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Willis Group Holdings reported a 2 percent increase in 2010 second quarter net income as it increased organic growth by 4 percent despite the headwinds of a soft market and continued challenges from the economic downturn.
The London-headquartered insurance broker said net income rose by $2 million to $89 million from the same period last year. Earnings per share was flat at 52 cents a share. Revenues grew 2 percent, or $15 million, to $799 million during the period.
The firm’s Chairman and Chief Executive Officer, Joe Plumeri, credited the company’s performance with capturing new business and solid retention rates.
“It is an outstanding result given the headwinds,” he said during a conference call with financial analysts today.
He noted that in the United States there is no evidence yet of a sustained recovery, and the rest of the world remains under economic pressure. The tough economy is leading to a reduced number of exposures written. That, combined with the continued soft market, has resulted in a tough environment to conduct business, he said.
Mr. Plumeri said there is little expectation that the soft market will change “significantly” for the rest of the year. Despite the challenges, he called the second quarter organic growth performance in North America “stunning” at negative one percent, while the company reported organic growth in its Global segment at 7 percent and International at 8 percent.
For the six months, net income increased 5 percent, or $13 million, to $292 million, up 4 cents a share to $1.71. Revenues grew 3 percent, or $57 million, to $1.77 billion.
On the issue of obtaining upfront commissions in lieu of contingent commissions, he said Willis’ stance has put it “in good stead with our clients and prospects.”
He noted that the firm’s performance in North America, as opposed to competitors, is evidence that Willis’ stance against taking contingent commissions is having an effect. However, he reiterated his stance that he expects insures to fairly pay the broker for the business it delivers.
“I don’t expect to be paid any less because we do not take contingents,” he declared.
In early morning trading today, Willis stock fell 98 cents a share to $30.97 and continued trading downward throughout the morning after missing consensus earnings per share by 3 cents.