This discussion includes references to non-GAAP financial measures as defined in Regulation G of SEC rules. We present such non-GAAP financial measures, as we believe such information is of interest to the investment community because it provides additional meaningful methods of evaluating certain aspects of the Company’s operating performance from period to period on a basis that may not be otherwise apparent on a GAAP basis. Organic revenue growth and organic growth in commissions and fees exclude the impact of acquisitions and disposals and year over year movements in foreign exchange from growth in revenues and commissions and fees. We believe organic revenue growth and organic growth in commissions and fees provide a measure that the investment community may find helpful in assessing the performance of operations that were part of our operations in both the current and prior periods,
Willis-Ireland. We do not expect the Redomicile to have a material impact on our financial results. We remain subject to the SEC reporting requirements, the mandates of the Sarbanes-Oxley Act and applicable corporate governance rules of the NYSE, and we continue to report our consolidated financial results in US dollars and in accordance with US GAAP. We also comply with any additional reporting requirements of Irish Law. The shares of Willis-Ireland are traded on the NYSE under the symbol ‘WSH’, the same symbol under which Willis-Bermuda shares traded prior to the Effective Time.
In our capacity as advisor and insurance broker, we act as an intermediary between our clients and
From 2000 through 2003 we benefited from a hard market with premium rates stable or increasing. During 2004, we saw a rapid transition from a hard market to a soft market, with premium rates falling in most markets. Rates continued to decline in most sectors through 2005 and 2006, with the exception of catastrophe-exposed markets. In 2007, the market softened further with decreases in many of the market sectors in which we operated and this
In 2009, the stabilization of rates in the reinsurance market and some specialty markets was offset by the continuing soft market in other sectors and the adverse impact of the weakened economic environment across the globe.
In 2010, our main priorities will include driving revenue growth, continuing to execute our Shaping Our Future initiative, creating incremental savings to fund growth, completing the HRH integration and leveraging our growth opportunities from our expanded footprint.
Despite the difficult trading conditions in 2009, we reported 2 percent organic growth in commissions and fees in 2009 compared with 2008. This reflected growth in Global operations, in particular in Reinsurance, and many of our International businesses partly offset by a fall in organic commissions and fees in our North America, UK and Irish retail operations where revenues were adversely impacted by the continued soft market and weak economic conditions.
Net income from continuing operations in 2009 was $436 million, or $2.58 per diluted share, compared with $302 million, or $2.04 per diluted share, in 2008. This increase included organic growth in commissions and fees, a reduction in costs associated with our 2008 expense review from $0.45 per diluted share in 2008 to $0.11 per diluted share for severance costs, in 2009 and a one-time tax release in 2009 relating to a change in UK tax law in 2009 equivalent to $0.16 per diluted share.
a favorable year over year impact from foreign currency translation, equivalent to 3 percentage points; and
a $10 million gain from the sale of part of our interest in Gras Savoye;
Net income from continuing operations in 2008 was $302 million, or $2.04 per diluted share, compared with $409 million, or $2.78 per diluted share, in 2007. The benefits of good organic revenue growth, improved margins in our International and Global operations and a lower effective tax rate were more than offset by a $0.45 per diluted share impact of charges for the 2008 expense review and a $0.27 per diluted share year over year impact from foreign exchange.
consideration for the HRH acquisition had an $0.11 dilutive impact on full year diluted earnings per share.
Total revenues at $2,827 million were $249 million, or 10 percent, higher than in 2007. Organic revenue growth of 4 percent, a 7 percent benefit from net acquisitions and disposals primarily reflecting the HRH acquisition and a 1 percentage point benefit from foreign currency translation were partly offset by lower investment and other income. Organic revenue growth of 4 percent reflected net new business growth of 6 percent and a 2 percent negative impact from declining rates and other market factors.
an adverse year over year impact from foreign currency translation, equivalent to approximately 2 percentage points; and
a $22 million increase in intangible asset amortization, of which $21 million related to HRH;
substantially improves our position in key markets such as New York, Atlanta, California, Texas, Chicago, Boston, and Florida;
The integration of HRH with the existing Willis North America business was a key priority throughout 2009 and the process is now substantially complete. We believe that the goals we set for the integration are being successfully met, as we have:
We recognized goodwill and other intangible assets on the HRH acquisition of approximately $1.6 billion and $0.6 billion, respectively.
In December 2009, we completed a leveraged transaction with the original family shareholders of Gras Savoye and Astorg Partners, a private equity fund, to reorganize the capital of Gras Savoye. As a result of this transaction:
we have a new call option to acquire a 100 percent interest in Gras Savoye in 2015.
As a consequence of the reduction in our ownership interest we expect earnings from our associates to be approximately $10 million lower in 2010 compared with 2009.
Additionally, in the latter part of 2008 and in light of the global economic uncertainty, we launched Right Sizing Willis to reinforce our cost saving initiatives. Right Sizing Willis initiatives include talent management to either improve or manage out poor performers, location optimization and aggressive reduction of discretionary spending.
In 2008, we incurred a pre-tax charge of $92 million ($66 million net of tax, equivalent to $0.45 per diluted share) comprising:
$26 million of other operating expenses, including property and systems rationalization costs.
In 2009, we realized approximately $100 million of gross benefits from previous initiatives, including:
approximately $15 million from a program of initiatives within Reinsurance focused on enhancing our client offering, including implementation of a global sales model, improving service delivery, developing further cutting edge analytical capabilities and hiring of additional production and specialist product resources.
In September 2009, we issued $300 million of 7% senior notes due 2019. We then launched a tender offer on September 22, 2009 to repurchase any and all of our $250 million 5.125% senior notes
Total debt, total equity and the capitalization ratio at December 31, 2009 were as follows:
Our principal sources of liquidity are cash from operations, cash and cash equivalents of $191 million at December 31, 2009 and $300 million remaining availability under our revolving credit facility.
Investment income was $50 million for 2009, $31 million lower than 2008, with the decrease reflecting significantly lower average interest rates
in 2009. The impact of rate decreases on our investment income was partially mitigated by our forward hedging program. In 2009 this generated additional income of $27 million compared with LIBOR based rates. We expect to see a lower benefit from our forward hedging program in 2010.
Organic growth in commissions and fees was 2 percent for 2009, despite a negative 3 percent impact from declining premium rates and other market factors. Overall organic growth comprises good growth in our Global operations and many of our International operations, partly offset by declines in our North America, UK and Irish retail operations reflecting the weak economic environments and continuing soft market conditions in these territories. Organic revenue growth by segment is discussed further in ‘Operating Results - Segment Information’ below.
