Willis Group reports second quarter 2010 results
Willis Group Holdings plc reported results for the quarter and six months ended June 30, 2010.
“Our second quarter results continue to reflect the strength of our geographic diversity and our relentless focus on building the business,” said Joe Plumeri, Chairman and Chief Executive Officer, Willis Group Holdings, in a statement. “Organic growth in commissions and fees was 4 percent, driven by 16 percent new business growth and solid client retention. This result was in the face of a continued soft insurance market and challenging economic conditions. We continue to exercise disciplined expense management while funding investments for future growth.”
Reported net income from continuing operations for the quarter ended June 30, 2010 was $89 million, or $0.52 per diluted share, compared with $87 million, or $0.52 per diluted share, in the same period a year ago. Reported net income from continuing operations for the second quarter of 2010 was impacted by a net loss on disposal of operations of $3 million after tax, or $0.02 per diluted share, and for the second quarter of 2009 by certain items, which are detailed later in this release.
Adjusted net income per diluted share from continuing operations increased 4 percent to $0.54 in the second quarter of 2010 compared with $0.52 in the second quarter of 2009. Foreign currency movements favorably impacted earnings by $0.03 per diluted share compared with the second quarter of 2009. In addition, a pre-tax gain of $12 million, or $0.04 per diluted share, was recognized on the curtailment of the US pension plan in the second quarter of 2009.
Total reported revenues for the quarter ended June 30, 2010 were $799 million compared with $784 million for the same period last year, an increase of 2 percent. Total commissions and fees were $789 million, an increase of 2 percent from $772 million in the second quarter of 2009. Foreign currency movements unfavorably impacted reported commissions and fees by 2 percent. Investment income was $10 million in the second quarter of 2010, compared with $12 million in the second quarter of 2009. This decline was principally due to lower interest rates.
Organic growth in commissions and fees was 4 percent in the second quarter of 2010 compared with the second quarter of 2009. Net new business growth of 6 percent reflected strong new business generation of 16 percent and solid client retention. Partially offsetting net new business growth was a 2 percent negative impact from declining premium rates and other market factors.
The North America segment reported a 2 percent decline in commissions and fees in the second quarter of 2010 compared with the second quarter of 2009. Organic commissions and fees declined 1 percent in the second quarter of 2010 compared with an 8 percent decline in the same period a year ago. North America generated new business growth in the teens, with improved client retention, and also benefited from positive growth in the employee benefits practice. In addition, there was a $2.9 million favorable impact from a one-time accounting adjustment related to the HRH acquisition within the specialty businesses. The segment continues to be impacted by headwinds from soft insurance market conditions and ongoing weakness in the US economy. Operating margin was 20.5 percent in the second quarter of 2010. This compares with operating margin of 22.3 percent in second quarter of 2009, which included the pre-tax gain of $9 million from the curtailment of the US pension plan.
The International business segment reported 6 percent growth in commissions and fees and contributed 8 percent organic growth in commissions and fees in the second quarter of 2010 compared with the same period in 2009. Growth was recorded across all regions, with double- digit expansion in Latin America, Asia and Eastern Europe. The UK and Ireland retail market recorded modestly positive growth after several negative quarters. Operating margin was 23.5 percent in the second quarter of 2010.
The Global segment, which comprises the Reinsurance, Global Specialties, Faber & Dumas, and Willis Capital Markets & Advisory divisions, reported 4 percent growth in commissions and fees and 7 percent organic growth in commissions and fees in the second quarter of 2010 compared with the second quarter of 2009. Willis Capital Markets & Advisory was the primary driver of organic growth in the second quarter as a result of increased capital market activity. Reinsurance and Global Specialties also contributed positive growth in commissions and fees. Reinsurance continues to generate strong new business despite market softness, while the Global Specialties practices, especially Financial and Executive Risks and Energy, were significant contributors to organic growth in the second quarter. Operating margin was 31.8 percent in the second quarter of 2010.
