Ipswich: Willis boss hails revenue growth as review costs erode earnings

GLOBAL insurance broker Willis, whose UK operation includes a major presence in Ipswich, has reported a 4% increase in annual revenues but flat earnings for 2011.

Total reported revenues for 2011 were US$3.45billion (about �2.19bn) compared with US$3.33bn for 2010, with adjusted earnings per share from continuing operations unchanged at US$2.75.

However, reported net income from continuing operations fell to US$218million (about �139m), from US$455m in 2010, largely reflecting the impact of one-off charges relating to an operational review launched a year ago.

Willis said organic growth in commissions and fees of 2%, including higher retention of business and “modest growth” in net new business, had been offset by lower premium rates and other market factors while investment income had fallen by 18%, to US�31m (�19.8m) from US$38m.

The reported operating margin was 17.1% for 2011 compared with 22.6% for 2010, although on an adjusted basis figure was down only marginally at 22.5% against 23.0%.

Willis chairman and chief executive Joe Plumeri said: “I’m enormously proud of the work that our management team and all of our associates did to serve our clients and shareholders over the last year, a year in which difficult economic conditions prevailed in many of the geographies in which we operate and in the sectors we serve.”

However, he added that while 2011 had “included many achievements for which Willis can be proud”, levels of organic growth had shown areas “where we must improve in 2012.”

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The charges related the operational review totalled around US$180m for the year. Willis said the review had delivered cost savings of around US$80m last year, against its previous estimate of US$75m, and the annual saving going forward was now expected to total about US$135m compared with a previous estimate of US$115m to US$125m.

“A year ago, we told investors that we would review all of our businesses to better align our resources with our growth strategies, and that’s exactly what we did,” said Mr Plumeri.

“That review is expected to save us, prospectively, approximately $135 million annually, and we’ll use those savings to continue to invest in growth initiatives that position Willis to compete and win in the months and years ahead.

“I have no doubt that, in 2012, our businesses that performed well last year will remain strong, and those businesses that must strengthen will do so.”