Net income down, revenue up for Willis Group in second quarter

Willis Group Holdings has reported a net income of $47 million in the second quarter of 2014 down from $105 million in the same period last year.

It also reported net income of $293 million for the first half of the year, down from $324 million for the first six months of 2013.

Total reported revenues, which include commissions and fees, investment income and other income, were $935 million in the second quarter of 2014, up from $890 million in the same period of 2013.

The global risk advisor and insurance and reinsurance broker also saw organic growth in commissions and fees of 4.5% for the three months ended June 30, which is said was led by emerging markets and North America.

The North America segment saw a 4.8% jump in organic commissions and fees in Q2 compared with the second quarter of 2013, while its  International segment saw 5.6% organic growth in commissions and fees.

“Strong revenue growth in the second quarter 2014 was more than offset by increased expenses primarily driven by investment in new hires since the end of the second quarter 2013,” Willis’ statement notes.

“The resulting business performance reduced second quarter earnings by approximately $0.04 per diluted share compared to the same period last year. The pace of hiring has moderated since the second half of 2013, with global headcount up about 1% year to date in 2014.”

Total commissions and fees were $2.02 billion for the first six months 2014, compared to $1.93 billion for the first half of last year. Organic growth in commissions and fees was 4.3% in the first half of 2014.

Underlying EBITDA (underlying earnings before interest, taxes, depreciation and amortization), was $549 million in the first half of 2014, which was “essentially flat” compared with the first half of last year, Willis reported.

“Willis grew revenues strongly in many of its businesses and even saw modest growth in reinsurance where the market faces significant rate pressure,” Dominic Casserley, Willis Group’s CEO commented in a press release.

“This is testament to our diversified strength across geographies, sectors and business lines and reflects the cumulative investments for growth we have made, including in the second half of last year, in revenue-producing talent and client service and risk management capabilities,” he said.

“We will continue to invest selectively in talent but expect salary and benefit expense growth, excluding acquisitions, to moderate during the second half of the year as the comparisons to prior year periods begin to reflect both the higher base levels in the second half of 2013 and also our lower headcount growth in 2014.”