Willis more than doubles profit

Willis has announced profits more than doubled in its second quarter to $87m as commission and fees grew.

Financial highlights (2008 in brackets)

• Commissions and fees $772 ($641m) half year: $1,687m ($1,413m)
• Total Revenues $784 ($661m) half year: $1,714m ($1,456m)
• Operating Income $165m ($77m) half year: $439m $302m)
• Net Income $87m ($39m) half year: $280m $205m
• Organic growth in commissions and fees 1%

“Willis’ strength lies in its business diversity. We continue to see excellent results from our International and Global segments, and this is bolstering our overall performance in the face of difficult economic conditions, particularly in the US, UK and Ireland,” said Joe Plumeri, chairman and CEO.

“The HRH integration continues to go better than expected, with synergies tracking ahead of schedule. We continue to run our company with discipline and foresight, implementing strict cost controls, right sizing for the current environment, and investing in areas that will drive current and future growth.”

By sector

International business 5% organic growth. Shaping our Future growth initiatives more than offset the soft rate environment and weakness in the UK and Ireland retail market. Double-digit growth in Denmark, Spain, Poland and Russia, and Venezuela and Argentina.

North America segment 8% percent decline in organic commissions and fees. Soft insurance market conditions, as well as increased weakness in the US economy, which has especially impacted the US Construction and Employee Benefits practices. The operating margin in North America expanded 660 basis points to 22.3% in the second quarter of 2009 compared to the second quarter of 2008 as a result of HRH integration synergies, expense management, and $9m of the US pension curtailment gain.

Global segment, which comprises Global Specialties, Faber & Dumas and Reinsurance, 7% organic growth. Double-digit growth in reinsurance driven by International and North America reinsurance while Global Specialties’ growth was slightly negative due to the effects of global economic weakness, specifically in energy and financial and executive risks.

Stanford legal cases

Willis admitted one of its subsidiaries has been sued in federal courts in Texas and Florida by plaintiff lawyers acting on behalf of Mexican and South American investors in Stanford Financial Group.

A Willis employee has also been named in the Texas suit and Willis has separately received a demand letter from a Texas law firm, in advance of commencing litigation.

The complaints allege that Willis aided Stanford's efforts to sell certificates of deposit by issuing to Stanford certain letters regarding the insurance policies that Willis placed for the firm. The plaintiffs are collectively seeking damages in excess of $1 billion.??

The Company said that it will defend itself vigorously. The Company does not believe that any Willis employee knew that Stanford was engaged in fraudulent activity, and it is undertaking a full investigation of the facts so it can address this matter as expeditiously as possible.

Plumeri confident

Plumeri said. “We have always run this company with discipline, and that continues to pay off in strong operating margins, as we keep a tight control on expenses and maintain our business at the right size for the current environment. Importantly, we remain ahead of plan on achieving HRH integration synergies, and we continue to invest in Shaping our Future. Accelerating growth remains our number one priority.”