We issued an updated research report on
Willis Group Holdings Public Limited Company
on Apr 1, 2015.
Willis Group's fourth-quarter 2014 adjusted net income of $0.46 per
share surpassed the Zacks Consensus Estimate of $0.45 by a penny.
The bottom line also improved 17.9% year over year on higher
revenues. The increase in revenues, in turn, is attributable to
mid-single digit organic growth in commissions and fees as well as
Willis Group has been consistently expanding its global presence in
countries like Italy, Canada, the U.K. and France. The company has
been undertaking a number of acquisitions to drive inorganic
growth. In 2014, the company made five acquisitions. These include
the takeovers of Charles Monat Limited, Max Matthiessen, IFG Group
plc., Miller Insurance Services, and Almondz Insurance
Brokers Private Limited.
Willis Re Inc. - the North American reinsurance business of Willis
Group - has also inked a deal to buy SurePoint Reinsurance
Advisors, LLC in 2014.
The company expects the acquisitions of Charles Monat, Max
Matthiessen and Miller Insurance Services (likely to be closed in
2015), to contribute to the company's EBITDA in 2015. Willis Group
also believes that the transactions will be accretive to its
earnings in 2015, 2016 and 2017.
Furthermore, Willis Group has been striving to enhance its
shareholder value via dividend increases and share buybacks. In Feb
2015, the company's board of directors authorized a 3.3% dividend
hike, increasing dividend at a seven-year compound annual growth
rate (CAGR) of 2.54%. Additionally, the company spent $213 million
to buy back 5.1 million shares in 2014 and intends to utilize
another $175 million for the same in 2015.
In order to improve the clients services offered, realize
operational opportunities as well as make new investment in growth
initiatives, Willis Group announced the Operational Improvement
Program in Apr 2014. Cost savings worth $11 million were already
achieved in 2014. Going forward, this program is expected to lead
to more cost savings and also to expand margins.
However, Wills Group has been experiencing a decline in investment
income since 2011 due to lower-than-average interest rates.
Operating expenses have also been on a rise over the last few years
resulting in margin contraction. Moreover, the implementation of
the Operational Improvement Program from second quarter of 2014,
led to higher restructuring costs, which in turn increased the
overall expenses of the company. In 2014, the company incurred
expenditures of $36 million for this program.
Currently, Wills Group carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks from the insurance sector include Arch Capital
, First American Financial Corp.
and Fidelity National Financial, Inc.
. All these stocks sport a Zacks Rank #1 (Strong Buy).
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WILLIS GP HLDGS (WSH): Free Stock Analysis
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