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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the ~~quarter~~quarterly period ended ~~September 30, 2007~~March 31, 2008
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-16503

WILLIS GROUP HOLDINGS LIMITED
(Exact name of registrant as specified in its charter)

Bermuda (~~Jurisdiction~~State or other jurisdiction of incorporation or organization)		98-0352587 (I.R.S. Employer Identification No.)
c/o Willis Group Limited 51 Lime Street, London, EC3M 7DQ, England (Address of principal executive offices) (011) 44-20-3124-6000 (Registrant's telephone number, including area code)

~~c/o Willis Group Limited~~
~~Ten Trinity Square, London EC3P 3AX, England~~
~~(Address of principal executive offices)~~

~~(011) 44-20-7488-8111~~
~~(Registrant's telephone number, including area code)~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a ~~non-accelerated filer.~~smaller reporting company. See ~~definition~~the definitions of ~~"accelerated filer and large~~"large accelerated filer", "accelerated filer" and "smaller reporting company" in ~~rule~~Rule 12b-2 of the ~~exchange act. (Check one):~~Exchange Act.

Large accelerated filer ý

Accelerated filer o

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

As of ~~October 31, 2007~~April 30, 2008, there were outstanding ~~142,900,861~~141,220,207 shares of common stock, par value $0.000115 per share of the registrant.

WILLIS GROUP HOLDINGS LIMITED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED ~~SEPTEMBER 30, 2007~~MARCH 31, 2008

Table of Contents

			Page
Information Concerning Forward-Looking Statements			3
PART I—Financial Information
	Item 1—Financial Statements		5
	Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations		34
	Item 3—Quantitative and Qualitative Disclosures about Market Risk		46
	Item 4—Controls and Procedures		46
PART II—Other Information
	Item 1—Legal Proceedings		47
	Item 1A—Risk Factors		47
	Item 2—Unregistered Sales of Equity Securities and Use of Proceeds		47
	Item 3—Defaults upon Senior Securities		47
	Item 4—Submission of Matters to a Vote of Security Holders		47
	Item 5—Other Information		48
	Item 6—Exhibits		49
Signatures		~~Signatures~~	50

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

We have included in this document "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, included in this document that address activities, events or developments that we expect or anticipate may occur in the future ~~including~~are forward-looking statements. Examples of forward looking statements include statements we make in "Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations—Summary—2008 expense review" and—"Financial targets" and elsewhere regarding such things as our outlook and guidance regarding future operating margin and adjusted ~~EPS,~~earnings per diluted share, future capital expenditures, expected growth in commissions and fees, business strategies, competitive strengths, goals, the anticipated benefits of new initiatives, growth of our business and operations, plans, and references to future ~~successes are forward-looking statements.~~successes. Also, when we use the words such as "anticipate", "believe", "estimate", "expect", "intend", "plan", "probably", or similar expressions, we are making forward-looking statements.

There are important uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including regional, national or global political, economic, business, competitive, market and regulatory conditions and the following:

•: our ability to implement and realize anticipated benefits of the Shaping ~~Our~~our Future initiative and other new initiatives,
•: the extent and timing of, and prices paid in connection with, any share repurchases under existing or future programs,
•: increases in client retentions,

•: our ability to retain existing clients and attract new business, and our ability to retain key
employees,
•: changes in commercial property and casualty markets, or changes in premiums and availability of insurance products due to a catastrophic event such as a hurricane,
•: volatility or declines in other insurance markets and the premiums on which our commissions are based,
•: impact of competition,
•: the timing or ability to carry out share repurchases or take other steps to manage our capital,
•: fluctuations in exchange and interest rates that could affect expenses and revenue,
•: rating agency actions that could inhibit ability to borrow funds or the pricing thereof,
•: legislative and regulatory changes affecting both our ability to operate and client demand,
•: potential costs and difficulties in complying with a wide variety of foreign laws and regulations, given the global scope of our operations,
•: changes in the tax or accounting treatment of our operations,
•: our exposure to potential liabilities arising from errors and omissions claims against us,
•: the results of regulatory investigations, legal proceedings and other contingencies, and
•: the timing of any exercise of put and call arrangements with associated companies.

The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. See also Part I, Item 1A "Risk Factors" for additional factors included in the Form 10-K for the year ended December 31, ~~2006~~2007 filed on February ~~28, 2007 for additional factors.~~27, 2008.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent

in the forward-looking statements included in this document, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved.

Our forward-looking statements speak only as of the date made and we will not update these forward-looking statements unless the securities laws require us to do so. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this document may not occur and we caution you against unduly relying on these forward-looking statements.

PART I—FINANCIAL INFORMATION

Item 1—Financial Statements

WILLIS GROUP HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

			2007			2006			2007			2006					Three months ended March 31,
			Three months ended September 30,						Nine months ended September 30,
			(millions, except per share data)														2008			2007
			(unaudited)														(millions, except per share data) (unaudited)
REVENUES	REVENUES														REVENUES
															Commissions and fees		$	772		$	711
	Commissions and fees		$	549		$	519		$	1,867		$	1,743		Investment income			22			24
	Investment income			25			24			72			64		Other income (Note 2)			1			4

		Total revenues		574			543			1,939			1,807			Total revenues		795			739

EXPENSES	EXPENSES														EXPENSES
	Salaries and benefits			(352	)		(383	)		(1,089	)		(1,082	)	Salaries and benefits			(411	)		(377	)
	Other operating expenses			(116	)		(138	)		(341	)		(351	)	Other operating expenses			(149	)		(111	)
	Depreciation expense and amortization of intangible assets			(16	)		(17	)		(49	)		(46	)	Depreciation expense and amortization of intangible assets			(16	)		(16	)
	Gain on disposal of London headquarters			3			99			9			99		Gain on disposal of London headquarters			6			3
	Net loss on disposal of operations			—			(7	)		—			(7	)
																Total expenses		(570	)		(501	)
		Total expenses		(481	)		(446	)		(1,470	)		(1,387	)

