Welcome. Thank you for standing by. At this time, all participants have been placed on a listen-only mode until the question and answer session. To ask a question, please press star, followed by one on your touchtone phone, and record your name when prompted. Today's conference is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the conference over to Mr. Peter Poillon, Head of Investor Relations for Willis Group. You may begin.
Thank you. Welcome to our third quarter 2012 earnings conference call and webcast. Our call today is hosted by Joe Plumeri, Willis Group Holdings Chairman and Chief Executive Officer. A webcast replay of the call can be accessed through the investor relations section of our website at www.willis.com. If you have any questions after the call, my direct line is 212-915-8084. As we begin our call, let me remind you that we may make certain statements relating to future results, which are forward-looking statements as that term is defined by the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those estimated or anticipated.
These statements reflect our opinions only as of today's date. We undertake no obligation to revise or publicly update them in light of new information or future events. Please refer to our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2011, and subsequent filings, as well as our earnings press release, for a more detailed discussion of the risk factors that may affect our results. Copies may be obtained from the SEC or by visiting the investor relations section of our website. Also, please note that certain financial measures we use on the call are expressed on a non-GAAP basis. Our GAAP results and GAAP to non-GAAP reconciliation can be found in our earnings press release. I'll now turn the call over to Joe.
Thanks, Peter. Hi, everybody. Thank you for joining our call today. You've read our news release. You've had a chance to look at our results. We're in London today. Like you, we've had a chance to read your preliminary reports. We're going to limit our remarks today so we can quickly get to answering your questions. With me are Mike Neborak, our CFO, and Vic Krauze, our head of Willis North America. They'll both make comments after my introduction. With us are also Steve Hearn, head of Willis Global, and Tim Wright, head of Willis International. They're available if you want to drill deeply into those business units. The most important thing is that we mix it up and we talk about the things that you want to talk about, and we have a lot of time for questions that you'll have.
You all saw our news release last week and wrote about it. I'm sure there are questions out there because it's the last time I'll sit in this seat, to be able to answer them. Three months ago, you'll also recall, you heard from Vic, Steve, and Tim. It was important that you got their strategies from their mouths so that they've all been promoted into their positions within the last two years, and you hadn't had a chance, obviously, to meet them. The purpose of those calls was to give you a chance to understand the direction they were taking their business in. As you saw from our news release about the third quarter, the businesses are fully embarked on the strategies that they laid out for you, in early August. We're now in the fourth quarter, my last as CEO of Willis.
The third quarter, and what we're talking about today, has been, I think, a watershed one, which the team strategies have put in place and all of those overhanging issues that we've talked about over the last few calls are out the door. We're leaving a clean slate behind for Dominic, Steve, and what I think is an outstanding team. The purpose here is to take your questions to eliminate any doubt that the noise has quieted. Your judgment should rest on the results that Willis delivers when its numbers are added up at the end of the fourth quarter, free of the costly and distracting issues you had to sift through these past months. Let's talk about the third quarter.
When you unpack our 2% organic growth, Willis International is back to its historic range of 5% organic growth, aided by an impressive turnaround for our U.K. business. Willis North America came in flat, both substantial improvements from the prior quarter. You saw that Willis Global came in with 3% organic growth with some real standout performances within the unit. The results are starting to come in. These are great leaders with great businesses. In January, Dominic will take over an outstanding company and a truly wonderful team. Recall that our second quarter earnings call, we laid out our reasons for optimism about the second half. 2% for the third quarter is not where we wanted to be as we talked to you today. Our optimism remained high, actually right up to the end of the quarter.
Without getting granular deal by deal, those final days of the quarter saw about $12 million of revenue deferred to the fourth quarter and beyond. It's just the way it goes sometimes. That equates to about 160 basis points of additional organic growth right there. What happened? Most notably, a number of deals that our Willis Capital Markets team has been diligently working on haven't closed yet, waiting for regulatory sign-offs and the like. Those deals closest to closing, while not guaranteed to close in the fourth quarter, we feel fairly certain that the associated revenues will close in the near future. Movement of revenues happened in this business. Take Venezuela, for example. There was a delay in insurance buying there ahead of the recent presidential elections. People were worried about currency fluctuations.
The political uncertainty there in a country where we're dominant had a real effect on our results. We also saw a noticeable deferral of revenues for future periods in China and South Africa. None of these regional bumps dull our genuine enthusiasm for our business and prospects that we laid out for you after the second quarter. To the contrary, you'll hear on this call we progressed during the quarter how North America is no longer negative, Willis UK achieved positive growth, and how pipelines continue to improve. These are all important positive forward indicators that will set Dominic, Steve, and the team up for the next time you'll meet. Let me offer a brief overview of the numbers before I pass the phone on to Mike.
Our fully diluted adjusted earnings per share came in at $0.22, excluding the $0.01 of positive foreign exchange, earnings were $0.21 per diluted share. That compares to a year ago quarter of $0.41 per diluted share. Much as I would like to say, no explanation is necessary, our underlying earnings results are better than they appear at first glance relative to the prior year results. Let me expand on my quote in the news release to provide some more background, I break it down for you and I explain why it doesn't look as it appears. First, last year, our third quarter included the impact from a profitability initiative in our reinsurance business that amounted to about $5 million or $0.02 a share. Those revenues did not recur.
Second, our third quarter results last year also included $5 million of expense benefits from release of funds related to potential legal liabilities. We talked about those in some detail a year ago. That difference equals another $0.02 a share relative to prior year. Third, in last year's results, we benefited from a catch-up tax adjustment to align our effective tax rate based on our year-to-date results at the time. That amounted to almost $0.05 a share. In the current quarter, we recorded a similar but far smaller tax adjustment, that's another almost $0.05 differential. Fourth, as I discussed last quarter, North America had a lopsided comparison related to the fraud we uncovered and reported earlier this year. I know I'm tired about talking about that fraud too, but it's over. That hurt our current quarter earnings by $0.01 relative to a year ago.
The third quarter is the last quarter where we have a negative comparison related to that issue. You can do the math to pro forma last year's results and compare it to this quarter's results. After you do that, obviously, we're still below last year's results. There's a few other things I need you to keep in mind. One, consider that our current quarter investment income is $3 million, or about $0.01 lower simply due to lower yields. Two, our associate line, which primarily Gras Savoye is most about, is about $12 million lower, and that is an after-tax figure. Gras Savoye, as discussed last quarter, is in the midst of an operational review this year that we expect will drive improved profitability in the future, and we said we expect far lower results this year relative to last year.
