NU Online News Service, Oct. 25, 12:16 p.m. EDT

Insurance broker Willis Group Holdings plc says third-quarter net income decreased 8 percent in part due to a $15 million charge for its operational review that eliminated 200 positions during the third quarter along with declines in its Loan Protector business.

Third-quarter net income dropped $5 million over the same period last year to $60 million. Revenues increased 4 percent, or $29 million, to $762 million.

For the first nine months of this year, net income was down 48 percent, or $176 million, to $191 million. Revenues increased 5 percent, or $129 million, to $2.6 billion.

Joe Plumeri, chairman and chief executive officer of Willis, speaking to financial analysts today, says he feels good about the results noting that, excluding the performance of Loan Protector, the company's performance would have been better.

Loan Protector places insurance protection primarily for mortgage-services companies. Plumeri says the drop was due to “attrition” in the mortgage business.

Organic growth in the third quarter rose 2 percent on the strength of Willis' global and international business. North America was minus 4 percent.

Without the drag of Loan Protector, Plumeri says organic growth in North America would have been 4 percent.

For the first nine months of this year, organic growth was up 3 percent—up 6 percent in global and international while minus-2 percent for North America.

 Contributing to the drop in net income, Willis' operational review resulted in a $15 million charge for the third quarter and $130 million for the first nine months of this year.

The review resulted in the elimination of 200 positions in the third quarter and 800 positions through the first nine months of this year.

The firm says it has “identified further opportunities for efficiencies” and its operational review will result in a total charge of approximately $160 million for the year.

The result will be $75 million in cost savings in 2011 and annual cost savings of approximately $115 to $125 million beginning next year.

Plumeri says a “decent economy” will result in growth next year and that, overall, the underlying performance of the company is much better than the initial report suggests.

“We expect to do better and that is why we have taken the actions we have,” says Plumeri.

In response to a question concerning the direction of insurance rates, Plumeri says while rates are flat there is “a little bit of breeze” coming from insurers that rates are on the increase.

“What you are getting from carriers is a sense [of] hope, maybe, I call it subjective, that rates will go from flat in the U.S. to maybe up a little bit because the statistics require it and the economics require it,” says Plumeri. “That's the subjective part. I gave you the factual part. The subjective part is that there is probably a little bit of a breeze that they would like to see. I haven't seen it in exposures and I haven't seen it in real rates.”

Where there have been increases, he adds, they have been offset in lines of business where capacity remains abundant.

Turning to acquisitions, Plumeri says the company has not made significant acquisitions in some time, but it is opening itself up to the possibility to again make them where there is a strategic fit. He adds that this is not a signal that Willis plans to go on any buying spree.

Willis' last acquisition was in August of Brokerskie Centrum Ubezpieczeniowe in Poland by its Willis Europe division.

The firm made a major acquisition in 2008, acquiring Richmond, Va.-based Hilb, Rogal & Hobbs.