OPERATING INCOME	OPERATING INCOME			93			97			469			420		OPERATING INCOME			225			238
	Interest expense			(17	)		(9	)		(48	)		(27	)	Interest expense			(16	)		(12	)

INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST	INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			76			88			421			393		INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			209			226
INCOME TAXES				(12	)		(3	)		(116	)		(101	)
Income taxes															Income taxes			(60	)		(68	)

INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST	INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			64			85			305			292		INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			149			158
INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX				5			6			20			20
MINORITY INTEREST, NET OF TAX				(2	)		(2	)		(11	)		(11	)
Interest in earnings of associates, net of tax															Interest in earnings of associates, net of tax			26			19
Minority interest, net of tax															Minority interest, net of tax			(9	)		(8	)

NET INCOME	NET INCOME		$	67		$	89		$	314		$	301		NET INCOME		$	166		$	169

EARNINGS PER SHARE (Note 3)
EARNINGS PER SHARE (Note 4)															EARNINGS PER SHARE (Note 4)
	—Basic		$	0.47		$	0.57		$	2.15		$	1.92		—Basic		$	1.17		$	1.11
	—Diluted		$	0.46		$	0.56		$	2.12		$	1.89		—Diluted		$	1.16		$	1.10

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (Note 3)
AVERAGE NUMBER OF SHARES OUTSTANDING (Note 4)															AVERAGE NUMBER OF SHARES OUTSTANDING (Note 4)
	—Basic			143			157			146			157		—Basic			142			152
	—Diluted			145			159			148			159		—Diluted			143			154

CASH DIVIDENDS DECLARED PER COMMON SHARE	CASH DIVIDENDS DECLARED PER COMMON SHARE		$	0.250		$	0.235		$	0.750		$	0.705		CASH DIVIDENDS DECLARED PER COMMON SHARE		$	0.260		$	0.250

The accompanying notes are an integral part of these condensed consolidated financial statements.

WILLIS GROUP HOLDINGS LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

			March 31, 2008			December 31, 2007
			(millions, except share data) (unaudited)
ASSETS
	Cash and cash equivalents		$	195		$	200
	Fiduciary funds—restricted			1,792			1,520
	Short-term investments			38			40
	Accounts receivable, net of allowance for doubtful accounts of $32 million in both 2008 and 2007			10,091			8,241
	Fixed assets, net of accumulated depreciation of $227 million in 2008 and $211 million in 2007			345			315
	Goodwill			1,654			1,648
	Other intangible assets, net of accumulated amortization of $49 million in 2008 and $46 million in 2007			74			78
	Investments in associates			260			193
	Pension benefits asset			451			404
	Other assets			326			309

TOTAL ASSETS			$	15,226		$	12,948

LIABILITIES AND STOCKHOLDERS' EQUITY
	Accounts payable		$	11,280		$	9,265
	Deferred revenue and accrued expenses			291			388
	Net deferred tax liabilities			13			5
	Income taxes payable			82			43
	Long-term debt (Note 7)			1,415			1,250
	Liability for pension benefits			45			43
	Other liabilities			605			559

		Total liabilities		13,731			11,553

COMMITMENTS AND CONTINGENCIES (Note 6)
MINORITY INTEREST				58			48
STOCKHOLDERS' EQUITY
	Common shares, $0.000115 par value; Authorized: 4,000,000,000; Issued and outstanding, 141,180,669 shares in 2008 and 143,093,509 shares in 2007			—			—
	Additional paid-in capital			—			41
	Retained earnings			1,574			1,463
	Accumulated other comprehensive loss, net of tax			(133	)		(153	)
	Treasury stock, at cost, 66,902 shares in 2008 and 71,858 shares in 2007			(4	)		(4	)

		Total stockholders' equity		1,437			1,347

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	15,226		$	12,948

The accompanying notes are an integral part of these condensed consolidated financial statements.

WILLIS GROUP HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

				Three months ended March 31,
				2008			2007
				(millions) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income			$	166		$	169
	Adjustments to reconcile net income to net cash provided by operating activities:
		Net gain on disposal of operations, fixed and intangible assets and short-term investments			(1	)		—
		Gain on disposal of London headquarters			(6	)		(3	)
		Depreciation expense and amortization of intangible assets			16			16
		Provision for doubtful accounts			—			1
		Minority interest			8			8
		Provision (benefit) for deferred income taxes			10			(2	)
		Excess tax benefits from share-based payment arrangements			(2	)		(5	)
		Share-based compensation			9			9
		Undistributed earnings of associates			(26	)		(19	)
		Other			8			(15	)
	Changes in operating assets and liabilities, net of effects from purchase of subsidiaries:
		Fiduciary funds—restricted			(240	)		(160	)
		Accounts receivable			(1,772	)		(1,255	)
		Accounts payable			1,903			1,363
		Additional funding of UK and US pension plans			(27	)		(27	)
		Other assets			5			6
		Other liabilities			(42	)		(6	)

			Net cash provided by operating activities		9			80

CASH FLOWS FROM INVESTING ACTIVITIES
		Proceeds on disposal of fixed and intangible assets			1			—
		Additions to fixed assets			(44	)		(26	)
		Acquisitions of subsidiaries, net of cash acquired			(5	)		(5	)
		Investments in associates			(31	)		—
		Proceeds on sale of short-term investments			3			4

			Net cash used in investing activities		(76	)		(27	)

CASH FLOWS FROM FINANCING ACTIVITIES
		Proceeds from draw down of revolving credit facility			165			—
		Repayments of debt			—			(200	)
		Senior notes issued, net of debt issuance costs			—			595
		Repurchase of shares			(75	)		(457	)
		Proceeds from issue of shares			1			4
		Excess tax benefits from share-based payment arrangements			2			5
		Dividends paid			(36	)		(36	)

			Net cash provided by (used in) financing activities		57			(89	)

DECREASE IN CASH AND CASH EQUIVALENTS					(10	)		(36	)
Effect of exchange rate changes on cash and cash equivalents					5			1
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					200			288

CASH AND CASH EQUIVALENTS, END OF PERIOD				$	195		$	253

The accompanying notes are an integral part of these condensed consolidated financial statements.