Our 2008 total revenues at $2,827 million were $249 million, or 10 percent, higher than in 2007, reflecting a 7 percent benefit from net acquisitions and disposals, principally attributable to HRH, organic commissions and fee growth of 4 percent and a 1 percent benefit from foreign currency translation, partly offset by lower investment and other income.
For the year ended December 31, 2008, reported revenues in International benefited from the year over year weakening of the US dollar against the euro, compared with 2007. However, in our Global operations the revenue line benefit of the stronger euro was offset by sterling weakening against the US dollar, compared with 2007.
Other income was $2 million for 2008, $17 million lower than in 2007 which benefited from a higher than usual level of proceeds from the sale of books of business.
General and administrative expenses at $2,422 million for 2009 were $181 million, or 8 percent, higher than 2008. The increase was mainly attributable to:
a $66 million increase in pension costs, equivalent to approximately 3 percentage points. This excludes the $12 million US curtailment gain and $8 million due to the introduction of a salary sacrifice scheme in the UK. The increase attributable to the salary sacrifice scheme was marginally more than offset by a reduction in salaries and payroll taxes;
a year over year benefit from foreign currency translation of $172 million, equivalent to approximately 8 percentage points. This includes the impact of losses on forward contracts being more than offset by gains relating to the significant year over year strengthening of the US dollar against the pound sterling (in which our London market based operations incur the majority of their expenses), and the euro, together with the benefit of lower foreign exchange losses relating to the UK sterling pension asset;
Salaries and benefits were 56 percent of revenues for 2009, compared with 58 percent in 2008 reflecting the benefits of:
good cost controls, including our previous Shaping Our Future and 2008 expense review initiatives, together with the initial benefits from our Right Sizing Willis initiatives in 2009; and
Effective May 15, 2009, we closed our US defined benefit pension plan to future accrual and recognized a curtailment gain of $12 million in second quarter 2009. As a result the full year 2009 charge for the US plan was $7 million compared with an expected $39 million charge had the plan not been closed to future accrual.
From a payroll tax perspective, this is a more efficient method of making pension contributions.
As a result of this change, the Company made additional pension contributions of $8 million, with a marginally higher saving in salaries and payroll taxes.
Other expenses were 18 percent of revenues for 2009 compared with 21 percent in 2008, reflecting the benefit of:
the non-recurrence of $26 million of costs eliminated by the 2008 expense review, equivalent to 5 percentage points; and
$135 million, or 7 percentage points, was attributable to the fourth quarter acquisition of HRH;
a foreign exchange loss of $68 million, or 4 percentage points, including $34 million related to the revaluation of our UK pension benefits asset together with $23 million relating to sterling purchases to fund the Company’s contributions to the plan.
Salaries and benefits were 58 percent of 2008 revenues, compared with 56 percent in 2007, with the increase reflecting:
a $15 million reduction in pension charges. This decrease was mainly attributable to an increase in the expected return on assets in the UK pension plan reflecting higher opening asset levels due to the significant additional contributions we have made.
Amortization of intangible assets of $100 million in 2009 was $64 million higher than in 2008.
Amortization of intangible assets of $36 million in 2008 was $22 million higher than in 2007 with the increase primarily attributable to a $21 million charge in fourth quarter 2008 in respect of intangible assets recognized on the HRH acquisition.
Operating margin was 21 percent for 2009 compared with 18 percent for 2008. This increase reflected the impact of:
a $66 million increase in pension costs, excluding the $12 million US curtailment gain and the $8 million impact of the UK salary sacrifice scheme discussed above;
a $64 million increase in amortization of intangible assets, principally attributable to HRH; and
Operating margin was 18 percent in 2008 compared with 24 percent in 2007. This decrease reflected the impact of:
a $27 million release relating to a 2009 change in tax law. As at June 30, 2009 we held a provision of $27 million relating to tax that would potentially be payable should the unremitted earnings of our foreign subsidiaries be repatriated. Following a change in UK tax law effective in third quarter 2009, these earnings may now be repatriated without additional tax cost and, consequently, the provision has been released; and
Excluding the benefit of these tax credits, the effective tax rate for 2009 would be 26 percent.
non-taxable exchange gains arising from the significant movement in the exchange rate between the US dollar and sterling; and
the benefit of a $10 million release of uncertain tax provisions in 2007 compared to a $5 million release in 2008. Both 2008 and 2007 benefited from the release of tax provisions relating to prior tax periods following the resolution of tax issues surrounding prior debt refinancing; and
a one-off benefit of $4 million in 2007 relating to the restatement of the closing UK deferred tax liabilities to reflect the reduced rate of corporation tax applicable on the reversal of those liabilities.
Interest in earnings of associates, net of tax, was $33 million in 2009, $11 million higher than in 2008. These increases reflect improved performance and an increased ownership share in Gras Savoye, our largest associate, for most of the year. As described within the ‘Executive Summary’ section above, our interest in Gras Savoye reduced from
Net income from continuing operations for 2009 was $436 million compared with $302 million in 2008. The $134 million increase primarily reflected the $191 million increase in operating income, discussed above, partly offset by the $69 million increase in interest expense.
We organize our business into three segments: Global, North America and International. Our Global business provides specialist brokerage and consulting services to clients worldwide for risks
In 2008, the Company changed its basis of segmental allocation for central costs. All accounting adjustments for foreign exchange hedging activities and foreign exchange movements on the UK pension plan asset or liability are held at the Corporate level, together with legal costs that are managed centrally.
with legal costs that are managed centrally. As a result of this change, $1 million net operating profit for full year 2007, previously allocated to the Global segment, has been reported within Corporate.
Productivity continued to improve with a 3 percent rise in revenues per FTE employee to $358,000 in 2009 compared with 2008. Client retention remained steady at 90 percent for the full year 2009.
Commissions and fees were $34 million, or 5 percent, higher in 2008 compared with 2007 of which 3 percent was attributable to the net impact of acquisitions and disposals, mainly due to HRH’s UK-based specialty business. There was no net impact from foreign currency translation as a benefit from the euro strengthening year over year against the dollar was offset by a negative impact from sterling weakening against the dollar.
Client retention levels in Global improved to approximately 90 percent in 2008 compared with approximately 89 percent in 2007.
