Insurance broker Willis reported net income in the second quarter of this year rose 8 percent compared with last year as its chief executive insisted organic growth has remained consistently stronger than its rivals.
The London-headquartered broker reported net income increased $6 million in the quarter over the same period last year to $78 million, or 54 cents a share, up 9 cents. Revenues grew 6 percent, or $33 million, to $626 million.
For the first six months of the year, net income rose $35 million, or 17 percent, to $247 million, or $1.65 a share, an increase of 32 cents a share. Revenues grew 8 percent, or $101 million, to $1.4 billion.
Willis said growth was helped by a 5 percent increase in new business, despite pressures from the soft market which affected commissions with a 1 percent loss. Organic growth grew by 4 percent overall, with international business showing the strongest growth at 7 percent followed by North America at 5 percent.
During an analyst's conference call today, Joe Plumeri, chairman and chief executive officer, responding to a comment that the firm's organic growth was not as strong as others, said Willis' organic growth has shown more strength over the long term than its rivals.
"We have always grown organically very, very well and continue to do so nicely," he said.
He said the only way to effectively fight declining earnings in the face of the soft market is for the sales force to make calls on customers and find new business.
"If you make enough calls, you are going to improve your business," Mr. Plumeri said.
He stood fast to his position that Willis would not take supplemental commissions. He reasoned that doing so can unduly influence book performance. He noted, however, this does not mean Willis is not seeking higher commission payments.
"When we say that we are not taking supplemental commissions, it does not mean I don't want to get paid," he said, emphasizing the firm is seeking higher upfront commissions.
When asked if he felt the firm has so far received the commissions it should, he said, "We have been successful in getting paid what we think we ought to be paid."
On the reinsurance brokerage end, Peter Hearn, chairman and CEO of Willis Re, said during the call that the sector is seeking price decreases as high as 30 percent. This, coupled with primary carriers keeping higher retentions, means some earnings loss. He noted, however, that it remains a strong business despite market softness.
David Small, an analyst for Bear Stearns, said in a note, "Overall, this looks like another solid quarter…The company continued to post solid organic growth."
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