Welcome. Thank you for standing by. At this time, all participants' lines are on listen only for today's conference. During the question and answer session, please press star one on your touch-tone phone. Today's conference is being recorded. If you have any objections, you may disconnect. I would like to turn the meeting over to Mr. Peter Hearn. You may begin, sir.
Thank you. Welcome to our fourth quarter 2011 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.
Please note that these forward-looking statements reflect our opinions only as of the date of this presentation. We undertake no obligation to revise or publicly update the results of any update to these forward-looking statements 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, 2010, and for the year ended December 31, 2011, which we expect to file by the end of February, 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. 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.
Welcome, and thank you for joining our call today. On the call with me are Michael Neborak, Chief Financial Officer, and the entire management team. Too many names to mention, but they're all here to answer any questions that you have, and we'll be here as long as you'd like us to be. As usual, we'll be able to answer questions at the conclusion of our prepared remarks. First of all, let me tell you that the remarks I'm about to go into are longer than you usually hear from me. The reason is because I think you deserve as much detail as possible about the last quarter, and about the year.
I'm going to try to get into as much detail as I possibly can, so it gives you some idea and some insight as to what happened in 2011, and in the last quarter, especially. During our last call, I told you that we expected our full year adjusted earnings per share would be in the range of $2.70-$2.80, and our adjusted operating margin would be in the mid 22% range. Fully diluted adjusted earnings per share came in at $2.75, excluding the $0.05 positive impact from foreign exchange for the fourth quarter. Fully diluted adjusted earnings per share obviously came in at $2.70. Our adjusted operating margin for the year came in at 22.5%. We came in pretty much where we expected, although on the lower end of the earnings per share range if the FX impact is excluded.
One of the things I want to make very clear throughout this conversation is that I am not satisfied with our financial results last year. Willis has an excellent track record, as you know, one of consistently outpacing our peers in both organic revenue growth and margin. We fell short of that in 2011. That's simply not acceptable. To me, the year felt like Murphy showed up every day, where it seemed like if something could go wrong, it went wrong. That's not an excuse. It's simply the way it was, and we're going to fix that. As I've been discussing throughout this year, the continued difficult global economy has taken its toll on our commission and fee growth. Going into 2011, we expected some improvement in economic conditions, but perhaps unjustly so. Beyond the economic conditions, we definitely had a poor quarter.
It wasn't just the economy, and frankly, substandard year by Willis's high standards. As I go through the segment results, I will tell you very frankly about the issues encountered, including Loan Protector, once again, business retention issues in North America segment unrelated to Loan Protector, the generally poor results in our U.K. retail business, and also poor business results at our largest associate, Gras Savoye. I'm glad 2011 is behind us, and I expect far better performance in 2012. Now let me start by discussing our segment results for the fourth quarter in some detail. North America. In North America, where we have experienced declining commissions and fees, we have the Loan Protector issue that was discussed at length last quarter.
In summary, the fourth quarter of 2010, Loan Protector generated over $16 million of commissions and fees, and in the fourth quarter of 2011, it generated about $4 million. That's a $12 million difference, and a lot of that is margin because of the nature of that business, so the impact is severe. Last quarter, we laid out all the reasons behind the decline, so that it's not a surprise to you, but it's still painful for us to say anyway. Beyond Loan Protector, North America's organic growth has declined, and the rate of decline accelerated as the year progressed. In fact, our fourth quarter North America commission and fees, excluding Loan Protector, declined a little over 3%, which is a very disappointing result. Let me talk about some of the issues in the segment.
First, the lingering effect of what we hope and expect is the tail end of a downtrending economy. This, as you know already, has hit us hardest in our two largest North America practices, employee benefits and construction. Those two businesses represent about 36% of our business in North America. Second, business retention in North America, and this is excluding Loan Protector, declined 300 basis points from 92% in the fourth quarter of 2010 to 89% in the fourth quarter of 2011. That's sizable. That's the 3% difference if you just look at it on an apples to apples basis of decline right there. That's very sizable for us, where our metric usually on a retention basis is 92%, 93%, pretty consistently. The biggest driver of the retention decline relates to the HRH integration, which has generally gone well over the past three years.
However, it did lead to some departures by HRH producers. What we saw in the fourth quarter was the resultant lag of the loss of accounts after non-compete agreements expired and the related business came up for renewal. I should remind you that when we acquired HRH back in 2008, it was not growing. To remedy the situation, Willis employed strong management and supervision, as we do in all of our businesses. As might be expected, certain producers were unable or unwilling to accept the Willis culture, and they left, either voluntarily or otherwise. When that happens, they tend to go to small regional brokerages. These are tough actions, and some companies put off for years, those actions after an acquisitions, but we don't. While we've been negatively impacted by some of these departures, the overall integration has been very successful.
We've integrated over 70 HRH offices into existing Willis offices since 2008 and have cut over $200 million in expenses from the HRH operations during that time frame work. All of that is behind us. In any case, we believe that this situation is now stabilized, we will work to bring those accounts back to Willis over time, I think retention will return to normal levels in 2012. Also, during this past quarter, North America encountered an unusual amount of lost business driven by M&A activity amongst our clients. In fact, during the quarter, one such M&A client loss cost us over $2 million of revenue. Of course, M&A can happen at any time can work to our advantage or disadvantage, this happened to be a quarter where it clearly worked against us.
We have no reason to believe that this will be a continuing trend in the future or at least of this magnitude. It was just very unusual. On the positive side, rates during the quarter were no longer a headwind. Rates on average across the segment were flat. I won't go far as to say that we had a tailwind during the quarter, because we didn't. There has been a significant amount of market commentary and conjecture that rates are firming, and I'm happy to say that thus far in 2012, it is obviously early yet, but thus far, we've seen real rate improvement in certain sectors of our North America business.
Based on estimates, and these are estimates derived from internal surveys of Willis brokers and placement specialists across North America, property rates increased mid-single digits in January, while both casualty and personal lines both increased low single digits. Those are early indications of what we hope will be a nice trend in those sectors in 2012, and should give a nice uplift to our business if they continue and/or annualize throughout the year. Anything I say about 2012 and the optimism I feel about 2012 does not have rate included in that optimism or those comments. As I've reminded you in the past, any improvement in rates will directly benefit our top line as the vast majority of our North American revenue are commission-based.
While rate firming or hardening at the primary insurers and reinsurers takes time to make its way into our financial results, I certainly look forward to updating you on that on future calls. Also on the positive side in our North America segment, unemployment rates have started to decline, and there have been indications that the U.S. economy is on the rise. I'm not an economist, and I'll not prognosticate. However, any improvement in economic factors should have a positive effect on our North America results prospectively, albeit on a lag basis, especially in employee benefits, because more people will be working and construction. We've already seen signs that clients that haven't built in three years are starting to build again. That means our construction business, especially our OCIPs, for which we are renowned, will start to come back again. We see early signs of that.
