 WILLIS
GROUP HOLDINGS Fact Book
Third Quarter 2014
December 2014
*
*
*
*
*
*
Exhibit 99.1 |
 Important
disclosures regarding forward-looking statements | 2
This presentation contains certain “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934,
which are intended to be covered by the safe harbors created by those laws. These forward-looking
statements include information about possible or assumed future results of our operations.
All statements, other than statements of historical facts, included in this document that address
activities, events or developments that we expect or anticipate may occur in the future,
including such things as our outlook, potential cost savings and accelerated adjusted operating margin
and adjusted earnings per share growth, future capital expenditures, growth in commissions and
fees, business strategies, competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, plans, and references to future successes
are forward-looking statements. Also, when we use the words such as ‘anticipate’,
‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘plan’, ‘probably’, or similar expressions, we are making forward-
looking statements.
There are important uncertainties, events and factors that could cause our actual results or
performance to differ materially from those in the forward-looking statements contained in this
document, including the following: the impact of any regional, national or global political, economic,
business, competitive, market, environmental or regulatory conditions on our global business
operations; the impact of current global economic conditions on our results of operations and financial condition, including as a result of those associated with the Eurozone, any
insolvencies of or other difficulties experienced by our clients, insurance companies or financial
institutions; our ability to implement and fully realize anticipated benefits of our new growth
strategy and revenue generating initiatives; our ability to implement and realize anticipated benefits
of any expense reduction initiative, including our ability to achieve expected savings from the
multi-year operational improvement program as a result of unexpected costs or delays and demand on managerial, operational and administrative resources and/or
macroeconomic factors affecting the program; changes in the tax or accounting treatment of our
operations and fluctuations in our tax rate; volatility or declines in insurance markets and
premiums on which our commissions are based, but which we do not control; our ability to develop and
implement technology solutions and invest in innovative product offerings in an efficient and
effective manner; our ability to continue to manage our significant indebtedness; our ability to compete in our industry; our ability to develop new products and services;
material changes in commercial property and casualty markets generally or the availability of
insurance products or changes in premiums resulting from a catastrophic event, such as a
hurricane; our ability to retain key employees and clients and attract new business; the timing or
ability to carry out share repurchases and redemptions; the timing or ability to carry out
refinancing or take other steps to manage our capital and the limitations in our long-term debt
agreements that may restrict our ability to take these actions; fluctuations in our earnings as
a result of potential changes to our valuation allowance(s) on our deferred tax assets; any
fluctuations in exchange and interest rates that could affect expenses and revenue; the potential
costs and difficulties in complying with a wide variety of foreign laws and regulations and any
related changes, given the global scope of our operations; rating agency actions, including a
downgrade to our credit rating, that could inhibit our ability to borrow funds or the pricing thereof
and in certain circumstances cause us to offer to buy back some of our debt; a significant
decline in the value of investments that fund our pension plans or changes in our pension plan
liabilities or funding obligations; our ability to achieve anticipated benefits of any acquisition
or other transactions in which we may engage, including any revenue growth or operational
efficiencies; our ability to effectively integrate any acquisition into our business; our inability to
exercise full management control over our associates, such as Gras Savoye; our ability to
receive dividends or other distributions in needed amounts from our subsidiaries; any potential
impact from the US healthcare reform legislation; our involvement in and the results of any regulatory
investigations, legal proceedings and other contingencies; underwriting, advisory or
reputational risks associated with non-core operations as well as the potential significant impact
our non-core operations (including the Willis Capital Markets & Advisory operations) can
have on our financial results; our exposure to potential liabilities arising from errors and omissions
and other potential claims against us; the interruption or loss of our information
processing systems, data security breaches or failure to maintain secure information systems; and
impairment of the goodwill in one of our reporting units, in which case we may be required to
record significant charges to earnings. The foregoing list of factors is not exhaustive and new factors may emerge from time to time that
could also affect actual performance and results. For additional information see also
Part I, Item 1A “Risk Factors” included in Willis’ Form 10-K for the year ended
December 31, 2013, and our subsequent filings with the Securities and Exchange Commission. Copies are
available online at http://www.sec.gov or on request from the Company.
