Willis Towers Watson Public Limited Company · NASDAQ:WTW
Willis Towers Watson Public — Willis Group Holdings — Bank of America Merrill Lynch Insurance Conference 2012
33 slides from Willis Towers Watson Public's conference presentation, Feb 16, 2012
Slide 1: Willis Group Holdings
Exhibit 99.1 WILLIS GROUP HOLDINGS Joe Plumeri Chairman and Chief Executive Officer Bank of America Merrill Lynch Insurance Conference February 16, 2012
Slide 2: Willis: A leading global insurance broker
Willis: A leading global insurance broker Willis Global Franchise 2011 Commissions and Fees by Segment Willis Subsidiaries and Associates Broad range of professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services Global distribution capabiliti
Slide 3: 2011: A year in transition
2011: A year in transition 2011 challenges Continued economic weakness, particularly in North America, U.K. and Europe Rates were soft but less of a headwind in latter half of 2011 Increased operational costs due to: Continued investment in growth markets Increased retention award amortization Reins
Slide 4: 2011: A year in transition (cont.)
2011: A year in transition (cont.) What we achieved Undertook and completed Company-wide operational review Aimed at aligning resources and positioning the company for future growth Total charge of $180m in 2011 Resulting in cost savings of approximately $80m in 2011 Expected annualized savings of ~
Slide 5: 2011: A year in transition (cont.)
2011: A year in transition (cont.) What we achieved: 4% reported and 2% Organic C&F growth Global - organic C&F growth of 7% with growth in each business unit Reinsurance up high single-digits led by growth in North America Global Specialties up mid single-digits, led by Energy, Marine and Aerospace
Slide 6: Strong track record of organic growth leadership
Strong track record of organic growth leadership Commissions and fees: $3.42 billion (2011) 8% Average organic growth 2006 – 2011: 4% 4% Willis 4% 3% 3% Peers 0% 2% 2% 2% Annual premiums written: 0% ~$40 billion + (1)% (1)% Relationships with more than (2)% 5,000 insurance carriers worldwide 2006 20
Slide 7: Growth driven by new business production
Growth driven by new business production % Organic growth in commissions and fees 6% average net new underlying business 2006 – 2011 7 See important disclosures regarding Non-GAAP measures on page 24
Slide 8: Strong adjusted operating margins
Strong adjusted operating margins 24% 23% 23% 23% 22% 21% 21% 21% 21% 20% 19% 19% 2006 2007 2008 2009 2010 2011 Willis Peer Average Average 2006 – 2011 Willis 23% Peers 20% Note: Peer averages are based on Willis estimates using public information from AJG, AON, BRO, MMC 8 See important disclosures
Slide 9: Strong cash flow from operations
Strong cash flow from operations 2011 decline driven by Operational Review cash outflow of ~$100m 2011 uses of cash Dividends (~ $170 million) Mandatory debt repayments (~$110 million) Operational review (~$100 million) Capex (~ $110 million) 2012 expected uses of cash Similar to 2011, except Mandat
Slide 10: Leverage Ratios Continue to Improve
Leverage Ratios Continue to Improve • Adjusted EBITDA $915 million in 2011, an improvement of $3 million versus 2010 • Debt outstanding $2.4 billion as at December 31, 2011, a reduction of $281 million since 2008 3.8x 2.7x 2.5x 2.6x 1.8x 1.3x (a) 2006 2007 2008 2009 2010 2011 Debt / Adjusted EBITDA
Slide 11: Capital priorities
Capital priorities Reinvestment in the business for future growth Continue to pay down debt Aim to reduce Debt/EBITDA to low 2x level Share repurchase Announced buyback of up to $100m for 2012 Small “tuck-in” accretive acquisitions Dividend Announced 3.8% increase to annual rate of $1.08 per share 1
Slide 12: Looking ahead
* * * * * Looking ahead * 12
Slide 13: 2012 - driving growth
2012 - driving growth Continue to realign our business model to further grow the Company Deliver the Willis Cause Grow each of our businesses Nurture growth in North America Harness growth in International Maximize the Global businesses Share repurchase Small “tuck-in” accretive acquisitions Adjuste
Slide 14: Rate environment evolving
Rate environment evolving Seeing early signs of overall improvement : Rates were slightly positive in North America in 4Q2011 January survey of Willis brokers in North America Property up mid-single digits Casualty and personal lines up low-single digits Jan 1, 2012 US reinsurance renewals saw posit
Slide 15: Wrap up
Wrap up Willis is in great shape Operational review complete and delivering savings Revenue initiatives rolled out – focus on execution Debt refinanced – greater flexibility Strong balance sheet The right management team in place to lead us forward Well placed to benefit from rate improvement 15 See
Slide 16: Appendix
* * * * Appendix 16
Slide 17: Willis North America overview
Willis North America overview Segment overview 2011 commissions and fees – by region Extensive retail platform with leading positions in major markets Western Able to leverage industry and specialty 14% South practice group expertise across network 16% Atlantic Major practice groups include: 20% Emp