Let me provide you a little bit more detail and comments on the segment's results. The new business generation was in the low double digits. That's solid, but it's not enough to overcome the negative impact from the negative Loan Protector issue and retention decline. Employee benefits, North America's largest practice, was down 1% for the quarter and for the year. As I said, with unemployment rates in the U.S. on the decline, I'm hopeful for improvement in 2012. Construction, this is an interesting trend to give you some insight. Construction, North America's next largest practice, was also down 1% for the quarter and 2% for the year. While the construction industry is still under pressure, the decline in our business is a lot less than it was a year ago. It was down 9% in 2008, 11% in 2009, 5% in 2010.
It's down 2% and trending, as I said earlier, in the right direction. On the brighter side, our healthcare practice had a great quarter, growing almost double digits in the quarter and mid-single digits in 2011. North America's margins during the quarter declined almost 500 basis points to 20.3%. Obviously, the decline in Commissions and Fees, including the continued decline in Loan Protector, was the biggest driver of the decline. This was a difficult quarter for North America, but don't get me wrong, this is still a great business with over $1.3 billion of brokerage and fee business this year, and with a 21% margin for the year, which is still very good despite these setbacks. That's why we're very, very excited and encouraged about next year or 2012.
Let me remind you that in 2006 and 2007, North America's margins were in the mid-teens when excluding the impact of one-off activities like gains from sales of businesses. This segment has come along very nicely in the last few years. HRH was an important acquisition for us as it increased our footprint in North America exponentially. I'll admit, the acquisition has been testy for us, given its timing. We announced the deal in June of 2008, closed it October of 2008, and you know what happened in between. The subsequent decline in economic and market conditions were devastating. We've worked hard to rightsize its expense base and instill our sales disciplines and is on the right track. There's no doubt in my mind this is a far better business today than when we bought it a few years ago.
I'll conclude on North America by saying that I expect this segment to be back on the road of increased organic growth in 2012. I'll say that again. I will conclude on North America by saying that I expect this segment to be back on the road of increased organic growth in 2012. Let me talk about international. Moving on to international, we reported 2% organic BNF growth for the quarter, which is solid given economic conditions in many of the regions in which we operate, notably below recent quarter strong results, which have ranged in the positive 5%-8% range. We continue to see significant growth opportunities across the international spectrum, I'm pleased with the results of our strategy to invest in the financial growth regions of the world such as Latin America, Russia, and China, all doing extremely well.
Many of our continental Europe businesses continue to do well despite the difficult economy, that's a tribute to our strong brand. International growth this quarter, as it has been much of the year, was negatively impacted by our U.K. retail business that has been continuously and severely impacted by the high economic conditions, tough economic conditions in the region. As you all know, this geographic region continues to struggle against a difficult economy, the economy doesn't explain the entire steep decline in revenue in the fourth quarter. Keep in mind that the U.K. Commissions and Fees for the full year declined low single digits, we firmly believe that the fourth quarter result is an aberration and not a forward run by any means. This business generally has approximately 10%-20% of its revenues generated from one-off types of business. Typically, that is consultancy projects.
Those are the types of revenues that are most vulnerable to economic conditions. During the fourth quarter, it so happens that our one-off revenue was weak relative to what was a pretty strong fourth quarter of 2010 for such revenue. Compounding that, during the fourth quarter, we experienced cancellations of projects signed earlier in the year, resulting in the reversal of accrued revenue booked in earlier quarters. Again, the cancellations were driven by economic conditions, we chalk that up to the economy. In the U.K. business alone, retention declined 2% period-over-period. That was primarily driven by the loss of one significant client by M&A. Similar to North America, we got stung by some bad luck in that category. It wasn't all luck. We also lost some client business because of producer defections and some isolated service issues.
Those are serious issues. We recognize that we've made what I believe to be the requisite management changes in that business, I expect improvement in 2012 and beyond. Let me provide you with a little bit more insight into the overall international segment results. New business generation in the international segment remained in the low double digits with only negligible rate headwind. It's a great business. Overall retention remained flat but healthy at about 93%. That's very, very good in the international sector, and is not bad when considering that the U.K. declined 2%, as I just discussed. Eastern Europe delivered double-digit growth with strong contributions from Poland and from Russia. Asia-Pacific, continental Europe, and Latin America all grew high single digits, led by strong growth in China, in Asia-Pacific, Italy and Germany, in continental Europe, and Brazil and Argentina in Latin America.
The operating margin in international declined 600 basis points to 26.3%. You decline to 600 basis points and you're still at 26.3%. That shows you how strong the segment is. Declining revenue in the U.K. retail business, combined with the higher amortization of retention awards and continued investment that we made in the future, were the primary drivers of the margin decline. Similar to my ending comments in North America, I want to emphasize that our international segment, as a whole, is doing extremely well. It delivered 5% organic growth in 2011 in the midst of considerable global economic turmoil. Its revenues exceed $1 billion, with margins in excess of 21% for the year. Two of the segments, Eastern Europe and Latin America, grew high double digits in 2011, and Asia grew by low double digits. There's not a lot to complain about.
You got to be able to extract the U.K. from the rest of the international branches that I talked about. On the international branch side, the growth was in the mid to high single digits. You get an idea for my optimism and my comfort in what we're doing internationally. There's not a lot to complain about, as I said. Sure, we have to work on certain business units, that will get done, of course, we could really benefit from some improvement in the economy in Europe, I'm satisfied with the overall results of this segment in 2011. Let me switch to the global segment. The global business segment was once again strong in the fourth quarter, delivering 6% organic BNF growth. Let me give you some details by business. First, reinsurance.
Reinsurance had a great year, and I'm proud of everybody in that segment. They maintained strong growth momentum with double-digit growth. The fourth quarter is historically a relatively small quarter for revenues in the reinsurance business. As you know, the first quarter is our biggest quarter. Growth was driven primarily by renewal business, with particular strength in international and specialty during the quarter. In terms of the reinsurance market overall, most of the attention has been on the recent January 1 renewals after a tough 2011 in terms of natural catastrophe losses. We found that while there have been movement in rate, the market has become more segmented, with rate increases driven by individual loss history and exposure movements. U.S. renewals continued to move up in line with U.S. reinsurers, seeing positive rate trend on catastrophe-affected property as a function of loss activity and changes in modeling of exposures.