Operating margin was 31 percent in 2009 compared with 29 percent in 2008. This improvement reflected a significant benefit from foreign currency translation, together with organic revenue growth, particularly driven by our Reinsurance business, and good cost controls including a reduction in discretionary expenses. The benefit of these was partly offset by a significant increase in the UK pension expense and the sharp reduction in investment income.
Despite an overall reduction in headcount since December 31, 2008, we continue to recruit selectively for our Global businesses. In first quarter 2009, we recruited a reinsurance team from Carvill. This team provides specialty, casualty and professional liability experience. We have also recruited specialty expertise in Marine, Aerospace and Faber & Dumas.
Operating margin in Reinsurance in 2008 was broadly in line with 2007 as the impact of lower commissions and fees was largely offset by the benefits of Shaping Our Future initiatives, lower pension costs and the positive results of our continued investments to strengthen capital markets and analytics capabilities throughout the soft market.
In fourth quarter 2008, we changed our methodology for the calculation of organic growth in commissions and fees. Previously, organic growth included growth from acquisitions from the date of acquisition. Under the new method, the first twelve months of commissions and fees generated from acquisitions are excluded. Comparatives have been adjusted accordingly.
Our primary focus in North America in 2009 was the integration of HRH into our existing operations and the improvement of margin. Additionally, in the second half of the year we refocused our efforts on revenue growth and we believe this has led to over 10 percent new business generation in parts of the business during that time period.
The integration of the HRH acquisition made good progress in fourth quarter 2008 with only 2 percent attrition of legacy HRH producers since the announcement of the HRH acquisition in June 2008.
Client retention levels improved to approximately 91 percent in 2008, an increase of approximately 3 percentage points from 2007, and productivity continued to improve with an approximately 2 percent rise in revenues per FTE employee in 2008 compared with 2007.
the acquisition of HRH and the synergies and cost savings achieved from the integration of HRH with our existing North America operations;
a reduction in underlying expense base reflecting the benefits of our 2008 Expense Review and Right Sizing Willis initiatives; and
a $9 million benefit from the curtailment of the US pension scheme relating to our North America retail employees;
reducing our expense base through synergies and other cost savings. On a combined basis, we achieved approximately $205 million of cost savings in 2009; and
Operating margin in North America in 2008 was 15 percent compared with 19 percent in 2007. The decrease of 4 percentage points reflected:
Commissions and fees in International were $35 million, or 3 percent, lower in 2009 compared with 2008 as double digit new business generation in many of our International units was more than offset by an adverse impact from foreign exchange of 8 percent, a 3 percent adverse impact from rates and other market factors, and significantly lower revenues in our UK and Irish retail operations.
Client retention levels remained high at approximately 90 percent for 2009.
Commissions and fees in International were $93 million, or 10 percent, higher in 2008 compared with 2007.
Foreign currency translation benefited 2008 revenues by 1 percent compared with 2007.
Productivity in International continued to improve with revenues per FTE employee rising by 6 percent in 2008 compared with 2007 and average client retention levels remaining high at approximately 91 percent.
Operating margin in International was 26 percent in 2009 compared with 28 percent in 2008. The benefits of:
a weak performance by our Irish retail operations reflecting their difficult market conditions.
Our preliminary estimate of the impact of these changes on our 2010 income statement is that diluted earnings per share for the Group may be approximately $0.03 lower than it would otherwise have been.
Currently, we do not anticipate any material impact on our balance sheet from the devaluation.
2009. Elsewhere, pension benefits are typically provided through defined contribution plans.
lower asset returns from lower asset levels following the decline in the equity markets;
additional pension contributions of $8 million in connection with the pension related salary sacrifice scheme; and
The US pension charge was $6 million lower in 2009 compared with 2008 reflecting the closure of the scheme and the resulting $12 million curtailment gain.
Assumes all plan participants are one year younger. Expected long-term rates of return on plan assets are developed from the expected future returns of the various asset classes using the target asset allocations. The expected long-term rate of return used for determining the net UK pension expense in 2009 remained unchanged at 7.8 percent, equivalent to an expected return in 2009 of $127 million. The expected and actual returns on UK plan assets for the three years ended December 31, 2009 were as follows:
Mortality assumptions at December 31, 2009 were unchanged from December 31, 2008. The mortality assumption is the 100 percent PNA00 table without an age adjustment. As an indication of the longevity assumed, our calculations assume that a UK male retiree aged 65 at December 31, 2009 would have a life expectancy of 22 years.
estimation of future cash flows which is dependent on internal forecasts;
the estimation of the useful life over which cash flows will occur; and
We base our fair value estimates on assumptions we believe to be reasonable. However, changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit.
Our annual goodwill impairment analysis, which we performed during the fourth quarter of 2009, did not result in an impairment charge (2008: $nil, 2007: $nil).
At December 31, 2009, we had gross deferred tax assets of $390 million (2008: $362 million) against which a valuation allowance of $92 million (2008:
We purchase professional indemnity insurance for errors and omissions claims. The terms of this insurance vary by policy year and self-insured risks have increased significantly over recent years. We have established provisions against various actual and potential claims, lawsuits and other proceedings relating principally to alleged errors and omissions in connection with the placement of insurance and reinsurance in the ordinary course of business. Such provisions cover claims that have been reported but not paid and also claims that have been incurred but
not reported. These provisions are established based on actuarial estimates together with individual case
reviews and are believed to be adequate in the light of current information and legal advice.
During 2009, we have taken a number of actions to significantly improve our debt maturity profile:
in March 2009, we issued 12.875% senior notes due 2016 in an aggregate principal amount of $500 million to Goldman Sachs Mezzanine Partners which generated net proceeds of $482 million. These proceeds, together with $208 million cash generated from operating activities and cash in hand, were used to pay down the $750 million outstanding on our interim credit facility as of December 31, 2008; and
Once the remaining $83 million of senior notes due July 2010 are repaid, the only mandatory repayments over the next 5 years are the scheduled repayments on our $700 million 5-year term loan and $4 million due on a fixed rate loan note due 2012.
payment of interest on debt and $110 million of mandatory repayments under our 2013 term loan;
payment of the $90 million principal outstanding on our senior notes due July 2010;
Based on current market conditions and information available to us at this time, we believe that we have sufficient liquidity to meet our cash needs for at least the next 12 months.
outlook and our current ratings allow us more flexibility in our capital planning.
