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Willis Group Reports Fourth Quarter 2012 Results

Willis Group Holdings plc (NYSE: WSH), the global insurance broker, today reported results for the fourth quarter of 2012 and twelve months ended December 31, 2012. The quarter also marked the culmination of Joe Plumeri’s 12 year tenure as CEO and the appointment of Dominic Casserley in that role.

As the Company announced in December 2012, it incurred significant charges during the fourth quarter related to goodwill impairment in North America and a change in the Company’s cash retention awards program. Additionally, during the quarter, the Company set up a valuation allowance against its deferred tax asset. These items, collectively, had a notable negative impact on reported results. Excluding those items, all of which have no impact on the expected cash profile of the company, the Company’s fourth quarter 2012 adjusted earnings per share were flat versus the prior year quarter as higher commissions and fees were offset by higher salary and benefits expense and taxes.

Financial highlights for:

Three months ended

Twelve months ended

December 31,

December 31,
2012   2011   Change 2012   2011   Change
Reported earnings per diluted share from continuing operations $ (4.65 ) $ 0.14 NM $ (2.58 ) $ 1.15 NM
Adjusted earnings per diluted share from continuing operations $ 0.45 $ 0.45 - % $ 2.58 $ 2.74 (5.8 )%
Reported operating margin (89.0 )% 9.9 % NM (6.0 )% 16.4 % NM
Adjusted operating margin 19.1 % 18.7 % 40 bps 21.6 % 22.5 % (90) bps
Reported commissions and fees growth 7.0 % (1.6 )% 1.3 % 3.7 %
Organic commissions and fees growth 7.5 % (2.3 )% 3.1 % 1.8 %

NM = not meaningful

Willis Group’s fourth quarter organic commissions and fees growth was 7.5%. Among the notable highlights within the Company’s three segments was organic growth of 11.6% for Willis Global, with positive organic growth in each of the Global businesses. Willis International contributed 7.4% growth, driven by growth across all geographic regions, except Australasia, and with notable improvement from Willis UK. Results for Willis North America showed organic growth of 5.0% attributable, in part, to the reversal in the fourth quarter of 2011 of revenue that was improperly recorded during 2011. Excluding that revenue reversal, organic growth in Willis North America was 3.1%, the best organic growth results delivered by the segment in six years.

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