Willis Holdings Company said it eliminated 400 positions and nearly doubled its net income in the third quarter 2006, helped by the sale of its London headquarters.
For the third quarter, Willis reported that net income rose 97 percent, or $44 million, to $89 million, or 56 cents a share, from $45 million, or 28 cents a share in 2005. Revenues were up 11 percent, or $56 million, from $487 million, to $543 million.
Without the sale of the headquarters and charges related to reorganization, the adjusted net income for the quarter would be $57 million, or 36 cents per share, Willis said.
Willis completed the sale of its London headquarters last month for $191 million, 25 percent of which it received in cash and the remaining balance due in November. The company is leasing back the building until it moves into new London headquarters in early 2008.
For the first nine months of 2006, Willis reported net income growth of 33 percent, or $75 million, from $226 million, or $1.38 a share, to $301 million, or $1.89 a share. Revenues rose 6 percent, or $102 million, from $1.7 billion to $1.8 billion.
"The quarter was exceptional and it is where we thought it would be at this time," said Joe Plumeri, chairman and chief executive officer of the firm.
Mr. Plumeri added that the company has seen good results in all segments of its business. The firm continues to make acquisitions, purchasing additional shares of the French brokerage firm Gras Savoye, which Willis plans to wholly own by 2010. Gras Savoye, he said, averages annual revenue of $500 million.
He explained Willis' acquisition strategy is to make total acquisitions of $50 to $100 million in revenue a year over the next five years in targeted lines and geography.
The company said it has made six acquisitions as of Sept. 30, with total annual revenue of $20 million.
Willis also said it had continued its buyback plan during the third quarter, purchasing $32 million worth of common stock.
Organic growth and net new business grew 8 percent, Mr. Plumeri reported. The impact of the continuing soft market was offset by new business and the rate decline is expected to continue through the year, he added.
The company revealed that it eliminated 400 positions in the third quarter, recording $25 million in severance charges. Mr. Plumeri said similar charges are not expected in 2007.
In the first quarter of 2005, Willis eliminated 500 positions, part of what it terms the "Shaping Our Future" initiative.
Mr. Plumeri said he would like to see the firm rely more on fees and less on commissions for its revenue stream. Currently, he said, the split is 65 percent commission and 35 percent fee. Eventually, he would like to see a 50-50 split, but did not offer a timetable for doing so.
Willis said it declared a quarterly dividend of 23.5 cents a share payable on Jan. 15, 2007, to shareholders of record as of Dec. 31.
The firm also announced that Paul Hazen resigned from its board of directors after serving six years. The former chairman of Wells Fargo is scaling back his involvement in business to pursue personal interests, according to a statement on his departure.
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