Exhibit 99.1
Willis Group Reports Strong First Quarter 2007 Results
Earnings up 25 Percent to $1.10 per Diluted Share
Reported Commissions and Fees up 10 Percent; 6 Percent Organic Revenue Growth
Operating Margin Expansion to 32.2 Percent, up 180 Basis Points
NEW YORK--(BUSINESS WIRE)--April 25, 2007--Willis Group Holdings Limited
(NYSE: WSH), the global insurance broker, today reported results for the quarter
ended March 31, 2007.
"Our results by every measure show we are off to a solid start in 2007, and
we once again delivered good organic revenue growth despite a softening market,"
said Joe Plumeri, Chairman and Chief Executive Officer. "We continue to execute
on our Shaping Our Future strategy creating new opportunities for growth as well
as cost efficiencies. Our confidence in the Company is clearly demonstrated by
the $457 million buyback of stock in the first quarter."
Financial Results
Net income for the quarter ended March 31, 2007 was $169 million compared
with $140 million a year ago, an increase of 21 percent. Earnings per diluted
share increased 25 percent to $1.10 in the first quarter 2007 from $0.88 a year
ago. The impact of foreign currency translation increased first quarter 2007
earnings per diluted share by $0.04 compared with the first quarter 2006.
Total reported revenues for the quarter ended March 31, 2007 were $739
million compared with $671 million for the same period last year, an increase of
10 percent. The effect of foreign currency translation increased reported
revenues by 3 percent.
Organic growth in commissions and fees, which excludes market remuneration,
was 6 percent in the first quarter 2007. This growth was attributed to net new
business won; the net impact of declining premium rates was offset by other
market factors. Each business unit contributed to overall organic growth in
commissions and fees in the first quarter 2007, with Global at 3 percent, North
America at 6 percent and International at 8 percent.
Operating margin was 32.2 percent for the quarter ended March 31, 2007
compared with 30.4 percent for the same period last year, an increase of 180
basis points.
Salaries and benefits expenses were $377 million, or 51.0 percent of total
revenues, in the first quarter 2007. This compares favorably with $348 million,
or 51.9 percent of total revenues, in the first quarter 2006. Net benefits
delivered by Shaping Our Future initiatives, accretion from recent hires and
lower pension costs drove this improvement.
Other operating expenses were $111 million, or 15.0 percent of total
revenues, in the first quarter 2007. This compares favorably with $105 million,
or 15.6 percent of revenues, in the first quarter 2006. This improvement was the
result of expense discipline and benefits from Shaping Our Future initiatives.
The incremental costs of new buildings in London and New York will start from
the second quarter 2007; hence other expenses in the first quarter 2007 were
modestly below the run rate for the rest of the year.
The Company's Shaping Our Future initiatives are progressing in line with
plans and we continue to estimate that the annualized net benefit will be
approximately $20 million in 2007, $30 million by 2008 and $45 million by 2009.
The Company has provided for an effective underlying tax rate in the first
quarter 2007 of 30.5 percent, excluding the tax effects of the disposal of the
UK head office, share-based compensation and amortization of intangible assets.
Capital Management
The Board of Directors declared a regular quarterly cash dividend on the
Company's common stock of $0.25 per share, an annual rate of $1.00 per share.
The dividend is payable on July 16, 2007 to shareholders of record on June 30,
2007.
In the first quarter 2007, the Company issued $600 million of 10-year
Senior Notes at 6.20 percent. The cash proceeds of the issue were used to fund
share buy backs and to repay outstanding borrowings of $200 million under the
revolving credit facility.
The Company repurchased 11.5 million shares for $457 million under
accelerated share repurchase programs as part of its existing $1 billion
authorization program in the first quarter 2007. There is $332 million remaining
under this authorization, which is anticipated to be utilized by the end of
2008.
As at March 31, 2007, cash and cash equivalents totaled $253 million, total
debt was $1.2 billion and total stockholders' equity was approximately $1.1
billion.
Outlook
For the full year 2007, Willis expects to continue to grow organic revenue
and expand adjusted operating margin modestly.
