Willis Corroon disappoints in first quarter

DISAPPOINTING first quarter results yesterday took shares in Willis Corroon 23 per cent lower to 1911 2 p. The insurance broker's pounds 42.2m profit before tax for the three months to 31 March were pounds 4.9m below the first quarter last year and pounds 10m below the gloomiest City expectation, writes Diane Coyle.

Operating profits in the UK rose 6 per cent to pounds 37m on turnover of pounds 101m, but US profits dropped from pounds 6.9m to pounds 200,000 on revenues of pounds 88.6m. Willis blamed the defection late last year of a team of construction risks specialists to a competitor, taking some business with them.

It also said it was losing business in the US at an unacceptable rate, with competition in the industry remaining fierce.

Charles Landa, insurance analyst at Societe Generale Strauss Turnbull, said: 'To say these results were disappointing is an understatement. It has caused particular consternation that there was no hint of a problem in the annual report published in March.' He has revised his forecast for full year profits down by pounds 20m to pounds 75m, just below the 1993 figure.

Willis said operating expenses rose by pounds 7.5m, a 5.5 per cent increase, with about half attributable to development costs. It has opened new offices in Europe, Latin America and the Pacific Rim.

Underlying costs grew 3.5 per cent. It said action was being taken to keep increases in costs more in line with revenue growth.

The group's discontinued underwriting businesses, which are being run down, made a loss of pounds 900,000 compared with a profit of pounds 1.1m a year earlier.