In Europe, the new RMS v11 wind model was released too late to impact January 1 renewals. Our global specialties, we saw solid growth driven by aerospace, construction, and marine. There's not a lot to say about that other than solid growth. Our global business was just really good, as it continues to be and always was and will be. In Willis Capital Markets & Advisory, which is a lumpy business, there's another indication where things just didn't show up when they were supposed to. That continues to improve our franchise and its franchise as it builds its pipeline. In this business, a few transactions can slide, as you know, in any given quarter and can have a notable impact on expected results. We saw it in the third quarter. Unfortunately, it happened again in the fourth quarter.
I'm excited about the pipeline and fully expect those deals and all the hard work put in by our capital markets team will bear fruit in the future. In fact, two of the deals that we had expected to close in the fourth quarter have already closed in the first quarter and generated over $4 million in revenue that will be included in our 2012 results. It was only a matter of a few days that kept us from recording this in the fourth quarter. Again, that's the kind of quarter and the year it was. Willis Faber & Dumas, which we recently rebranded from London Markets Wholesale, we had good growth in our global markets international business, driven by new business generation, offset by weakness in Faber & Dumas, which once again reflected softness in the wholesale market.
The operating margin in the global segment was up 160 basis points to 16.3%. Growth in commissions and fees and lower pension expense was partially offset by increased amortization of retention awards. Obviously, I've spent the least amount of time on this call discussing our global segment. That's a good thing because it's doing quite well. It generated revenue for the year just in excess of $1 billion. Its full year margin was almost 33%. Now let me talk about our associate line, which during these quarterly calls I rarely talk about. I usually focus my discussion on the business segment results. This quarter, we had what I would call a material adverse impact from our associates line. It's never happened to us before. It happened this time. Associates represent businesses in which we've invested, which we own less than 50%.
While we invest in these businesses, we do not control them, and information and data flow comes in to us on a lagged basis. During the fourth quarter, we saw our associates line decrease $7 million quarter-over-quarter. A significant portion of that decline was due to adjustments booked during the quarter related to Gras Savoye to true up earlier quarters. Gras Savoye is our associate retail brokerage business in France. It's the largest broker in France. We own about 30% of it, partnering in ownership with a French private equity and the management of the company. Its results have fallen below expectations, primarily due to economic conditions in France and other parts of Europe. What we've done at Gras Savoye is now in the midst of its own operational review. There's a new CEO at Gras Savoye.
Similar to what Willis did in 2011, what will result in some additional expense charge in 2012, but I'm confident it will come out of it with expenses better aligned with its revenue growth opportunities. Let me talk about the operational successes that I think we had in 2011. As I mentioned earlier, I'm dissatisfied with the financial results achieved during the quarter and for the year. However, I am pleased with what the company was able to achieve in 2011 from an operational standpoint and how all the hard work that we did in 2011 positions us well for the future, and I'd like to discuss those achievements briefly.
Our 2011 operational review, announced at the beginning of the year, was completed in the fourth quarter, and while the charge was greater than we had originally expected, I think we took important steps in aligning resources and positioning the company for future growth. Mike will discuss the charge in greater detail later on, but I am pleased with the outcome. We expect to achieve future expense savings of about $135 million annually, and we can use those savings to fund investments in the future. We also made great strides in our revenue initiatives in 2011. We spent great amount of time and training and money on our associates in Sales 2.0, which is our sales platform, and I'm confident that we have a stronger and better-prepared sales force today as a result, a sales force that can sell Willis' global capabilities at the local level.
We did not have any of that in 2011. That's been fully rolled out, and we should see the results of that in 2012. In late 2011, and earlier this year, we broadly rolled out our WILLPlace product. WILLPlace is designed to empower our sales associates with the best placement tool in the industry, allowing those associates to place business in the best market and at the best price and terms for our clients. It's a remarkable tool that learns and continually develops intelligent placement information. We're bringing an element of science to the art of broking.
Both of those initiatives were rolled out pretty late in the year, so very little of our 2011 revenue is attributable to them, but I'm excited about the prospect for both as they will clearly differentiate Willis from our peers and enhance our ability to deliver our value proposition, the Willis Cause, to all our clients. Similarly, 2011 marked the first full year of operations for Global Solutions, and I'm excited about the momentum we've achieved in such a short period of time. As a reminder, the Global Solutions Initiative was established to expand Willis' global account space and deliver our full range of services in a differentiated and compelling way, and is headed by Martin Sullivan.
We've established a proactive strategy to win business from some of the world's largest companies, and I'm pleased with the progress that Martin and his team have made on that initiative in a relatively short period of time. During the year, we generated over 35 new mandates from this team of professionals. With regard to our balance sheet, we announced the refinancing of our expensive Goldman debt back in the first quarter, and in the fourth quarter, we were able to refinance our bank facility, which comprises $300 million of term loan and $500 million of revolver. Mike will take you through some of the details of the financing, but I'm excited because not only does it save us money by lowering interest expense and commitment fees, but it also enhances our financial flexibility.
The mandatory principal repayment on the new term loan is significantly less than on the old term loan, and the final maturity was pushed to December 2016. This new facility enhances our discretionary cash flow options for the next few years, and that's an exciting proposition. I'm often asked, what are the company's priorities when it comes to capital management? Do we want to pay back our debt or pay our shareholders? The answer is yes to both, and in fact, we can do both in 2012. This is the first time since 2008 that we've had an opportunity to be flexible with our balance sheet and get it back on track since the days of the HRH acquisition. I told the board that I would like to initiate a share buyback in 2012, targeted at buying back up to $100 million, and the board was in agreement.
I'm sure you all saw the announcement in our press release last night. Remember, that's the first buyback since, again, before the HRH acquisition. That's five years ago almost, that we've done anything like that because we've had to take all of this time shoring up our balance sheet because of HRH. Our balance sheet is as strong as it's been since our acquisition of HRH back in 2008, and we view our shares as an attractive investment. Needless to say, I'm very confident in our business model and our ability to grow into the future. This share buyback and the increase in dividend payout that we also just announced are representative of our great confidence. At the same time, I would like to continue to pay down our bank debt and improve our leverage ratios, and I expect to be able to do that also.
I'd like to make one last comment about capital management and uses of cash. Last quarter, I commented that I would like us to be more active in the M&A arena, and I got all kinds of questions about what that meant. That comment brought about a lot of questions from investors and analysts, I hope I was clear in my intentions that we are only interested in looking at very strategic tuck-ins that improve our presence in a geographic region or strengthen our product offerings. We don't expect to spend billions of dollars in the M&A arena. I want to get that clear because that was a misconception off the last call. The December acquisition of Broking Italia, which is just one example, is a small Rome-based employee benefits broker with special expertise servicing private pension funds, which was a perfect example of what I'm talking about.
