NU Online News Service, Aug. 2, 3:33 p.m.EDT

Willis Group Holdings' financial results will begin tostrengthen in the second half of this year as the firm distancesitself from an internal accounting fraud scandal and resolvesintegration issues related to the acquisition of Hib, Rogal &Hobbs, says Chairman and Chief Executive Officer Joe Plumeri.

“You've obviously seen some of the other brokers' reports andearnings already,” said Plumeri during a conference call. “Thepositive trends that they've talked are very encouraging for theindustry as a whole…but as you saw our release last night, andcompare it with those who have already reported, it is fair towonder why Willis isn't in its historical position at the head ofthe pack.”

He noted that while the company reports organic growth of 2percent, there are a number of issues that continue to “coursethrough the system,” primarily related to the HRH acquisition,which is dragging down North America's results.

“This quarter marks an end to all of those things that have tobe flushed through,” says Plumeri.

HRH was acquired in 2008, right as the financial crisis hit.Part of HRH's business was Loan Protector, a specialty businessthat works with financial institutions to confirm their loans areproperly insured and interests are adequately protected. Plumerisaid Loan Protector hurt earnings by 1 cent per share compared tolast year, but he added, “This is the last quarter of the lopsidedcomparisons. Loan Protector is over.”

Additionally, Willis has said that several HRH producers leftthe firm, taking business with them after their non-competeagreements expired.

Compounding the HRH issues, Willis had to write down $28 millionin fraudulent overstatements in commissions and fees from a Chicagooffice in its Employee Benefit group during the period spanning2005 to 2011.

Willis' employee-benefits business also saw earnings pressure ashealthcare companies reduced commissions.

Contrary to Willis' general practice, management decided tobegin accepting contingent commissions on this business, whichis expected to replace the loss of revenue from the drop in salescommissions.

In Europe, the economic crisis continues to adversely affectbusiness and, Plumeri said, the firm put up subpar numbers for theUnited Kingdom and Australia.

“Those international numbers, we believe, are an anomaly, andnot indicative of any trend,” Plumeri said.

“Despite our growth, we didn't come in as high as we wanted tothis quarter,” he added.

For the second quarter, net income increased 24 percent, or $21million, to $110 million. Revenues were down 2 percent, or $19million, to $842 million.

Expenses were reduced by 1 percent, or $5 million, in thequarter to $500 million.

In the first six months of this year, Willis says net incomerose $211 million to $342 million. Revenues were off less than 1percent, or $13 million, to $1.86 billion.