Willis Group Holdings Limited’s (Willis) 1Q 09 total revenues fell short of our expectation. However, adjusted net income well surpassed our expectation reflecting lower-than-expected operating and interest expenses during the quarter. Y-o-y revenue growth was primarily attributable to the Hilb Rogal and Hobbs Company (HRH) acquisition. In difficult market conditions, the company reported an improvement in operating and net margin in 1Q 09, reflecting strong cost management strategies....

Willis Group Holdings Limited’s (Willis) NYSE common stock price has declined significantly since our 3Q 08 update report dated 13 November 2008, reflecting broad-based weakness across the NYSE composite and AMBest Global Insurance indices. Although we expect to increase our revenue estimates following better-than-expected 4Q 08 and FY 2008 results, declining margins and the company’s high leverage are causes of significant concern....

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Going forward, it is likely that premium rates will harden slightly following large catastrophe and investment losses. However, top-line growth is expected to be limited by lower global economic growth and recession in the major advanced economies in which Willis principally operates. We remain concerned that the company’s increased financial leverage…