It was an exclusive negotiation with a team that we had known for more than 10 years, it doubled our market share in Rome while increasing our penetration into the niche pension market. That's just an example of what I was talking about by increasing our M&A activity. We expect to do more of that kind of thing in 2012. Let me give you some thoughts about contingents. I'd like to take a moment to discuss contingent fees because they're always topical, especially if Willis talks about them. As I am sure most of you know from reading our press release, we have decided to accept contingent fees in our employee benefits business. As I'm sure most of you also know well, we have long taken a strong stance against accepting contingent fees in any of our retail businesses.
We will continue to take that position across the remainder of our product lines. Why employee benefits? Employee benefits world has changed in response to pressures caused by healthcare reform. A significant number of employee benefits insurers changed their broker compensation to tiers based on volume and continued to pay brokers traditional contingent commissions. In other words, they were reducing what we were getting paid and told us the only way we could make it up was with volume contingents. We had to make a decision, we could not put the business in peril or our shareholders, which is the reason why we reversed our decision.
After several months of review under changing market conditions, we've concluded that we cannot be fully competitive going forward on employee benefits business if we continue to refuse to accept traditional contingent compensation, which as you know, is a perfectly legal form of compensation. In order to remain competitive, we will begin taking contingent compensation in our EB practice starting on April 1st, 2012. As a result of this change in our EB business, we're also reviewing our corporate policies, public documents, and our compensation disclosure processes generally. We will work, of course, closely with our clients and carriers to implement these changes, we will continue to act with integrity and in our clients' best interests. We were only doing this because we were forced to do it to be able to stay competitive in the marketplace and in our shareholders' best interests.
Let me give you some thoughts now about 2012, which I'm really excited about. Before I turn it over to Mike for his review of the financials, I'd like to spend a couple of minutes discussing some thoughts on 2012 and beyond. I don't really want Willis to be in the guidance game, but last year we provided guidance on two metrics for 2012. I had stated that I expect that in 2012, the company can achieve significant growth in earnings per share and significant expansion in our margins. I expressed those expectations at a time when I did not know that interest rates would continue to decline, when I had no idea the Eurozone crisis would create significant uncertainty throughout the region, and when I couldn't have foreseen that the U.K. economy would continue to deteriorate.
Today, I still say that we expect our results in 2012 to be significantly better than 2011. I want you to appreciate the conditions and factors that I just mentioned. Here are a couple of the drivers that get me to that conclusion. As you have noted over the past several months, there have been some significant changes in our leadership within the company. Tim Wright as CEO International, Luis Maurette as CEO Latin America, Dan Wilkinson as CEO of Willis UK, John Cavanagh as CEO of Willis Re, and Steve Hearn took over for the retired Grahame Millwater as CEO of Global Businesses. I have the utmost confidence in the Willis leadership team, both the newly appointed and those that have been in place longer.
Their experience and business acumen are as strong as any leadership team I've been associated with in my career. It's a team that is acutely focused on improving on 2011 results and truly acts as a team. I've already mentioned I'm very confident the operational review was successful in righting our expense base. As I discussed, I'm confident that the sales initiatives we rolled out in 2011 will kick in earnest in 2012. We will continue to see a drag on earnings growth and margin expansion from Loan Protector for about a quarter and a half, but we don't expect it to be as drastic for the year as what we experienced in 2011. I also don't expect our U.K. retail business and Gras Savoye results to weigh us down as we saw in 2011. I feel great about our business.
Obviously, I would welcome real rate hardening and improvement in the economy in the U.S. and Europe, but my optimism is not dependent upon any of these factors improving. I'm going to say that again. My optimism is not dependent upon any of those factors improving. We can grow our business in 2012, and we expect to do so. With that, I'll turn it over to Mike Neborak , who will provide you with an overview of the financials. Michael?
Thank you, Joe. I am going to focus my comments on areas most important to our fourth quarter and impacts on 2012. All comparisons are to Q4 2010 unless otherwise noted. The first item is the operational review. As described in our press release, we recorded a $50 million charge in the quarter related to the operational review, bringing the total charge recorded for 2011 to $180 million. The total charge in 2011 came in $20 million higher than the $160 million we previously communicated. Basically, we identified further opportunities to consolidate head count and facilities. In total, approximately 400 positions were eliminated in the quarter, bringing the full year figure to about 1,200. The operational review is now complete, and we will not be taking any further charges in 2012.
The $50 million charge taken in the fourth quarter was recorded as follows: $36 million to the Salaries and Benefits line and $14 million to other operating expenses. Geographically, $28 million of the Q4 charge was related to our international retail operations and $14 million came out of corporate. Total cost savings realized during 2011 were approximately $80 million, including $28 million in Q4. That figure in Q4, in terms of the realized savings, was spread about $17 million in our S&B line and $11 million in our other operating expense line. The annualized run rate of those cost savings is approximately $135 million or $15 million higher than the midpoint of our previously provided range of $115 million-$125 million. 2012 will benefit incrementally by approximately $55 million of lower costs before further investment.
$55 million is the difference between the realized savings of $80 million in 2011 and the $135 million annualized run rate of those savings. Turning to Q4 2011 results. Reported net income from continuing operations was $39 million, or $0.22 per diluted share. These figures were negatively impacted by certain items which we refer to as adjusting items. The major adjusting items for the quarter were $50 million in costs from the operational review and a $10 million write-off of capitalized costs related to the credit facility we refinanced during December. Adjusted net income from continuing operations was $81 million, or $0.46 per diluted share, which is down from the net income of $98 million or $0.57 per diluted share in the fourth quarter of 2010. Those results benefited by $0.05 to the positive from foreign exchange movements.
That foreign exchange impact was attributable to basically $13 million of lower expenses, principally from the absence of the hedge loss we recorded in the fourth quarter of 2010, and also from the strengthening of the U.S. dollar against our EUR expense base. I'll say based on the forward curve today, foreign exchange will be a negative in 2012, probably somewhere, as I look at it today, between $0.05 and $0.10. I just want to point that out. That'll change over the course of the year, but based on where the forward curve is today and what we've seen already, that is a figure for 2012 versus the positive impact it had during 2011. On the revenue side, our total reported revenues decreased 1% to $825 million. Commissions and Fees decreased 1% to $816 million.
Since Joe spent a lot of time walking through the organic growth by segment, I'm going to move on to investment income. Total investment income of $8 million was down slightly from $9 million in the year ago period, primarily due to declining net yields on cash and cash equivalents. The decline in net yields was driven some by declining interest rates, but more by the reduced benefit of a hedge program that has been in place for the past several years that cushioned the impact of declining rates on our investment income. More recently, as hedge positions have rolled off, we have chosen not to renew them because three-month bank CD rates cannot fall much further, and more importantly, the yield benefit from extending out maturities through swaps is very small due to the flat yield curve.
