Willis Tender Offer Results

Willis North America Inc., a subsidiary of Willis Group Holdings Limited (WSH - Analyst Report), today announced the final results of its cash tender offer to purchase any and all of its 5.125% senior notes due 2010.

The net proceeds from the offer came to $159,788,000. All of the 2010 notes that were tendered have been guaranteed for payment by Willis. The holders of the 2010 notes will be entitled to receive tender offer consideration of $1,027.50 per $1,000 principal amount of the 2010 notes, plus any accrued and unpaid interest.

The notes, which are guaranteed by Willis Group Holdings, carry ratings of Baa3 by Moody's and BBB- by S&P.

Bank of America (BAC - Analyst Report) and JPMorgan Chase (JPM - Analyst Report) were the joint book running managers for the sale.

Willis intends to use the net proceeds from this offering to purchase any and all of Willis North America's outstanding 5.125% senior notes due 2010 that are tendered and accepted in a separate offering. Any remaining proceeds will then be used for general corporate purposes.

Willis Group Holdings' second-quarter profit of 52 cents per share was just a penny ahead of the Zacks Consensus Estimate. Results reflected growth in Global operations (7% organic growth) and International (5%), partly offset by a fall in organic commissions and fees in North America (down 8%). Weak insurance markets coupled with the deepening U.S. economic crisis led to a decline in the North American segment's commissions and fees.

However, the company is experiencing strong organic growth in revenues from its International business and Global segments, with steady client retention levels and momentum from the "Shaping Our Future" growth initiatives contributing to the organic growth.

While we expect Willis to benefit from the rate stabilization in the reinsurance segment, we anticipate top-line growth to be curtailed as a result of the overall less-than-robust economic environment. Nevertheless, the company's cost-saving initiatives and capital-bolstering moves bode well. Hence we have a Neutral recommendation on the shares of Willis.