Finally, if you weigh everything we just laid out and add to it the revenues that moved in the last few days of the quarter, you see a picture that emerges that's quite different from a headline reading, "Adjusted earnings per share falls $0.19." Let me be clear as I say that. We own our numbers, and I'm not making any excuses, but it's important that I clarify a lot of these comparisons for you. The discussion about one-off comparables this quarter to the prior quarter is simply offered to provide insight and a better understanding of our results year-over-year. Everyone at Willis is clear about what we need to do. Our job is simply to generate more revenue in the periods ahead. I'll say that again. Our job is to simply generate more revenue in the periods ahead.
I am supremely confident in our ability to do just that. I'm equally confident in our business strategies and the teams that are executing those strategies. Our leadership team remains excited about growth opportunities throughout our businesses over the coming several quarters. Before I turn it over to Vic and Mike, let me run through some numbers and go into a little bit more detail on our businesses. Organic commissions and fees growth for the company came in at 2%, as I said earlier. For North America, and you'll be hearing this in a minute from Vic, I'm pleased to report that organic commission and fees for the quarter are flat relative to the third quarter of last year.
Flat growth isn't usually something you're pleased about, I'm not jumping for joy, but considering that last quarter we were down 3% and dealing with a bumpy economy and uncertainty with healthcare reform, we consider this a strong achievement. I believe Vic and his team are doing a great job of turning the business around. Yes, if you were to put aside the impact of the fraudulent activity we talked about before, North America is actually up 1%. For international, organic revenues are up 5%. That's a great uptick over the 2% growth we reported last year. It's back in line with the unit's historical growth levels of 4%-6%. If you remember, I said that international in the second quarter was an anomaly, and now you understand why. Importantly, within international, our Willis UK business returned to growth.
The fresh numbers are a tribute to everyone in our UK business for making that happen. Beyond the UK, we saw relative stability in our businesses within the eurozone, with Spain returning to growth, which is an amazing thing to do, especially with the economy in Spain. Across the world from several of our Latin American and Asian businesses. Lastly, our global segment exhibited steady growth in the third quarter, coming in at 3%. Year-to-date, global has grown 5%. During the quarter, Global Specialties grew mid-single digits with strong results from financial solutions, FINEX, and energy. Willis, Faber & Dumas grew low single digits, even though it was one of those businesses that experienced some negative timing in the quarter.
Reinsurance came in slightly negative, but remembering that list of comparables that I laid out a few minutes ago, it also is one of those areas where the comparison between this third quarter and the last one was going to create an uneven picture. If you allowed for the exclusion of those non-recurring prior year revenues, that business was up mid-single digits in the quarter. Willis Re performed particularly well in the International region, with very strong growth from our Asian and Latin American operations. All told, Willis Re has delivered significant growth year-to-date. With that, I did want to ask Vic to join Mike and me on the call to give some positives, things that we are doing to improve our financial results into the future. Vic?
Thank you, Joe. I do want to start out by saying I am really looking forward to the day when North America joins International and Global in delivering sustained organic growth, and I can join Tim and Steve in being available solely for questions. As Joe mentioned, we're making good progress at Willis North America. While the flat number isn't what we were aiming for, it is definitely an improvement from recent quarters. While we know it would've been in positive territory if you exclude the fraud Joe mentioned, it's now in the rear view mirror. We did feel it in our human capital business, where it accounted for approximately 400 basis points of the 5% decline in that business. Within human capital, we are seeing some rate improvement. The impact of that rate is tempered a bit due to carrier compensation model shifts we've spoken about before.
These shifts, as we've said, are due to healthcare reform and rising healthcare costs. Despite those challenges, we expect this business to improve, thanks to significant investments we've made in regional resources to take advantage of the volatility presented by healthcare reform. In a different area of our business, it's been quite a while since we've been able to say this, construction, our second-largest business, saw 1% growth this quarter. That was driven by several new business wins in the Northeast. While we love this good news, we have to remain cautious on the overall construction business as surety revenues continue to be impacted by lower rates. Moving across our practices, we saw good results with financial services, M&A, tech and telecom, financial, and executive risk. They all did well in the quarter.
Across all of Willis North America, new business came in at low double digits in the quarter. If you look at it sequentially each quarter in 2012, we've seen increases at each juncture. That gives us a good deal of confidence that our growing pipeline is converting to new business. I'll talk more about those pipelines in a second. I also know rates are very much on your mind. Let me give you a brief update from our perspective. We continue to see improvement in certain lines and geographic regions during the quarter, but it was relatively modest. On property, we're seeing average increases of 5%, driven by cat exposed risks, down slightly from last quarter. Non-cat is now flat year-over-year, as we predicted on our last earnings call, due to an abundance of capacity in the market and carriers looking to diversify their portfolios.
In casualty, we saw an average of 4%, driven mainly by workers' compensation, with liability increasing at a lesser amount. We continue to see a positive rate in our FINEX business, up 3.5% on average. As I said last quarter, the overall rate improvement so far in 2012 has not had a material impact on our revenue base. To the extent it's helped, it's been offset by insurance program restructures and a reduction in products purchased. The economic environment remains a headwind, with many of our clients actively managing their insurance expense. Echoing Joe's comments, it's good to put some of the noise in our comparables behind us. It's also good to see progress in our strategy to improve our business. As I've said before, there's still more to do, and we're busy doing it.
With my few minutes remaining, I'd like to update you on three key initiatives we believe will improve the business, pipelines, recruiting, and retention. First, on pipelines. Our rolling 12-month pipeline has now improved to three times our new business goal. That was the target we gave our teams, and I'm pleased we've achieved that target. Since January, our pipelines have roughly doubled, and they continue to grow. That goal achieved, we're now increasingly focused on conversion of that pipeline. I'm sure you're wondering about that conversion time for our pipeline. Unfortunately, it's a little difficult to answer. I expect we'll see some of our pipeline converting to revenues in as little as six to nine months, depending on certain business, while other businesses can take up to 18-24 months. This all depends on the complexity of the account and the type of business.
It's just important that you appreciate that there is a gestation period between the pipeline and our financial results. Second, we're continuing to build a sustainable recruiting platform that attracts experienced producers to Willis. Our headcount remains positive for 2012, and we're still working towards a goal of increasing producer count 3%-4% annually while actively managing underperformers. Third and last, I'm pleased with our retention rate of 91% in both the quarter and year to date. Building up our retention levels underpins our growth objectives. We're working hard to retain our current clients, ensuring we understand how they view our performance so we can make it better. Beyond those three priorities, we also continue to expand our Sales 2.0 rollout across North America. Through the first nine months of the year, we've held around 1,700 Sales 2.0 meetings with clients and prospects.
