Willis Group Holdings Limited’s (Willis) 1Q 09 total revenues fell short of our expectation. However, adjusted net income well surpassed our expectation reflecting lower-than-expected operating and interest expenses during the quarter. Y-o-y revenue growth was primarily attributable to the Hilb Rogal and Hobbs Company (HRH) acquisition. In difficult market conditions, the company reported an improvement in operating and net margin in 1Q 09, reflecting strong cost management strategies. Given the 1Q 09 performance, we are likely to increase our bottom-line estimates. Although we remain concerned by the company’s high leverage, our outlook for the stock has definitely improved. Therefore, we maintain our HOLD rating for Willis’s NYSE common stock, although the target price no longer suggests a HOLD. We will reassess the NYSE common stock rating for Willis in our next update report. Based on our fundamental outlook and as we anticipate a significant positive currency impact on the European stock, we maintain our BUY rating for the European stock. We will reassess the rating for Willis in our next update report.

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