Exhibit 99.1
Willis Group Reports Strong Second Quarter
2007 Results
Earnings per Diluted Share Increased 20 Percent
Six Percent Reported Revenue Growth
Four Percent Organic Growth in Commissions and Fees
Operating Margin up 190 Basis Points to 22.0 percent
NEW YORK--(BUSINESS WIRE)--Aug. 1, 2007--Willis Group Holdings
Limited (NYSE: WSH), the global insurance broker, today reported
results for the quarter and six months ended June 30, 2007.
"Our results this quarter once again illustrate the diligent
execution of our Shaping our Future strategies for growth,
productivity and efficiency," said Joe Plumeri, Chairman and Chief
Executive Officer. "The top line is growing nicely despite the very
soft market conditions; we are realizing cost savings identified last
year, maintaining ongoing expense discipline and managing capital."
Second Quarter 2007 Financial Results
Net income for the quarter ended June 30, 2007 was USD78 million
compared with USD72 million a year ago, an increase of 8 percent.
Earnings per diluted share increased 20 percent to USD0.54 in the
quarter ended June 30, 2007, up from USD0.45 a year ago. The impact of
foreign currency translation decreased second quarter 2007 earnings
per diluted share by USD0.03 compared with the second quarter 2006.
Total reported revenues for the quarter ended June 30, 2007 rose 6
percent to USD626 million compared to USD593 million in the second
quarter 2006. The effect of foreign currency translation increased
reported revenues by 2 percent.
Organic growth in commissions and fees, which excludes market
remuneration, was 4 percent in the second quarter 2007. This growth
was attributed to net new business won of 5 percent; there was a
negative 1 percent impact from declining premium rates tempered by
other market factors such as higher commission rates, higher insured
values and changes in limits and exposures.
The International business unit contributed 7 percent organic
growth in commissions and fees in the second quarter 2007 and North
America contributed 5 percent growth. Global, which comprises
Reinsurance and Global Specialties, had zero organic growth in the
second quarter 2007 primarily due to the timing of some non-recurring
income.
Operating margin was 22.0 percent for the quarter ended June 30,
2007 compared with 20.1 percent for the same period last year, an
increase of 190 basis points. The margin improvement continued to be
driven by Shaping our Future initiatives, cost savings from the 2006
charges, good expense control and lower pension expense. This was
tempered by the negative effect of foreign currency translation in the
second quarter 2007.
We continue to estimate that the annualized net benefit from the
2006 Shaping our Future charges will be approximately USD20 million in
2007, USD30 million by 2008 and USD45 million by 2009.
Salaries and benefits expenses were USD360 million, or 57.5
percent of total revenues, in the second quarter 2007. This ratio
compares favorably with USD351 million, or 59.2 percent of total
revenues in the prior year quarter. Other operating expenses were
USD114 million, or 18.2 percent of total revenues, in the second
quarter 2007, comparable to USD108 million, or 18.2 percent of
revenues, in the second quarter 2006. Practical completion of the new
building in London was achieved at the end of the second quarter;
additional lease expense of USD7 million per quarter will be
recognized beginning third quarter 2007.
Six Months 2007 Financial Results
Net income for the six months ended June 30, 2007 was USD247
million compared with USD212 million a year ago, an increase of 17
percent. Earnings per diluted share increased 24 percent to USD1.65 in
the six months ended June 30, 2007, up from USD1.33 a year ago. The
effect of foreign currency translation increased earnings per diluted
share by USD0.01 through the six months ended June 30, 2007 compared
with the same period in 2006.
Total reported revenues for the six months ended June 30, 2007
were USD1.4 billion, an increase of 8 percent compared to the prior
year. The effect of foreign currency translation increased reported
revenues by 2 percent and net acquisitions of operations increased
reported revenues by 1 percent.
Organic growth in commissions and fees was 5 percent for the six
months ended June 30, 2007. This growth was attributed to net new
business won of 6 percent; there was a negative 1 percent impact from
declining premium rates tempered by other market factors such as
higher commission rates, higher insured values and changes in limits
and exposures.
Operating margin was 27.5 percent for the six months ended June
30, 2007 compared to 25.6 percent for the same period last year, an
improvement of 190 basis points. The margin improvement continued to
be driven by execution of Shaping our Future initiatives, good expense
control and lower pension expense.
The Company has provided for an effective underlying tax rate in
the six months ended June 30, 2007 of 30.5 percent, excluding the tax
effects of the disposal of the UK head office and share-based
compensation.
Capital Management
The Board of Directors today declared a regular quarterly cash
dividend on the Company's common stock of USD0.25 per share, an annual
rate of USD1.00 per share. The dividend is payable on October 15, 2007
to shareholders of record on September 30, 2007.