Of those, we've converted over 18% of those meetings into new business wins. We've trained over 2,600 of our associates in the Sales 2.0 process, and close to 600-plus producers are using the process as they interact with clients and prospects. That's a good start to a program that I take very seriously. I fully expect it will continue to gain traction amongst our sales associates and drive increased revenue. Overall, I'm pleased with the progress we're making in North America. The economy notwithstanding, I firmly believe that if we maintain and execute on our 3-tier strategy of improved pipelines, increased producer headcount, improved retention levels, we'll return to delivering solid organic growth and improved margins. With that, I'll turn it over to Mike.
Thank you, Vic, and hello, everyone. In reviewing the numbers, all comparisons are to Q3 2011, unless otherwise noted. All references to adjusted figures exclude those items that we disclosed in the supplemental financial information in our press release. Reported net income was $26 million, or $0.15 per diluted share. That compares to $60 million or $0.35 per diluted share. Excluding the impact of adjusting items, adjusted net income was $38 million, or $0.22 per diluted share. That compares to $72 million, or $0.41 per diluted share in the third quarter of 2011. Let me provide some more detail on the adjusted figures. Excluded from adjusted net income in the current quarter is an $11 million settlement with our former joint venture partner in India, recorded in other operating expenses, and the related $1 million loss from dissolving that joint venture.
This settlement will allow Willis to move forward with a new partner in India, where we believe there is great opportunity for growth. Excluded from adjusted net income in the third quarter of 2011 was $15 million of expenses related to our 2011 operational review. $7 million of that cost was recorded in salaries and benefits, while $8 million was recorded in other operating expenses. As noted in our press release, foreign currency fluctuations positively impacted our third quarter 2012 results by $0.01 per share. In total, foreign exchange reduced revenue by $17 million and reduced operating expenses by $21 million, producing the $0.01 per share benefit. The $21 million expense benefit was broken out $13 million to the salary and benefit line and $8 million to other operating expenses. Let me talk more about expenses.
Total reported expenses were up $14 million, or 2.1%, from $670 million to $684 million. Total adjusted expenses increased by $17 million, from $655 million to $672 million, or 2.6%. When the $21 million benefit from foreign exchange is excluded, underlying growth in our total adjusted expenses was $38 million, or 5.8%. That 5.8% can be broken down in terms of underlying salary and benefit growth of 6.8% and underlying growth in other operating expenses of 3.6%. As a reminder, our third quarter 2011 other operating expenses were favorably impacted by a $5 million release of funds related to liabilities that did not show up. There was no similar benefit in our third quarter 2012 results. Excluding the impact of that expense credit in Q3 2011, expense growth was 5% in the current quarter. Let me expand on the 5.8% underlying growth in total adjusted expenses by business unit.
In North America, total expenses grew $8 million to $9 million, which is about 3.5%. International expenses grew just shy of 7%, and expenses in global grew a little bit over 8%. I'll remind or I'll mention that excluding the non-recurring expense credits which were in that business, adjusted expense growth in global would have been 5.5%. The important point here is that our expense increase is focused on our higher revenue growth in margin businesses. Recall from previous discussions, we commented that in 2011, we were investing in new hires in key geographic regions such as Latin America and Asia. At the same time, we were developing our infrastructure and investing in support areas of the company such as compliance, our new European data center, our operations in Mumbai, and in investment technology.
As you would expect, we're seeing the increased run rate of those investments here in 2012. Year to date, total adjusted expenses grew 4.1%, excluding foreign exchange. Let me tell you about salaries and benefit, which as you know, is the largest component of our expense base. Adjusted salaries and benefits were up approximately 4%, or $20 million, from $482 million to $502 million in the current quarter. Excluding the $13 million of positive foreign exchange I referred to earlier, salaries and benefits, net growth was $33 million, or 6.8%. You should note that on our salary and benefit line, excluding the favorable impact of foreign exchange, has been very consistent over the first three quarters this year, coming in each quarter in a narrow range of $512 million to $515 million.
In contrast, last year, our S&B line declined throughout the year as we benefited from actions taken in our operational review. Another factor which increased our S&B line this quarter is that we incurred unexpected salary and benefit increases in Latin America totaling over $3 million for a number of reasons, including mandatory pay raises in Venezuela driven by the presidential elections. Year to date, adjusted salaries and benefits grew 4.3%, excluding foreign exchange. The other large component, other operating expenses. That line on an adjusted basis was down $3 million or 2.2% in the quarter from $138 million to $135 million. If you exclude the $8 million favorable impact from foreign exchange, other operating expenses grew by $5 million or 3.6%.
All of that growth can be attributed to the $5 million of expense credits recorded in the third quarter of last year that did not recur this year. Year to date, adjusted other operating expenses increased close to 4.2%, excluding foreign exchange. There have been many comments overnight about our operating margin and the disappointment with it. Let me explain why our adjusted operating margin contracted 290 basis points from 13.8% in Q3 2011 to 10.9% this quarter. First, 40 basis points of that contraction came from lower investment income. Obviously, there's little we can do about that in the current yield environment.
We saw the impact of non-recurring items, 60 basis points from the non-recurrence of expense credits, 40 basis points from Chicago fraudulent activity, 40 basis points from the elevated Latin American salary and benefit expenses, and 60 basis points from the non-recurrence of the reinsurance profitability initiative. To summarize, we had approximately 200 basis points of negative impact on our margin from the non-recurrence of several items that occurred in the third quarter of last year. Some of that was offset by 70 basis points of beneficial foreign exchange. That leaves 120 basis points of the decline from adjusted expense growth exceeding revenue growth. On the tax side, if you exclude the impact of certain non-recurring items, the estimated effective annual tax rate for the quarter and the nine months was 24%.
The number that you'll see in the press release, if you do the math, is about 26%. That's purely because the adjusting item I referred to in terms of the India joint venture cost is not tax-deductible for tax purposes, that elevates our book tax rate. At this point, we expect the 2012 effective rate to be approximately 24%. Let me touch on the associates line, which, as you all know, is primarily Gras Savoye. For the quarter, that line recorded a loss of $2 million, consistent with what we told you last quarter, compared to net income of $10 million in the year ago period. This is a $12 million swing or $0.07 per share.
I also said last quarter that we expect the associates line for the full year 2012 to be down $6 million to $7 million versus 2011, including our expectations for Q4 to show a loss of $5 million to $6 million. On our balance sheet, total debt outstanding at the end of the quarter was approximately $2.4 billion, our debt to adjusted EBITDA on a latest 12-month basis was approximately 2.7 times. During the third quarter, we generated approximately $150 million of cash from operations. We had positive contributions from working capital. Capital expenditures in the quarter were about $34 million. We repaid $30 million of our revolver, leaving a balance outstanding of $20 million, we purchased approximately 1.2 million shares of our stock at a total cost of $42 million. We've now completed the $100 million share buyback that we announced earlier in the year.
