30 April 2014 Insurance

Reinsurance drives solid Q1 growth for Willis

Driven by its reinsurance unit, Willis posted strong results for the first quarter of 2014 with both its revenues and profits increasing. The company also announced a plan to deliver substantial cost savings across the business over the next four years.

The broker’s total revenues increased by 4.4 percent to $1.09 billion in the first quarter of 2014 compared with $1.05 billion in the first quarter of 2013. It made a net profit of $246 million compared with $219 million in the same period a year ago.

The broker’s global segment, which comprises Willis Re, Global Insurance (Willis UK and Specialties businesses), Facultative, Risk, and Willis Capital Markets & Advisory, achieved 2 percent organic growth in commissions and fees in the quarter of 2014 compared with the first quarter of 2013.

It said growth was led by Willis Re, which recorded high mid-single digit growth in the seasonally largest quarter for the reinsurance business, driven by high-teens growth in specialty reinsurance and mid-single digit growth in North America reinsurance.

Its global Insurance unit had a disappointing quarter, down high single digits primarily due to lower performance in three of the unit's major businesses: Willis UK, Transportation, and Construction, Property & Casualty. It said the weaker performance reflects varying degrees of lower new business growth, lower retention and negative timing of revenues amongst those businesses.

Its North America segment achieved 4.7 percent organic commissions and fees growth in the first quarter of 2014 compared with the first quarter of 2013. Its international segment achieved 7.2 percent organic growth in commissions and fees in the first quarter 2014 compared with the same period in 2013.

“We began 2014 with another quarter of solid mid-single digit revenue growth and positive contributions from each of our segments. Willis International and Willis North America both performed strongly. Willis Global grew modestly, with a strong contribution from its reinsurance business partially offset by its UK retail and specialty insurance businesses," said Willis Group CEO Dominic Casserley.

“Adjusted operating income matched the prior year, as we continued to invest in higher growth regions such as emerging markets, businesses such as Global Wealth Solutions in Asia, and client service improvements such as our Connecting Willis initiative.”

Casserley added: “The long-term strategy we set out at our 2013 Investor Conference calls for continued investment to drive organic growth, a spread between revenues and expenses on average of 70 basis points or more, and resulting in improved cash flow generation. We remain confident about and committed to that plan. Further, as we continue to invest to grow revenues, we also have an opportunity to take more action on expenses.

“Today, we are launching a multi-year operational improvement program designed to further strengthen our client service capabilities and to deliver expected cumulative cost savings of approximately $420 million through 2017 and annual cost savings of approximately $300 million starting in 2018.”

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