The Company made no additional share repurchases in the second
quarter 2007. For the six months ended June 30, 2007, a total of 11.5
million shares have been repurchased for USD458 million under
accelerated share repurchase programs as part of the existing USD1
billion authorization program. There is USD331 million remaining under
this authorization, which is anticipated to be utilized by the end of
2008.
In the second quarter 2007, the Company acquired Chicago-based
InsuranceNoodle, a leading internet distributor of U.S. small business
property-casualty insurance with annual revenues of approximately USD6
million. The Company also purchased an additional 17 percent holding
in Coyle Hamilton Willis, the largest insurance and re-insurance
broker, pensions, actuarial and risk management consultancy in the
Republic of Ireland, raising its total shareholding to 86 percent.
As at June 30, 2007, cash and cash equivalents totaled USD142
million, total debt was USD1.2 billion and total stockholders' equity
was approximately USD1.2 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.
"We are building a Company for success in all market environments,
delivering solid, profitable growth this quarter despite the soft
market," said Mr. Plumeri. "Our plan is to continue to execute Shaping
our Future, and drive revenue growth while maintaining our ongoing
expense discipline."
Conference Call and Web Cast
A conference call to discuss second quarter 2007 results will be
held August 2, 2007 at 8:00 a.m. Eastern Time. To participate in the
live teleconference, please dial (888) 566-5771 (Domestic) or +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 September 2, 2007
at 11:00 p.m. Eastern Time, by calling (888) 568-0906 (domestic) or +1
(203) 369-3788 (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 three and six months ended June 30, 2007.
NOTE: All figures are in USD unless otherwise stated.
WILLIS GROUP HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three months Six months
ended ended
June 30, June 30,
-------------- -------------
2007 2006 2007 2006
------- ------ ------ ------
Revenues
Commissions and fees 603 572 1,318 1,224
Investment income 23 21 47 40
------- ------ ------ ------
Total Revenues 626 593 1,365 1,264
------- ------ ------ ------
Expenses
Salaries and benefits (including share-
based compensation of 9, 5, 18, 8) 360 351 737 699
Other operating expenses 114 108 225 213
Depreciation expense and amortization of
intangible assets 17 15 33 29
Gain on disposal of UK head office (3) - (6) -
------- ------ ------ ------
Total Expenses 488 474 989 941
------- ------ ------ ------
Operating Income 138 119 376 323
Interest expense 19 9 31 18
------- ------ ------ ------
Income before Income Taxes, Interest in
Earnings of Associates and Minority
Interest 119 110 345 305
Income taxes 36 36 104 98
------- ------ ------ ------
Income before Interest in Earnings of
Associates and Minority Interest 83 74 241 207
Interest in earnings of associates, net
of tax (4) - 15 14
Minority interest, net of tax (1) (2) (9) (9)
------- ------ ------ ------
Net Income 78 72 247 212
======= ====== ====== ======
Earnings per Share
- Basic 0.55 0.46 1.68 1.35
- Diluted 0.54 0.45 1.65 1.33
======= ====== ====== ======
Average Number of Shares Outstanding
- Basic 142 157 147 157
- Diluted 145 159 150 159
======= ====== ====== ======
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.
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 June 30, 2007:
Three months ended June 30,
----------------------------------------------
%
2007 2006(1) Change
----------------- -------------- -------------
Global $186 $185 1%
North America 197 190 4%
International 220 197 12%
----------------- -------------- -------------
Commissions and fees 603 572 5%
Investment income 23 21 10%
----------------- -------------- -------------
Total revenues $626 $593 6%
================= ============== =============
Change attributable to
-----------------------------------------------
Foreign Acquisitions Organic
currency and Market revenue
translation disposals remuneration growth
------------ ------------ ------------ --------
Global 1% 0% 0% 0%
North America 0% 0% (1)% 5%
International 5% 0% 0% 7%
------------ ------------ ------------ --------
Commissions and fees 2% 0% (1)% 4%
Investment income 8% 0% 0% 2%
------------ ------------ ------------ --------
Total revenues 2% 0% 0% 4%
============ ============ ============ ========
(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 (Q2 2006 revenue reclassification of USD75
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 (Q2 2006 revenue reclassification of USD5 million).
Our prior period revenue analysis has been adjusted to reflect our new
internal reporting structure.