Finally, at September 30th, our cash and cash equivalents on our balance sheet amounted to $424 million. That compares to $407 million at June 30th. With that, I'll turn it back to Joe.
Thanks, Mike. Before I offer some concluding remarks, it's important that I comment on one additional matter that was included in our earnings release last night. Here's the background. Willis has nearly $1.8 billion of goodwill related to North America as of September 30th. The majority of that goodwill was recognized when we made our acquisition of HRH back in 2008. Each year, we're required by, as you know, U.S. GAAP accounting rules to test goodwill vigorously for impairment. Willis regularly performs this test in the fourth quarter, we're in the early stages of that work right now. The test, as you also know, is very technical in nature, a lot of science, requires a determination of the fair value of the segment. We conduct this test by doing a thorough analysis of our past results a conservative estimate of future projections.
As you've heard before and heard again from me and Vic today, the North America segment results lagged over the past few years as its two biggest businesses, employee benefits and construction, have been hit hard by the economic downturn in the U.S. The unit was also hindered by integration issues stemming from the HRH acquisition, which included producer defections that we've all talked about before. As such, at this time, we expect that we will record a one-time non-cash goodwill impairment charge for our North American unit during the fourth quarter, which may be material to our earnings reported on a GAAP basis. At this stage, we don't have an estimate or a range for the amount of the expected charge. As soon as we finalize the analysis, we'll file an 8-K and certainly disclose the amount.
It's not unreasonable for you as investors and analysts to ask if this potential goodwill impairment contradicts our view of North America's prospects going forward. It's natural for you to suggest that. I don't believe it does. If we incur the impairment charge, we'll do so because it's the prudent and responsible measure based on specific accounting requirements and because of continuing uncertainty in the market. Until the North America results objectively demonstrate sustained growth, we, as prudent managers of our business, believe we are following the appropriate course of action. Let me add, we remain very optimistic about the growth opportunities of North American business and are passionate about delivering growth there. We're confident about the future because as Vic outlined for you, we believe our pipelines are solid, our producer headcount is growing, our retention is steady.
Repeating what we've said before, we believe the integration issues are fully behind us. In sum, Vic and his team are positioned for real progress going forward. As I conclude, let me also address one other question that I know is on your mind, having read your reports. You, our investors and analysts, and me, have had an open and honest, transparent dialogue for 12 years. You've asked, I've answered, and importantly, we, Willis, have delivered handsomely for our shareholders. You've made mention about who will next sit in this chair to answer your questions and deliver your results. You've written that our CEO-elect, Dominic Casserley, has a stellar CV with 30 years at McKinsey, working for the best companies in our industry. You've also said you don't know him and haven't had a chance to meet him. Let me tell you something.
When you do, I think you'll agree with me and our board that he's an outstanding choice to lead our firm, along with Steve Hearn, making the decisions, building and growing the business in the best traditions of Willis, a firm with 184 years of proud history, and the last 12 of which I've been honored as its steward. For the third quarter and the next 2 months or so, the fourth quarter, the duty is mine, the results are mine, and the responsibility is mine. Before I take your questions, let me conclude with a couple of remarks. The quarterly results did not come in the way we wanted them to. As a management team, we were disappointed. We anticipated that we last spoke, it would be better. That said, we remain optimistic about our business going forward. We tried to explain what happened.
As you've heard from us today, the forward indicators for growth are in place, they're working, and we remain excited about the future. All of the negative comparisons to the prior years, created by such things as Loan Protector, the fraudulent activity, the expense credits, and all the other items that we've explained in, I think, gory detail, are all behind us. There is nothing that we know about between now and the end of the year that's going to come up. Unless there's some surprise, everything is behind us. The fourth quarter is a clean slate. I speak on behalf of everyone here at Willis when I say with affirmation that we are looking forward to presenting clean and clear financial results going forward.
Before I ask if you have any questions, and I'm sure you do, since this is my last call, a lot of you have covered Willis since I began this great adventure 12 years ago. Every one of these calls, numbering almost 48, have been balanced, they've been courteous, you've been professional, and you've treated me with a great deal of dignity, and I can't tell you how much I appreciate that. Moreover, not only have you been balanced and professional, but you have trusted me, trusted what I have told you, and gave me a credibility that I have been very honored and feel very honored to have been given.
I want to thank you, this is my last opportunity, for having been given the opportunity to serve this company and serve you, and to give you the kind of returns that we have given you, and I'm very proud of, and proud of this company. I want to thank you very much for everything that you have done for me and your support. Now, I'll turn it over for questions.
Thank you. We are now ready to begin the question and answer session. If you would like to ask a question, please press star followed by one on your touchtone phone. Please record your name when prompted. Our first question today is from Greg Locraft with Morgan Stanley.
Hi. Good morning. Thanks, Joe, and congratulations on the upcoming transition. Certainly, it's been a great ride. You've done a great job growing revenues considerably, earnings, and the stock price. Hats off.
Thank you very much. Appreciated your comments as well. Thank you.
Sure. Since you are on the board and going to stay on the board, can you give us a little color behind what attracted the board to Dominic in the search process? What were the attributes? I know you did go into it a little bit, but what specifically over other candidates really stood out at the board level for him?
Well, I think that, not to get into all the gory details, obviously, when you hear from him, this is a man who's been in McKinsey 29 years, but more importantly than that, is a global figure. He's lived in the United States, he's lived in Asia. He opened their operation in Asia. He's run the global operation out of London. He's traveled the world. He understands the globe. This is a global company. He's advised financial services companies, a lot of them all over the world. He's very involved in and knowledgeable in insurance and financial services. That when you look at that kind of background, the globality, the experience, and the fact that he understands these businesses, puts him in a better position to be able to lead this company into the future. I think it's all about taking it to the next level.
They're all passages we go through. When you look at what he's done and you look at the next level we need to take it through, I don't think they could have made a better decision.
Okay, great. You'll be chairman of the board for a bit, so you'll be his boss in the early days. Any sort of specific things that you'll be watching for in the first six months or so?
I'm going to make sure he stays in shape.
Okay, great. Shifting gears, on the capital deployment side, you did exhaust the buybacks in the quarter. I assume there's no more coming in 2012, and we'll then revisit that in 2013?
Yes.
Okay, great. Last, on the goodwill charge, $1.8 billion in North America is obviously, almost two-thirds of the total equity of the company. Any kind of covenant issues or anything to call out at this point in time on your debt outstanding that equity owners might not be as focused on right now as you go through that process?
None whatsoever.
Okay, perfect. Thanks again, Joe. Congratulations.
Thank you. Thanks for your nice comments, Greg Locraft.
Thank you. Our next question is from Adam Klauber with William Blair.
Hello, Adam. How are you doing?
Morning, Joe. Pretty good. Congrats also on a great run of the company.