Although we believe that the assumptions underlying our forward-looking statements are reasonable,
any of these assumptions, and therefore also the forward-looking statements based on these
assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included in this presentation, our
inclusion of this information is not a representation or guarantee by us that our objectives and plans
will be achieved. Our forward-looking statements speak only as of the date made and
we will not update these forward-looking statements unless the securities laws require us to do
so. In light of these risks, uncertainties and assumptions, the forward-looking events
discussed in this presentation may not occur, and we caution you against unduly relying on these
forward-looking statements. |
 Important
disclosures regarding non-GAAP measures | 3
This
presentation
contains
references
to
"non-GAAP
financial
measures"
as
defined
in
Regulation
G
of
SEC
rules.
We
present
these
measures
because
we
believe
they
are
of
interest
to
the
investment
community
and
they
provide
additional
meaningful
methods
of
evaluating
certain
aspects
of
the
Company’s
operating
performance
from
period
to
period
on
a
basis
that
may
not
be
otherwise
apparent
on
a
generally
accepted
accounting
principles
(GAAP)
basis.
These
financial
measures
should
be
viewed
in
addition
to,
not
in
lieu
of,
the
Company’s
condensed
consolidated
income
statements
and
balance
sheet
as
of
the
relevant
date.
Consistent
with
Regulation
G,
a
description
of
such
information
is
provided
below
and
a
reconciliation
of
certain
of
such
items
to
GAAP
information
can
be
found
in
our
periodic
filings
with
the
SEC.
Our
method
of
calculating
these
non-GAAP
financial
measures
may
differ
from
other
companies
and
therefore
comparability
may
be
limited.
Definitions
of
non-GAAP
financial
measures
We
believe
that
investors’
understanding
of
the
Company’s
performance
is
enhanced
by
our
disclosure
of
the
following
non-GAAP
financial
measures.
Our
method
of
calculating
these
measures
may
differ
from
those
used
by
other
companies
and
therefore
comparability
may
be
limited.
Organic
commissions
and
fees
growth
Organic
growth
in
commissions
and
fees
excludes
the
impact
of
acquisitions
and
disposals,
period
over
period
movements
in
foreign
currency,
and
investment
and
other
income
from
growth
in
revenues.
We
believe
organic
growth
in
commissions
and
fees
provides
a
measure
that
the
investment
community
may
find
helpful
in
assessing
the
performance
of
operations
that
were
part
of
our
operations
in
both
the
current
and
prior
periods,
and
provides
a
measure
against
which
our
businesses
may
be
assessed
in
the
future.
Underlying
revenues,
underlying
total
expenses,
underlying
salaries
and
benefits,
underlying
other
operating
expenses,
underlying
operating
income,
underlying
EBITDA,
underlying
net
income
and
underlying
net
income
per
diluted
share
Underlying
revenues,
underlying
total
expenses,
underlying
salaries
and
benefits,
underlying
other
operating
expenses,
underlying
operating
income,
underlying
EBITDA,
underlying
net
income,
and
underlying
earnings
per
diluted
share
are
calculated
by
excluding
the
impact
of
certain
specified
items
and
period
over
period
movements
in
foreign
currency
from
total
revenues,
total
expenses,
salaries
and
benefits,
other
operating
expenses,
operating
income,
net
(loss)
income,
and
earnings
per
diluted
share,
respectively,
the
most
directly
comparable
GAAP
measures.
We
believe
that
excluding
these
items,
as
applicable,
from
total
revenue,
total
expenses,
salaries
and
benefits,
other
operating
expenses,
operating
income,
net
(loss)
income
and
earnings
per
diluted
share,
provides
a
more
complete
and
consistent
comparative
analysis
of
our
results
of
operations.
