![]() May 2014 I Barclays Americas Select Franchise Conference 2014 Willis Group Holdings Steven Hearn, Deputy CEO Willis Group Exhibit 99.1 |
![]() Disclaimer Important disclosures regarding forward-looking statements 2 Barclays Americas Select Franchise Conference 2014 These presentations contain certain “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, included in this document that address activities, events or developments that we expect or anticipate may occur in the future, including such things as our outlook, potential cost savings and accelerated adjusted operating margin and adjusted earnings per share growth, 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 ‘aim’, ‘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, environmental or regulatory conditions on our global business operations; the impact of current global economic conditions on our results of operations and financial condition, including as a result of those associated with the Eurozone, any insolvencies of or other difficulties experienced by our clients, insurance companies or financial institutions; our ability to implement and fully realize anticipated benefits of our new growth strategy and revenue generating initiatives; our ability to implement and realize anticipated benefits of any expense reduction initiative, including our ability to achieve expected savings from the multi-year operational improvement program as a result of unexpected costs or delays and demand on managerial, operational and administrative resources and/or macroeconomic factors affecting the program; volatility or declines in insurance markets and premiums on which our commissions are based, but which we do not control; our ability to develop and implement technology solutions and invest in innovative product offerings in an efficient and effective manner; our ability to continue to manage our significant indebtedness; our ability to compete in our industry, including any impact if we continue to refuse to accept contingent commissions from carriers in the non-Human Capital areas of our retail brokerage business our ability to develop new products and services; 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; our ability to retain key employees and clients and attract new business; the timing or ability to carry out share repurchases and redemptions the timing or ability to carry out refinancing 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 actions; fluctuations in our earnings as a result of potential changes to our valuation allowance(s) on our deferred tax assets; any fluctuations in exchange and interest rates that could affect expenses and revenue; 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; rating agency actions, including a downgrade to our credit rating, that could inhibit our ability to borrow funds or the pricing thereof and in certain circumstances cause us to offer to buy back some of our debt; a significant decline in the value of investments that fund our pension plans or changes in our pension plan liabilities or funding obligations; |
![]() Disclaimer 3 Barclays Americas Select Franchise Conference 2014 Important disclosures regarding non-GAAP measures our ability to achieve anticipated benefits of any acquisition or other transactions in which we may engage, including any revenue growth or operational efficiencies; our ability to effectively integrate any acquisition into our business; our inability to exercise full management control over our associates, such as Gras Savoye; our ability to receive dividends or other distributions in needed amounts from our subsidiaries; changes in the tax or accounting treatment of our operations and fluctuations in our tax rate; any potential impact from the US healthcare reform legislation; our involvement in and the results of any regulatory investigations, legal proceedings and other contingencies; underwriting, advisory or reputational risks associated with non-core operations as well as the potential significant impact our non-core operations (including the Willis Capital Markets & Advisory operations) can have on our financial results; 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, data security breaches or failure to maintain secure information systems; impairment of the goodwill in one of our reporting units, in which case we may be required to record significant charges to earnings. . 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 information see also Part I, Item 1A “Risk Factors” included in Willis’ Form 10-K for the year ended December 31, 2013, 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. 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 presentation, 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 presentation may not occur, and we caution you against unduly relying on these forward-looking statements. of such information is provided below and a reconciliation of certain of such items to GAAP information can be found in our periodic filings with the SEC. Our method of calculating these non-GAAP financial measures may differ from other companies and therefore comparability may be limited. This presentation contains references to "non-GAAP financial measures" as defined in Regulation G of SEC rules. We present these measures because we believe they are of interest to the investment community and they provide 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 generally accepted accounting principles (GAAP) basis. These financial measures should be viewed in addition to, not in lieu of, the Company’s condensed consolidated income statements and balance sheet as of the relevant date. Consistent with Regulation G, a description Important disclosures regarding forward-looking statements continued |