Well, you followed this company and me a long time, and I appreciate very much how balanced you've been and the courtesies you've given me. Thank you.
Yeah, thanks. Again, as we look going forward, in a challenging economic environment, doesn't seem like the U.S. or globally, we're growing quite rapidly. What do you think the key is to balancing continuing to grow the producer force, yet hold expenses in line?
Well, I think a couple of things. I think that if you look at the experience of the last three or four years, it's pretty obvious that the results and the fact that we haven't grown the earnings per share have been predominantly due to the acquisition that we made. I think somebody made a comment that I read overnight that it was a mistake. It was not a mistake. I guarantee you, three or four years from now or even sooner, somebody's going to look back, and history is a more clear indicator than current events are. I do not think it was a mistake.
I think it purely, and a great foundation, supported the fact that we have locations all over North America that will serve the middle market very well and beyond. I don't think growing the producer headcount is when you see that, lots of you always believe, because we've talked about this before, that that's going to mean that the expenses are going to go up a lot. The expenses in North America have been kept to a very low minimum. We have room in North America as we begin to grow the revenue, and we put a lot of the comparables and the issues that we've talked about behind us. I think we have enough room on the expense side to be able to use the money to grow the headcount and to be able to grow the revenues as that's happening.
The lowest expense growth in the company has been North America. I think there's room to selectively recruit. Vic's doing a lot of that now. Don't believe that the expenses are going to go up through the roof just because we're going to increase our headcount, and it's going to be selective at that. Vic, you want to add anything to that?
The only thing I'd add, Joe, is, our target is to grow our producer headcount 3%-4% a year on a net basis. That's 30, 35 producers. That is not exorbitant producer recruiting in my mind, so.
Thanks.
Also remember that I think that the worst of the employee benefit and the construction issues, as Vic said, are behind us. In the last quarter, we didn't mention this, but the employee benefit business, in terms of new accounts, grew substantially. That is very heartening for the employee benefits going forward. I think when you start to see the revenues improve in North America, and you start to see the headcount go up nicely, we have not had, as Vic mentioned in the last call, any defections of any note for now almost a year in North America. You're starting to see a runoff that's now getting very slim as it relates to the defections that occurred in 2010 and 2011. All this stuff's starting to come together, and you're going to start to see the cleanliness of North America start to show.
Thanks. One other follow-up. Within Global, which has been probably the highest growth unit, reinsurance has been one of the, or probably the primary driver of growth there. As that market softens a little and probably even gets more competitive, can reinsurance still be the driver that it was? Are there other segments of the business that can come up and take its place?
I think a lot of the answer to that question has to do with a lot of restructuring that Steve is doing. I'll let him answer the question.
Yeah. Thanks, Joe. I guess, probably a couple of comments. Firstly, relative market share. You're absolutely right, the reinsurance business has been at the heart of driving the growth in our Willis Global segment. It's roughly half of the Willis Global's turnover and a significant profit driver for Willis Global and for the company more generally. We have relative market share to look at in terms of where we are in that business. If you took Europe, we have dominant market share in some industry sectors and some countries. If you looked at somewhere like Willis North America, arguably the most mature reinsurance environment, our market share would be in high single digits. If you took our two larger competitors of the intermediated business, their market share would be as much as north of 70% of that market. We have huge space to grow, even somewhere like that.
If I get to China, an emerging reinsurance opportunities, again, significant growth potential for us. As Joe says, this touches on the more strategic work that we've been doing in terms of transformation of Willis Global as well, in so far as I've talked about in the previous couple of calls, the transformation that we've been doing in Willis Global in terms of connecting our reinsurance and insurance and placement businesses more closely together, and I think through there you'll see good growth. One of the things with reinsurance, as you may know, is the success of this year is actually born out of the results of next year. I can tell you, we've had a very good run of new business wins around the world during this year and should bode well for next year.
Okay.
Thank you very much.
Thank you. Appreciate it.
Thank you. Our next question is from Mark Hughes with SunTrust.
Hi, Mark.
Hi, Mark. Good morning. My congratulations as well, Joe. Best of luck.
Thank you, Mark. I appreciate the support.
Thank you. The international business, the expense is up 7%. It sounds like there were some unusual items in the quarter. What should we expect for expense growth there, say, over the next six months?
I'll answer the first part of the question. As Mike said to you, we had a couple of unusual items in South America, where we had to give raises to everybody in Venezuela prior to the election. It's a good way to get elected, by the way, just make sure everybody gets a raise. It makes them feel good when they go to the polls. We have a big operation. We dominate in Venezuela, so we had to give everybody raises there. There were a few other unusual items that jacked the expenses up, so they really were not ongoing operational expenses. They were much lower than that. Tim, you want to answer the second part of the question?
Yes, Joe. I think that's absolutely right. There were a number of things together that drove up expenses in this quarter. One was the Venezuela situation, which we've talked about. Second was some restructuring of certain operations that we're looking to turn around, which we've talked about on prior calls. We are investing in this business. We see a lot of growth potential in different parts of the world, and we've invested behind that. These are out of line with long-term expense expectations.
Any comments on the international business, especially in Europe? Spain returned to growth, U.K. was positive. It sounds like you're taking share, how about the underlying demand for insurance? How did it fare this quarter compared to prior quarters?
That's absolutely right. Obviously, the U.K. and the rest of Europe is a considerable part of our business, the economic environment that we face there probably means that the overall market we're operating in is flat or down. The evidence that we have is that we are taking share in those markets. It varies from country to country. Actually, we think there continue to be share-taking opportunities across the U.K. and the European markets. We think we're actually doing well in a difficult environment.
Thank you.
Okay. Thank you, Mark.
Thank you. Our next question is from Dan Farrell with Sterne Agee.
Hi, Dan.
Hi. Good morning. Can you talk a little bit more about some of the underlying trends at Gras Savoye and maybe some of the strategies that are being put in place there on a go-forward basis? I apologize if you've commented on it, but if you haven't, on guidance for both the affiliate line and the monetary interest line for 2013, if you can give us any indication what you're thinking along that.
The first part about Gras Savoye I'll answer is that we're going through in Gras Savoye, as we talked about before, we have a new CEO who is looking at the business, doing an operational review, and you're going to see that take place over the course of the next 12 months or so. We feel very good about Gras Savoye. We feel very good about our affiliation, our possibilities in the future. The company was run by one person for 37 years. Bringing a new face in with a fresh attitude, strategically and operationally, it's just going to take a little time. To get rid of a lot of costs in a place like Gras Savoye is not so easy in France. There's a lot of things that you got to go through.
