Insurance broker Willis Group Holdings says it plans to eliminate 200 full-time positions after reporting a fourth-quarter net loss of more than $800 million.

Willis CEO Dominic Casserley says the firm will take a first-quarter charge of about $35 million to $45 million, primarily from the elimination of the 200 positions. Willis expects to save $20 million to $25 million starting the second quarter, with annualized savings of approximately $25 million to $30 million.

Willis says the decision to eliminate the positions is a cost-savings move that came after an assessment of the firm’s organizational structure in the weeks since Casserley took over Jan. 7 from the departing Joe Plumeri.

Willis reported a Q4 net loss of $801 million compared to net income of $29 million the prior year. Revenues showed some increase, up 6 percent for the quarter to $871 million.

The brokerage took $1.06 billion in charges in Q4 related to goodwill impairment in North America, write-offs, bonuses and taxes. Additionally, the firm reduced its Q4 2011 net income by $50 million related to a 2011 operational review and $22 million related to write-off of uncollectable accounts receivables.

Willis came under scrutiny last year when it discovered fraudulent overstatements in a Chicago office that spanned a six-year period. Integration issues related to its Hilb, Rogal & Hobbs acquisition also weighed on the company’s earnings.

For the year, Willis reported a net loss of $433 million compared to net income of $220 million. Revenues rose 1 percent, or $33 million, to $3.5 billion.

On the positive side, the firm pointed to Q4 organic growth of 7.5 percent and 3.1 percent for the year.

When asked by an analyst during Willis’ Q4 earnings call how long the honeymoon period for the new CEO would last, Casserley said, “I think in the world that we live in today, honeymoons don’t last very long at all.”

Additionally, Willis announced that Martin Sullivan, deputy chairman of Willis Group Holdings and chairman and CEO of the Willis Global Solutions unit, will leave the firm in May.

Sullivan, who headed American International Group through a turbulent period after the departure of longtime CEO Hank Greenberg, is leaving Willis to pursue other interests, according to the firm.

“Martin joined Willis as our deputy chairman at a time when we were determined to establish a deeper penetration among the world’s largest accounts,” Casserley says in a statement. “We are grateful for Martin’s service to our firm and the success that he and his team have enjoyed, and we intend to carry it forward.”

Sullivan began his insurance career at AIG, taking the reins of the company in 2005 following Greenberg’s departure. Sullivan left AIG shortly after AIG reported $15.3 billion in writedowns, and a 2008 first-quarter loss of $7.8 billion stemming from the company’s backing of credit-default swaps. The losses eventually forced AIG to obtain a government bailout of more than $180 billion, which AIG paid off by 2012’s end.

Willis says Deputy CEO Steve Hearn, in his role as CEO of Willis Global, will lead the Global Solutions unit.

Sullivan joined Willis in 2010 to head up what was then a new business unit, Global Solutions, after leaving AIG in 2008.

As part of its series of job cuts, Willis has eliminated the position of chief operating officer.

In a filing with the Securities & Exchange Commission, Willis said it eliminated the position held by Gioia Ghezzi on Feb. 14. A spokeswoman said the firm will split Ghezzi’s responsibilities between two existing staff members.

Ghezzi joined Willis in April from McKinsey & Co., succeeding Tim Wright, who was named CEO of Willis International.

Special Reports /

Willis to Eliminate 200 Positions; Reports $800 Milion Q4 Net Loss

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