NU Online News Service, April 29, 3:18 p.m. EDT

Willis Group Holdings, plc, reported first-quarter net income rose 6 percent over last year as the company captured new business and continued to control costs.

"Economic conditions remain challenging in a number of countries in which we operate, on top of that...the rate environment is still very soft, but against this background we delivered, and that's what we are excited about," said Joe Plumeri, chairman and chief executive officer of the insurance brokerage firm during a conference call with investment analysts.

Willis reported first quarter net income rose $11 million to $204 million compared to the same period last year, increasing earnings per share by 4 cents to $1.20.

Revenues rose 5 percent, or $42 million, to $972 million on the strength of a 5 percent growth in commissions and fees of $48 million to $963 million.

The company reported organic growth of 3 percent, with all business segments contributing positively.

North America, which stood at negative 5 percent for the first quarter last year, was at 1 percent growth this quarter.

Mr. Plumeri said organic growth grew on the strength of "strong new business with high client retention and producer retention."

In response to questions about whether the conversion of contingent commissions from its acquisition of Hilb, Rogal & Hobbs affected the organic growth numbers for North America, Mr. Plumeri said the transition of those commissions takes place over the course of a year and not a single quarter.

Mr. Plumeri said the change is not done on a dollar-for-dollar basis and is not reflected in the organic growth numbers.

Willis does not accept contingent commissions because it feels they create a conflict of interest and Hilb and Rogal is now adopting the stance of the parent company.

Willis acquired HRH in 2008 and has a three year window to convert the broker's contingent commissions to up-front, supplemental commissions. HRH has $8 million of contingent commissions left to convert of $20 million that it had during the first quarter of last year.

Willis has steadfastly refused to accept contingent commissions on its brokerage business and this week it launched a campaign to educate risk managers on the inherent conflict of interests that the broker says they produce. See article (http://tinyurl.com/34ufcvy).

Despite the recession, Mr. Plumeri said there were signs of some improvement in the firm's construction and employee benefits business. Construction moved from double digit negative growth to single digit, and employee benefits was flat for the first quarter, which he said was impressive in the face of continued lay-offs.

On the issue of health care, the complexity of health insurance programs, the increased number of people getting coverage from passage of the health reform act, and continued increased in cost in insurance programs, bode well for Willis as companies will seek the expertise of a broker to navigate the challenges and demands ahead, Mr. Plumeri observed.

Special Reports /

Willis Reports 1Q Net Income Up 6%

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