pounds 8m shake-up at Willis to improve profits

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Willis Corroon, the insurance broking group, yesterday took a further step in the reorganisation of its business with the announcement of an pounds 8.2m charge to cover profit improvement measures.

Unveiling a 17 per cent rise in nine-months profits, the chairman, John Reeve, said: "The action the group has been taking to re-focus on its core businesses has achieved the objectives of improving profitability and strengthening the balance sheet, essential precursors to the next phase of the group's strategic development."

The programme of change at the group would include several immediate profit improvement measures, he said. The cost of will be taken in the full-year figures and is likely to be around the same level as the pounds 8.2m profit commission received from the group's Lloyd's members' agency so far this year.

The group said it would continue to seek growth opportunities, but reiterated its view that it saw no need to join with another group to combat competitive insurance markets.

Max Taylor, chief operating officer, said they did not feel under any greater pressure to merge with another large player following the acquisition by Aon Corporation of Inchcape's Bain Hogg broking operation. Willis was focused on organic growth, and in attracting the best people, he said. Were it to make an acquisition it would be a "very specific targeted acquisition" in the US retail market.

However, the group also intends to grow its existing offices in continental Europe and is looking to add to its Latin American network of offices, which includes Mexico, Venezuela and Peru.

The nine-months figures showed the group shrugging off continuing difficult markets to report profits 17 per cent higher at pounds 88.2m. Stripping out the pounds 8.2m from the Lloyd's members' agency and disposal gains, the underlying businesses recorded a 14 per cent increase to pounds 75.5m. The figures included a 57 per cent leap in underlying profits to pounds 8.3m for the third quarter.

Mr Reeve said brokerage and fees had risen 2 per cent in the year to date, at constant exchange rates, reflecting higher business volumes, particularly in the UK and North American retail and global reinsurance operations. Tight control of costs led to increased margins.

Nearly a third of its expected dollar earnings for next year are hedged at $1.50 to the pound, the group said, which will go some way to offsetting the recent strength of sterling.

Although the figures were better than expectations, the shares managed a rise of just 0.5p to 129.5p yesterday.