WILLIS GROUP HOLDINGS LIMITED
SUPPLEMENTAL FINANCIAL INFORMATION
(in millions) (unaudited)
2. Revenue analysis (continued)
The following table reconciles the percentage change in reported
revenues to organic revenue growth by business unit for the six months
ended June 30, 2007:
Six months ended June 30,
-----------------------------------------------
%
2007 2006(1) Change
----------------- -------------- --------------
Global 447 426 5%
North America 385 368 5%
International 486 430 13%
----------------- -------------- --------------
Commissions and fees 1,318 1,224 8%
Investment income 47 40 18%
----------------- -------------- --------------
Total revenues 1,365 1,264 8%
================= ============== ==============
Change attributable to
-----------------------------------------------
Foreign Acquisitions Organic
currency and Market revenue
translation disposals remuneration growth
------------ ------------ ------------ --------
Global 1% 2% 0% 2%
North America 0% 1% (1)% 5%
International 6% 0% 0% 7%
------------ ------------ ------------ --------
Commissions and fees 2% 1% 0% 5%
Investment income 7% 1% 0% 10%
------------ ------------ ------------ --------
Total revenues 2% 1% 0% 5%
============ ============ ============ ========
(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 (Q2 YTD 2006 revenue reclassification of USD145
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 (Q2 YTD 2006 revenue reclassification of USD8
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
----------------------------------
Q1 Q2 Q3 Q4 FY
------ ------ ------ ------ ------
Revenues (1)
Global 241 185 160 151 737
North America 178 190 180 208 756
International 233 197 179 239 848
------ ------ ------ ------ ------
Commissions and fees 652 572 519 598 2,341
Investment income 19 21 24 23 87
------ ------ ------ ------ ------
Total Revenues 671 593 543 621 2,428
------ ------ ------ ------ ------
Expenses
Salaries and benefits 348 351 383 375 1,457
Other operating expenses 105 108 138 103 454
Depreciation expense and
amortization of intangible assets 14 15 17 17 63
Gain on disposal of UK head office - - (99) (3) (102)
Net loss/(gain) on disposal of
operations - - 7 (3) 4
------ ------ ------ ------ ------
Total Expenses 467 474 446 489 1,876
------ ------ ------ ------ ------
Operating Income 204 119 97 132 552
Operating Income margin 30.4% 20.1% 17.9% 21.3% 22.7%
Interest expense 9 9 9 11 38
------ ------ ------ ------ ------
Income before Income Taxes,
Interest in Earnings of
Associates and Minority Interest 195 110 88 121 514
Income taxes 62 36 3 (38) 63
------ ------ ------ ------ ------
Income before Interest in Earnings
of Associates and Minority
Interest 133 74 85 159 451
Interest in earnings of
associates, net of tax 14 - 6 (4) 16
Minority interest, net of tax (7) (2) (2) (7) (18)
------ ------ ------ ------ ------
Net Income 140 72 89 148 449
====== ====== ====== ====== ======
Earnings per Share
- - Diluted 0.88 0.45 0.56 0.94 2.84
====== ====== ====== ====== ======
Average Number of Shares
Outstanding
- - Diluted 159 159 159 157 158
====== ====== ====== ====== ======
WILLIS GROUP HOLDINGS LIMITED, NON-GAAP FINANCIAL SUPPLEMENT
(in millions, except per share data)
(unaudited)
2007
---------------------
Q1 Q2 Q2 YTD
------- ------ ------
Revenues (1)
Global 261 186 447
North America 188 197 385
International 266 220 486
------- ------ ------
Commissions and fees 715 603 1,318
Investment income 24 23 47
------- ------ ------
Total Revenues 739 626 1,365
------- ------ ------
Expenses
Salaries and benefits 377 360 737
Other operating expenses 111 114 225
Depreciation expense and amortization of
intangible assets 16 17 33
Gain on disposal of UK head office (3) (3) (6)
Net loss/(gain) on disposal of operations - - -
------- ------ ------
Total Expenses 501 488 989
------- ------ ------
Operating Income 238 138 376
Operating Income margin 32.2% 22.0% 27.5%
Interest expense 12 19 31
------- ------ ------
Income before Income Taxes, Interest in Earnings
of Associates and Minority Interest 226 119 345
Income taxes 68 36 104
------- ------ ------
Income before Interest in Earnings of Associates
and Minority Interest 158 83 241
Interest in earnings of associates, net of tax 19 (4) 15
Minority interest, net of tax (8) (1) (9)
------- ------ ------
Net Income 169 78 247
======= ====== ======
Earnings per Share
- - Diluted 1.10 0.54 1.65
======= ====== ======
Average Number of Shares Outstanding
- - Diluted 154 145 150
======= ====== ======
(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, 212-915-8084
kerry.calaiaro@willis.com
or
Media:
Valerie Di Maria, 212-915-8272
valerie.dimaria@willis.com