Additionally,
to
eliminate
the
impact
of
year
over
year
foreign
exchange
movements,
prior
year
revenues,
expenses
and
net
(loss)
income,
have
been
rebased
to
current
period
exchange
rates
and
the
year
over
year
movement
in
foreign
exchange
gains
and
losses
have
been
recognized
within
Other
income
(expense),
net.
For
underlying
EPS,
the
elimination
of
the
impact
of
year
over
year
foreign
exchange
movements
has
been
calculated
by
excluding
the
impact
of
foreign
currency
in
the
current
periods
rather
than
rebasing
the
prior
periods. |
 Global
risk adviser and broker | 4
Commission and fee mix
~ 70% / 30%
Client
Globally diverse
client base in >150
countries
Segmented: Large
corporates, small
and middle market
Adviser Broker
Broad P&C
Specialty
Human Capital & Benefits
Reinsurance
Capital Markets
Analytics
Insurer
Placed ~$50 billion
in premium in 2013
More than 2,500
carrier
relationships |
 Global
risk advisor and broker | 5
With roots dating to 1828, Willis operates today on every continent, with
approximately 18,000 employees in over 400 offices
Across geographies, industries and specialties, Willis provides its local and
multinational clients with resilience for a risky world
Willis is known for its market-leading products and professional services in
risk management and risk transfer
Willis experts rank among the world’s leading authorities on analytics,
modelling and mitigation strategies at the intersection of global commerce
and extreme events |
 Strong
growth in organic commissions and fees and operating cash flows
| 6
Mid-single digit organic growth
across all segments in 2013
Willis North America 4.8%
Willis International 5.8%
Willis Global 4.3%
2013 corporate/non-operating uses of
cash:
Dividends $193 million
Capex $112 million
M&A expenditures of ~$34 million
See important disclosures regarding non-GAAP measures on page 3 and
reconciliations starting on page 16 Organic commission and fee growth %
Cash flow from operations ($ millions) |
 SEGMENT
OVERVIEWS *
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*
*
*
*
*
*
*
*
*
*
* |
 2013
North America C&F: $1.35 billion Willis North America overview
| 8
(1)
CAPPPS: Captives, Actuarial, Programs, Pooling and Personal Lines
Major practices
•
More than 5,000 associates delivering
industry and product specific solutions to
our clients
•
Over 100 locations, broad geographic
reach with ability to connect with Willis
network.
Segment
2013
commissions
and
fees
–
by
region
•
Human Capital ~25% of 2013 North
America C&F
•
Construction ~14% of North America C&F
•
Healthcare
•
Real estate/hospitality
•
Financial and Executive risk |
 2013
International C&F: $0.9 billion Willis International overview
| 9
Segment
2013
commissions
and
fees
–
by
region
•
Approximately 6,000 associates in over 40
countries
•
Offices designed to grow business locally
around the world, making use of the skills,
industry knowledge and expertise available
within segment and elsewhere in the
Group
Retail operations
•
Western and Eastern Europe
•
Latin America
•
Asia Pacific
•
South Africa
•
Middle East
•
Australasia |
 Willis
Global overview | 10
2013
commissions
and
fees
–
by
business
Segment
Willis Re
•
One of the world’s largest reinsurance
brokers with three divisions: North
America, International and Specialty
•
Strong market share in major markets,
particularly marine and aviation
•
Complete range of transactional
capabilities including, in conjunction with
WCM&A, a wide variety of capital markets
based products
•
Cutting edge analytical and advisory