We continue to identify and implement further actions to control costs and enhance our operating performance, including cash flow. These actions include the rationalization of our cost base through our ongoing Right Sizing Willis initiatives to achieve the best structure within the current environment.
a $65 million increase in cash payments for interest reflecting higher average debt levels, particularly following the funding of the HRH acquisition;
a $46 million reduction in additional contributions to our UK and US defined benefit pension plans;
the $926 million net cash outflow attributable to the HRH acquisition in 2008;
Total net cash used in investing activities was $1,033 million in 2008 compared with $181 million in 2007. The movement was attributable to:
an $899 million net increase in the cost of acquisitions, primarily reflecting $926 million attributable to the HRH acquisition; and
a reduction in fixed asset spend of $91 million, principally attributable to sharply reduced expenditure on our new London and US headquarters buildings following their completion.
Net cash used in financing activities was $516 million in 2009 compared with an inflow of $808 million in 2008 and an outflow of $193 million in 2007.
$521 million, of which $27 million related to our first mandatory debt repayment.
In 2008, we repurchased 2.3 million shares at a cost of $75 million and in 2007 we repurchased 11.5 million shares for $480 million of cash.
Cash dividends paid in 2009 were $174 million compared with $146 million in 2008 and $143 million in 2007.
In December 2009, we applied the net cash proceeds of $155 million from the Gras Savoye transaction, together with other cash in hand, to reduce the balance outstanding on the 5-year term loan by approximately $180 million to $521 million.
We lease our London headquarters building under a 25 year operating lease, which expires in 2032. Annual rentals are $31 million per year and we have subleased approximately 30 percent of the premises under leases up to 15 years. The outstanding contractual obligation for lease rentals at December 31, 2009 was $785 million and the amounts receivable from subleases was $100 million.
For the US plan, expected contributions are the contributions we will be required to make under US pension legislation based on our December 31, 2009 balance sheet position. We currently expect to contribute $30 million in 2010 and $30 million per year from 2011 to 2014.
Apart from commitments, guarantees and contingencies, as disclosed in Note 18 to the Consolidated Financial Statements, the Company has no off-balance sheet arrangements that have, or
are reasonably likely to have, a material effect on the Company’s financial condition, results of operations or liquidity.
Consolidated Statements of Operations for each of the three years in the period ended December 31, 2009
Willis Group Holdings plc (‘Willis Group Holdings’) (formerly Willis Group Holdings Limited (‘Willis-Bermuda’) - see Note 2 - Redomicile to Ireland) and subsidiaries (collectively, the ‘Company’ or the Group) provide a broad range of insurance and reinsurance broking and risk management consulting services to its clients worldwide, both directly and indirectly through its associates. The Company provides both specialized risk management advisory and consulting services on a global basis to clients engaged in specific industrial and commercial activities, and services to small, medium and major corporates through its retail operations.
On September 24, 2009, Willis Group Holdings was incorporated in Ireland, in order to effectuate the change of the place of incorporation of the parent company of the Group. Willis Group Holdings operated as a wholly-owned subsidiary of Willis-Bermuda until December 31, 2009, when the outstanding common shares of Willis-Bermuda were canceled and Willis Group Holdings issued ordinary shares with substantially the same rights and preferences on a one-for-one basis to the holders of the Willis-Bermuda common shares that were canceled. Upon completion of this transaction, Willis Group Holdings replaced Willis-Bermuda as the ultimate parent company and Willis-Bermuda became a wholly-owned subsidiary of Willis Group Holdings.
This transaction was accounted for as a merger between entities under common control; accordingly, the historical financial statements of Willis-Bermuda for periods prior to this transaction are considered to be the historical financial statements of Willis Group Holdings. No changes in capital structure, assets or liabilities resulted from this transaction, other than Willis Group Holdings has provided a guarantee of amounts due under certain borrowing arrangements of two of its subsidiaries as described in notes 24 and 25.
Significant accounting policies followed in the preparation of the consolidated financial statements.
During third quarter 2009, the new Accounting Standards Codification (‘ASC’) was issued by the Financial Accounting Standards Board (‘FASB’). The ASC has become the source of authoritative US GAAP recognized by the FASB to be applied by nongovernmental entities. The ASC is not intended to change or alter existing GAAP and therefore all references to GAAP remain throughout this document.
New accounting guidance related to business combinations was effective from January 1, 2009. This guidance made substantial changes to how entities account for business combinations, establishing principles and requirements for how the acquirer:
Assets and liabilities that arose from business combinations with acquisition dates prior to the effective date (financial years beginning after December 15, 2008) are not adjusted upon adoption, with certain exceptions for acquired deferred tax assets and acquired income tax positions.
Accordingly, certain reclassifications have been made in prior year amounts to conform to current year presentation.
In June 2009, the FASB issued new accounting guidance which amends the evaluation criteria to identify the primary beneficiary of a Variable Interest Entity (‘VIE’) and requires ongoing reassessment of whether an
Fixed assets are stated at cost less accumulated depreciation. Expenditures for improvements are capitalized; repairs and maintenance are charged to expenses as incurred. Depreciation is computed using the straight-line method based on the estimated useful lives of assets.
Depreciation on buildings and long leaseholds is calculated over the lesser of 50 years or the lease term. Depreciation on leasehold improvements is calculated over the lesser of the useful life of the assets or the remaining lease term. Depreciation on furniture and equipment is calculated based on a range of 3 to 10 years.
Goodwill represents the excess of the cost of businesses acquired over the fair market value of identifiable net assets at the dates of acquisition. The Company reviews goodwill for impairment annually and whenever facts or circumstances indicate that the carrying amounts may not be recoverable. As part of the evaluation the estimated future discounted cash flows associated with the underlying business operation are compared to the carrying amount of goodwill to determine if a write-down is required. If such an assessment indicates that the discounted future cash flows are not sufficient, the carrying amount is reduced to the estimated fair value. Acquired intangible assets are being amortized on a straight-line basis over their estimated useful life with the exception of customer relationships for HRH which are amortized in line with the underlying cash flows.
The Company recognizes deferred tax assets and liabilities for the estimated future tax consequences of events attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating and capital loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted rates in effect for the year in which the differences are expected to
The Company recognizes interest relating to unrecognized tax benefits and penalties within income taxes.
The Company has two principal defined benefit pension plans which cover the majority of employees in the United States and United Kingdom. Both these plans are now closed to new entrants. Effective May 15, 2009, the Company closed the US defined benefit pension plan to future accrual. New entrants in the United Kingdom are offered the opportunity to join a defined contribution plan and in the United States are offered the opportunity to join a 401(k) plan. In addition, there are smaller plans in certain other countries in which the Company operates. Elsewhere, pension benefits are typically provided through defined contribution plans.