WILLIS GROUP HOLDINGS LIMITED

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

September 30,
2007
December 31,
2006

(millions, except share data)

(unaudited)

ASSETS
Cash and cash equivalents $ 210 $ 288
Fiduciary funds—restricted 1,690 1,772
Short-term investments 48 58
Accounts receivable, net of allowance for doubtful accounts of $34 million in 2007 and $32 million in 2006 8,604 8,756
Fixed assets, net of accumulated depreciation of $212 million in 2007 and $202 million in 2006 279 167
Goodwill and other intangible assets, net of accumulated amortization of $162 million in 2007 and $152 million in 2006 1,727 1,656
Investments in associates 195 173
Net deferred tax assets 45 72
Pension benefits asset 313 166
Other assets 281 270

TOTAL ASSETS $ 13,392 $ 13,378

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 9,811 $ 10,062
Deferred revenue and accrued expenses 351 430
Income taxes payable (Note 2) 103 54
Long-term debt (Note 6) 1,200 800
Liability for pension benefits 20 34
Other liabilities 570 502

Total liabilities 12,055 11,882

COMMITMENTS AND CONTINGENCIES (Note 5)

MINORITY INTEREST

40

42

STOCKHOLDERS' EQUITY

Common shares, $0.000115 par value; Authorized: 4,000,000,000; Issued and outstanding, 142,842,327 shares in 2007 and 153,002,802 shares in 2006 — —
Additional paid-in capital (Note 11) 50 388
Retained earnings (Note 12) 1,404 1,250
Accumulated other comprehensive loss, net of tax (Note 8) (152 ) (178 )
Treasury stock, at cost, 89,017 shares in 2007 and 165,979 shares in 2006 (5 ) (6 )

Total stockholders' equity 1,297 1,454

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,392 $ 13,378

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~WILLIS GROUP HOLDINGS LIMITED~~
~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Nine months ended
September 30,

2007
2006

(millions)

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 314 $ 301
Adjustments to reconcile net income to net cash provided by operating activities:
Net gain on disposal of operations, fixed and intangible assets and short-term investments (14 ) —
Gain on disposal of London headquarters (9 ) (99 )
Depreciation expense and amortization of intangible assets 49 46
Provision (benefit) for deferred income taxes 22 (1 )
Excess tax benefits from share-based payment arrangements (8 ) (8 )
Share-based compensation 26 15
Undistributed earnings of associates (14 ) (14 )
Other (25 ) 3
Changes in operating assets and liabilities, net of effects from purchase of subsidiaries:
Fiduciary funds—restricted 141 (425 )
Accounts receivable 316 (1,116 )
Accounts payable (448 ) 1,600
Additional funding of UK and US pension plans (96 ) (165 )
Other assets (24 ) (62 )
Other liabilities 3 —

Net cash provided by operating activities 233 75

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of fixed and intangible assets 21 58
Additions to fixed assets (135 ) (35 )
Net cash proceeds from disposal of operations, net of cash disposed — 4
Acquisitions of subsidiaries, net of cash acquired (76 ) (47 )
Investments in associates (1 ) (25 )
Proceeds on sale of short-term investments 12 10

Net cash used in investing activities (179 ) (35 )

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from drawdown on revolving credit facility — 35
Repayment of debt (200 ) —
Senior notes issued, net of debt issuance costs 594 —
Repurchase of shares (457 ) (32 )
Proceeds from issue of shares 20 12
Excess tax benefits from share-based payment arrangements 8 8
Dividends paid (107 ) (108 )

Net cash used in financing activities (142 ) (85 )

DECREASE IN CASH AND CASH EQUIVALENTS (88 ) (45 )
Effect of exchange rate changes on cash and cash equivalents 10 6
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 288 193

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 210 $ 154

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~WILLIS GROUP HOLDINGS LIMITED~~
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. NATURE OF OPERATIONS

Willis Group Holdings Limited ("Willis Group Holdings") and subsidiaries (collectively, the "Company") provide a broad range of ~~value-added~~insurance brokerage, reinsurance and risk management consulting ~~reinsurance and insurance brokerage~~ services to its worldwide clients, both directly and indirectly through its ~~associates, to a diverse base of clients internationally.~~associates. The Company provides both specialized risk management advisory and ~~other~~consulting services on a global basis to clients worldwide in ~~various industries, including aerospace, marine, energy~~specific industrial and ~~construction.~~ commercial activities, and services to small, medium and major corporates through its retail operations.

In its capacity as an advisor and insurance broker, the Company acts as an intermediary between clients and insurance carriers by advising clients on risk management requirements, helping clients determine the best means of managing risk, and negotiating and placing insurance risk with insurance carriers through the Company's global distribution network.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements ("Interim Financial Statements") have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

The Interim Financial Statements are unaudited but include all adjustments (consisting of normal recurring adjustments) which the Company's management considers necessary for a fair presentation of the financial position as of such dates and the operating results and cash flows for those periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The results of operations for the ~~nine~~three month period ended ~~September 30, 2007~~March 31, 2008 may not necessarily be indicative of the operating results for the entire fiscal year.

The December 31, ~~2006~~2007 balance sheet was derived from audited financial statements but does not include all disclosures required by US GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These Interim Financial Statements should be read in conjunction with the Company's consolidated balance sheets as of December 31, ~~2006~~2007 and ~~2005,~~2006, and the related consolidated statements of operations, cash flows and changes in stockholders' equity for each of the three years in the period ended December 31, ~~2006~~2007 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission.

