Willis Group Holdings reported a 37 percent decrease in net income, but beat investment analyst's estimates of earnings per share by 3 cents, driving its stock up $2.80 a share by noontime trading.
The London-headquartered insurance broker's stock performance was also fueled by its announcement that it plans to begin a $1 billion stock repurchase program. The plan, the broker said, is an open-ended program where purchases will be made from time to time on the open market and through negotiated trades.
Joe Plumeri, chairman and chief executive officer, said during an analyst's call today that the repurchase plan is an indication of the firm's confidence in its future and its determination to invest in itself.
For the quarter, net income declined $42 million to $72 million or 45 cents a share, compared with $114 million or 70 cents a share. The decline was primarily due to a 35 percent increase in expenses of $124 million compared with the same period last year, from $350 million to $474 million. Revenues grew 8 percent or 44 million, from $549 million to $593 million.
For the six months, net income is up 17 percent or $31 million, from $181 million or $1.10 a share to $212 million or $1.33 a share. Revenues during the period grew 4 percent or $46 million, from $1.22 billion to $1.26 billion.
Willis reported organic growth increased by 10 percent, which Mr. Plumeri said was quite impressive given the soft pricing market. He said rates continue to soften in all sectors, outside of windstorm and catastrophe exposures where there is hardening.
"We are very pleased with our market share pick-up," he said, adding that the increase in business was across the board. He noted that the company's aerospace and reinsurance brokerage performed exceptionally well.
North America organic growth was up 8 percent, while global business was up 13 percent. Other business organic growth was up 6 percent.
New hires, Mr. Plumeri said, are beginning to perform to expectations while the firm still works to control costs. The results of this work, he continued, are just beginning to take effect, and he predicted the results will grow in the coming years.
Willis also declared a quarterly dividend of 23.5 cents a share payable on Oct. 13 to shareholders of record as of Sept. 30.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.