Fees for risk management and other services are recognized as the services are provided. Negotiated fee arrangements for an agreed period covering multiple insurance placements, the provision of risk management and/or other services are determined, contract by contract, on the basis of the relative fair value of the services completed and the services yet to be rendered. The Company establishes contract cancellation reserves where appropriate: at December 31, 2009, 2008 and 2007, such amounts were not material.
The Company incurred severance costs of $24 million in the year ended December 31, 2009 (2008: $26 million) relating to over 450 positions that have been, or are in the process of being, eliminated as part of the Company’s continuing focus on managing expense. Of these costs, $18 million was incurred in first half 2009 as part of the Company’s Right Sizing Willis initiatives and $6 million was incurred in the second half of 2009 relating to severance costs arising in the normal course of business (2008: $2 million; 2007: $2 million). Severance costs for these employees were recognized pursuant to the terms of their existing benefit arrangements or employment agreements.
In 2008, the Company also incurred severance expenses as it integrated HRH into its existing North America operations. Severance costs of $2 million (2007: $nil) relating to the elimination of approximately 100 positions in the Company’s existing operations were recognized through the consolidated statement of operations in 2008. In addition, $16 million of severance expenses relating to 900 HRH positions eliminated as part of the integration plan were recognized as a liability on acquisition.
The Company has adopted the plans described below, which provide for the grant of time-based options and performance-based options and various other share-based grants to employees. The objectives of these plans include attracting and retaining the best personnel, motivating management personnel by means of growth-related incentives to achieve long-range goals and providing employees with the opportunity to increase their share ownership in the Company.
All options granted under this plan are exercisable at £2 per share ($3.22 using the year-end exchange rate of £1 = $1.61). The options vest immediately on the grant date and are exercisable any time up to July 13, 2010.
Options granted under the Hilb Rogal and Hamilton Company 2000 Stock Incentive Plan, the Hilb Rogal & Hobbs Company 2007 Stock Incentive Plan and the Hilb Rogal & Hobbs Company Non-Employee Directors Stock Incentive Plan were converted into options to acquire shares of Willis Group Holdings. No further grants are to be made under these plans.
A summary of option activity under the plans at December 31, 2009, and changes during the year then ended is presented below:
Certain options are exercisable in pounds sterling and are converted to dollars using the exchange rate at December 31, 2009.
A summary of restricted stock unit activity under the Plans at December 31, 2009, and changes during the year then ended is presented below:
The total of restricted stock units vested during the year ended December 31, 2009, was 550,224 shares at an average share price of $24.53 (2008: 435,855 shares at an average share price of $32.78). At December 31, 2009 there was $42 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements under the plan: that cost is expected to be recognized over a weighted average period of 1 year.
Total proceeds from the disposal of operations for 2009 were $315 million, including $281 million for 18 percent of the Group’s 49 percent interest in Gras Savoye and $39 million for 100 percent of Bliss & Glennon.
On December 17, 2009, the Company completed a leveraged transaction with the original family shareholders of Gras Savoye and Astorg Partners, a private equity fund, to reorganize the capital of Gras Savoye (‘December 2009 leveraged transaction’), its principal investment in associates. The Company, the family shareholders and Astorg now own equal stakes of 31 percent in Gras Savoye and have equal representation of one third of the voting rights on its board. The remaining shareholding is held by a large pool of Gras Savoye managers.
As a result of the December 2009 leveraged transaction the Company recognized a gain of $10 million in the consolidated statement of operations from the reduction of its interest in Gras Savoye from 49 percent to 31 percent. The Company received total proceeds of $281 million, comprising cash and interest bearing
At December 31, 2009, the Company had valuation allowances of $92 million (2008: $85 million) to reduce its deferred tax assets to estimated realizable value. The valuation allowances at December 31, 2009 relate to the deferred tax assets arising from UK capital loss carryforwards ($56 million) and UK trading losses ($2 million), which have no expiration date and to the deferred tax assets arising from US State net operating losses ($34 million). Capital loss carryforwards can only be offset against future UK capital gains.
The Company files tax returns in the various tax jurisdictions in which it operates. The 2005 US tax year closed in 2009 upon the expiration of the statute of limitations on assessment. US tax returns have been filed timely. The Company has not received notice that the IRS will be conducting an audit of the open years. The Company has not extended the federal statute of limitations for assessment in the US.
Basic and diluted earnings per share are calculated by dividing net income attributable to Willis Group Holdings by the average number of shares outstanding during each period. The computation of diluted earnings per share reflects the potential dilution that could occur if dilutive securities and other contracts to
Options to purchase 16.1 million shares for the year ended December 31, 2009 were not included in the computation of the dilutive effect of stock options because the effect was antidilutive (2008: 22.1 million shares; 2007: 2.6 million shares).
On October 1, 2008, Willis completed the acquisition of HRH in a transaction involving both cash and stock consideration. The acquisition was effected by merging Willis HRH Inc, an indirect wholly owned subsidiary of Willis Group Holdings, with and into HRH.
The consideration paid by Willis including amounts payable in respect of stock options and costs directly attributable to the business combination was approximately $1.8 billion, as analyzed below:
Willis’ cost of acquiring HRH of $1.8 billion was allocated to the assets acquired and liabilities assumed according to their estimated fair values at the date of acquisition. By September 30, 2009, being one year from the acquisition date, the Company finalized the purchase price allocation, resulting in an additional net $20 million of goodwill being recognized over the preliminary allocation made.
The following table presents the Company’s final allocation of the purchase price to the assets acquired and liabilities assumed, based on their fair values:
After 5 years $320 million will have been amortized on a cumulative basis; after 10 years $486 million; and after 15 years $582 million.
Trade names were valued using the relief from royalty method, whereby the fair value of the trademark was estimated as the present value of the after tax royalty income stream that could be derived by licensing out the trade names.
The weighted average amortization period for the acquired intangible assets is 18.7 years.
An adjustment to increase amortization expense based on the estimated fair value of identifiable intangible assets from the purchase price allocation, which are being amortized over their estimated useful lives over a range of 2 to 20 years, of $80 million and $83 million for the year to December 31, 2008 and 2007.
An adjustment to the weighted average number of shares used in the pro forma EPS calculation to reflect the issuance of 24.4 million new shares on October 1, 2008 as if it took place on January 1, 2007.