~~Accounting Changes~~Fair value measurement—adoption of FAS 157

The Company adopted ~~FASB Interpretation~~Financial Accounting Standards No. ~~48,~~~~Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109~~157 ("~~FIN 48"~~FAS 157")~~, with effect from~~ on January 1, ~~2007. FIN 48 changed~~2008. FAS 157:

•

applies to certain assets and liabilities that are being measured and reported on a fair value basis;

•

defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosure about fair value measurements; and

•

enables the test for recognition of uncertain tax positions to a 'more-likely-than-not recognition threshold' which is defined as 'greater than 50 percent'. Once the threshold is crossed, the enterprise then recognizes its best estimatereader of the ~~amount that will ultimately be sustained upon review~~financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the ~~relevant tax authorities.~~

~~As a consequence~~quality and reliability of ~~adopting FIN 48,~~ the ~~Company recorded a $4 million increase in income taxes payable and charged a cumulative adjustment of $4 million~~information used to ~~opening retained earnings at January 1, 2007.~~

Total unrecognized tax benefits as of January 1, 2007 totaled $30 million which, if recognized, would all impact the Company's effective tax rate. During the nine months ended September 30, 2007, the Company recognized approximately $10 million of tax benefits related to the release of provisions no

determine fair values.

~~longer required due to either settlement through negotiation or closure~~WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

FAS 157 requires that assets and liabilities carried at fair value are classified and disclosed in one of the ~~statute of limitations on assessment.~~following three categories:

Total unrecognized tax benefits as at September 30, 2007 totaled $20 million which, if recognized, would all impact the Company's effective tax rate. During the next 12 months it is reasonably possible

•

Level 1: Quoted market prices in active markets for identical assets or liabilities.

•

Level 2: Observable market based inputs or unobservable inputs that the Company will recognize approximately $5 million of tax benefits related to the release of provisions no longer required due to either settlement through negotiation or closure of the statute of limitations on assessment.

~~The Company recognizes interest and penalties relating to unrecognized tax benefits as part of its income taxes expense. Total accrued interest as of January 1, 2007 was $2 million.~~

The Company files tax returns in the various tax jurisdictions in which it operates, principally the United States and United Kingdom. In 2006, the Company resolved all issues related to the IRS examination of the 2003 federal income tax return. The 2003 US tax year closed in 2007 upon the expiration of the statute of limitations on assessment. US tax returns for tax years 2004, 2005 and 2006 have been filed. The Company hasare corroborated by market data.

•

Level 3: Unobservable inputs that are not received any indication that the IRS will be conducting an audit of either of these open years. Texas is the only state with an active income tax audit. The Company has not extended the federal statute of limitations for assessment in the US. All UK tax returns have been timely filed and are in the normal process of being reviewed, with the HM Revenue & Customs making enquiries to obtain additional information. As previously noted the Company resolved all issues relating to enquiries into restructurings in respect of the 2001 tax year. All UK enquiries into the 2002 tax year have been cleared in 2007, but tax years 2003 and 2004 are still subject to on-going enquiries. No enquiries have yet been received in relation to tax year 2005. The 2006 UK returns will be timely filed. The earliest UK tax year the Company has kept open is 1995 in relation to foreign tax relief calculations.

corroborated by market data.

The following table ~~illustrates~~summarizes the ~~incremental effect~~valuation of ~~applying FIN 48~~the Company's assets and liabilities by the FAS 157 fair value hierarchy at March 31, 2008:

			March 31, 2008
			Level 1		Level 2		Level 3		Total
			(millions)
Assets at fair value:
	Fiduciary funds—restricted		$	1,792	$	—	$	—	$	1,792
	Short-term investments			38		—		—		38
	Derivative financial instruments			—		30		—		30

		Total assets	$	1,830	$	30	$	—	$	1,860

Liabilities at fair value:
	Derivative financial instruments		$	—	$	26	$	—	$	26

		Total liabilities	$	—	$	26	$	—	$	26

The Company's fiduciary funds-restricted and short-term investments consist mainly of cash and time deposits. Fair values are based on ~~individual line items~~quoted market values.

The fair value of the Company's derivative financial instruments is computed based on a market approach using information generated by market transactions involving comparable instruments.

Other Income

Other income comprises gains on the ~~condensed consolidated balance sheet as~~disposals of ~~September 30, 2007.~~intangible assets, which primarily arise on the disposal of books of business. Prior to January 1, 2008, the Company reported these gains within "Commissions and fees". Comparatives have been adjusted accordingly. Although the Company is not in the business of selling intangible assets (mainly books of business), from time to time the Company will dispose of a book of business (a customer list) or other intangible asset that does not produce adequate margins or fit with our strategy.

September 30, 2007

Before
application
of FIN 48
Effect of
FIN 48
application
After
Application
of FIN 48

(millions)

Income taxes payable $ 99 $ 4 $ 103
Total liabilities 12,051 4 12,055
Retained earnings 1,408 (4 ) 1,404
Total stockholders' equity 1,301 (4 ) 1,297
Total liabilities and stockholders' equity $ 13,392 $ — $ 13,392

	September 30, 2007
	Before application of FIN 48		Effect of FIN 48 application		After Application of FIN 48
	(millions)
Income taxes payable	$	99		$	4		$	103
Total liabilities		12,051			4			12,055
Retained earnings		1,408			(4	)		1,404
Total stockholders' equity		1,301			(4	)		1,297
Total liabilities and stockholders' equity	$	13,392		$	—		$	13,392

3. SEVERANCE COSTS

As part of the Company's 2008 expense review, the Company incurred $15 million of severance costs relating to approximately 150 positions that have been, or are in the process of being, eliminated. Severance costs for these employees were recognized pursuant to the terms of their existing benefit arrangements or employee agreements. Of the $15 million charge for severance costs in first quarter

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

3. SEVERANCE COSTS (Continued)

2008, $4 million was paid in the first quarter and $11 million has been carried forward at March 31, 2008. In some countries, termination cash payments are spread over periods of up to two years.

Severance costs also arise in the normal course of business and these charges amounted to $1 million in the three months ended March 31, 2008 (2007: $1 million).

4. EARNINGS PER SHARE

Basic and diluted earnings per share are calculated by dividing net income by the ~~weighted~~ average number of shares outstanding during each period. The computation of diluted earnings per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue shares were exercised or converted into shares or resulted in the issue of shares that then shared in the net income of the Company. At

~~September 30, 2007,~~ March 31, 2008, time-based and performance-based options to purchase ~~14.3~~14.8 million and ~~0.3~~0.2 million ~~(2006: 16.2~~(2007: 14.5 million and ~~0.6~~0.3 million) shares, respectively, and ~~1.6~~1.7 million ~~(2006: 0.8~~(2007: 1.6 million) restricted ~~stock units,~~shares, were outstanding.