![]() Global risk adviser and broker 4 Barclays Americas Select Franchise Conference 2014 Commission and fee mix ~ 70% / 30% Clients Globally diverse client base in >150 countries Segmented: Large corporates, small and middle market Carriers Placed ~$50 billion in premium in 2013 More than 2,500 carrier relationships Adviser Broker Broad P&C Specialty Human Capital & Benefits Reinsurance Capital Markets Analytics |
![]() 2013 revenue - $3.7 billion Global International Global risk adviser and broker 5 Barclays Americas Select Franchise Conference 2014 4.9% organic commissions and fees growth 19.4% adjusted operating margin $2.64 adjusted EPS $561 million cash flow from operations 2013 metrics • With roots dating to 1828, Willis operates today on every continent, with more than 18,000 employees in over 400 offices • Across geographies, industries and specialties, Willis provides its local and multinational clients with resilience for a risky world • Willis is known for its market-leading products and professional services in risk management and risk transfer • Willis experts rank among the world’s leading authorities on analytics, modelling and mitigation strategies at the intersection of global commerce and extreme events North America 25% 37% 38% |
![]() Investment highlights 6 Operate in attractive growth markets • Long-term structural drivers – GDP, trade, inflation, demographics • Growing insurance and broking penetration in developing markets • Expanding set of risks: climate, cyber, health Highly diversified business • Geographically diversified • Clients across all segments and industries • 85% P&C, 15% Human Capital & Benefits Solid Operating Performance • Improved organic commissions and fees growth across the business • Solid adjusted operating income and EBITDA margins • Strong and growing cash generation Barclays Americas Select Franchise Conference 2014 |
![]() Our growth opportunities 7 • Faster growth geographies, industries and sectors • Latin America, Asia, Reinsurance, Global Wealth Solutions • Global healthcare and demographic changes • The Willis Advantage exchange in the U.S. • Growing employee benefits demand across the world • Connectivity between businesses • New and existing insurance capital • Global360 • Disciplined approach to M&A opportunities • Gras Savoye • Expanding list of other options • Disciplined NPV process Barclays Americas Select Franchise Conference 2014 |
![]() Refining our segment approach: Large Corporates 8 Opportunity: • Number of companies in U.S. with annual sales of >$1 billion grew 5% 2010 - 2012 • Commissions and fees paid by the same group grew 10% over that period Approach: • Focus on products and industries where we can win • Develop deep analytical insights • Team approach and compensation model • Bringing all of Willis to our clients • Selectively invest in talent focused on this segment Barclays Americas Select Franchise Conference 2014 |
![]() Refining our segment approach: Small and Middle Market clients 9 Opportunity: • Small proportion of revenues today • Drive profitability and growth Approach: • More cost effective model to improve profitability • Manage as a separate practice in North America with national leadership • Use insurance facilities to simplify placement model • Build out Willis Networks in Europe • Divest SME business where we do not have a competitive advantage Barclays Americas Select Franchise Conference 2014 |
![]() Accelerating our Human Capital & Benefits strategy 10 Opportunity: • Over $500 million of Willis revenue globally in 2013 • Opportunity to take market share in disaggregated U.S. market, driven by complex healthcare reform act • Willis employee benefits business in Europe is growing faster than P&C • Emerging markets (e.g., China and Brazil) provide substantial growth opportunities • Opportunity to double revenue in medium term through organic and inorganic growth Approach: • Announced global Human Capital & Benefits practice • Focus on client segments and industries where we can win • Healthcare focus in U.S.; mixed healthcare and pensions elsewhere • Service to multinationals in global benefits programs • Select M&A opportunities (e.g. Gras Savoye has significant benefits business) Barclays Americas Select Franchise Conference 2014 |