The above adjustments have been tax effected where appropriate at a rate of 40%.
Realized gains and losses, net of tax, on debt securities are included in net income. During the years ended December 31, 2009, 2008 and 2007, sales of debt securities totaled $21 million, $15 million and $19 million, respectively, on which realized gains and losses were not material to the consolidated results of the Company. Fiduciary funds - restricted, consisting primarily of time deposits with original maturities of less than or equal to three months, were $1,683 million as of December 31, 2009 (2008: $1,854 million).
As of December 31, 2009, the fair value of the assets in the VIE was approximately $903 million (2008: $931 million) and the fair value of the associated liabilities was approximately $903 million (2008: $931 million). There are no assets of the Company that serve as collateral for the VIE.
The Company recognized a depreciation charge of $60 million, $54 million and $52 million in the years ended December 31, 2009, 2008 and 2007, respectively.
The Company’s annual goodwill impairment tests for 2009 and prior years, have not resulted in an impairment charge.
The changes in the carrying amount of goodwill by operating segment for the years ended December 31, 2009 and 2008 are as follows:
As a result of the December 2009 leveraged transaction the Company recognized a gain of $10 million in the consolidated statement of operations from the reduction of its interest in Gras Savoye from 49 percent to 31 percent. The Company received total proceeds of $281 million, comprising cash and interest bearing vendor loans and convertible bonds issued by Gras Savoye. See Note 6 - Net Gain on Disposal of Operations for an analysis of the proceeds and the calculation of the gain.
As of December 31, 2009 and 2008, the Company’s other investments in associates, individually and in the aggregate, were not material to the Company’s operations.
Unaudited condensed financial information for associates, in the aggregate, as of and for the three years ended December 31, 2009 is presented below. For convenience purposes: (i) balance sheet data has been translated to US dollars at the relevant year-end exchange rate, and (ii) condensed statements of operations data has been translated to US dollars at the relevant average exchange rate.
Disclosure is based on the Company’s best estimate of the results of its associates and is subject to change upon receipt of their financial statements for 2009.
For the year ended December 31, 2009, the Company recognized $12 million (2008: $9 million; 2007: $6 million) in respect of dividends received from associates.
The Company maintains two principal defined benefit pension plans that cover the majority of our employees in the United States and United Kingdom. Both of these plans are now closed to new entrants. New entrants in the United Kingdom are offered the opportunity to join a defined contribution plan and in the United States are offered the opportunity to join a 401(k) plan. In addition to the Company’s UK and US defined benefit pension plans, the Company has several smaller defined benefit pension plans in certain other countries in which it operates. Elsewhere, pension benefits are typically provided through defined contribution plans. It is the Company’s policy to fund pension costs as required by applicable laws and regulations.
$157 million (2008: $208 million) in respect of the US defined benefit pension plan; and
$30 million (2008: $29 million) in respect of the International defined benefit pension plans.
The accumulated benefit obligations for the Company’s UK and US defined benefit pension plans were $1,811 million and $686 million, respectively (2008: $1,377 million and $635 million, respectively).
During 2009, the Group moved to a salary sacrifice arrangement. The impact of this on the pensions charge is to reduce employee contributions (by $8 million in 2009) and increase employer service cost and employer contributions by the same amount. There is a corresponding reduction in salaries and benefits expenses.
The Company’s pension plan asset allocations based on fair values were as follows:
Level 2: refers to fair values estimated using observable market based inputs or unobservable inputs that are corroborated by market data; and
The following tables present, at December 31, 2009, for each of the fair-value hierarchy levels, the Company’s UK and US pension plan assets that are measured at fair value on a recurring basis.
In 2010, the Company expects to contribute $92 million to the UK plan, of which $11 million is in respect of salary sacrifice contributions, and $30 million to the US plan.
Effective May 15, 2009, the Company closed the US defined benefit plan to future accrual. Consequently, a curtailment gain of $12 million was recognized during the year ended December 31, 2009.
However, as a result of the turmoil in worldwide equity markets in the latter half of 2008 and consequent declines in pension plan asset values, the Company now provides pension plan disclosures for these schemes. A $30 million pension benefit liability (2008: $29 million) has been recognized in respect of these schemes.
Amounts recognized in accumulated other comprehensive loss consist of a net actuarial loss of $24 million (2008: $27 million).
The estimated net loss for the international defined benefit plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $1 million.
The determination of the expected long-term rate of return on the international plan assets is dependent upon the specific circumstances of each individual plan. The assessment may include analyzing historical investment performance, investment community forecasts and current market conditions to develop expected returns for each asset class used by the plans.
In 2010, the Company expects to contribute $8 million to the international plans.
The 5-year term loan facility bears interest at LIBOR plus 2.250% and is repayable $27 million per quarter, with a final payment of $116 million due in fourth quarter of 2013. There was no balance outstanding on the revolving credit facility at December 31, 2009. Drawings under this facility bear interest at LIBOR plus 2.250% and the facility also expires on October 1, 2013. Since December 31, 2009 the Company has repaid in
In September 2009, the Company issued $300 million of 7.0% senior notes due 2019. A tender offer was launched on September 22, 2009, to repurchase any and all of the $250 million 5.125% senior notes due July 2010 at a premium of $27.50 per $1,000 face value. Notes totaling approximately $160 million were tendered and repurchased.
The agreement relating to the 12.875% senior notes contains a requirement to maintain maximum levels of consolidated funded indebtedness in relation to consolidated EBITDA, subject to certain adjustments. In addition, the agreement includes covenants relating to the delivery of financial statements, reports and notices, limitations on liens, limitations on sales and other disposals of assets, limitations on indebtedness and other liabilities, limitations on sale and leaseback transactions, limitations on mergers and other fundamental changes, maintenance of property, maintenance of insurance, nature of business, compliance with applicable laws, maintenance of corporate existence and rights, payment of taxes and access to information and properties. At December 31, 2009, the Company was in compliance with all covenants.
All direct obligations under the senior notes listed above are guaranteed by Willis Group Holdings, Willis Netherlands Holdings B.V., Willis Investment UK Holdings Limited, TA I Limited, TA II Limited, TA III Limited and TA IV Limited, Willis Group Limited and Willis North America.
The agreements relating to the senior credit facilities and revolving credit facility contain numerous operating and financial covenants, including requirements to maintain minimum ratios of consolidated adjusted EBITDA to consolidated fixed charges and maximum levels of consolidated funded indebtedness in relation to consolidated EBITDA, in each case subject to certain adjustments.