Basic and diluted earnings per share are as follows:

Three months ended
September 30,
Nine months ended
September 30,

2007
2006
2007
2006

(millions, except per share data)

Net income $ 67 $ 89 $ 314 $ 301

Basic weighted average number of shares outstanding 143 157 146 157
Dilutive weighted effect of potentially issuable shares 2 2 2 2

Diluted weighted average number of shares outstanding 145 159 148 159

Basic earnings per share $ 0.47 $ 0.57 $ 2.15 $ 1.92
Dilutive weighted effect of potentially issuable shares (0.01 ) (0.01 ) (0.03 ) (0.03 )

Diluted earnings per share $ 0.46 $ 0.56 $ 2.12 $ 1.89

	Three months ended March 31,
	2008			2007
	(millions, except per share data)
Net income	$	166		$	169

Basic average number of shares outstanding		142			152
Dilutive effect of potentially issuable shares		1			2

Diluted average number of shares outstanding		143			154

Basic earnings per share	$	1.17		$	1.11
Dilutive effect of potentially issuable shares		(0.01	)		(0.01	)

Diluted earnings per share	$	1.16		$	1.10

Options to purchase ~~1.8~~12.9 million shares were not included in the computation of the dilutive effect of stock options for the three ~~and nine month periods~~months ended ~~September 30, 2007~~March 31, 2008 because the effect was antidilutive ~~(2006: 12.9 million shares)~~(Three months ended March 31, 2007: 5.6 million).

4.WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

5. PENSION PLANS

The components of the net periodic benefit cost of the UK and US defined benefit plans are as follows:

Three months ended
September 30,
Nine months ended
September 30,

UK pension benefits

2007
2006
2007
2006

(millions)

Components of net periodic benefit cost:
Service cost $ 12 $ 13 $ 35 $ 38
Interest cost 29 25 84 72
Expected return on plan assets (46 ) (36 ) (135 ) (105 )
Amortization of unrecognized prior service gain (1 ) — (2 ) (2 )
Amortization of unrecognized actuarial loss 1 3 3 10

Net periodic benefit (income) cost $ (5 ) $ 5 $ (15 ) $ 13

Three months ended
September 30,

Nine months ended
September 30,

US pension benefits

2007
2006
2007
2006

(millions)

Components of net periodic benefit cost:
Service cost $ 5 $ 5 $ 16 $ 15
Interest cost 8 8 26 24
Expected return on plan assets (11 ) (10 ) (33 ) (30 )
Amortization of unrecognized prior service gain — — (1 ) —

Net periodic benefit cost $ 2 $ 3 $ 8 $ 9

		Three months ended March 31,
		UK Pension Benefits						US Pension Benefits
		2008			2007			2008			2007
		(millions)
Components of net periodic benefit (income) cost:
	Service cost	$	9		$	12		$	6		$	5
	Interest cost		31			27			9			9
	Expected return on plan assets		(48	)		(44	)		(12	)		(11	)
	Amortization of unrecognized prior service gain		(1	)		(1	)		—			—
	Amortization of unrecognized actuarial loss		—			1			—			—

Net periodic benefit (income) cost		$	(9	)	$	(5	)	$	3		$	3

As of ~~September 30, 2007,~~March 31, 2008, the Company had contributed ~~$112~~$37 million and ~~$23~~$2 million of contributions to the UK and US defined benefit pension plans ~~(2006: $64~~(2007: $37 million and ~~$31~~$4 million), respectively. The Company expects to contribute ~~a total of $170~~approximately $150 million to the UK ~~and US~~ defined benefit pension ~~plans~~plan and $25 million to the US plan for the full year ~~2007.~~2008. However, 2008 contributions to the UK plan may decrease subject to the outcome of the full triennial valuation of the UK plan which will be completed later this year.

5.6. COMMITMENTS AND CONTINGENCIES

Claims, Lawsuits and Other Proceedings

The Company is subject to various actual and potential claims, lawsuits and other proceedings relating principally to alleged errors and omissions in connection with the placement of insurance and reinsurance in the ordinary course of business. Similar to other corporations, the Company is also subject to a variety of other claims, including those relating to the Company's employment practices. Some of the claims, lawsuits and other proceedings seek damages in amounts which could, if assessed, be significant.

Errors and omissions claims, lawsuits and other proceedings arising in the ordinary course of business are covered in part by professional indemnity or other appropriate insurance. The terms of this insurance vary by policy year and self-insured risks have increased significantly in recent years. In

respect of self-insured risks, the Company has established provisions which are believed to be adequate in the light of current information and legal advice, and the Company adjusts such provisions from time to time according to developments.

On the basis of current information, the Company does not expect that the actual claims, lawsuits and other proceedings, to which the Company is subject, or potential claims, lawsuits and other proceedings relating to matters of which it is aware will ultimately have a material adverse effect on the Company's financial condition, results of operations or liquidity. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation, it is possible

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

6. COMMITMENTS AND CONTINGENCIES (Continued)

that an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or annual periods.

The most significant actual or potential claims, lawsuits and other proceedings, of which we are currently aware are:

Inquiries and Investigations

In April 2005, the Company entered into an Assurance of Discontinuance ("NY AOD") with the New York Attorney General and the New York Superintendent of Insurance resolving the investigation commenced by the New York Attorney General in April 2004 which concerned, among other things, arrangements pursuant to which insurers compensated insurance brokers for distribution and other services provided to insurers and, as the investigation of brokers and insurers continued, broadened into an investigation of other possible violations of law, including violations of fiduciary duty, securities laws, and antitrust laws. Pursuant to the NY AOD, the Company has paid $50 million to eligible customers. The Company also agreed to continue certain business reforms it had already implemented and to implement certain other business reforms. These reforms include an agreement not to accept contingent compensation; and an undertaking to disclose to customers any compensation the Company will receive in connection with providing policy placement services to the customer. The Company also resolved a similar investigation commenced by the Minnesota Attorney General in 2005 by entering into an Assurance of Discontinuance pursuant to which the Company paid $1 million to Minnesota customers and implemented the business reforms described in the NY AOD. In July 2007 the Company resolved a similar investigation by the Florida Attorney General, the Florida Department of Financial Services and the Florida Office of Insurance Regulation by agreeing to reimburse approximately $2.6 million to Florida public entities who were customers and to reimburse the state for its investigatory costs.