The Company expects to deliver breakout financial performance in the next
few years. Specifically, by the full year 2010, the Company has set financial
targets of salaries and benefits expense as a percentage of total revenues to be
below 54 percent, adjusted operating margin of 28 percent or better and industry
leading organic revenue growth.
"Our plan is to continue to drive revenue growth despite softening
insurance markets, while maintaining our expense discipline," said Mr. Plumeri,
"We have shown we are executing on our Shaping our Future initiatives by
delivering profitable growth, and we are making progress towards our financial
targets."
Conference Call and Web Cast
A conference call to discuss first quarter 2007 results will be held April
26, 2007 at 8:00 a.m. Eastern Time. To participate in the live teleconference,
please dial (888) 566-5771 (Domestic) +1 (210) 839-8503 (International) with a
passcode 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 a.m., Eastern Time, and ending May 10, 2007 at 11:00 p.m.
Eastern Time, by calling (866) 508-6479 (domestic) or +1 (203) 369-1901
(international) with no passcode, or by accessing the website.
Willis Group Holdings Limited 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. Including our Associates, we
have around 300 offices in some 100 countries, with a global team of
approximately 16,000 employees serving clients in some 190 countries. Additional
information on Willis may be found on its website www.willis.com.
This press release may contain certain statements relating to future
results, which are forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results or those
anticipated, depending on a variety of factors such as general economic
conditions in different countries around the world, fluctuations in global
equity and fixed income markets, changes in premium rates, the competitive
environment and the actual cost of resolution of contingent liabilities. Further
information concerning the Company and its business, including factors that
potentially could materially affect the Company's financial results are
contained in the Company's filings with the Securities and Exchange Commission.
This press release includes supplemental financial information which may
contain 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 generally accepted accounting principles (GAAP)
information follows. 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 statements of operations for the quarter ended March 31,
2007.
WILLIS GROUP HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three months
ended
March 31,
---------------
2007 2006
------- -------
Revenues
Commissions and fees $ 715 $ 652
Investment income 24 19
------- -------
Total Revenues 739 671
------- -------
Expenses
Salaries and benefits 377 348
Other operating expenses 111 105
Depreciation expense and amortization of intangible
assets 16 14
Gain on disposal of UK head office (3) -
------- -------
Total Expenses 501 467
------- -------
Operating Income 238 204
Interest expense 12 9
------- -------
Income before Income Taxes, Interest in Earnings of
Associates and Minority Interest 226 195
Income taxes 68 62
------- -------
Income before Interest in Earnings of Associates and
Minority Interest 158 133
Interest in earnings of associates, net of tax 19 14
Minority interest, net of tax (8) (7)
------- -------
Net Income $ 169 $ 140
======= =======
Earnings per Share
- Basic $ 1.11 $ 0.89
- Diluted $ 1.10 $ 0.88
======= =======
Average Number of Shares Outstanding
- Basic 152 157
- Diluted 154 159
======= =======
WILLIS GROUP HOLDINGS LIMITED
SUPPLEMENTAL FINANCIAL INFORMATION
(in millions) (unaudited)
1. Definitions of Non-GAAP Financial Measures
We believe that investors' understanding of the Company's
performance is enhanced by our disclosure of the following non-GAAP
financial measures. Our method of calculating these measures may
differ from those used by other companies and therefore comparability
may be limited.
Organic revenue growth
Organic revenue growth excludes the impact of foreign currency
translation, acquisitions and disposals and market remuneration from
reported revenues. We use organic revenue growth as a measure of
business growth generated by operations that were part of the Company
at the end of the period.
Adjusted operating margin
Adjusted operating margin is operating margin excluding net gains
and losses on disposals and other one-time items: specifically, in
2006 we excluded our significant expenditure on Shaping Our Future
initiatives in the third and fourth quarters. We believe that
excluding these items from operating margin, along with the GAAP
measures, provides a more complete and consistent comparative analysis
of our results of operations.
