We recently added to our position in Willis Group Holdings, a leader in the insurance brokerage industry. Willis suffered earnings declines in 2005 due to regulatory pressures that eliminated contingent commissions paid to insurance brokers by underwriters, as well as a heavy investment in hiring brokers away from competitors. Over the past year business fundamentals have begun to improve withWillis showing accelerating organic revenue growth and stable margins.Willis, as the third largest broker in a highly fragmented industry, is well positioned to benefit from market share losses by large competitors who were more severely weakened by the regulatory disruptions of the past few years. In addition, recent pricing trends have been positive across the industry for both underwriters and brokers.Willis pays a dividend yield of 2.4% and should earn more than $3 per share in 2 to 3 years, presenting an attractive valuation at less than 13x
normalized earnings.
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normalized earnings.
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