The Company ~~continues to respond~~has responded to requests for documents and information by the regulators and/or attorneys general of more than twenty other states, the District of Columbia, one US city, Canada, and Australia that ~~are conducting~~conducted similar investigations. The Company ~~is co-operating~~has co-operated fully with these investigations and has engaged in discussions with regulators and attorneys general about their investigations but cannot predict at this time how or when those investigations will be resolved.

The ~~Company's operations in nine European countries have received questionnaires from either the~~ European Commission issued questionnaires pursuant to its Sector Inquiry or, in respect of Norway, the European Free Trade Association Surveillance Authority, related to insurance business practices, including compensation arrangements for ~~brokers. At~~brokers, to at least 150 ~~other~~ European brokers ~~received similar questionnaires.~~including our operations in nine European countries. The Company responded to the European Commission questionnaires and has filed the European Free Trade Association Surveillance Authority for two of its Norwegian entities. The ~~Company has received and responded to further questionnaires relating to reinsurance and co-insurance. The~~ European Commission reported on a final basis on September 25, 2007 expressing

concerns over potential conflicts of interest in the industry relating to remuneration and binding authorities when assuming a dual role for clients and insurers and also over the nature of the coinsurance market. The Company continues to ~~cooperate~~co-operate with both the European Commission and the European Free Trade Association Surveillance Authority.

Since August 2004, various plaintiffs have filed purported class actions in the United States District Court for the Southern District of New York, the Northern District of Illinois, the Northern District of

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

6. COMMITMENTS AND CONTINGENCIES (Continued)

California, the New Jersey District court, and the Circuit Court for the Eighteenth Judicial Circuit in and for Seminole County, Florida Civil Division, under a variety of legal theories, including state tort, contract, fiduciary duty and statutory theories, and federal antitrust and RICO theories. Other than a federal suit in Illinois that was voluntarily dismissed by the plaintiff in May 2005, all of ~~the~~these federal actions have been consolidated into two actions in federal court in New Jersey. One of the consolidated actions addresses employee benefits, while the other consolidated action addresses all other lines of insurance. In addition to the two federal actions, the Company was also named as a defendant in a purported class action in the Eighteenth Judicial Circuit in and for Seminole County, Florida Civil Division. Both the consolidated federal actions and the Florida state action name various insurance carriers and insurance brokerage firms, including the Company, as defendants. In July 2007, class action suits, similar to the suits consolidated in New Jersey, were filed in the United States District Courts in the Southern District of Florida and the Southern District of New York. The complaints seek monetary damages and equitable relief and make allegations regarding the practices and conduct that has been the subject of the investigation of state attorneys general and insurance commissioners, including allegations that the brokers have breached their duties to their clients by entering into contingent compensation agreements with either no disclosure or limited disclosure to clients and entered into other improper activities. The complaints also allege the existence of a conspiracy among the insurance carriers and brokers and the federal court complaints allege violations of the federal RICO statute. In July 2007, class action suits, similar to the suits consolidated in New Jersey, were filed in the United States District Courts in the Southern District of Florida and the Southern District of New York. In separate decisions issued in August and September 2007, the Judge in the two consolidated federal actions dismissed the antitrust and RICO claims with prejudice and dismissed certain of the state claims without prejudice. Plaintiffs have filed a notice of appeal regarding these dismissal rulings. In January 2008, the Judge dismissed the ERISA claims with prejudice in the employee benefits suit. Additional actions could be brought in the future by individual policyholders. The Company disputes the allegations in all of these suits and intends to defend itself vigorously against these actions. The outcomes of these lawsuits, however, including any losses or other payments that may occur as a result, cannot be predicted at this time.

~~Sovereign/WFUM~~

Sovereign, a wholly owned subsidiary, operated as an insurance company in the United Kingdom and from 1972 Sovereign's underwriting activities were managed by another wholly owned subsidiary, Willis Faber (Underwriting Management) Limited, or WFUM. WFUM also provided underwriting agency and other services to third-party insurance companies, which are referred to as the stamp companies. As part of its services as agent, WFUM underwrote insurance and reinsurance business on behalf of Sovereign and the stamp companies and arranged reinsurance on their behalf. In 1991, Sovereign and the stamp companies ceased underwriting new business. Sovereign entered provisional liquidation in 1997.

~~In 2004, the solvent stamp companies entered into a settlement agreement whereby Willis Group Limited and all its subsidiaries received certain immediate releases and other releases staged in return~~

for certain staged payments. The final staged payment was made on May 11, 2007 and consequently, Willis and its subsidiaries were released from further potential liabilities to the solvent stamp companies arising out of WFUM's agency role.

On January 5, 2000, a scheme of arrangement proposed by Sovereign to its creditors became effective. The stated purpose of the scheme of arrangement is to resolve Sovereign's liabilities and provide that Sovereign's business is run off in as orderly a manner as possible. The scheme administrators have announced payments to creditors at a payment percentage of 40 percent payable out of Sovereign's assets. Since entering provisional liquidation, Sovereign has been managed by KPMG on behalf of the creditors and Sovereign's assets are therefore separate and distinct from the Company's, and any payment from Sovereign will have no effect on the Company's results of operations, financial condition or liquidity.

Sovereign in common with all the solvent stamp companies has commenced the process of attempting to enter into final cut-off schemes of arrangements with their creditors. Votes took place at creditors' meetings on October 27, 2006 and sufficient voters (by number and by value) have approved the scheme proposals. The schemes were approved by the English and US courts in 2007.

