The broker eliminated all contingent commissions in October after New York Attorney General Eliot Spitzer announced a suit against Marsh & McLennan Companies over contingency fee abuses.

For the first quarter, net income plummeted by more than half to $72 million, while revenues only increased 1 percent to $669 million. The first-quarter report included a charge of $51 million for a policyholder reimbursement fund set up to settle the investigations by Mr. Spitzer and Minnesota Attorney General Mike Hatch. The firm also recorded $9 million in legal and administrative fees and increased its provision for claims by $20 million.

Mr. Plumeri said Willis is going through a “metamorphosis…breaking from the old and introducing the new.” He said first-quarter results contained the “shedding of all the bad things and none of the good we will see going forward. This is a model [that will be] much more enduring going forward.”

Mr. Plumeri indicated he was disappointed insurers have not come to terms with Willis over the payment of fees for services the broker provides to them but was optimistic it would be resolved eventually. The firm collected $3 million in service fees from carriers. He said this figure should increase over the course of the year. In 2004, the broker collected $22 million in the first quarter for such services.

The CEO also expanded on the comments he made in Philadelphia at the Risk and Insurance Management Society's annual conference, where he called for a ban on all forms of contingency payments. His remarks sparked an angry rebuke from the National Association of Professional Insurance Agents, which called his suggestions hypocritical.

Mr. Plumeri noted the posting of a white paper on the Willis Web site, titled: “The Leadership Moment.” In the paper, Willis calls on all brokers, both retail and wholesale, to embrace “full disclosure and unconditional transparency.” The full text of the Willis white paper is available at www.willis.com/Extras/RIMSNews.aspx.

Flag: By The Numbers

Results Reflect New Realities

The first-quarter earnings report for Willis was affected by the soft market and the purging of contingency fees. Here are some key numbers:

o 51%–Drop in first-quarter net income.

o 500–Number of employees to be eliminated, representing 4 percent of the broker's work force.

o $28 Million–Severance costs associated with downsizing.

o $50 Million–Anticipated savings from restructuring.