Willis has reported 3rd quarter results.
Highlights are:
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Reported earnings per diluted share from continuing operations of $0.15 compared to $0.34 in third quarter of 2011; adjusted earnings per diluted share from continuing operations of $0.22 compared to $0.41 in year ago quarter;
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Reported commissions and fees decreased 1% compared with the third quarter of 2011;
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Organic growth in commissions and fees of 2%;
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Reported operating margin of 9.3% compared to 11.8% in third quarter of 2011; adjusted operating margin of 10.9% compared to 13.8% in year ago quarter;
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Repurchased 1.16 million shares for approximately $42m during the quarter; completes $100m 2012 repurchase programme.
“Our organic growth this quarter of 2%, which includes strong performances in a number of areas, offers encouraging signs that Willis is moving past a range of issues that have affected our comparable results quarter-over-quarter,” said Joe Plumeri, chairman and ceo of Willis Group Holdings. “While we aimed to do better, the 5% organic growth for International–aided by an impressive turnaround for our UK business and the flat results for North America–are both well improved from the prior quarter. The organic growth of 3% for Willis Global, while demonstrating excellent performance in many areas, also highlights some of the comparables that dragged on our results broadly across Willis this quarter. These comparables and other events warrant further elaboration,” Plumeri added.
“For example, a year ago, we benefitted from a number of one-off items throughout the group that were unlikely to repeat this year. Those unusual benefits included $5m from a reinsurance profitability initiative; $5m from the release of funds related to potential legal liabilities; $3m of revenues related to the previously disclosed fraudulent activity in Chicago; and net beneficial tax adjustments that were significantly higher than what was recorded this quarter. In addition, two items outside of our operational control, declines in investment income and our associates line for Gras Savoye, deducted $3m and $12m, respectively, from our earnings this quarter against a year ago. Taken together, it’s important to highlight that all of these items had a significant impact on earnings in the third quarter of 2011 and created an uneven comparison from this quarter to the prior year.
A broad picture of the issues that coloured our results also includes the deferral of some expected revenues from the third quarter into the fourth quarter and beyond. These include a number of transactions with significant revenue attached to them involving our Willis Capital Markets & Advisory unit, and other one-off deals in our businesses, that were pushed back or otherwise delayed.
During twelve years of growth and shareholder return during my tenure, we’ve enjoyed periods when we got the breaks and others, like the last few quarters, when we’ve recorded positive results even against the overhang from sizable non-recurring items. As we compete vigorously to retain business, win new accounts and minimize our costs during my final quarter as ceo, we believe that these negative comparables are now largely receded. I am very confident that a few months from now, when Dominic Casserley and Steve Hearn take over, they’ll steer a strong and streamlined company that is no longer working against the tide."
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