter of 2009 compared with 16.8 percent
for the prior year period. The improvement in the adjusted operating margin reflected solid organic growth
in commissions and fees, merger integration and other expense savings and favorable year on year foreign
Full Year 2009 Financial Results
Reported net income from continuing operations for 2009 was $436 million, or $2.58 per diluted share, compared
with $302 million, or $2.04 per diluted share, in 2008. Reported net income for the 2009
and 2008 years was affected by certain items which are reviewed in detail in this release,
including the acquisition of HRH and 2008 expense review charges for severance and other costs.
Excluding these items, adjusted earnings per diluted share from continuing operations were $2.67 for 2009 compared with
$2.55 in 2008, an increase of 5 percent. In addition, adjusted earnings from continuing operations for
2009 included a $27 million, or $0.16 per diluted share, tax credit resulting from changes to
UK tax law on repatriation of unremitted earnings of our foreign subsidiaries (described below). Excluding this
item, adjusted earnings per diluted share from continuing operations in 2009 would have been $2.51. Foreign
currency movements reduced earnings per diluted share by $0.17 in 2009.
Total reported revenues for 2009 were $3.3 billion compared with $2.8 billion for 2008, an increase of
15 percent. The increase was primarily due to the HRH acquisition, while the effect of foreign
currency translation decreased reported revenues by 4 percent.
Organic growth in commissions and fees was 2 percent in 2009 compared with 2008. This growth reflected
net new business won of 5 percent, offset by a negative 3 percent impact from declining
premium rates and other market factors.
Reported operating margin was 21.3 percent for 2009 compared with 17.8 percent for 2008. Excluding certain items,
which are reviewed in detail in this release, adjusted operating margin was 21.8 percent for 2009
compared with 21.2 percent for 2008. The improvement in the adjusted operating margin reflected solid organic
growth in commissions and fees, expense savings and favorable year on year foreign currency movement, partially
offset by lower investment income, higher pension expense and increased intangible amortization.
The reported income tax expense for 2009 was $96 million compared to $97 million for 2008. The
2009 tax expense included the release of a provision of $27 million which had been recorded
for tax that would potentially be payable should the unremitted earnings of our foreign subsidiaries be
repatriated. Following a change in UK tax law effective in the third quarter of 2009, these
earnings can now be repatriated without additional tax cost and, consequently, the provision has been released.
After adjusting the effective tax rate to exclude non-recurring items the effective underlying tax rate for the
quarter and year ended December 31, 2009 was approximately 26 percent, the same as the 2008
Income from discontinued operations, net of tax, was $2 million, or $0.01 per diluted share, for the
year ended December 31, 2009, relating to disposals of Bliss & Glennon and Managing Agency Group,
the Company’s US-based wholesale insurance operations. No net gain or loss was recognized relating to either
As of December 31, 2009, cash and cash equivalents totaled $191 million and total debt was $2.4
billion. Total debt was reduced by approximately $230 million in the fourth quarter of 2009, primarily
due to proceeds received on the completion of the Gras Savoye transaction.
Total stockholders’ equity as at December 31, 2009 was $2.2 billion.
During the fourth quarter of 2009, the Company announced the completion of a leveraged transaction with the
original family shareholders of Gras Savoye & Cie, and Astorg partners, a private equity fund, to
reorganize the capital of Gras Savoye. With the closing of the transaction, Willis now owns a
31.8 percent stake in the new holding company and has 33.3 percent of the voting rights
on the new holding company board.
Redomicile to Ireland
On December 31, 2009, the Willis Group completed the change of place of incorporation of its parent
company from Bermuda to Ireland.
As a result of this move, common shares in Willis Group Holdings Limited were cancelled and ordinary
shares in Willis Group Holdings plc were issued to all shareholders on a one-for-one basis. Willis
Group Holdings plc began trading on the New York Stock Exchange on January 4, 2010. Willis
will continue to be subject to United States Securities and Exchange Commission (SEC) reporting requirements, prepare
its financial statements and pay dividends in US dollars, and be subject to US Generally Accepted
Accounting Principles (GAAP).
Subject to the Irish High Court approving a capital reduction procedure to create distributable reserves in the
Company, a common procedure for corporate groups moving their holding companies to Ireland, the Board of
Directors has authorized a quarterly cash dividend on the Company’s ordinary shares of $0.26 per share
(an annual rate of $1.04 per share). It is intended that the dividend will be payable
on April 16, 2010 to shareholders of record on March 31, 2010.
“We are proud of the results we delivered for 2009 and especially proud of our associates around
the globe and thank them for their hard work in delivering these results,” said Joe Plumeri,
Chairman and Chief Executive Officer, Willis Group Holdings. “We will continue to run the company with
discipline and foresight, managing our expense base and strengthening the balance sheet, while investing in areas
that will drive current and future growth.”
