Willis to Relocate 3,500 Workers as Profit Misses Estimates

Apr 30, 2014 5:21 pm ET

(Updates with closing share price in third paragraph)

April 30 (Bloomberg) -- Willis Group Holdings Plc plans to eliminate jobs and relocate 3,500 employees after reporting first-quarter earnings that missed analysts’ estimates.

The moves will yield $420 million in cost savings through 2017 and $300 million annually after that, the London-based company said late yesterday in a statement. Willis, the third- largest insurance broker by market value, said workers will be shifted to lower-cost locations.

Willis dropped 5.1 percent to close at $40.99 in New York trading, the biggest decline since 2012. Quarterly operating earnings per share was $1.36, compared with the $1.40 average estimate of 16 analysts surveyed by Bloomberg.

The “EPS miss and the apparent need for an extensive operational improvement program” will weigh on shares, said Meyer Shields, an analyst at KBW in a note to investors.

Chief Executive Officer Dominic Casserley plans to move “support roles” to reduce the percentage of employees in higher-cost locations to 60 percent from 80 percent, according to the statement. Willis said in a filing that low-cost sites include Mumbai and Nashville, Tennessee.

The broker cited a total of about 21,700 employees at year- end in a regulatory filing, including 3,700 at associate companies. The cost-cutting initiative applies to the larger group of 18,000 staffers at Willis, said Juliet Massey, a spokeswoman for the company.

‘More Action’

“As we continue to invest to grow revenues, we also have an opportunity to take more action on expenses,” Casserley said in the statement.

The broker has more than 400 offices in almost 120 countries, according to a regulatory filing. Chicago’s Sears Tower, the second-tallest building in the U.S. behind One World Trade Center in New York, was renamed the Willis Tower in 2009 and the broker moved about 500 employees into the building.

First-quarter net income rose 12 percent to $246 million, or $1.35 a share, from $219 million, or $1.24, a year earlier.

--With assistance from Zachary Tracer and Noah Buhayar in New York.