services, including Willis Research
Network, the insurance industry’s largest
partnership with global academic
•
Reinsurance, Specialty Insurance and
Capital Markets businesses
•
Approximately 4,000 associates
•
Clients around the globe
2013 Global C&F: $1.36 billion
2013
Reinsurance
C&F
–
by
division |
 Willis
Global overview (continued) | 11
2013
commissions
and
fees
–
by
business
Willis Insurance UK
•
Combination of Global Specialty business
and UK retail business, creating a
seamless client proposition
•
Strong global positions in:
•
Transport –
includes aerospace,
inspace and marine
•
Natural resources
•
Construction
•
Political, people and terrorism (PP&T)
•
Financial and executive risk
(Finex/Finmar)
•
Fine
art,
jewelry,
art,
specie,
bloodstock
Willis Capital Markets & Advisory
•
Advises on M&A and capital markets
transactions
2013
Willis
Insurance
UK
C&F
–
by
specialty
Facultative
•
Faber
Global
–
wholesale
and
facultative
solutions
through
London,
European
&
Bermuda
markets |
 3Q14
RESULTS *
*
*
*
*
*
*
*
*
*
*
*
*
* |
 3Q 2014
summary financial results | 13
3Q 2014
3Q 2013
Reported C&F growth
2.1%
5.6%
Organic C&F growth
2.5%
5.7%
Reported operating margin
4.2%
8.8%
Underlying operating margin
6.3%
7.7%
Reported diluted EPS
(0.04)
$
(0.15)
$
Underlying diluted EPS
0.14
$
0.19
$
Underlying EBITDA
87
$
96
$
Organic C&F growth led by International with solid results in North America and
Reinsurance. Started to see moderation in growth relative to previous
quarters that we expected. Continued
to
make
good
progress
on
Operational
Improvement
Program
–
current
expectations
for
savings from actions expected in 2014 and 2015 are ahead of initial estimates.
Foreign currency movements and Operational Improvement Program impacted EPS
by $(0.10) and $(0.08) per diluted share, respectively.
See important disclosures regarding non-GAAP measures on page 3 and
reconciliations starting on page 16 |
 Reported
3Q 2014 Commissions and fees growth
14
•
Excellent result driven by growth in
emerging markets and Western
Europe
•
Growth led by International with solid
results in North America and
Reinsurance
•
Willis Re grew low-single digits, driven
by strong growth in North America
•
UK Insurance down mid-single digits:
•
Partly due to major construction
project in year ago quarter that did
not recur
•
Growth in geographic regions led by
Midwest and Atlantic
•
Human Capital up mid-single digits
•
Construction down due to lower projects
compared to prior year
Organic
Group
North
America
Global
International
% Growth
3Q 2014 vs. 3Q 2013
See important disclosures regarding non-GAAP measures on page 3 and
reconciliations starting on page 16 0.3%
-0.4% |
 APPENDIX
*
*
*
*
*
*
*
*
*
*
*
*
* |
 Important
disclosures regarding non-GAAP measures Commissions and fees analysis
| 16
2014
2013
Change
Foreign
currency
translation
Acquisitions
and
disposals
Organic
commissions
and fees
growth
($ millions)
%
%
%
%
Three months ended
September 30, 2014
North America
$328
$322
1.9
-
(1.5)
3.4
International
190
180
5.6
(4.2)
3.5
6.3
Global
290
289
0.3
1.3
(0.6)
-0.4
Total
$808
$791
2.1
(0.4)
-
2.5
2014
2013
Change
Foreign
currency
translation
Acquisitions
and
disposals
Organic
commissions
and fees
growth
($ millions)
%
%
%
%
Nine months ended
September 30, 2014
North America
$1,037
$1,004
3.3
(0.1)
(1.0)
4.4
International
691
652
6.0
(2.0)
1.5
6.5
Global
1,100
1,066
3.2
1.6
(0.3)
1.9
Total
$2,828
$2,722
3.9
0.2
(0.1)
3.8 |
 Important
disclosures regarding non-GAAP measures (continued) Commissions and fees