For example, the yield pickup on a two-year swap versus three-month LIBOR is approximately 15 basis points. We look at the risk as being asymmetric. Lock in receiving today's two-year swap rate while paying three-month variable LIBOR for the next two years. Some additional hedges will continue to roll off in 2012. Consequently, we estimate that full year 2012 investment income will continue to decline from the $31 million in 2011 to somewhere around $22 million-$23 million in 2012. Included in fiduciary assets on the balance sheet was fiduciary cash of $1.7 billion, down from $1.8 billion at the end of the third quarter. Let me turn to expenses. Again, our intention is to keep expense growth lower than revenue growth and expand the operating margin. Total reported operating expenses were up $63 million or 10% to $719 million.
$50 million of that increase came from costs associated with implementing the operational review. After backing out those costs and adjusting out the FX benefit, the underlying organic growth in total expenses comes in at approximately 4% or an increase of $24 million. That 4% underlying growth came from 1.9% growth in Salaries and Benefits and a 9% growth in all other operating expenses. That's the big picture. Let me spend a little bit more time on each major component. Starting with Compensation, reported Salaries and Benefits was up $45 million or 10% to $512 million in the quarter. If you exclude the $36 million operational review cost, that portion of the $50 million that got charged to the S&B line, underlying S&B growth was 2% or $9 million.
That 2% underlying S&B growth came from higher amortization expense related to cash retention awards and other compensation costs, including salary increases, 401(k) match, and investment in new hires. Those increases were partially offset by approximately $17 million of realized expense savings coming from the operational review, lower stock-based compensation expense, and lower pension expense. Reported other operating expenses were up $20 million or 13% to $173 million. After excluding $14 million of operational review costs and approximately $13 million of foreign exchange benefits, the underlying growth in other operating expenses was 12% or $19 million. The principal reason for that increase is in the quarter, a heavy spend for training. Joe mentioned the implementation of Sales 2.0 in WILLPlace. We also, in the quarter, installed a new general ledger at the top.
We still have quite a bit more work to do, but the training associated with that ledger. We have a continued conversion of our North American branch offices to a new brokerage system called Applied Epic. Really, in the fourth quarter, the increase in cost is really related to training, which has to go directly to our P&L. Finally, depreciation expense was approximately $18 million flat to Q4 2010, and the amortization expense was $16 million, down from $18 million in Q4 2010 due to scheduled reduction in HRH-related amortization. With regard to operating expense growth for 2012, we previously communicated an estimate of 3%-4% growth on an adjusted earnings basis, meaning excluding the impact of adjusting items on 2011 expenses.
We also discussed what was driving the growth in 2012, specifically increased amortization of retention awards, continued investment in people and technology for future growth, and so forth. I'd like to highlight that the increase in retention award amortization in 2012 will be substantially lower than in 2011, and we expect over time, the next 2 years, that subsequent increases will slow to be in a range so that cost will be flat to up slightly. As I discussed earlier, we increased the operational review charge from $160 million-$180 million. That $20 million increase will save us incrementally $15 million annually or 60 basis points against our $2.6 billion expense base. As a result, we expect that our expense growth in 2012, excluding the impact of foreign exchange, will be at the lower end of the 3%-4% range.
Interest expense was $44 million in the quarter, compared to $42 million in the fourth quarter of last year. That reported interest expense in the fourth quarter of 2011 included the write-off I referred to earlier of the $10 million of capitalized expenses related to the credit facility that was refinanced during December. Excluding the write-off, interest expense was down from Q4 2010, primarily due to refinancing high-cost debt last March. We expect our quarterly interest expense to be approximately $34 million during 2012. Our income tax expense for the quarter was $8 million, resulting in an income tax rate of 16%, compared to an income tax expense of $28 million and a tax rate of 21% in the year ago quarter. The annual effective tax rate on ordinary income for the year was approximately 24%, compared to 26% in 2010.
The decrease was mainly due to the impact of the 2011 operational review and changes in the geographic mix of income. We expect the 2012 effective rate to be slightly in excess of 24%. In our U.K. and U.S. and international defined benefit plans, we had a combined deficit of $125 million at December 31st versus a $15 million surplus at the end of 2010, principally due to the impact of lower interest rates. Essentially, the rate we discount future pension liabilities at declined 75 basis points on average across our plans. Pension contribution payments were $27 million in the quarter. During 2011, we made cash contributions of approximately $135 million to our pension plans. Pension expense in the quarter was $3 million, a $5 million reduction from the fourth quarter of 2010. That puts the full year 2011 pension expense at $11 million.
I expect the 2012 full year pension expense to be about $5 million to $6 million lower than that. With regard to our U.K. pension plan, we continue to negotiate with the trustees to determine ultimate funding requirements over the next several years. However, I will say for 2012, total cash contributions are not expected to change materially. During the quarter, we reduced our total debt outstanding by about $25 million. Our debt to EBITDA ratio at December 31st was 2.5 times. As Joe mentioned, we successfully completed the refinancing of our bank facility during December. I'd like to highlight some of the key aspects of that transaction. First, the LIBOR spread or interest rate on both the term loan and any drawn amounts on our revolver by 75 basis points.
Second, we reduced the commitment fees on the undrawn revolver anywhere from about 12 and a half to 25 basis points. We had two revolvers under the old facility. On one revolver, we saved 12 and a half basis points. On the other revolver, we saved 25 basis points. The final maturity of the facility was extended to December 2016 from September 2013. Importantly, our leverage ratio covenant increased from three times to 3.25 times. The restricted payments leverage coverage covenant, which serves to restrict share buybacks, increased from 2.75 times to three times. The 2012 mandatory amortization, as Joe mentioned, declined from about $110 million to just less than $8 million. In summary, the new bank facility provides us with a lot more financial flexibility. This enhanced flexibility allows us to both pay down debt and buy back stock during 2012.
At December 31st, cash and cash equivalents amounted to $436 million. That compares to $363 million at September 30th. Approximately $100 million of that cash is available for general corporate purposes. Finally, during the fourth quarter, we generated approximately $170 million in cash from operations, bringing the total for 2011 to $440 million. With that, I'll turn it back to Joe.
Thanks, Mike. Before turning it over to question and answers, I'd like to conclude with a couple of thoughts. Obviously, I'm very happy that 2011 is now in the rear view mirror. This is a company that expects to be a leader in the industry every period, whether it be organic growth or adjusted margins. We did not get it done this quarter and in 2011, and I'm not one for excuses. I don't like making them, and I don't readily accept them. We could have done better in our retail businesses. We could have done better across the board. As I look back at our results this past quarter, if we didn't have the drag from Loan Protector, our overall organic growth improved to positive 1%.