I don't want to get more specific other than to generally tell you that there'll be a big operational review, and I think that will breed a lot of profits for us in the future as the years go by. You got to remember too, they got great strengths in parts of the world that will be, I think, very fertile economically in the years to come, especially Africa, where there's 27 locations. At one point in time in the future, Dominic and the rest of the team will be looking at 30-plus locations in Africa alone. This all bodes very well.
As it relates to 2013, I can only tell you, we haven't given guidance, but I can tell you that you enter the fourth quarter, as I said earlier, without these comparisons that we've constantly gone through, without this baggage that we constantly said, without these comments like, "Without this and without that, it would've been this." It's done. It's over. These comparisons are gone, and I feel very good about the fact, and so does the team, is that now you'll start to see the real Willis start to emerge in the fourth quarter and beyond, and we feel very good about that.
Okay. Thank you, and all the best to you in the future, Joe.
Thank you very much, Dan. Thanks for your comments.
Thank you. Our next question is from Bob Glasspiegel with Langen McAlenney.
Good morning, Joe.
Bobby, how you doing?
I'm doing great. Let me add my thanks. I've enjoyed the last 30 years plus a lot. You're a large shareholder of Willis. We're going to sort of watch whether your shareholder matches your words of optimism. What should we expect to see about your holdings looking out over the next few years?
I've been in this business, the stock business, Bobby, with you for a long time. That's why we've known each other for a long time. Usually what happens is that when you buy stocks, you like to buy industries that you know and management that you know in businesses that you know. I don't think I know anyone better than this one. Other than the fact that because I've been the CEO, I've had to, and I'm honestly answering this question, I have not sold a lot of stock over a 12-year period of time. We all have personal responsibilities and things of that nature that we have to have in terms of diversification.
I will tell you that once I get over that bit, and I get over the personal things that you have to do, you will see that the preponderance of my holdings will stay intact.
Okay. We will look and see what you're doing outside of Willis with great interest.
You know why. I'll let you know.
You used the word clean slate, I think, to describe the goodwill accounting charge. Are you saying that you've therefore scrubbed the entire balance sheet and we shouldn't look for any further charges beyond the goodwill? Normally when you get a management transition change, insurance 101 management is you take charges, blame it on the prior management team, and give yourself a little wiggle room to manage through the future. I guess the question is, how carefully have we scrubbed the balance sheet to allow Dominic the clean slate that you say he's got?
I can't speak for him, Bobby, obviously, he's going to do what he should do, and I obviously would endorse anything that he believes should happen. From this perspective right now, from a balance sheet point of view, it's clean. What he decides to do is something for him to analyze and for him to talk to you about. I can't make any predictions about that. From a technical point of view, and as you say, 101, that's a clean balance sheet. There's nothing in the balance sheet that is unclean about it. As it relates to future charges, I can't make predictions about that.
Thank you.
Thanks, Bobby.
Thank you. Our next question is from Al Copersino with Columbia Management.
Oh, hi, Joe. How are you?
Fine, thanks. How are you doing?
Good. Hey, you gave a little bit more clarity around the coming goodwill charge. You said it may be material to GAAP earnings. I don't recall if the GAAP earnings phrase was in the release. Material to GAAP earnings, my understanding, means more than 10% of revenues. Are you able to give us any sizing around that?
I can't. I simply wanted to make sure that I covered all the bases. I really don't know. If I knew, I'd tell you. That's why I'm giving you a heads up about the fact that the probability exists, and I say material simply because it's a possibility, so I want to get it all in. I simply do not know. As soon as we know, I'll 8-K it, and you'll know.
Right.
I don't want you to get blindsided.
Right. Another question was on the expense front. In looking through the press release, it seemed like some of the third Q 2011 items were one-off favorables that you were looking at, and some of the third quarter 2012 items are ongoing negatives. I didn't quite take the comfort that the paragraph perhaps was meant to give me about the margin comparison. Could you react to that?
As it relates to the third quarter 2011, most of those were non-recurring. In terms of the current quarter, the Chicago fraud activity is non-recurring. The elevated Latin America expenses, they've become elevated and they stay there. They're not going to continue to elevate, at least as much as we know. I would characterize that as non-recurring in terms of kind of getting to that level.
Those are really the two items in the current quarter, which added up to 80 basis points. The other two items I referred to were really the absence of those from the third quarter of 2011.
Let me just add something to that, if I can, Al. What he said also was that when all of that sorted itself out, we were still 120 basis points decline, if you took that into consideration. If you add back on our revenue side, the things that did not hit or deferred, which were greater than 120 basis points, then this margin picture would look much different, and so would the earnings per share.
That's helpful. I appreciate that. If I can sneak one more in, if that's okay.
Please.
Joe, you referenced the revenues that were pushed into the fourth quarter, perhaps beyond that. I guess my question is, I assume there's always a movement back and forth of revenues. You get some revenues in the third quarter that perhaps were originally expected in the second quarter, and so on. Could you give a sense for what the gives and takes were this quarter? Were there some revenues this quarter that perhaps had been expected three months earlier? What's the net impact of that movement?
Sure. That's a legitimate question. There's always going to be, on a quarterly basis, because of the nature of the business, Al, a movement here or there. I will tell you, though, that in this particular quarter, the movement has been more profound than usual. As a matter of fact, more profound than I've ever seen it. That's why I went into detail earlier in my comments when I said up until a couple of weeks before the end of the quarter, there was a $12 million movement, where our expectation was much greater than the 2% that you saw. I would tell you that, yes, you're right, there's always movement here or there, but much more profound this time.
In Willis Capital Markets, there are deals that have already been announced that simply have not closed that were supposed to close in the third quarter, amounted to a large part of that $12 million. You add on the China that I talked about, you add on the Venezuela that I talked about, and some other items, all of a sudden, you're not looking at two, you're looking at well over four, close to five. That's how profound the quarter was. When you get rid of those comparisons and you add back in the things that should hit and all of the issues that my associates have talked about, you get a much different picture of what Willis is, and that's why I think you should judge it when you see the fourth quarter.
That's helpful as well.
You got to remember also, my colleagues remind me, that the third quarter is the smallest quarter for us.
More apt to see volatility. Yeah, I got it. That's very helpful. I appreciate it. Thank you, Joe.
Thanks so much for the question, Al. Nice talking to you.
You as well.
Thank you. Our next question is from Josh Shanker with Deutsche Bank.
Hi.
Good morning, everyone.
How you doing?
Good, thank you, Joe. Just tagging on to Al's question a little bit, if we went through segment by segment trying to figure out what normalized organic growth is, taking out all the unusual items for comparables, where would we be by each segment?
