Willis gives details of client-focused strategic shift

Last week the broker reported a slight drop in net income in the first six months of 2013 to $324m from $332m. Revenues increased marginally to $1.9bn in the first six months, although the company reported organic growth of 5.1%. Speaking at an investor day, Willis Chief Executive Dominic Casserley admitted that the company had recently underperformed, following integration issues with its $2.1bn acquisition of US broker Hilb Rogal & Hobbs Company in 2008. Following the acquisition, a number of key HRH staff left taking clients with them, he explained. Mr Casserly, who took over as CEO from Joseph Plumeri in January, launched a major strategic review shortly after taking on the top job at Willis. The results of the review, which included seeking the opinions of its clients, were unveiled to investors in New York this week. They will see the company make targeted investments in countries and specialisms where it is strongest, as well as in high growth markets and employee benefits.hideMr Casserley told investors that 'risk was a good place to be'. Increasing global GDP, the expansion of the middle class, urbanisation and aging populations were creating assets that need protecting and risks that need managing, he said. In particular, cyber, supply chain, natural catastrophes and climate change were all helping make risk a boardroom issue, he added. As a result, Willis believes that demand for good risk advisory will grow, especially for 'analytical brokers' that can deliver solutions and that have the ability to understand and predict risk, according to Mr Casserley. "Brokers will become data collectors and analysts to their clients. The engine driving advice and solutions will be analytics. But analytics will not be developed in a vacuum-it needs to be informed by clients," he said. "If we combine our expertise and analytical power then we will win," said Mr Casserley. Willis' strategy is to connect with its clients, innovate and invest, he said. In particular, the broker wants to increase revenues from high growth markets from the current 20% to 30% by 2017. The US would shrink from 49% to 38% while other developed markets like Europe would stay much as they are-although Willis will seek 'targeted' expansion in these markets. "We will not try to be all things to all clients. Our intent is to grow the book where we can bring analytics and customisation-we are investing in this opportunity," said Mr Casserley. He also wants the broker to do a better job of cross-selling-offering more of Willis' services to clients wherever they are best. For example, only 25% of Willis' global specialty revenue is derived from North American clients, when this should be more like 50%, said Mr Casserley. At the investor day, Mr Casserley also said that Willis would apply a set of criteria to contingent fees and other income derived from the insurance market. "How we compete is centred on meeting the needs of our clients. The client is at the centre, but there is an important issue with market derived income," said Mr Casserley. Revenue that brokers can derive from insurance carriers takes many forms, and is not just contingent commissions, he explained. For example, analytics can also be used by insurers for product development. "We will apply a set of criteria on a case by case basis. We will ask: Is the offering in the client's interest? Is it transparent to the client and is it consistent to the regulations? We will look at what we can do case by case," explained Mr Casserley. Also this week, one of Willis' main rivals in London, Jardine Lloyd Thompson, announced a 7% increase in revenue growth. JLT reported total revenues up 10% to £487.2m in the first six months. Pre-tax profits were also up at JLT-£85.1m in the first half of 2013 compared with £82.4m in the same period of 2012. The broker is also investing in a bid to grow, especially in emerging markets where JLT has had considerable success in recent years. In the first half of 2013 it completed three acquisitions in Asia, as well as recruiting an additional 300 staff. Earlier this month, US broker Aon reported a 3% increase in revenues to $5.8bn in the first six months of 2013. Net income was $524m, a 4% rise on last year. Marsh reports next week.

Willis gives details of client-focused strategic shift

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