NU Online News Service, Aug. 4, 1:41 p.m. EDT
Willis Group Holdings has eliminated approximately 600 positions so far this year as part of its operational review, leading to a second-quarter charge of $18 million and contributing to a 2 percent drop in net income.
Reporting its second-quarter results today, the London-headquartered broker says it eliminated 150 positions in the second quarter, costing the firm $9 million in severance costs. Willis says it paid $57 million in severance for the elimination of 600 positions during the first half of the year.
The operational review is expected to eventually cost the firm approximately $130 million with annual savings of $65 million to $75 million this year and $95 million to $105 million annually by next year.
During a conference call, Willis says a few more reductions are expected, but most of the remainder of the review will consist of moving positions from "a high-cost location to a low-cost location" to reduce costs.
Joe Plumeri, chairman and CEO for Willis, says the actions are a realignment "of resources where the efficiency and resources deliver."
Willis says its second-quarter net income declined 2 percent, or $2 million, to $89 million. Revenues were up 8 percent, or $64 million, to $863 million.
For the first six months of the year, net income dropped 57 percent, or $171 million, to $131 million.
In addition to the $18 million charge for the operational review, Willis took an $11 million charge for its regulatory settlement with the Financial Services Authority in July over failure to install proper controls in its anti-bribery and corruption system.
Plumeri says that despite the continued soft market and the negative impact of a weak global economy, the firm reported organic growth of 3 percent in commissions and fees from a combination of high retention rates and new business.
Given the challenges in North America's economy and the soft market, Plumeri says the firm did well recording flat organic growth in the quarter. Its Global segment recorded organic growth of 3 percent while International came in with strong 6 percent growth.
He says the actions the firm has taken to improve business are aimed at "significant growth" in the future. "We don't want modest growth."
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