In addition, the credit agreements include covenants relating to the delivery of financial statements, reports and notices, limitations on liens, limitations on sales and other disposals of assets, limitations on indebtedness and other liabilities, limitations on sale and leaseback transactions, limitations on mergers and other fundamental changes, maintenance of property, maintenance of insurance, nature of business, compliance with applicable laws, maintenance of corporate existence and rights, use of proceeds, payment of taxes and access to information and properties. At December 31, 2009, the Company was in compliance with all covenants.
As of December 31, 2009, the aggregate future minimum rental commitments under all non-cancellable operating lease agreements are as follows:
The Company leases its London headquarters under a 25-year operating lease. The Company’s contractual obligations in relation to this commitment included in the table above total $785 million (2008: $720 million).
Rent expense amounted to $154 million for the year ended December 31, 2009 (2008: $151 million; 2007: $132 million). The Company’s rental income from subleases was $21 million for the year ended December 31, 2009 (2008: $22 million; 2007: $14 million).
Guarantees issued by certain of Willis Group Holdings’ subsidiaries with respect to the interim credit facility and the senior notes are discussed in Note 17 - Debt in these consolidated financial statements.
For certain subsidiaries and associates, the Company has the right to purchase shares (a call option) from co-shareholders at various dates in the future. In addition, the co-shareholders of certain subsidiaries and associates have the right to sell (a put option) their shares to the Company at various dates in the future. Generally, the exercise price of such put options and call options is formula-based (using revenues and earnings) and is designed to reflect fair value. Based on current projections of profitability and exchange rates, the potential amount payable from these options is not expected to exceed $49 million (2008: $434 million).
The Company is subject to various actual and potential claims, lawsuits and other proceedings relating principally to alleged errors and omissions in connection with the placement of insurance and reinsurance in the ordinary course of business. Similar to other corporations, the Company is also subject to a variety of other claims, including those relating to the Company’s employment practices. Some of the claims, lawsuits and other proceedings seek damages in amounts which could, if assessed, be significant.
Errors and omissions claims, lawsuits and other proceedings arising in the ordinary course of business are covered in part by professional indemnity or other appropriate insurance. The terms of this insurance vary by policy year and self-insured risks have increased significantly in recent years. In respect of self-insured risks, the Company has established provisions which are believed to be adequate in the light of current information and legal advice, and the Company adjusts such provisions from time to time according to developments.
On the basis of current information, the Company does not expect that the actual claims, lawsuits and other proceedings, to which the Company is subject, or potential claims, lawsuits and other proceedings relating to matters of which it is aware will ultimately have a material adverse effect on the Company’s financial condition, results of operations or liquidity. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation and disputes with insurance companies, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s results of operations or cash flows in particular quarterly or annual periods.
The Amended and Restated AOD specifically recognizes that Willis has substantially met its obligations under the AOD and ends many of the requirements previously imposed. It relieves Willis of a number of technical compliance obligations that have imposed significant administrative and financial burdens on its operations. The Amended and Restated AOD no longer limits the types of compensation Willis can receive and has lowered the compensation disclosure requirements to clients that the AOD originally imposed.
The Amended and Restated AOD requires Willis to: (i) in New York, and each of the other 49 states of the United States, the District of Columbia and U.S. territories, provide compensation disclosure that will, at a minimum, comply with the terms of 11 NYCCR 30 (adopted on February 10, 2010), as may be amended from time to time, or the provisions of the AOD that existed prior to the adoption of the Amended and Restated AOD; and (ii) maintain its compliance programs and continue to provide appropriate training to relevant employees in business ethics, professional obligations, conflicts of interest and antitrust and trade practices compliance. In addition, in placing, renewing, consulting on or servicing any insurance policy, it prohibits Willis from directly or indirectly (a) accepting from or requesting of any insurer any promise or commitment to use any of Willis’s brokerage, agency, producing or consulting services in exchange for production of business to such insurer or (b) knowingly place, renew or consult on or service a client’s insurance business through a wholesale broker in a manner that is contrary to the client’s best interest.
allegations regarding the practices and conduct that have been the subject of the investigation of state attorneys general and insurance commissioners, including allegations that the brokers have breached their duties to their clients by entering into contingent compensation agreements with either no disclosure or limited disclosure to clients and participated in other improper activities. The complaints also allege the existence of a conspiracy among insurance carriers and brokers and allege violations of federal antitrust laws, the federal Racketeer Influenced and Corrupt Organizations (‘RICO’) statute and the Employee Retirement Income Security Act of 1974 (‘ERISA’). In separate decisions issued in August and September 2007, the antitrust and RICO Act claims were dismissed with prejudice and the state claims were dismissed without prejudice from the Commercial Complaint. In January 2008, the Judge dismissed the ERISA claims with prejudice from the EB Complaint and the state law claims without prejudice. Plaintiffs filed a notice of appeal regarding the dismissal of the antitrust and RICO claims and oral arguments on this appeal were heard in April 2009 but there is no indication when a ruling will be issued. Additional actions could be brought in the future by individual policyholders. The Company disputes the allegations in all of these suits and has been and intends to continue to defend itself vigorously against these actions. The outcomes of these lawsuits, however, including any losses or other payments that may occur as a result, cannot be predicted at this time.
On September 11, 2009, Willis Limited, entered into a settlement agreement with CNA, subsidiaries of CNA Financial Corporation. Pursuant to the settlement agreement, Willis Limited has agreed to pay a total of $130 million to CNA in two installments. The first installment of $60 million was paid on October 9, 2009 and the second installment of $70 million was paid on December 23, 2009. Each party has also released and waived all claims it may have against any of the other parties arising out of or in connection with the subject-matter of the litigation. The settlement includes no admission of wrongdoing by any party. The Company has partially collected and believes it will collect in full the $130 million required to fund the settlement agreement from errors and omissions insurers.
Various arbitrations relating to reinsurance continue to be active and from time to time the principals request co-operation from the Company and suggest that claims may be asserted against the Company. Such claims may be made against the Company if reinsurers do not pay claims on policies issued by them. The Company cannot predict at this time whether any such claims will be made or the damages that may be alleged.
