Willis Group Holdings plc
) reported first-quarter 2012 adjusted net income from continuing
operations of $1.32 per share, beating the Zacks Consensus Estimate
by 6 cents. Results were 2.3% higher than $1.29 earned in the
year-ago quarter. Adjusted net income from continuing operations
was $233 million, up 4% from $224 million in the prior-year
The improvement resulted from improved top line coupled with
Adjusting for write-off of uncollectible accounts receivable
balance and legal fees of $8 million or 4 cents a share, the
company reported net income of $225 or $1.28 per share, a
substantial improvement from $35 million or 20 cents in the
Total revenue in the quarter inched up 0.6% year over year to
$1.01 billion. The improvement came on the back of a slight
increase in commissions and fees. Revenues, however, lagged the
Zacks Consensus Estimate of $1.03 billion.
Commissions and fees crept up 0.6% year over year in the
quarter, based on higher numbers at the Global and International
Investment income for Willis in the quarter declined 37% from
the year-ago quarter to $5 million, on the back of lower net yields
on cash and cash equivalents.
Total expense decreased 9.4% year over year to $696 million,
primarily due to a decline in salaries and benefits.
In the quarter under review, adjusted operating income was $330
million, down 1% year over year. Operating margin contracted 40
basis points to 32.6%.
Organic growth in commissions and fees was 5% in the quarter, while
reported growth was 4%.
Organic growth was primarily driven by high single-digit
increase in Reinsurance business, which benefited from new business
growth and improved rate environment.
Operating margin was 48.1%, contracting 80 basis points year
: Commissions and fees declined 2% year over year on an organic
basis while it slipped 3% on a reported basis. Soft performance of
Loan Protector business affected organic growth.
Operating margin in the quarter expanded 110 basis points.
: Commissions and fees increased 4% year over year on an organic
basis with on a reported basis, it grew 1%. Eastern Europe and
Latin America grew by double digits while Asia reported high
single-digit growth. In Europe, the continental business grew in
the low single-digits while the UK business declined in the mid
Operating margin contracted 210 basis points to 27.7%.
The cash and cash equivalent balance at quarter end stood at
$464 million, up approximately 6.4% from 2011 end.
Long-term debt increased 3.4% to $2.43 billion from 2011
Dividends and Share Buybacks
The company's board authorized a dividend of 27 cents to the
shareholders of record at June 30, payable on July 13. This
dividend represents an increase of 3.8%
Willis expects to repurchase shares worth up to $100 million in
2012. As such, the company spent $21 million to buyback 0.6 million
shares in the first quarter.
The quantitative Zacks #3 Rank (short-term Hold rating) for the
company indicates no clear directional pressure on the stock over
the near term.
Headquartered in London, the United Kingdom, Willis Group
Holdings plc and its subsidiaries provide a broad range of
insurance brokerage, reinsurance and risk management consulting
services to its worldwide clients, both directly and through its
Marsh & McLennan Companies Inc.
), which competes with Willis Group
is scheduled to release its first quarter results on May 1, before
MARSH &MCLENNAN (
): Free Stock Analysis Report
WILLIS GP HLDGS (
): Free Stock Analysis Report
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