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Best insurance stock today - Zacks estimates Willis Group Holdings EPS : Willis Group Holdings plc (WSH - Analyst Report) reported fourth-quarter 2012 adjusted net income from continuing operations of 45 cents per share, surpassing the Zacks Consensus Estimate by a penny. Results were in line with the year-ago earnings.

Including goodwill impairment charge of $2.62 per share, write-off of unamortized cash retention awards of 79 cents, 2012 cash bonus accrual of $1 per share, insurance recovery of 2 cents, loss on disposal of operations of 1 cent, deferred tax valuation allowance of 64 cents and dilutive impact of potentially issuable shares of 6 cents, Willis Group incurred a loss of $4.65 per share, compared with an income of 14 cents in the prior-year quarter.

Total revenue in the quarter increased 6.3% year over year to $871 million due to higher commissions and fees. Commissions and fees improved 7% year over year to $867 million in the quarter.

Investment income plummeted 100% year over year to $4 million, attributable to lower net yields on cash and cash equivalents.

Total expense shot up 123% year over year to $1.6 billion, primarily due to an increase in salaries and benefits, and goodwill impairment charge.

In the quarter under review, adjusted operating income was $166 million, up 8.5% year over year. Operating margin expanded 40 basis points to 19.1%.

Global: Organic growth in commissions and fees was 11.6% in the quarter, while reported growth was 11.3%. Organic growth was primarily driven by better results across all lines of business.

Operating margin was 19.7%, expanding 340 basis points year over year.

North America: Commissions and fees, on an organic basis, grew 5%, while on a reported basis grew 4.7%.

Operating margin in the quarter contracted 250 basis points to 17.2%.

International: On an organic basis, commissions and fees increased 7.4% year over year, while on a reported basis, it increased 6.4%. Latin America reported strong double-digit growth, while Europe and UK reported mid-single digit growth. Asia recorded low single-digit growth.

Operating margin was 23.6%, contracting 270 basis points.

Adjusted net income from continuing operations of $2.58 per share were in line with the Zacks Consensus Estimate. Earnings declined 5.8% over 2011.

Including goodwill impairment charge of $2.60 per share, write-off of unamortized cash retention awards of 78 cents, 2012 cash bonus accrual of 99 cents, insurance recovery of 3 cents, loss on disposal of operations of 2 cents, India JV settlement of 6 cents, write-off of uncollectible accounts receivable balance and legal fees of 5 cents, deferred tax valuation allowance of 64 cents and the dilutive impact of potentially issuable shares of 6 cents, Willis Group incurred a loss of $2.58 per share, compared with an income of $1.15 in 2011.

Management is reviewing the organizational design and expects to reduce headcount. The review will be completed in the first quarter of 2013. As a result Willis Group expects to incur a pre-tax charge of about $35 million to $45 million in the first quarter of 2013.

Nevertheless, beginning in the second quarter, the company expects to realize cost savings, primarily through headcount reduction, of approximately $20 million to $25 million in 2013. Moreover, it expects annualized cost savings of approximately $25 million to $30 million.

Financial Update

Willis exited 2012 with cash and cash equivalents of $500 million, up 14.7% year over year.

Long-term debt slid 0.7% to $2.3 billion from 2011 end.

Cash flow from operating activities in 2012 was $524 million, up 19.4%.

In Feb 2013, the board of directors approved a 3.7% increase in the quarterly cash dividend. Willis will pay the increased dividend of 28 cents on Apr 15, 2013 to shareholders of record as on Mar 29, 2013. The annualized dividend comes to $1.12 per share.

Marsh & McLennan Companies, Inc. (MMC - Analyst Report) reported its fourth-quarter 2012 operating earnings of 52 cents per share, in line with the Zacks Consensus Estimate.

However, the results were slightly higher than the year-ago quarter�s earnings of 46 cents per share.

Arthur J Gallagher & Co. (AJG - Snapshot Report) reported earnings of 39 cents in the fourth quarter, a penny above the Zacks Consensus Estimate and up 11% year over year.

Aon plc (AON - Snapshot Report) posted earnings of $1.27 per share, exceeding the Zacks Consensus Estimate by 1.6% and the year-ago earnings by 31%.

Willis Group currently carries a Zacks Rank #3 (Hold)