![]() Refining our approach to inorganic growth 11 Barclays Americas Select Franchise Conference 2014 Opportunity: • Inorganic growth will supplement our organic growth to drive mid-teens shareholder returns over the medium term Approach: • Meaningful uptick in number of transactions being evaluated • Seek value-additive acquisitions (quality, market leadership, growth), maintaining financial discipline (NPV positive) • Current focus includes: • Emerging markets • Human Capital & Benefits • Reinsurance • Specialisms (product, industry) • Filling geographic gaps • Willis often preferred buyer due to attractive culture |
![]() Refining our approach to inorganic growth: Gras Savoye 12 • Largest provider of insurance brokerage in France with a multi-specialist and integrated positioning and leading African and Eastern European franchises • Passes many qualitative tests for which we evaluate targets: • Quality • Market leadership • Emerging markets exposure • Human Capital & Benefits • Geographic gaps (e.g., France, Africa, Middle East, Asia) • Cost restructuring complete in 2013 • Opportunity now to grow revenues and EBITDA • Potential for post-acquisition revenue and cost synergies • Final quantitative test in 2015 Barclays Americas Select Franchise Conference 2014 |
![]() Operational improvement program- expected savings and charge summary 13 Barclays Americas Select Franchise Conference 2014 2014 2015 2016 2017 2018 + Expected savings $5 $45 $135 $235 Cumulative savings (2014-2017) $5 $50 $185 $420 Annualized savings (2018 and beyond) $300 Total expected charge (2014-2017) $410 Total charges, actual savings and timing may vary positively or negatively from these estimates due to changes in the scope, underlying assumptions or execution risk of the restructuring plan throughout its duration. $ million (estimated) We will report regularly on realized savings and actual charges 70% 30% Source of savings Estimated split Real estate, information technology and other areas Role relocation and reduction |
![]() Operational improvement program - key levers and target operational outcomes 14 Barclays Americas Select Franchise Conference 2014 Key levers Target outcomes over life of program Relocation of roles • Minimum 3,500 support roles moved from higher to lower cost locations • Ratio of total employees in higher / lower cost locations shifted from current 80:20 to 60:40* • Use proven existing lower cost locations in Mumbai, Ipswich and Nashville. Explore further sites in Europe and Latin America • Some reduction in support roles Improved use of real estate • Redesign and rationalization of office space in line with modern professional service firm standard • Reduced ratio of seats to employees* • Reduced average total square footage of floor space per employee* IT transformation • Reduced complexity, reduced duplication of operational systems to improve client service and organizational performance * Key operational metrics that will be reported regularly |
![]() Strategic benefits of realized program 15 Barclays Americas Select Franchise Conference 2014 Key levers Target outcomes over life of program Step-up in operational efficiency • Resources rebalanced to optimal locations • Enhanced operational excellence in systems • Reduce our operational cost base Continued investment for growth • A majority of savings expected to be reflected in earnings • Potential for remainder of savings to be invested to support growth Reinforced commitment to positive spread between revenue growth and expense growth • Growing revenues with positive operating leverage to improve cash flow and deliver compelling shareholder returns |
![]() Objective of mid-teens total shareholder return over medium term 16 Barclays Americas Select Franchise Conference 2014 Targeting mid-single digit organic revenue growth Targeting minimum 70 bps of positive spread - adjusted basis Flattening capital expenditures and pension funding Invest in the business for growth M&A Generate a steadily rising dividend Repurchase shares 2013 / 2014 Improving cash generation |
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![]() 18 Important disclosures regarding Non-GAAP measures: 2013 Commissions and fees growth Barclays Americas Select Franchise Conference 2014 FY Reported Growth 5.1% Acquisitions & Disposals / other 0.5% Foreign Currency Movements -0.3% Organic Growth 4.9% Willis Group Holdings |
![]() 19 (In millions) FY 2013 Operating Income $663 - Excluding: - Fees related to the extinguishment of debt 1 - Expense reduction initiative 46 Adjusted Operating Income $710 Operating Margin 18.1% Adjusted Operating Margin 19.4% Important disclosures regarding Non-GAAP measures: Adjusted operating income Barclays Americas Select Franchise Conference 2014 |
![]() 20 (In millions) FY 2013 Net Income $365 - Excluding: - Fees related to the extinguishment of debt 1 - Loss on extinguishment of debt 60 - Expense reduction initiative 38 - Deferred tax valuation allowance 9 - Net (gain) loss on disposal of operations (1) Adjusted Net Income $472 Diluted shares outstanding 179 Net Income per diluted share $2.04 Adjusted Net Income per diluted share $2.64 Important disclosures regarding Non-GAAP measures: Adjusted net income Barclays Americas Select Franchise Conference 2014 |