Conference Call and Web Cast
A conference call to discuss the fourth quarter 2009 results will be held on Thursday, February 4,
2010, at 8:00 AM Eastern Time. To participate in the live teleconference, please dial (866) 803-2143
(domestic) or +1 (210) 795-1098 (international) with a pass code of “Willis”. The live audio web
cast (which will be listen-only) may be accessed at www.willis.com. This call will be available
by replay starting at approximately 10:00 AM Eastern Time, through March 6, 2010 at 11:59 PM
Eastern Time, by calling (877) 611-5293 (domestic) or +1 (203) 369-4862 (international) with no pass code,
or by accessing the website.
Willis Group Holdings plc is a leading global insurance broker, developing and delivering professional insurance, reinsurance, risk
management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around
the world. Willis has more than 400 offices in nearly 120 countries, with a global team
of approximately 20,000 Associates serving clients in approximately 190 countries. Additional information on Willis may be
found at www.willis.com.
We have included in this document “forward-looking statements’’ within the meaning of Section 27A of the Securities
Act of 1933, and Section 21E of the Securities Exchange Act of 1934, which are intended
to be covered by the safe harbors created by those laws. These forward-looking statements include information
about possible or assumed future results of our operations. All statements, other than statements of historical
facts that address activities, events or developments that we expect or anticipate may occur in the
future, including such things as the potential benefits of the redomicile to Ireland, or the Gras
Savoye transaction, our outlook, future capital expenditures, growth in commissions and fees, business strategies, competitive strengths,
goals, the benefits of new initiatives, growth of our business and operations, plans and references to
future successes are forward-looking statements. Also, when we use the words such as “anticipate’’, “believe’’, “estimate’’,
“expect’’, “intend’’, “plan’’, “probably’’, or similar expressions, we are making forward-looking statements.
There are important uncertainties, events and factors that could cause our actual results or performance to differ
materially from those in the forward-looking statements contained in this document, including the following:
- the impact of any regional, national or global political, economic, business, competitive, market and regulatory conditions
on our global business operations;
- the impact of current financial market conditions and the current credit crisis on our results of operations
and financial condition, including as a result of any insolvencies of or other difficulties experienced by
our clients, insurance companies or financial institutions;
- our ability to continue to manage our significant indebtedness;
- our ability to implement and realize anticipated benefits of the Shaping our Future initiative and any other
- material changes in commercial property and casualty markets generally or the availability of insurance products or changes
in premiums resulting from a catastrophic event, such as a hurricane, or otherwise;
- the volatility or declines in other insurance markets and premiums on which our commissions are based, but
which we do not control;
- our ability to compete effectively in our industry;
- our ability to retain key employees and clients and attract new business;
- the timing or ability to carry out share repurchases or take other steps to manage our capital
and the limitations in our long-term debt agreements that may restrict our ability to take these
- any fluctuations in exchange and interest rates that could affect expenses and revenue;
- rating agency actions that could inhibit ability to borrow funds or the pricing thereof;
- a significant decline in the value of investments that fund our pension plans or changes in our
pension plan funding obligations;
- our ability to achieve the expected strategic benefits as a result of the Gras Savoye transaction;
- the timing of any exercise of put and call arrangements with associated companies;
- changes in the tax or accounting treatment of our operations;
- the potential costs and difficulties in complying with a wide variety of foreign laws and regulations and
any related changes, given the global scope of our operations;
- our involvements in and the results of any regulatory investigations, legal proceedings and other contingencies;
- our exposure to potential liabilities arising from errors and omissions and other potential claims against us; and
- the interruption or loss of our information processing systems or failure to maintain secure information systems.
The foregoing list of factors is not exhaustive and new factors may emerge from time to time
that could also affect actual performance and results. For additional factors see the section entitled “Risk
Factors’’ included in Willis’ Form 10-K for the year ended December 31, 2008 and Form 10-Q
for the quarter ended September 30, 2009, and our subsequent filings with the Securities and Exchange
Commission. Copies are available online at http://www.sec.gov or on request from the Company as
set forth in Part I, Item 1 “Business-Available Information” in Willis’ Form 10-K.
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and
therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In
light of the significant uncertainties inherent in the forward-looking statements included in this document, our inclusion
of this information is not a representation or guarantee by us that our objectives and plans
will be achieved.
Our forward-looking statements speak only as of the date made and we will not update these forward-looking
statements unless the securities laws require us to do so. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this document may not occur, and we caution you
against unduly relying on these forward-looking statements.
This press release contains references to non-GAAP financial measures as defined in Regulation G of SEC rules.
Consistent with Regulation G, a reconciliation of this supplemental financial information to our GAAP information is
in the note disclosures that follow. We present such non-GAAP supplemental financial information, as we believe
such information is of interest to the investment community because it provides additional meaningful methods of
evaluating certain aspects of the Company’s operating performance from period to period on a basis that
may not be otherwise apparent on a GAAP basis. This supplemental financial information should be viewed
in addition to, not in lieu of, the Company’s condensed consolidated income statements for the three
and twelve months ended December 31, 2009 and balance sheet as at that date.