Slide 18: Willis International overview
Willis International overview Segment overview 2011 commissions and fees – by region Retail operations in Eastern and Western Europe, the United Kingdom & Ireland, Asia Pacific, the Middle East, South Africa and Latin America Providing services to business locally in over 120 countries; leading posi
Slide 19: Willis Global overview
Willis Global overview Segment overview 2011 commissions and fees – by business Reinsurance Willis Re One of only three global reinsurance brokers Significant market share in major markets, particularly marine and aviation Cutting edge analytical and advisory services, including Willis Research Netw
Slide 20: Willis Global overview (continued)
Willis Global overview (continued) Segment overview 2011 commissions and fees Global Specialties Strong global positions in Aerospace/Inspace FINEX and Financial Solutions – political risks and UK financial institutions Marine Energy Construction Willis Faber & Dumas includes Faber & Dumas - wholesa
Slide 21: The Willis Cause
The Willis Cause 21 See important disclosures regarding forward-looking statements on page 24
Slide 22: Delivering the Willis Cause
Delivering the Willis Cause Deliver the Willis Cause - our value proposition to clients – more consistently and efficiently. Initiatives include: Client Advocates to deliver all aspects of the Cause to clients Growing new business through: Global Solutions to grow our share of the Global 1,220 accou
Slide 23: Important disclosures regarding forward-looking statements
Important disclosures regarding forward-looking statements 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 cre
Slide 24: Important disclosures regarding Non-GAAP measures
Important disclosures regarding Non-GAAP measures 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 metho
Slide 25: Non-GAAP measures: Operating Income to Adjusted Operating Income
Important disclosures regarding Non-GAAP measures (continued) Operating Income to Adjusted Operating Income 2006 2007 2008 2009 2010 2011 (In millions) FY FY FY FY FY FY Operating Income $552 $620 $503 $694 $753 $591 Excluding: (a) 2011 Operational review - - - - - 180 (b) FSA regulatory settlement
Slide 26: Non-GAAP measures: Quarterly Operating Income reconciliation
Important disclosures regarding Non-GAAP measures (continued) Operating Income to Adjusted Operating Income 2010 2011 (In millions) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Operating Income $301 $169 $106 $177 $238 $157 $90 $106 Excluding: (a) 2011 Operational review charge - - - - 97 18 15 50 (b) FSA regulatory set
Slide 27: Non-GAAP measures: Net Income to Adjusted Net Income
Important disclosures regarding Non-GAAP measures (continued) Net Income to Adjusted Net Income 2006 2007 2008 2009 2010 2011 (In millions, except per share data) FY FY FY FY FY FY Net Income attributable to Willis Group Holdings plc $449 $409 $302 $436 $455 $218 Excluding the following, net of tax:
Slide 28: Non-GAAP measures: Quarterly Net Income reconciliation
Important disclosures regarding Non-GAAP measures (continued) Net Income to Adjusted Net Income 2010 2011 (In millions, except per share data) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Net Income attributable to Willis Group Holdings plc $204 $89 $64 $98 $34 $85 $60 $39 Excluding the following, net of tax: 2011 opera
Slide 29: Non-GAAP measures: Adjusted EBITDA and Debt/Adjusted EBITDA
Important disclosures regarding Non-GAAP measures (continued) Adjusted EBITDA and Debt/Adjusted EBITDA 2006 2007 2008 2009 2010 2011 (In millions) FY FY FY FY FY FY Operating Income $552 $620 $503 $694 $753 $591 Excluding: (a) - - - - - 180 2011 operational review (b) - - - - - 11 FSA regulatory set
Slide 30: Notes to the non-GAAP reconciliations
Important disclosures regarding Non-GAAP measures (continued) Notes to the Operating Income to Adjusted Operating Income reconciliation and Net Income from Continuing Operations to Adjusted Net Income from Continuing Operations reconciliation (a) $50 million pre-tax charge in 4Q11 ($180 million in F
Slide 31: Commissions and Fees Analysis 2011
Important disclosures regarding Non-GAAP measures (continued) Commissions and Fees Analysis (a) Organic Foreign Acquisitions commissions currency and Contingent and fees 2011 2010 Change translation disposals Commissions growth ($ millions) % % % % % Three months ended December 31, 2011 Global $213
Slide 32: Commissions and Fees Analysis 2010 and 2009
Important disclosures regarding Non-GAAP measures (continued) Commissions and Fees Analysis (a) Organic Foreign Acquisitions commissions currency and Contingent and fees 2010 2009 Change translation disposals Commissions growth ($ millions) % % % % % 2010 Full year Global $994 $931 7 - - - 7 North A
Slide 33: Willis Group Holdings
WILLIS GROUP HOLDINGS Joe Plumeri Chairman and Chief Executive Officer Bank of America Merrill Lynch Insurance Conference February 16, 2012
Willis Group Holdings — Bank of America Merrill Lynch Insurance Conference 2012 on 6ix