Sovereign has expressed concern about the enforceability of certain reinsurance put in place by WFUM on behalf of Sovereign. The failure of Sovereign to collect reinsurance following any adverse arbitration awards would increase the likelihood of Sovereign pursuing potential claims, including shortfalls in reinsurance recoveries, against WFUM. Sovereign has reserved its rights generally in respect of such potential claims, and WFUM, Willis Group and certain brokerage subsidiaries have entered into standstill agreements with Sovereign which preserve its rights with respect to its potential claims. The Company believes that any such claim will be covered by errors and omissions insurance.

Reinsurance Market Dispute

Various legal proceedings are pending, have been concluded or may commence between reinsurers, reinsureds and in some cases their intermediaries, including reinsurance brokers, relating to personal accident excess of loss reinsurance for the years 1993 to 1998. The proceedings principally concern allegations by reinsurers that they have sustained substantial losses due to an alleged abnormal "spiral" in the market in which the reinsurance contracts were placed, the existence and nature of which, as well as other information, was not disclosed to them by the reinsureds or their reinsurance broker. A "spiral" is a market term for a situation in which reinsureds and reinsurers reinsure each other with the effect that the same loss or portion of that loss moves through the market multiple times.

The reinsurers concerned have taken the position that, despite their decisions to underwrite risks or a group of risks, they are no longer bound by their reinsurance contracts. As a result, they have stopped settling claims and are seeking to recover claims already paid. The Company also understands that there have been at least two arbitration awards in relation to a spiral, among other things, in which the reinsurer successfully argued that it was no longer bound by parts of its reinsurance program. Willis Limited, the Company's principal insurance brokerage subsidiary in the United Kingdom, acted as the reinsurance broker or otherwise as intermediary, but not as an underwriter, for numerous personal

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

6. COMMITMENTS AND CONTINGENCIES (Continued)

accident reinsurance contracts, including two contracts that were involved in one of the arbitrations. Due to the small number of reinsurance brokers generally, Willis Limited was one of a small number of

brokers active in the market for this reinsurance during the relevant period. ~~The Company~~Willis Limited also utilized other brokers active in this market as sub-agents, including brokers who are parties to the legal proceedings described above, for certain contracts and may be responsible for any errors and omissions they may have made. In July 2003, one of the reinsurers received a judgment in the English High Court against certain parties, including a sub-broker ~~the Company~~Willis Limited used to place two of the contracts involved in this trial. Although neither the Company nor any of its subsidiaries were a party to this proceeding or any arbitration, ~~the Company~~Willis Limited entered into tolling agreements with certain of the principals to the reinsurance contracts tolling the statute of limitations pending the outcome of proceedings between the reinsureds and reinsurers.

~~Recently one~~Two former ~~client~~clients of ~~the Company,~~Willis Limited, American Reliable Insurance Company and one of its associated companies ("ARIC"), and CNA Insurance Company Limited and two of its associated companies ("CNA") have each terminated ~~its~~their respective tolling ~~agreement~~agreements with ~~the Company~~Willis Limited and commenced litigation in the English Commercial Court against Willis ~~Limited alleging~~Limited. ARIC has alleged conspiracy between a ~~Company~~former Willis Limited employee and the ARIC underwriter as well as negligence and CNA has alleged deceit and negligence by the same Willis Limited employee both in connection with placements of personal accident reinsurance in the excess of loss market in London and elsewhere. The Company disputes these allegations and intends to vigorously defend itself against these actions. ARIC's asserted claim is approximately $257 million (plus unspecified interest and costs) and CNA's asserted claim is approximately $251 million (plus various unspecified claims for exemplary damages, interest and costs). The Company cannot predict at this time what, if any, damages might result from this action but believes that any amounts likely required to resolve the claims will be ~~fully~~ covered by errors and omissions insurance. Various arbitrations continue to be active and from time to time the principals request ~~cooperation~~co-operation from the Company and suggest that claims may be asserted against the Company. Such claims may be made against the Company if reinsurers do not pay claims on policies issued by them. The Company cannot predict at this time whether any such claims will be made or the damages that may be alleged.

Gender Discrimination Class Action

A federal district court action was commenced against the Company in 2001 on behalf of an alleged nationwide class of present and former female officer and officer equivalent employees alleging that the Company discriminated against them on the basis of their gender and seeking injunctive relief, money damages, attorneys' fees and costs. The court denied plaintiffs' motions to certify a nationwide class or to grant nationwide discovery, but did certify a class of female officers and officer equivalent employees based in the Northeast (New York, New Jersey and Massachusetts) offices. The class consists of approximately 200 women. In June 2007 the parties reached a settlement in principle on the class claims and with the two remaining named plaintiffs on their individual claims for an amount that will not have a material adverse effect on our results of operations. The parties ~~must agree~~have agreed on the terms of the written settlement agreement including the terms of the injunctive relief that the Company will agree to provide under the ~~settlement.~~settlement which was approved by the court in February 2008. The judge is currently determining the amount of attorney fees the plaintiffs are entitled to receive, which is not material to the Company. A former female employee, whose motion to intervene in the class action

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

6. COMMITMENTS AND CONTINGENCIES (Continued)

was denied, has filed a purported class action with almost identical allegations as those contained in this suit, except seeking a class period of 1998 to the time of trial. The Company's motion to dismiss this suit was ~~denied. The~~denied and the court did not grant the Company ~~is seeking~~ permission ~~from the court~~ to immediately file an appeal from the denial of its motion to dismiss. The parties are in the discovery phase of the litigation. The Company cannot predict at this time what, if any, damages might result from this action.

World Trade Center

We acted as the insurance broker, but not as an underwriter, for the placement of both property and casualty insurance for a number of entities which were directly impacted by the September 11, 2001 destruction of the World Trade Center complex, including Silverstein Properties LLC, which acquired a 99-year leasehold interest in the twin towers and related facilities from the Port Authority of New York and New Jersey in July 2001. Although the World Trade Center complex insurance was bound at or before the July 2001 closing of the leasehold acquisition, consistent with standard industry practice, the final policy wording for the placements was still in the process of being finalized when the twin towers and other buildings in the complex were destroyed on September 11, 2001.