analysis | 17
2013
2012
Change
Foreign
currency
translation
Acquisitions
and
disposals
Organic
commissions
and fees growth
($ millions)
%
%
%
%
2013 Full year
North America
$1,349
$1,281
5.3
(0.1)
0.6
4.8
International
926
874
5.9
0.1
-
5.8
Global
1,358
1,303
4.2
(0.9)
0.8
4.3
Commissions and Fees
$3,633
$3,458
5.1
(0.3)
0.5
4.9
2012
2011
Change
Foreign
currency
translation
Acquisitions
and
disposals
Organic
commissions
and fees growth
($ millions)
%
%
%
%
2012 Full year
North America
$1,281
$1,285
(0.3)
0.1
-
(0.4)
International
874
870
0.5
(5.8)
-
6.3
Global
1,303
1,259
3.5
(1.4)
0.2
4.7
Commissions and Fees
$3,458
$3,414
1.3
(1.8)
-
3.1
2011
2010
Change
Foreign
currency
translation
Acquisitions
and
disposals
Organic
commissions
and fees growth
($ millions)
%
%
%
%
2011 Full year
North America
$1,285
$1,344
(4.4)
(0.1)
1.3
(5.6)
International
870
777
12.0
4.7
-
7.3
Global
1,259
1,172
7.4
2.5
(2.3)
7.2
Commissions and Fees
$3,414
$3,293
3.7
2.1
(0.2)
1.8 |
 Important
disclosures regarding non-GAAP measures (continued) Operating income to
underlying operating income | 18
For prior periods, underlying measures have been rebased to current period
exchange rates to remove the impact of foreign currency movements when
comparing periods 2013
2014
(In millions)
1Q
2Q
3Q
YTD
1Q
2Q
3Q
YTD
Total revenue
$1,051
$890
$795
$2,736
$1,097
$935
$812
$2,844
excluding:
Foreign currency movements
3
5
(3)
5
-
-
-
-
Underlying revenue
$1,054
$895
$792
$2,741
$1,097
$935
$812
$2,844
Operating income
$281
$167
$70
$518
$326
$148
$34
$508
excluding:
Operational improvement program
-
-
-
-
-
3
17
20
Expense reduction initiative
46
-
-
46
-
-
-
-
Fees related to extinguishment of debt
-
-
1
1
Foreign currency movements
(4)
(11)
(10)
(25)
-
-
-
-
Underlying operating income
$323
$156
$61
$540
$326
$151
$51
$528
Operating margin (operating income as a
percentage of total revenue)
26.7%
18.8%
8.8%
18.9%
29.7%
15.8%
4.2%
17.9%
Underlying operating margin (underlying operating
income as a percentage of underlying total revenue)
30.6%
17.4%
7.7%
19.7%
29.7%
16.1%
6.3%
18.6%
-
-
-
- |
 Important
disclosures regarding non-GAAP measures (continued) Net (loss) income to
underlying net income | 19
2013
2014
(In millions, except per share data)
1Q
2Q
3Q
YTD
1Q
2Q
3Q
YTD
Net (loss) income
$219
$105
($27)
$297
$246
$47
($7)
$286
Excluding the following, net of tax:
Operational improvement program
-
-
-
-
-
2
14
16
Venezuela currency devaluation
-
-
-
-
-
13
-
13
Deferred tax valuation allowance
-
-
-
-
-
21
-
21
Expense reduction initiative
38
-
-
38
-
-
-
-
Net loss on disposal of operations
-
-
-
-
2
-
-
2
Fes related to extinguishment of debt
-
-
1
1
Loss on extinguishment of debt
60
60
Foreign currency movements
(1)
(6)
(5)
(18)
(29)
-
-
-
-
Underlying net income
$251
$100
$16
$367
$248
$83
$7
$338
Diluted shares outstanding
(2)
176
178
177
178
182
182
178
182
Net income per diluted share
$ 1.67
$1.35
$0.26
($0.04)
$1.57
Underlying net income per diluted share
$2.22
$1.39
$0.49
$0.14
$2.02
$1.46
$0.59
$0.59
($0.15)
$0.19
$1.24
(1)
For prior periods, underlying measures (other than EPS) have been rebased to current period exchange
rates to remove the impact of foreign currency movements when comparing periods. In the
current three and nine month periods only, underlying EPS excludes the $0.10 and $0.16, respectively,
negative year over year impact of foreign currency movements in order to assist comparability to EPS
figures that have been disclosed in prior periods.