It's tough to do that because if I do that, I'm giving you as close to guidance as possible and estimates, and then in the next quarter, you're going to be all over Dominic and say, "Joe said this, and Joe said that." I can tell you the following, that International has now shown itself to be more normal than the anomaly in the second quarter. I think it's pretty responsible to say that we're comfortable in that area. In Global, I think we said it correctly. It showed 3%, but if you took away the profitability initiative that was mentioned earlier, it's really five, and I made a mention of that. 5%, 6% area is what's more normalized. I feel that there's comfort there. I'm looking at Steve, and I'm saying that that's not a guesstimate. That's what's really been running.
In Vic's case, he gave you a good sense of employee benefits. I gave you a good sense of employee benefits. He's given you a good sense of pipelines. He's given you a good sense that construction might be a little bit better than what we've experienced over the last four years. We've had no defections. We got the tail end of the weight of accounts leaving, which obviously disallows us to show real growth because of the weight of what's rubbing up against it. When you look at all of that together, you're looking at, I think, a revenue picture that we feel very confident about going into the future quarters that will exceed our expense growth.
Okay. I'll take it. On the North American segment, if we look at the commentary from carriers and we look at just the somewhat small growth that we're seeing in the U.S. economy, your commentary is that you're getting rate, but it's being offset by negative exposures. Why, from your seat, are you still seeing negative exposure in the North American segment, which contradicts what we're hearing from carriers in the broad economy?
This is Vic. The overall rate impact that we actually see across the whole revenue base is less than a point and a half. It's not significant rate impact that we're seeing, and it's spread across different lines and different geographies. You take a look at the surety business, which is actually quite compressed, and when you're only growing 1% ex the issues we talked about, it doesn't take a lot to make an impact. When we're growing 4% or 5% in the future, which I hope to one day, it would be less of an issue.
I also think that it's important, Josh, to mention, because I've tried to read as many of the reports with regard to insurance companies and rates I don't know that they make a distinction well enough between the renewable book and the new business. The renewable book gets higher rates than the new business does because you're fighting for new business, and there's a pressure for rate there. It's certainly firmer than it was, but I don't know that if you break it down geographically by product area, new, renewable, et cetera, you're going to get the same kind of picture that's being shown. In addition to that, our job as brokers is to get the cheapest possible price that we can for our clients.
In a lot of cases, people forget that our brokers are trying very hard to do that on a day in and day out basis. Throw the exposures in, throw the higher deductibles in, throw the economy in. In a lot of cases, businesses look at insurance costs as a T&E. It's an expense, and they try to get it down as much as possible, especially when their businesses aren't growing. I've looked at that, and I've questioned that. Vic will tell you, I'm looking at him as we're talking. What about rate? What's going on here? They're getting rate. I would talk about it all the time. I'm pretty convinced that we are doing what we could as brokers and that we're not allowing rate to get away from us, if you will.
Well, I appreciate the comments. Good luck to you, Joe, and good luck to Dominic. Then we'll look to the fourth quarter.
Thanks, Josh. I appreciate very much your comments, as always.
Thank you. Our next question is from Meyer Shields with Stifel Nicolaus.
Hello, my friend. How are you?
I'm well, how are you?
I'm doing well. It's a living.
Okay, well, I hope so. I certainly want to echo everyone's commentary, wishing you the best of luck and thank you for.
Thanks, Meyer, I appreciate it.
A great run. A couple of questions, again, on the expense side. In North America, if we're talking about 3% to 4% headcount growth, we typically see the revenues lag the initial expenses when there is recruitment, then there's sort of the normal upward influence on salaries and benefits and so on. Does that mean that organic expense growth in North America is somewhere in the 5% to 6% range?
No, I really don't think it does. Actually, if I look at S&P for the year to date, it's down across North America while we've actually still grown our producer headcount. Our discretionary costs are down. We actually watch the expense line very carefully, it's a difficult needle to thread to grow your headcount in areas you want to grow while still managing the overall business. I actually feel very comfortable with where we stand on that.
As I said, Meyer, I think the best expense controls, because we have had an unpredictable ability to be able to know what our revenue growth will be, the biggest discipline we've had, the best discipline we've had in expenses has been in North America. Starting way back with the acquisition, where we took a lot of costs out because of the economic depression that we were in. I don't have any issues, nor should you, with regard to expenses in North America going forward. The issue is a revenue issue. It is not an expense issue.
The other point, Meyer, that Vic was referring to, when he referred to 3% to 4%, he was referring to the producer population, not the employee base in North America, which are much different. The producer population's about 800+.
Yeah.
Total employees about 6,000.
The total headcount is down.
Okay. What was the total headcount? I'm sorry, I just missed that number.
The headcount for North America, he was talking about 3%, 4% with regard to the producer headcount going up. The total headcount in North America has gone down for four years.
Okay. What % of North American employees are producers?
800.
800 out of a number that's somewhere between 5,000 and 6,000 people.
Oh, okay. Yeah, all right then. Clearly makes a difference.
That's why he said 3% or 4% is 30 people.
Right. Okay. That's very helpful. When we look at the revenue shift that you're talking about to the fourth quarter, I'm looking at the $12 million, but I understand it's a bunch of different pieces. Are all of those revenues already booked in the third quarter, or are all the expenses already included in the third quarter, or do any of those get pushed out until the revenues can actually be booked?
I can't think of them. I'm thinking through. The reason I'm hesitating is I'm trying to think through if any expense will follow, and I can't think of anything other than bonuses that are normally accrued, but operational expense has already been taken, so the revenue has yet to come.
Okay, fantastic. Thanks so much. Best of luck again.
Thank you.
Thank you. Our next question is from Michael Nannizzi with Goldman Sachs.
Hi, thanks. It's Eric Fraser for Mike.
Eric.
Good, thanks. A quick follow-up on North America exposures. Are you seeing any bifurcation between smaller and larger accounts?
I don't really think so. I think every client out there is looking for ways to manage their insurance costs, so I don't think we could really come up with a segment for you on that line.
Okay. Then, can you just reiterate that if there are any one-offs in Q4 2011 that we should be aware of as we think about comparisons to the fourth quarter of this year?
None. As I said earlier, at this moment, as I speak, all of the comparables, the negative comparables are gone. I can't speak for something that will happen in the next couple of months that I don't know about, like Venezuela came up in the last quarter. There's nothing that I know about at this juncture that's a negative that still exists.
Sure thing. Then just one last piece of handing over a clean slate might be considered litigation. Can you provide any update on the Stanford proceedings?
I'll give you an update on the Stanford proceedings in that there's nothing new from the last time we spoke. My general counsel is sitting next to me, Adam Rosman. Adam, is there anything you want to add?
The only thing I'd add is a key part of the case, we've asked the Supreme Court to review. They recently have asked the solicitor general for his opinion on whether the Supreme Court should take the case. We view that as a positive development. Most importantly, as we've said from the beginning, we will fight the case every step of the way, and we believe it's baseless.
Okay, thanks. Best of luck.
