The chief executive of Willis Group Holdings Ltd. defended thecompany's spending on recruitment and retention, which led to a 35percent decrease in net income in the third quarter, missinganalysts' earning estimates by five cents a share.

Joe Plumeri, the insurance brokerage firm's chairman and chiefexecutive officer, speaking to analysts today during a conferencecall, said the company's strategy is to grow the firm throughsales. The only way to do this, he noted, is to invest in peoplecapable of achieving growth.

"We plan to grow revenue through aggressive expansion of oursales force," Mr. Plumeri said. "We spend money purposely withgrowth [in mind] for the future."

"Decisions made today will mean a stronger, more profitableWillis in the future," he said.

To this end, he said the firm has recruited new talent and paidincentives to keep others at the firm in what he called a "verycompetitive" hiring environment. He admitted, however, that Willishas lost some of its executives to "new and old competitors."

In the third quarter, expenses for salaries and benefitsincreased 13 percent, or $37 million, from $276 million to $313million. Net income dropped $26 million, going from $75 million, or45 cents a share in 2004, to $49 million, or 30 cents a share.Analyst's consensus estimate was 35 cents a share. Revenues wereoff $3 million, or less than 1 percent, going from $490 million to$487 million.

For the nine months, net income was down 25 percent, or $79million, going from $319 million, or $1.89 a share, to $240million, or $1.45 a share. Revenues were up 1 percent, or $18million, from $1.69 billion to $1.7 billion.

Mr. Plumeri pointed out that besides expenses for recruitmentand retention, the firm is spending money to improve its technologyand incurred legal costs related to the contingency fee scandal andother matters.

This third quarter was the first to substantially show theimpact of the loss of contingent commissions--abandoned earlierthis year as part of a settlement with Attorney General EliotSpitzer--and the loss of revenue with the sale of its wholesaledivision, Stewart Smith.

In a separate announcement today, Willis said it is expandingthe responsibilities of several of its executives and appointing anew chief financial officer.

Patrick Regan was named chief financial officer. He will reportto Thomas Colraine, vice chairman, co-chief operating officer andCFO. Mr. Colraine will retain the title of CFO until the end ofthis year.

Mr. Regan came from Royal & Sun Alliance, where he was groupfinancial controller for the past two years.

Mr. Colraine will oversee mergers and acquisitions, investorrelations, risk management, global operations, informationtechnology, real estate and human resources. He will also retainoversight of the company's financial group.

Richard Bucknall, vice chairman and co-chief operating officer,will continue to lead the global business unit. In addition, hewill be responsible for enhancing and increasing "the globalefficiencies of Willis' business processes," the broker said.

Gregory A. Arms was named executive vice president and chairmanof Willis' global employee benefits practice.

Willis also announced it would pay a quarterly cash dividend onthe company's common stock of 21.5 cents a share payable Jan. 16,2006 to shareholders of record as of Dec. 31.