Willis reports 3Q net income of $49 million

Willis Group Holdings Limited (NYSE: WSH) recently reported a decline in net profits for the 3Q of 2005, in comparison to results announced in the third quarter of 2004.
The Company ‘s net income for the 3Q in 2005 was $49 million, or $0.30 per diluted share. In 2004, the company reported 3Q earnings of $75 million, or $0.45 per diluted share.
Willis says it also saw a decrease in total revenues to $487 million, or 1%, compared to the $490 million it made during the same period last year. The Company claims that the effect of foreign currency translation decreased reported revenues 2% while net acquisitions added 1%.
The Company’s adjusted operating margin was 14.8% for the 3Q, compared with 22.2% in 2004, and Willis reports that about 4% of this decline was due to the elimination of contingent commissions and the decline in other market remuneration. The remainder of the decline, according to the Company, was mainly due to net incremental hiring and employee retention.
The Company’s volume and profit-based contingent commissions relating to 2004 arrangements totaled $1 million in the 3Q for 2005, compared with $10 million in 2004. Other market remuneration declined to $3 million in the third quarter compared with $19 million for the comparable period a year ago. The decline in contingent commissions and other market remuneration Willis says, reduced organic revenue growth by 6%.
Reported net income for the 3Qafter net gain on disposal of operations and first quarter charges for regulatory settlements and related expenses, severance costs and other provisions was $240 million, or $1.45 per diluted share, compared to $319 million, or $1.89 per diluted share, a year ago.
Regardless of the recent decline, Willis expects to generate a reported operating margin of about 21% and an adjusted operating margin of about 22% for the full 2005 year.
This outlook takes into account expectations of decreased revenue from contingent commissions and continued higher expenses due to net incremental hiring and employee retention.