Had some of the M&A that I talked about hit us pretty hard in North America and our U.K. retail businesses, gone to our benefit or just not occurred. If capital markets deal closed just a couple of weeks earlier, as expected, our organic growth could have easily been another three percentage points higher than it wound up. Of course, our already strong margins would have improved instead of backtracking 50 basis points at 22.5%, which is still outstanding margins. We're not satisfied with it, as I said before, we're all about being significant. That was the hand that we were dealt, we live with the results. Throughout 2011, we took the important steps needed to be in position to prosper in 2012. I'm very excited about this year.
I look forward to coming to work every day because I work for a great company, I work with great people. I really believe that feeling permeates throughout the organization, we all look forward to delivering the Willis Cause in 2012 and beyond. I appreciate your patience and our allowing to go into more than the usual detail, I thought you deserved as much information and as much detail as we possibly could give you. I appreciate you allowing us to do that, I know it took some time to do it, I hope it was worthwhile for you. We'll be able to answer any questions that you now have.
Thank you. We'll begin the question and answer session. If you'd like to ask a question, please press star one, please unmute your phone and record your name. Your name is required to introduce your question. To remove your request, press star two. Our first question comes from Keith Walsh with Citi. Your line is open. Go ahead with your question.
Hey, good morning, everybody.
Hi, Keith.
Just first question here. Insurance Insider had an article pretty definitive about your leaving the company in July 2013. Everyone's asking about it. If you could just please address that, I've got a couple of follow-ups.
Insurance Insider is not the Bible. Look, the board, my contract, as you know, Keith, is up July 7th, 2013. The board's in the business continually of discussing succession. They have been doing that. They continue to do that. That's what boards do. What Joe Plumeri does is run a company. I spend my time doing that. I intend to do that certainly until my contract is over. That's what I'm concentrated on doing.
Okay, just getting to the business within North America, you mentioned you can grow overall in 2012. Thinking about Loan Protector, the retention issues, the M&A, how that impacted you as that rolls in through 2012, it seems like it's a large hurdle to start the year. What are the specific pieces that you can make that you can get back growth, why does retention revert back to normal levels?
When we review our branches in North America, especially, and we look to see, and I've done reviews of all of our regions now, we kind of washed out a lot of the lost business that we've gotten over three years. As you know, it takes a while for that to happen. It kind of happened to us in the last couple of quarters of last year. As we look back at the accounts that we've retained, the position of those accounts and questioned our branch managers, managing partners, regional people, national partners, I feel like that's been stabilized, and that's kind of ended. I feel very good about that. I feel very good about our construction business, as you heard me say, it's gone from down 11, down nine, down five to two.
We're starting to see pickup in people building again and our OCIP business, which is important for us, and our employee benefits platform is very important. I feel that all of that is over. A lot of that occurred because we had to take very drastic moves to remove expenses because revenues were not good during that period of time, Keith, as you know. We got a lot of accretion out of the moves that we made, and we got a lot of margin. The margin in North America actually increased over that period from the former Willis to now of over 500 basis points. I feel very good about that. Vic Krauze is here. Vic, do you want to add anything to that?
Sure, Joe. The only thing I'd like to add as well, over the past few years, we've been focused very heavily on consolidating facilities and people, implementing new systems, and reducing our expense base. In early 2012, we undertook several initiatives to get back focused on the important things, sales, pipelines, recruiting, and retention. On the sales side, we implemented Sales 2.0. We trained all of our producers last year. We retrained a lot of our producers. We've trained all of our management folks throughout North America, and we're starting to see some benefit of that in the fourth quarter, and we'll see benefit from that in 2012. Our pipelines are much more robust than they've ever been in the past. They've almost doubled over the past year. We've worked hard at retention of our people, where we thought we had some situations where we might be wobbly.
More importantly, we're back on the recruiting track. In 2008 and 2009, we didn't recruit very much because we were consolidating the place. We're back on track with that, and I expect our producer ranks to grow in 2012.
Okay, just last question. How big is the employee benefits contingent opportunity? What were they in the past when you still were accepting them, and what can they be in 2012 and beyond?
Probably, it'd be less than $7 million, anywhere between one and seven. Keith, we're starting late. We'll begin the process in April. I can't give you a number. It's very difficult. It's less than seven, probably in the four or five range. That's a guess. That's not something that you can be very laser-focused on and give you a number. It should add some money.
Okay, thanks a lot.
Okay. Thank you, Keith.
Our next question comes from Jerome Canard with Deutsche Bank. Your line is open.
Hi, good morning.
Morning.
Regarding the producer retention issue, mostly, I guess, in North America, but also a bit in the U.K. First off, when we're talking about the non-competes, did they expire in the fourth quarter of 2011?
No. What happened was is that the non-competes expired over time. Depending upon where you are and which state you're in North America, the ability to be able to enforce them and not enforce them varies. We got hit the most in California, when I say hit the most defections, in a lot of cases with HRH that a lot of the disciplines and the way or the culture of Willis that we impose, the good news was is that you have a very disciplined one organization now over, well, that took us three years to do it. Whereas HRH was a number of acquisitions, 280 to be exact, that had taken place over a long period of time where none of the things connected. You didn't have one culture, you had 280 cultures. Now I think you got one culture at Willis.
By doing it that way, we got that behind us. You heard Mike say we're installing one system. You also heard me say earlier that by doing that way, we had savings of over $200 million. Margins are well over 20%, they're 21%, and it was very accretive over that period of time. We happened to have done the deal under the worst economic circumstances that you could possibly imagine, that's all done. You just saw the lingering effects of all of that take place over the course of last year, and then the icing on the cake was Loan Protector.
Okay. In terms of the retention issue or the producer retentions, why wouldn't they continue poaching business or attracting their old clients in 1Q12, now that their non-competes have expired?
Well, nothing. You can ask that question of anybody in any company. That happens all the time. The name of this business is poaching. People try to take people. I think that the amount of poaching that was done is greater when somebody does a transaction, because the competition believes it's a window of opportunity to be able to take advantage of it. Secondly, you have people that are obviously more likely to listen to competitors' calls because it's a different environment and a different culture. I believe after three years now or so, that the people who are here are here, and that most would have gone, that went, and they're here, and I feel very stable in North America now. I feel our accounts are more stable, and that we're in good shape.
Okay. You talked a little bit about the efforts you are making to attract and retain talent. Clearly one of those things was improving compensation over the last year or so. At the same time now, you've also gone through the operational review. You have cut costs. What gives you the certitude that you're not going to revert back to the situation where producers are unhappy with their compensation?
Well, because that period of time was over. Again, we did an acquisition that you can't compare us to our competitors. We did a huge $2 billion major acquisition in 2008, exactly when the timing was wrong to do that. Nobody knew that was going to happen, but that's a fact. You got to remember the time, and you got to remember the products, and you got to remember the people were buying less insurance. People were making less money because exposures, people were buying less, the exposures were down. The environment was bad. A lot of producers were employee benefits producers or construction producers, so, they were much more apt to listen to the competitors as a result of that. I think all of that is over, and we've been through that, and I think we'll revert to norm, if not even better, in 2012.