Thank you.
Thank you. Our next question is from Brett Huff with Stephens.
Good morning, thanks for taking my questions.
Hi, Brett.
Two questions. One on the goodwill write-down. I know you can't really size it for us yet because it's in process, is there something that you all see now that you didn't see, I guess, last fourth quarter or even the fourth quarter before that when you do these annual reviews? Any insight on that drove the particular trigger this time that you can tell us?
No. As I said in my comments, now I'll say in the vernacular, when you go through the process of looking at impairment, there are strict bridges and architectural procedures that are very scientific that almost suggest that you have to guarantee that growth takes place. When you go through those scientific procedures that GAAP allows you or forces you to do, you can't come up with that science that makes it predictable, especially in an uncertain economy and an uncertain world. That's the reason why we're going through the impairment process. That's the science of it. From an art point of view, I'm looking at pipelines, I'm looking at retention, I'm looking at all the things that we talked about, my feeling about North America is much different than what that science forces me to do.
When I look at it scientifically, and I have to, on a GAAP basis, reinforce the predictability of North America based upon that bridge, which is very scientific, I can't do that, so my prudence tells me that you got to be able to look to impairment.
Great. That's helpful. The second question is more of a trend on construction. We haven't heard a lot of good news on construction in a while. Can you give us some more color on that? I guess specifically, it sounds like it might have been more Northeast. Is that an isolated item? Is it share taking? Is it a restarting generally that you're seeing a broader trend? Any comments there?
This is Vic. I'll jump in here. It was actually rewarding to see some growth in construction. It's been many quarters since we've been able to claim that, and that business has struggled really since 2008 for us. Actually, at the start of this quarter, as I travel the country and I talk to our construction teams and I look around the environment, I was heartened to see, and I would put this as very cautious optimism, that dirt was starting to move, projects were starting to be let. Our teams were starting to feel like they are having more activity, and I was hopeful that would translate into some more new business. It was not just the Northeast. We're actually starting to see more activity around the country. It hasn't all translated into business yet. My teams would be very cautiously optimistic, again, as I remind you.
We had new business on a P&C side. We had some projects going. Surety holds it back still. That market is still soft. I'm cautiously optimistic. As our second largest business, it's one that, if construction does take off, like I hope it will, it will bode well for Willis North America and Willis Group.
Is it mostly new or is it restarting of existing?
I would say it's all of the above. Contractors that are currently operating at one-third of what they used to do in 2006, 2007, are starting to see a pickup in their business. Projects that had not had funding and had not been built are starting to happen. It's all of the above. I think construction hit its bottom and we're starting to see some signs of life. I want to see that translate into several quarters of growth before I have a parade. Like I said, I'm starting to see some.
Little light at the end of the tunnel.
Yeah.
Great. Well, thanks for your time. Joe, best of luck in your next efforts.
Thanks, Brett. Thanks for everything. I appreciate it. I'll see you along the way.
Thank you. Our next question is from Raymond Iardella with Macquarie.
Hi, Ray. How you doing?
Good. How are you doing, Joe? Just one quick question, I guess, for Steve to start out. Just curious, I'm not as familiar with the sort of the role of deputy CEO. I'm just curious, could you give us a little bit more color on what the sort of duties are and then how you plan to manage those duties alongside running Global?
I must say, every eye in the room has now turned towards me.
I want to hear this myself, Ray.
Ray, I really appreciate the question very much. I had the pleasure of meeting Dominic for the first time two months ago through this process, I think it's been a matter of a lot of speculation that I was a candidate for the position of CEO as well. I can confirm, I went through a very rigorous process with our board and advisors in terms of that process. As the outcome of that was, as you've seen, that I'm deputy CEO elect, and in the new year, will take on that position. Met Dominic back in the middle of the summer as part of his process, and found somebody, maybe going back to an earlier question, who clearly brings with him a brain. That's obvious, I guess, with the 30-year career he's had at McKinsey, a strategic one at that.
Also somebody I think who I can work with and the leadership team here more generally can work with very well going forward. I'll retain my responsibilities for our global businesses until such time as Dominic decides that he has other things for me to do. I'm also the CEO of Willis Limited, our U.K.-regulated entity, I will continue in that capacity working with the non-executive chairman of that business, Rodney Baker-Bates. I think Dominic and I have concluded we have lots of other things to be getting on with in the meantime, and through that list of lots of other things I'll pick up some additional responsibilities. I hope that satisfies my colleagues in the room, if not you, Ray, in terms of an answer.
Yeah, I appreciate the additional color. The only other question I wanted to touch on quickly is sort of the India joint venture. Just curious, A, how large was that? Then B, kind of why are you guys so comfortable in terms of this new joint venture in India, if I think I heard you correctly, going forward?
Well, as you know, we can only own 26% of a business in India, so you have to have a partner. We had a partner when I got here 12 years ago, and it simply didn't work out. The license is not ours, if you will. It's the joint venture partners because they own the majority shares. They had an issue. I can't get into the gory details, as you could appreciate for legal reasons, but they had an issue in India. Then when they had an issue, we had an issue. To be able to disconnect ourselves from that issue, we had to pay an amount for our business, if you will, and that's the money that you heard Mike talk about. We weren't talking about enormous amounts of money, but we're talking about low double-digit numbers in the millions.
That's over with, that's done. That's another example of just another thing that occurred over the last few years that happens, and we seem to have gotten more of this stuff happen than anybody else. It's not crowing, well, it was me, but it happened, and it's over with. The new joint venture partner I'm excited about because we've actually been in business with them without being on a licensed basis with them for over a couple of years, so we know them quite well. We basically process whatever we do on an unpaid basis with them, so it's not like we started anew on a Monday with them and don't know them. We're pretty comfortable. We're waiting for the approval process to happen. We're waiting for all the legal processes to take place, and so we're ready to go, and we've got this behind us as well.
It's another example, thanks for bringing it up, of something that's behind us.
Okay. Well, I appreciate the color, and all the best in the future, Joe.
Thanks so much, Ray. Nice, obviously, operating with you. Thank you.
Thank you. Our next question is from Cliff Gallant with KBW.
Cliff, I can't believe that it looks like you're on the list for the last question, and you-
All my questions have been answered. 12 years ago.
I want you to know- we've been talking to each other now for 12 years. You were one of the early people in this company, and you believed in it early and believed in me, and I really sincerely appreciate that, Cliff.
Oh, no. Thank you for your leadership. I've enjoyed working with you. My questions today really have been answered, thank you and good luck, Joe.
Thank you very much. Is there any other questions?
I'm showing no further questions.
Thank you very much, everybody. Goodbye and so long.
Thank you. This does conclude today's conference. Thank you very much for joining. You may disconnect at this time.