New Jersey in July 2001. Although the World Trade Center complex insurance was bound at or before the July 2001 closing of the leasehold acquisition, consistent with standard industry practice, the final policy wording for the placements was still in the process of being finalized when the twin towers and other buildings in the complex were destroyed on September 11, 2001. There have been a number of lawsuits in the United States between the insured parties and the insurers for several placements and other disputes may arise in respect of insurance placed by us which could affect the Company including claims by one or more of the insureds that the Company made culpable errors or omissions in connection with our brokerage activities. However, the Company does not believe that our role as broker will lead to liabilities which in the aggregate would have a material adverse effect on our results of operations, financial condition or liquidity.
On or about July 24, 2009, a motion was filed by certain individuals (collectively, the “Movants”) with the U.S. Judicial Panel on Multidistrict Litigation (the “JPML”) to consolidate and coordinate in the Northern District of Texas nine separate putative class actions - including the Troice and Ranni actions described above, as well as other actions against various Stanford-related entities and individuals and the Commonwealth of Antigua and Barbuda - relating to Stanford and its allegedly fraudulent certificates of deposit.
On August 6, 2009, a putative class action complaint, captioned Canabal, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:09-CV-01474-D, was filed against Willis Group Holdings, Willis of Colorado, Inc. and the same Willis associate, among others, also in the Northern District of Texas, relating to the same alleged course of conduct as the Troice complaint described above. Based on substantially the same allegations as the Troice complaint, but on behalf of a putative class of Venezuelan investors, the Canabal complaint asserted various claims under Texas statutory and common law and sought actual damages in excess of $1 billion, punitive damages, attorneys’ fees and costs.
On or about August 10, 2009, the Movants filed with the JPML a Notice of Related Action that referred the Canabal action to the JPML. On October 6, 2009, the JPML ruled on the transfer motion, transferring seven of the subject actions (including the Troice and Ranni actions) - i.e., the original nine actions minus two that had since been dismissed - for consolidation or coordination in the Northern District of Texas. On October 27, 2009, the parties to the Canabal action stipulated to the designation of that action as an “xyz case” properly part of the new Stanford MDL proceeding in the Northern District of Texas.
It is estimated that $7 million of net derivative gain included in accumulated other comprehensive loss will be reclassified into earnings within the next twelve months.
The Company has in place a share buyback program for $1 billion. The program is an open-ended plan to repurchase the Company’s shares from time to time in the open market or through negotiated sales with persons who are not affiliates of the Company. In addition the board authorized in June 2008, the repurchase of up to the number of shares issued by the Company in connection with the acquisition of HRH.
No shares were repurchased by the Company during the year ended December 31, 2009 (year ended December 31, 2008, the Company repurchased 2.3 million shares for a total consideration of $75 million at an average price of $33.12). Repurchased shares were subsequently canceled. There was also a $1 million adjustment in 2008 relating to prior year price adjustments.
As at December 31, 2009, $925 million remains under the program for future repurchases.
The $481 million excess of the initial purchase price over nominal value for the two 2007 programs, together with the price adjustments in respect of the completed November 2006 and March 2007 programs has been charged to stockholders’ equity; $432 million was charged against additional paid-in capital and $49 million against retained earnings.
The fair value of these contracts is recorded in other assets and other liabilities. For contracts that qualify as accounting hedges, changes in fair value are recorded as a component of other comprehensive income.
Amounts are reclassified from other comprehensive income into earnings when the hedged exposure affects earnings. For contracts that do not qualify for hedge accounting, changes in fair value are recorded in other operating expenses.
To the extent that forecast pound sterling expenses exceed pound sterling revenues, the Company limits its exposure to this exchange rate risk by the use of forward contracts matched to specific, clearly identified cash outflows arising in the ordinary course of business;
To the extent the UK operations earn significant revenues in euros and Japanese yen, the Company limits its exposure to changes in the exchange rate between the US dollar and these currencies by the use of forward contracts matched to a percentage of forecast cash inflows in specific currencies and periods; and
Prior to 2008, the changes in fair value on contracts that did not qualify for hedge accounting were recorded within other operating expenses.
The table below summarizes by major currency the contractual amounts of the Company’s forward contracts to exchange foreign currencies for pounds sterling. Foreign currency notional amounts are reported in US dollars translated at spot rates at December 31.
Credit risk represents the loss that would be recognized at the reporting date if counterparties failed to perform as contracted and from movements in interest rates and foreign exchange rates. The Company does not
Long-Term Debt - Fair values are based on quoted market values.
foreign exchange hedging activities and foreign exchange movements on the UK pension plan asset or liability;
In 2008, the Company changed its basis of segmental allocation for central costs. All accounting adjustments for foreign exchange hedging activities and foreign exchange movements on the UK pension plan asset or liability are held at the Corporate level.
Corporate and Other includes the costs of the holding company, $48 million relating to foreign exchange hedging activities and foreign exchange on the UK pension plan asset (2008: $47 million; 2007: $7 million), $100 million relating to the amortization of intangible assets (2008: $36 million; 2007: $14 million), $13 million net gain on disposal of operations (2008: $nil; 2007: $2 million) $4 million certain legal costs (2008:$7 million; 2007: $6 million), $18 million integration costs associated with the acquisition of HRH (2008: $5 million; 2007: $nil) and $6 million costs associated with the redomicile of the Company’s parent company from Bermuda to Ireland (2008: $nil; 2007: $nil). In 2008, $92 million costs were included from the 2008 expense review (2007: $nil).
None of the Company’s customers represented more than 10 percent of the Company’s consolidated commissions and fees for the years ended December 31, 2009, 2008 and 2007.
On July 1, 2005, Willis North America Inc. (‘Willis North America’) issued senior notes totaling $600 million under its February 2004 registration statement. On March 28, 2007, Willis North America issued further senior notes totaling $600 million under its June 2006 registration statement. On September 29, 2009, Willis North America issued senior notes totaling $300 million under its June 2009 registration statement (Note 17 - Debt). The debt securities are jointly and severally, irrevocably and fully and unconditionally guaranteed by Willis Group Holdings, Willis Netherlands Holdings B.V., Willis Investment UK Holdings Limited, Willis Group Limited, Trinity Acquisition plc, TA I Limited, TA II Limited, TA III Limited and TA IV Limited.
Willis Group Holdings, which is a guarantor, on a parent company only basis;
FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)
Willis Group Holdings, which will be a guarantor, on a parent company only basis;
the Other Guarantors, which are all 100 percent directly or indirectly owned subsidiaries of the parent;
The entities included in the Other Guarantors column are Willis Netherlands Holdings B.V., Willis Investment UK Holdings Limited, TA I Limited, TA II Limited and TA III Limited.