Okay. One last question, if I may. You found an additional $20 million of charges that you could take, in terms of the operational review in the fourth quarter, and that's in addition to the $30 million that you already found in the third quarter that came after the $130 million. I guess, where were you able to find another $20 million where you could invest, let's say, in future cost saves? How could these positions that you now found to still reduce, are they going to cut to the bone at some point, or are those going to hamper your abilities to grow in the future?
No. The answer is, we took it both in savings and in investments, mostly that last 20 was a result of moves that we made internationally. I think the investments that we've made internationally in the areas that I talked about, which is Asia and Latin America and some places in Europe, a combination of some of the headcount cuts and the operational movements, excuse me, in moving people out of branches to operational centers, were all part of that. This operational review, as I said when I announced it a year ago, was not about cutting heads. It was about realigning our resources with our business, our ability to be able to grow our business and be able to service our business as efficiently as we possibly could.
Okay, thank you.
Thank you.
Our next question comes from Cliff Gallant with KBW. Your line is open.
Good morning.
Hi, Cliff. How you doing?
It might be going over the same ground again, but I just wanted to be clear to understand. The producers that have departed, is there a consistent reason as to why they left? Is it a compensation issue for them? Secondly, what can you do to control the accounts so that if you do lose people, that you can at least retain the business?
Cliff, it is not about compensation. It is about culture. You make a transaction as large as this. You see people like Gallagher and Brown & Brown make acquisitions almost daily. When they do it, they do it with private companies. They don't do it with public companies. When you do it with private companies, well, what you do is you've got all the people signed up, you talk to all the people, you know who the people are, you've been to all the branches. All of that's done before you make a transaction. When you buy a public company, you can't do that. Maybe you know seven or eight people during the due diligence process. You look at numbers, but you don't go see producers. You don't sign the producers up in advance before you do a deal. None of that stuff happens.
What we found when we did that deal is that, we're a company that integrates when we make acquisitions. It's not a roll-up. When they get integrated into a system they're not used to, it's cultural in nature. We got to begin to make them do things differently than we did before so we could get the synergies, which we did, which was over $200 million. You throw on top of that a bad economy, they weren't making as much money as they did before, because people weren't buying as much insurance, rates were soft, therefore, they've become, I guess, interested in other people's calls, if you will, that's what happened to us during that period of time. It had nothing to do with the way we pay people.
As a matter of fact, when we did the transaction, we basically created a pay plan that was almost the same as HRH's pay schedule was. I don't think it was compensation at all, Cliff. It was a combination of all of those things, which I think are now over. As I said before, the people who are here, it's now been a long enough time living inside this culture, the world's getting a little bit better, is now they're all part of one Willis, I think that that's stabilized.
Okay. Thank you, Joe.
Okay.
Our next question comes from Thomas Mitchell with Miller Tabak. Your line is open, Thomas.
Thank you. My first question has to do with the outlook for expenses
Just please follow my thinking process and tell me where I'm wrong, if I am wrong. You expect to have 3% growth in operating expenses on an underlying basis in 2012. You've described an expense savings that are expected of about 5% of the expense base. That implies to me, just off the top, that you may have an underlying embedded momentum in your cost base of 8% increases, which would suggest that over the long term, you need better than 8% revenue growth, not necessarily organic, but revenue growth in order to keep up with those expenses, or else you're going to have to keep coming up with new operational reviews every two or three years to drive down that underlying tendency to have to grow 8% on the expense side.
I'm just wondering, if you can explain a little bit in more detail how the numbers might work better than that.
Okay. I think first, in terms of your assumptions that you're making, you're taking the full run rate savings of $135 and putting it over $2.6 billion and coming up to 5%.
Yes.
You're double counting because $80 million or so of that $130 was already realized in 2011. The incremental benefit going into 2012 is basically an additional $50 million-$55 million. If you put that on top of $2.6 billion, your 5% comes down dramatically to about 2%. Okay? That would be point 1. That takes your 8% down to five, and there's other things that are kind of in there that you don't see that basically allows us to get it to what I said to be below 3%-4% area.
In the next year, when you haven't had an operational review, what I'm trying to get at is sort of what the underlying momentum of costs seems to be without doing these one-off charges, which do get repeated, it seems fairly frequently.
I just said that the cost next year will be between 3% and 4%, and we'll be at the lower end of that. The math that you went through where you had the 5% is really 2%. That's 3% right there. That's just not a good assumption that you're making.
I appreciate that. I'm buying into the 5%, but now I'm still asking you about it from the other point of view. I mean, this is a business that's been having growth in revenues that's less than the growth in expenses. The question really has to do with how do you avoid having to do an operational review that takes large charges every two or three years? Do you simply depend on getting your revenues up faster?
I think the other thing that I think requires explanation, I didn't go into a lot of detail, is that the amortization of a retention award, so that rate of increase, for example, in 2011 versus 2010, that increase in the amortization of the retention award was somewhere around $60 million. Okay? That will increase next year at a much slower rate. That'll be somewhere between, let's say, $35 and $40 million. In 2013 versus 2012, as it flattens out, that increase will be $15 to $20 million. That alone will take away any of what you're referring to in terms of a built-up expense base that we have to keep repeating.
You're assuming that the increase in the expenses will be normalized as you've looked at them over the last year or so. That's not going to be the case, essentially because of what Mike just said. $65 million increase was in 2011. That was a big increase. Then much less of an increase this year. Next year, less of an increase. Until the point, as Keith mentioned, and we discussed on a call ago, that you'll get that flat over time. You can look at it almost like a normal accrual of cash compensation, and that's what we expect to do. You're looking at that being normal increase every year, and you simply can't look at it that way. The 3% range is easily to keep in tow.
You're looking at 3%, then you're saying, "Well, that's going to go to four, that's going to go to five, then you're going to have to increase your revenues to make up for that." That's simply not the case. We expect the revenues to be better. Again, to your comment about the expenses being greater than the revenue, that's been a phenomenon of the last year or so. If you look back prior to the second quarter of 2010, our revenue grew greater than the peer group every quarter for 32 consecutive quarters. Our expenses were less. Some of your comments are not accurate.
I follow you. I think that's a very good answer. That's what I was looking for. My second question is, I thought that the retention problem was related to when the customer contracts expired, not to the fact that you lost more producers suddenly in the fourth quarter, but just the time when clients' contracts expired. Is that right?
No, it's nothing to do with. You're talking about the renewal process.
