Willis Corroon rejects calls for merger

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The Independent Online
Willis Corroon, one of the world's top six insurance brokers, yesterday turned its back on mergers with any of its main competitors as it announced a 6 per cent first-half rise in pre-tax profits to pounds 70.6m.

The company said it would concentrate on growing in a number of chosen insurance market sectors around the world. It added that, where necessary, it would go on the takeover trail itself if it felt that organic growth was not taking place fast enough.

John Reeve, executive chairman, said: "Notwithstanding considerable speculation as to the benefits of mergers between the big six global brokers, we have concluded after analysis of the issues that arguments in favour of such combinations are not compelling.

"In particular, cost economies of scale from such mergers are not likely to be sufficient to confer significant competitive advantage."

However, a spokesman added that the position might change for Willis Corroon if others among the top six did come together.

Mr Reeve was speaking as Willis Corroon revealed a 2 per cent rise in brokerage and commission income of pounds 365.2m in the first half of the year. Excluding pounds 2.4m from disposals of non-core businesses, profits from the group's operations was 4 per cent higher.

Willis Corroon said that in the second quarter of this year profits from continuing operations reached pounds 20.1m, excluding disposals, 16 per cent up on the same period last year. Brokerage and fee revenue rose 2 per cent to pounds 165.8m.

Mr Reeve said Willis Corroon had worked hard to add business volume to compensate for the continuing reductions in premiums across all sectors.

Despite some signs of firmer rates in the marine sector, the company continues to predict falling or - at best - stable premiums in the period immediately ahead.

Mr Reeve said the group had carried out an internal review and a new organisational structure would be introduced later in the year.

Willis Corroon is backing Lloyd's of London's reconstruction and renewal programme and is pleased that it appears likely to be adopted. The group expects to pay a five-year annual levy on its business, with a pounds 2.6m payment due later this year. Its members' agency expects to make a one-off contribution of pounds 3.5m.

Both payments will be covered by the release of litigation funds no longer needed.

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