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Willis Group Holdings plc (WSH): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Posted
12/13/2013 7:00:00 AM
By: Zacks.com
Referenced Stocks:WSH

Summary:
Willis Group's fourth-quarter earnings missed the Zacks Consensus Estimate as well as the year-ago number. However, the top line fared well on both counts, riding on the strength of higher commissions and fees. Moreover, each segment delivered organic growth for the fifth consecutive quarter. With solid retention levels and new business growth, we expect the company to continue the momentum. Its inorganic growth story also looks impressive. The company's cost-savings initiative had helped it reduce overall expenses and is expected to aid margin expansion that otherwise remains constrained due to increasing expenses. Willis Group remains focused on enhancing its shareholder value. It increased dividend by 7% and plans $200 million share buyback in 2014 However, the soft macro conditions might restrict significant top-line growth in the company. Additionally, with weak interest rate environment we expect investment income to remain under pressure. We, therefore, maintain a Neutral recommendation on Willis Group Holdings.

Overview:

Willis Group Holdings plc (WSH) 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 associates. The company provides both specialized risk management advisory and consulting services to clients engaged in specific industrial and commercial activities, and retail services to small, medium and major corporate houses.

In its capacity as an advisor and insurance broker, the company acts as an intermediary between clients and insurance carriers by advising clients on risk management requirements, helping them determine the best means of managing risk and negotiating and placing insurance risk with insurance carriers through the company's global distribution network.

On Sep 24, 2009, Willis Group Holdings was incorporated in Ireland in order to effectuate the change of the place of incorporation of the Group's parent company. The company operated as a wholly-owned subsidiary of Willis-Bermuda until Dec 31, 2009, when the outstanding common shares of Willis-Bermuda were cancelled and Willis Group Holdings issued ordinary shares with substantially the same rights and preferences on a one-for-one basis to the holders of the Willis-Bermuda common shares that were cancelled. Upon completion of this transaction, Willis Group Holdings replaced Willis-Bermuda as the ultimate parent company and Willis-Bermuda became a wholly-owned subsidiary of Willis Group Holdings.

Willis Group operates through three segments: Global, North America and International. The Global segment (accounted for 32% of operating revenues in 2012) provides specialist brokerage and consulting services to clients worldwide for specific industrial and commercial activities and is organized by specialism. The North American segment (38%) and the International segment (30%) predominantly comprise retail operations that provide services to small, medium and major corporations, accessing Global's specialist expertise when required.

Willis has more than 400 offices in 120 countries, with approximately 21,700 employees.

As of Dec 31, 2013, the company had $14.8 billion (down 2.1% year over year) in total assets, $2.3 billion (down 1.2% year over year) in long-term debt and $2.2 billion (up 30.4% year over year) in shareholder equity.


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