Insurer blames soft market and sluggish economy for ‘weakness’
Willis suffered “continued weakness” in the UK and Ireland, as fees and commissions declined 3% for the first three months of this year.
The disappointing result was set against a background of improving performance across the group.
Group fees and commissions increased 5% in this year’s first quarter, compared with the same period last year.
Willis refuse to disclose the underlying UK figures, but blamed the soft market and sluggish economy for the results.
Chief executive Joe Plumeri predicted a change in fortunes, however.
“We’ve seen some signs, though, of an improving UK economy, with positive GDP growth,” he told analysts.
Group growth was driven by the international business, which increased fees and commissions 12%. North America increased fees and commission 1%.
Group revenue grew 5% to $972m (£639.4m), compared with $930m in the first quarter of 2009.
Operating margin was 33.9% compared with 34.9% in Q1 2009.
The first-quarter report highlighted the reinsurance division as a strong performer, saying: “Solid net new business in this division more than offset the softness in reinsurance rates.
“Global specialties contributed positive organic growth in commissions and fees, led by financial and executive risks and marine.
“Operating margin was a seasonally high 45.5%, in line with the first quarter of 2009.”
Plumeri was optimistic for 2010, stressing that Willis had the foundations to beat economic and soft rate challenges.
“As we move through 2010, we will continue to reinforce our sales and revenue culture, maintain disciplined expense management to fund growth, and work to further strengthen our balance sheet.
“Even as we face continued challenges from economic and rate headwinds, I believe these efforts position us well for continued success.”
Plumeri has campaigned against contingent commissions, although the business has accepted contingent commissions that were legacy payments from HRH.
Willis accepted HRH contingent commissions of $8m in the first quarter of 2010, compared with $20m in the first quarter of 2009.