View from City Road: Still waiting at Willis

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The Independent Online
The royal family of Lloyd's of London, as the newly modernised Willis Corroon used to be known, provided some market interest yesterday in an otherwise sluggish insurance brokers' sector. The share price of the group rose 7p to 233p after the announcement of half yearly results.

Pre-tax profits of Willis for the six months ending 30 June were 17 per cent higher at pounds 63.1m, compared with analysts' expectations of around pounds 61m.

This is exciting news in a sector that has only been enlivened in the last few days by Britain's number one independent insurance broker, Sedgwick Group, buying a life and pensions broker, Noble Lowndes.

The once influential Willis has been club-footed in its management skills. A disastrous merger with the old Stewart Wrightson group in the late 1980s left it with little but an expensive name. A merger with Corroon & Black of the US in 1990 left shareholders of Corroon & Black thinking Christmas had come.

Willis used to be the largest Lloyd's broker of ships and their cargoes. That has been dwindling for years as air freight has grown. Now Willis can boast of putting no more than 15 per cent of its total premium turnover into Lloyd's. It handles an insignificant part of business placed from Lloyd's into the world's reinsurance markets. Moreover, the group is still saddled with the costs of its discontinued unprofitable operations, such as Sovereign.

Despite a rising dollar, which ought to be a boost, Willis shares have done little against the stock market since last September. A decision earlier this year to halve dividends has not helped, nor have lower interest rates. But investors are also waiting for signs of a pick-up in US premium rates. A yield of 3.4 per cent is hardly compensation while waiting for recovery.