Willis Posts $118 Million Q4 Net; $414 Million for Year

February 5, 2004

Willis Group Holdings Limited announced fourth quarter net earnings of $118 million, or $0.69 per diluted share, compared with $118 million, or $0.70 per diluted share, in the same period of 2002. Net income for the year ended December 31, 2003 was $414 million, or $2.45 per diluted share, compared to $210 million, or $1.28 per diluted share, in 2002.

In separate actions the company’s Board of Directors also approved a 15 percent increase in the regular quarterly cash dividend on the Company’s common stock to $0.1875 per share, an annual rate of $0.75 per share. The dividend is payable on April 15, 2004 to shareholders of record on March 31, 2004.

The Board also approved increasing the Company’s existing common share buyback authorization from $100 million to $300 million, and noted that Willis “has not yet purchased any shares pursuant to the authorization.”

Willis’ announcement explained that the flat Q4 earnings were affected by “non-cash compensation for performance-based stock options and net gain on disposal of operations.” It said that “adjusted net income increased 45 percent to $119 million for the quarter ended December 31, 2003 from $82 million in the same period last year, while adjusted net income per diluted share rose 43 percent to $0.70 for the fourth quarter of 2003 from $0.49 a year ago. The impact of foreign exchange in the fourth quarter of 2003 was a benefit of approximately $0.04 per share.”

Chairman and CEO Joe Plumeri commented: “We are pleased to raise our quarterly cash dividend again – our second increase since initiating the dividend just one year ago. This action reflects our strong cash flow and confidence in the outlook for growth.” He also pointed to the progress the company has made since it went public in June, 2001, noting that “in the year just ended, we accomplished all of the goals we set for the year – to grow earnings at least 25 percent and organic revenues at least 15 percent, to expand margins, to obtain an investment grade rating and to refinance our debt.”

The bulletin noted that the adjusted full year results, excluding a “one-time UK tax benefit on performance stock options,” increased “43 percent to $386 million from $270 million in the year ended December 31, 2002, while adjusted net income per diluted share rose 41 percent to $2.28 from $1.62 in 2002.

“Total reported revenues for the quarter ended December 31, 2003 increased 19 percent to $577 million, from $483 million for the same period last year. Organic revenues, which exclude the effects of foreign exchange, acquisitions and disposals, rose 11 percent. The adjusted operating margin was 34 percent for the fourth quarter of 2003 compared with 31 percent for the same period last year.

“Total reported revenues for the year ended December 31, 2003 increased 20 percent to $2,076 million, up from $1,735 million for the corresponding period in 2002, or 15 percent on an organic basis. The adjusted operating margin was 30 percent for the year ended December 31, 2003, compared with 28 percent for the same period last year.”

“Willis is in great shape,” Plumeri concluded. “This is our sixteenth consecutive quarter of record earnings; we raised the dividend again and refinanced our debt on investment grade terms – all within six years of the 1998 leveraged buy-out. In addition to our strong organic growth efforts, we continue to recruit top industry talent. The caliber of professionals who have joined Willis is proof positive that we are challenging the conventions of the global insurance broking sector and are cutting a new path rather than following industry norms. We are confident in the outlook for future growth at Willis, and reaffirm our long-term goal to grow adjusted net income per diluted share by 15 percent or better each year.”

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