We are downgrading our recommendation on Willis Group Holdings, Plc (WSH) to Underperform from Neutral due to the headwind from The Loan Protector business that is expected to weigh on North American results. The soft insurance market is likely to continue.
Additionally, the weakness in the US economy will remain a headwind and restrict any significant top-line growth in the company. Willis also expects to incur pre-tax charges of approximately $160 million in 2011, up from $130 million expected earlier.
Our six-month target price of $31.00 equates to about 11.2x our earnings estimate for 2011. This target price along with an annual dividend of $1.04 implies an expected negative return of about 8% over that period, which is consistent with our Underperform recommendation.
WILLIS GP HLDGS (WSH): Free Stock Analysis Report
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