Mason Hawkings’ Southeastern Buys 4% of Willis Group

Mason Hawkings’ Southeastern Buys 4% of Willis Group

An August 9 filing, by Mason Hawkins’ Southeastern Asset Management, Inc., discloses the purchase of over seven million shares in Willis Group Holdings PLC (NYSE:WSH), a leading global insurance broker. The purchase represents a four percent stake in the company.

Mason Hawkings' Southeastern Buys 4% of Willis Group

Through its subsidiaries, Willis Group Holdings PLC (NYSE:WSH) provides professional insurance, reinsurance, risk management, financial and human resource consulting, and actuarial services to various kinds of organizations globally. With a world-wide employee strength of about 17,000 employees, and 400 offices located across 120 countries, the company is represented practically in every corner of the world.

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Southeastern Asset Management was founded by Mason Hawkins and has an enviable record of generating positive returns for investors for the last 36 years. The success is attributed to hard-core discipline, unending research, and quality personnel with a long term view. The strategy of the team to acquire equities that quote at massive discounts to their book value has obviously paid off well.

Willis’ second quarter results reflected earnings per share of $0.59, in line with estimates. Though earnings rose 27 percent, a decline in revenue hid a special gain of $5 million in insurance claims. Revenues actually declined 2.2 percent to $842 million. “The last few quarters have tested our mettle, but we’re clear-eyed about the challenges we face ahead, those we can control and those we can’t,” said Chief Executive Joe Plumeri. “We can’t turn the global economy around, but we believe that our important initiatives in our sales and placement process will accelerate our momentum in coming months and bode well for the second half of the year.”

The stock currently trades at $35.42, and has a market capitalization of $6.14 billion and a P/E of 14.97. It trades at price/book ratio of 2.29. The company declared a regular quarterly cash dividend of $0.27 per share.

Insurance brokers have been seeing difficult times as economic uncertainties are taking a toll on revenue growth. Commission and fees, and investment income are under pressure across the industry.

A survey of the analysts’ recommendation trends shows 2 analysts putting a strong buy on the stock, 4 on a buy, 11 on hold and only 1 giving an underperform call. There are no sell recommendations. (Source: Yahoo Finance).

Aon PLC (NYSE:AON)’s second quarter saw net income fall to $246 million (73 cents a share) though revenues fell 0.4 percent to $2.82 billion, meeting earnings but missing revenue estimates. “While macro conditions remain fragile globally, we continue to anticipate improved performance in the second half of the year, our underlying performance is on track with our long-term targets, and we have completed significant steps to position the firm for long-term growth, strong free cash flow generation, and increased financial flexibility, as highlighted by the repurchase of $250 million of ordinary shares in the quarter,” said Greg Case, president and chief executive officer of Aon PLC (NYSE:AON).


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