Yes
is what you're talking about. What happens is that people leave, then there's a lag with regard to renewal, or you hold on some accounts because the renewal was close to when they left. Just the lag effect over time. It's a combination of both of those things, which I think are stabilized now. As I said, if you look at the difference in the quarters. If you look at even 2009, 2010, 2011, up until the last two quarters of 2011, you've had 92-ish% retention, which people in the industry will tell you is pretty good. 92, 93, which is what we've always had in North America until we got hit with this 89 in the fourth quarter, which is a good 3% below what it usually is, 3% retention is the same as 3% of growth.
It's the same number, we just got hit all at once.
Okay. Well, thank you very much.
Thank you. Thanks for the questions.
Our next question comes from Meyer Shields with Stifel Nicolaus. Your line is open.
Thanks. Good morning, everyone. One small question for the fourth quarter. Was there a negative true-up of prior quarter's incentive compensation, given the disappointing revenue results?
Well, our compensation system, since a lot of it's on retention, we don't make an in-quarter bonus accrual for a retention payment that's going to be made in this case here in March of 2012. The only true-up that would exist would be on the production side, where that production is obviously impacted by the level of sales versus level of sales in the prior quarter.
Nothing undoing earlier-
Nothing happened, Meyer, that was different.
Okay. No, that's helpful. Joe, with regard to contingents-
I knew you were going to say that.
Sorry. I kind of have to.
I know. That's your gig. Go ahead.
It's my gig. Why would you not implement the same philosophy that you're putting into place on the employee benefit side in the retail business?
We were forced to do it in the employee benefits business for the reason I mentioned. They changed, meaning the carriers, the way we got compensated, which said, they said to us, basically, "If you want to make up for what we're cutting you got to do it on a volume contingent basis." We're not going to sit there and take a cut, and on the next call or the call after that, you say to me, "Joe, don't you care about your shareholders? What are you going to do?" We made that move. The same thing did not happen in P&C. In the P&C business, Meyer, our commission rates on an upfront basis are high. They haven't changed.
If we had been on a volume basis last year or the year before that, or a profit basis on contingents, we'd have probably made less money, because our upfront commissions would not have been as high. We would have depended upon volume contingents or profit contingents. We would have made effectively less money. We did better by having higher upfront commissions and not taking contingents in P&C. The answer to your question is that they didn't change the way they pay us on P&C. They did on EB, and that's the reason why we changed our stance. It's as simple as that. As I also said, we're looking at all of our documentation, and we're reviewing everything we do as it relates to the subject of contingents, and the same thing as it relates to issues of transparency. We are very, very transparent around the world.
We found that our competitors are not, in a lot of cases. Of that, our competition is not being as forthright as we are, and we're reviewing in different places of the world, how we handle that. The world has changed. It's different than it used to be, and we're reviewing all of those things. For now, EB is the one that we're honing in on because they simply changed the way they pay us. They changed the nature of the game, and for the sake of our shareholders and the competitiveness of our people in the field, we had to change our view.
Okay. Thank you very much.
You're welcome.
Our next question comes from Matt Haberman with JPMC. Your line is open.
Hi, good morning, everybody.
Hi.
Hi. A couple questions. Just can you give us a sense of what the cash contributions to pension may look like in 2012, if any?
It's going to be very similar to what it was in 2011. It might be up a little bit in calendar year 2012.
Okay, that's helpful. Then, Joe, I was curious if maybe you could give us a little bit more specific guidance on the associates line, just since that's something we obviously don't have as much visibility in relative to the rest of the business.
That's fine. Thanks a lot for bringing that up. Again, that cost us, I don't know, $0.04. That usually doesn't happen. Again, I don't look at it as an excuse, but we don't have management control. We try to get as involved as we possibly can. France got hit hard with the economy, most of the businesses in France. We did a lot to be helpful in transforming the company. It's in the process of being transformed. There's a new CEO there. It basically gave us projections on budget that did not occur, so we had to true that up in the fourth quarter, and that's why you saw that hit. But over the period of that time, it was a lot of money, and as I said, $0.04 a share, that wouldn't have hurt us in the past.
I don't think that that will happen again as it happened last year, because we put a lot of things and helped them put a lot of things into effect on the expense line, and also with regard to things that we're helping them with. Again, as I said earlier, 11 years, Gras Savoye never come up on a call, and this is the year it comes up. You got to deal with it.
Okay. You would view this year as a low water mark and based on your.
Oh, yeah. Absolutely. That's why I went to gory detail, and I, again, appreciate all of you listening about all of these one-off things that seem to have happened to us that I just don't think are going to be the same this year.
That's all right. I just also want to translate another comment you made, which was, you mentioned that this year was going to continue to be a year of transition for them as they implemented some things and made some additional expenses to get to that transition.
Yeah. Not to the extent where we're gonna get hit with a bill like that, at all.
Okay.
It's a continuing transition, but you're talking about a third of whatever that transition is, and it's not going to be the same amount of money, because we're only responsible for a third of it. You might be talking about nothing or $1 million bucks or something like that.
Okay. I guess, the last question was, you had a comment in the press release, you also kind of reiterated on the call about the savings giving you flexibility to make investments in the business. I just wanted to clarify that when you're talking about that, we shouldn't necessarily be thinking over the short term that we should be curtailing the run rate savings, we should think about rolling into margins, correct?
I'm not sure I understand.
Put another way, if you've got about $75 million of run rate savings relative to the $135 through the end of this year, there's no kind of reinvestment tax we need to think about offsetting any of what's left to run through.
No.
Okay. All right. Just wanted to clarify.
That's okay.
All right. Thanks.
Thank you.
Again, if you do have a question, please press star one. Our next question comes from Jack Shirak with SunTrust. Your line is open.
Thank you very much. How much of an influence do you think Loan Protector will have on organic growth in the first half of 2012?
How much? I said it's Loan Protector will hurt us in the first quarter, and half of the second quarter, and then the distraction will go away.
Any thoughts on a couple of points on organic growth similar to what it has been or?
I'm sorry. Say that again.
Like a point or so on organic growth similar to what it has been recently?
It'll probably be in the area of, in the first quarter, it'll probably hurt us to the tune of $10 million. In the second quarter, $5 million. Then go away, then flatten out.
All right. What's the incremental financial benefit on EBITDA for employee benefits moving to contingent in 2012, you think?
Well, that's tough to say. The employee benefits business was down one in North America. Our expectation level is that that business will grow in 2012. It's 24% of our business in North America, it could be pretty influential. The margins are good in that business and could be very influential in its contribution to EBITDA and EBIT.
Oh, great. Thank you very much.
Thank you.
Currently, we have no further questions at this time.
Okay. Thanks, everybody. Appreciate it. Appreciate your patience. Bye-bye.
This concludes today's conference. Thank you for your participation.