(2)
Diluted earnings per share are calculated by dividing net income by the average number of shares
outstanding during each period. However potentially issuable share were not included in the
calculation of diluted earnings per share for the three months ended September 30, 2013 and 2014 because the
Company’s net loss rendered their impact anti-dilutive. The dilutive impact of potentially
issuable shares had a $nil impact on reconciling to adjusted earnings per share from
continuing operations.
-
-
-
-
-
-
-
-
-
- |
 Important
disclosures regarding non-GAAP measures (continued) Reported total expenses
to underlying total expenses | 20
For prior periods, underlying measures have been rebased to current period
exchange rates to remove the impact of foreign currency movements when
comparing periods 2013
2014
(In millions)
1Q
2Q
3Q
YTD
1Q
2Q
3Q
YTD
Reported total expenses
$770
$723
$725
$2,218
$771
$787
$778
$2,336
Excluding:
Operational improvement program
-
-
-
-
-
(3)
(17)
(20)
Expense reduction initiative
(46)
-
-
(46)
-
-
-
-
Fees related to extinguishment of debt
-
-
(1)
(1)
-
-
-
-
Foreign currency movements
7
16
7
30
-
-
-
-
Underlying total expenses
$731
$739
$731
$2,201
$771
$784
$761
$2,316 |
 Important
disclosures regarding non-GAAP measures (continued) Reported total expenses
to underlying total expenses | 21
For prior periods, underlying measures have been rebased to current period
exchange rates to remove the impact of foreign currency movements when
comparing periods 2013
2014
(In millions)
1Q
2Q
3Q
YTD
1Q
2Q
3Q
YTD
Reported total expenses
$770
$723
$725
$2,218
$771
$787
$778
$2,336
Excluding:
Operational improvement program
-
-
-
-
-
(3)
(17)
(20)
Expense reduction initiative
(46)
-
-
(46)
-
-
-
-
Fees related to extinguishment of debt
-
-
(1)
(1)
-
-
-
-
Foreign currency movements
7
16
7
30
-
-
-
-
Underlying total expenses
$731
$739
$731
$2,201
$771
$784
$761
$2,316 |
 Important
disclosures regarding non-GAAP measures (continued) Reported net (loss)
income to underlying EBITDA | 22
For prior periods, underlying measures have been rebased to current period
exchange rates to remove the impact of foreign currency movements when
comparing periods 2013
2014
1Q
2Q
3Q
YTD
1Q
2Q
3Q
YTD
Net (loss) income attributable to
Willis Group Holdings
$219
$105
($27)
$297
$246
$47
($7)
$286
Excluding:
Net (loss) income attributable to
noncontrolling interests
4
2
-
6
4
1
(1)
4
Interest in earnings(losses) of
associates, net of tax
(15)
3
1
(11)
(19)
3
(3)
(19)
Income taxes
48
29
11
88
63
59
2
124
Interest expense
31
32
30
93
32
35
34
101
Other expense (income), net
(6)
(4)
(5)
(15)
-
3
9
12
Loss on extinguishment of debt
-
-
60
60
-
-
-
-
Depreciation
26
21
21
68
23
24
23
70
Amortization
14
14
14
42
13
12
13
38
EBITDA
$321
$202
$105
$628
$362
$184
$70
$616
Excluding:
Operational Improvement Program
-
-
-
-
-
3
17
20
Expense reduction initiative
41
-
-
41
-
-
-
-
Fees related to extinguishment of
debt
-
-
1
1
-
-
-
-
Foreign currency movements
(3)
(11)
(10)
(24)
-
-
-
-
Underlying EBITDA
$359
$191
$96
$646
$362
$187
$87
$636 |
 WILLIS
GROUP HOLDINGS Fact Book
Third Quarter 2014
December 2014
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