2. Revenue analysis
Organic revenue growth is defined as revenue growth excluding the
impact of foreign currency translation, acquisitions and disposals and
market remuneration. The percentage change in reported revenues is the
most directly comparable GAAP measure, and the following table
reconciles this change to organic revenue growth by business unit for
the three months ended March 31, 2007:
Three months ended
March 31,
---------------------------
%
2007 2006(1) Change
-------- -------- --------
Global $ 261 $ 241 8%
North
America 188 178 6%
International 266 233 14%
-------- -------- --------
Commissions
and fees $ 715 $ 652 10%
Investment
income 24 19 26%
-------- -------- --------
Total
revenues $ 739 $ 671 10%
======== ======== ========
Change attributable to
----------------------------------------------------
Foreign Acquisitions Organic
currency and Market revenue
translation disposals remuneration growth
------------ ------------ ------------ ----------
Global 2% 3% 0% 3%
North
America 0% 0% 0% 6%
International 6% 0% 0% 8%
------------ ------------ ------------ ----------
Commissions
and fees 3% 1% 0% 6%
Investment
income 4% 2% 0% 20%
------------ ------------ ------------ ----------
Total
revenues 3% 1% 0% 6%
============ ============ ============ ==========
(1) Effective January 1, 2007, we changed our management
structure. Our UK and Irish retail operations, Willis UK and Ireland,
which were previously within our Global division, have been combined
with our previously existing international units to create a single
International segment (Q1 2006 revenue reclassification of $70
million). The new International segment incorporates all our retail
operations outside North America. Our Energy business previously
reported in our North America division is now reported within our
Global division (Q1 2006 revenue reclassification of $3 million). Our
prior period revenue analysis has been adjusted to reflect our new
internal reporting structure.
WILLIS GROUP HOLDINGS LIMITED
NON-GAAP FINANCIAL SUPPLEMENT
(in millions, except per share data)
(unaudited)
2006 2007
---------------------------------- ------
Q1 Q2 Q3 Q4 FY Q1
------ ------ ------ ------ ------ ------
Revenues (1)
Global $241 $185 $160 $151 $737 $261
North America 178 190 180 208 756 188
International 233 197 179 239 848 266
------ ------ ------ ------ ------ ------
Commissions and fees 652 572 519 598 2,341 715
Investment income 19 21 24 23 87 24
------ ------ ------ ------ ------ ------
Total Revenues 671 593 543 621 2,428 739
------ ------ ------ ------ ------ ------
Expenses
Salaries and benefits 348 351 383 375 1,457 377
Other operating expenses 105 108 138 103 454 111
Depreciation expense and
amortization of intangible
assets 14 15 17 17 63 16
Gain on disposal of UK head
office - - (99) (3) (102) (3)
Net loss/(gain) on disposal
of operations - - 7 (3) 4 -
------ ------ ------ ------ ------ ------
Total Expenses 467 474 446 489 1,876 501
------ ------ ------ ------ ------ ------
Operating Income 204 119 97 132 552 238
Operating Income margin 30.4% 20.1% 17.9% 21.3% 22.7% 32.2%
Interest expense 9 9 9 11 38 12
------ ------ ------ ------ ------ ------
Income before Income Taxes,
Interest in Earnings of
Associates and Minority
Interest 195 110 88 121 514 226
Income taxes 62 36 3 (38) 63 68
------ ------ ------ ------ ------ ------
Income before Interest in
Earnings of Associates and
Minority Interest 133 74 85 159 451 158
Interest in earnings of
associates, net of tax 14 - 6 (4) 16 19
Minority interest, net of tax (7) (2) (2) (7) (18) (8)
------ ------ ------ ------ ------ ------
Net Income $140 $72 $89 $148 $449 $169
====== ====== ====== ====== ====== ======
Earnings per Share
- - Diluted $0.88 $0.45 $0.56 $0.94 $2.84 $1.10
====== ====== ====== ====== ====== ======
Average Number of Shares
Outstanding
- - Diluted 159 159 159 157 158 154
====== ====== ====== ====== ====== ======
(1) As described in Note 2, our prior period revenue analysis has
been adjusted to reflect our 2007 internal reporting structure.
CONTACT: Willis Group Holdings Limited
Investors:
Kerry K. Calaiaro, +1 212 837-0880
kerry.calaiaro@willis.com
or
Media:
Dan Prince, +1 212 837-0806
daniel.prince@willis.com