There are a number of lawsuits pending in the United States between the insured parties and the insurers for several placements, with the Silverstein property placement being the most significant of these lawsuits. There were two jury trials in the Silverstein property suit in which the principal issue was whether the September 11 events constituted one or more occurrences for the purposes of the relevant insurance policies. The outcome from the two jury trials is that Silverstein has $4.6 billion in coverage as opposed to the $7 billion it was seeking. On appeal, the verdicts from both jury trials were upheld. Silverstein and a few insurers have filed petitions with the appellate court for reargument. In May 2007, Silverstein reached a settlement with all of its property insurers, putting an end to the property litigation. In June 2007, a state court action was commenced in the New York County Supreme Court by The Westfield Group against Silverstein and Willis seeking to recover the costs it incurred in establishing its insured status under Silverstein's liability policy. In January 2008 the Company reached a settlement in principle with The Westfield Group for an amount which will be covered by errors and omissions insurance. Other disputes may also arise in respect of the World Trade Center insurance placed by us which could affect Willis including claims by one or more of the insureds that we made culpable errors or omissions in connection with our brokerage activities. However, we do not believe that our role as broker will lead to liabilities which in the aggregate would have a material adverse effect on our results of operations, financial condition or liquidity.

WILLIS GROUP HOLDINGS LIMITED

6.NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

7. LONG-TERM DEBT

Long-term debt consists of the following:

September 30,
2007
December 31,
2006

(millions)

5.125% Senior notes due 2010 $ 250 $ 250
5.625% Senior notes due 2015 350 350
6.200% Senior notes due 2017 600 —
Revolving credit facility — 200

$ 1,200 $ 800

On March 28, 2007, the Company completed a senior notes offering of $600 million, 10 year notes priced at 6.200 percent. The net proceeds of the offering were used to repurchase common stock pursuant to the Company's stock repurchase program and to repay the outstanding $200 million borrowings under the revolving credit facility.

~~On November 7, 2007, the Company executed an amendment to its revolving credit facility which increases the covenant leverage ratio from 2.5:1.0 to 3.0:1.0.~~

	March 31, 2008		December 31, 2007
	(millions)
5.125% Senior notes due 2010	$	250	$	250
5.625% Senior notes due 2015		350		350
6.200% Senior notes due 2017		600		600
Revolving credit facility		215		50

	$	1,415	$	1,250

7.8. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Supplemental disclosures regarding cash flow information and non-cash flow investing and financing activities are as follows:

			Nine months ended September 30,							Three months ended March 31,
			2007			2006				2008		2007
			(millions)							(millions)
Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:								Supplemental disclosures of cash flow information:
	Cash payments for income taxes		$	40		$	67		Cash payments for income taxes	$	10	$	10
	Cash payments for interest			57			34		Cash payments for interest		37		21

Supplemental disclosures of non-cash flow investing and financing activities:	Supplemental disclosures of non-cash flow investing and financing activities:								Supplemental disclosures of non-cash flow investing and financing activities:
	Liabilities accrued for additions to fixed assets		$	12		$	—		Issue of stock on acquisitions of subsidiaries	$	4	$	—
	Issue of stock on acquisition of subsidiaries			15			2		Deferred payments on acquisitions of subsidiaries		—		—
	Deferred payments on acquisitions of subsidiaries			1			8
	Issue of loan note receivable on disposal of London headquarters			—			147

Acquisitions:	Acquisitions:								Acquisitions:
	Fair value of assets acquired		$	11		$	71		Fair value of assets acquired	$	10	$	—
	Less:	liabilities assumed		(2	)		(59	)	Less: Liabilities assumed		—		—
		cash acquired		—			(2	)	Cash acquired		—		—

Net assets acquired, net of cash acquired	Net assets acquired, net of cash acquired		$	9		$	10		Net assets acquired, net of cash acquired	$	10	$	—

~~8. ACCUMULATED OTHER COMPREHENSIVE LOSS, NET OF TAX~~WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

9. COMPREHENSIVE INCOME

a)

The components of comprehensive income are as follows:

Three months ended
September 30,
Nine months ended
September 30,

2007
2006
2007
2006

(millions)

Net income $ 67 $ 89 $ 314 $ 301
Other comprehensive income:
Foreign currency translation adjustment (net of tax of $nil, $nil, $nil and $nil) 15 1 29 27
Unrealized holding loss (net of tax of $nil, $nil, $nil and $nil) — — — (1 )
Net gain (loss) on derivative instruments (net of tax of $(3) million, $(4) million, $1 million and $(3) million) 7 8 (3 ) 5

Other comprehensive income (net of tax of $(3) million, $(4) million, $1 million and $(3) million) 22 9 26 31

Comprehensive income $ 89 $ 98 $ 340 $ 332

			Three months ended March 31,
			2008			2007
			(millions)
Net income			$	166		$	169
	Other comprehensive income (loss), net of tax:
		Foreign currency translation adjustment (net of tax of $nil in 2008 and $nil in 2007)		21			3
		FAS 158 pension funding adjustment (net of tax of $nil in 2008)		(1	)		—
		Net loss on derivative instruments (net of tax of $1 million in 2007)		—			(4	)

	Other comprehensive income (loss) (net of tax of $nil in 2008 and $1 million in 2007)			20			(1	)

Comprehensive income			$	186		$	168

b)

The components of accumulated other comprehensive loss, net of tax, are as follows:

September 30,
2007
December 31,
2006

(millions)

Net foreign currency translation adjustment $ 28 $ (1 )
Net unrealized holding loss (1 ) (1 )
Net pension benefits liability adjustment (173 ) —
Net minimum pension liability adjustment — 16
Net unrealized loss on derivative instruments (6 ) (3 )

(152 ) 11
Net adjustment on initial application of FAS 158 — (189 )

Accumulated other comprehensive loss, net of tax $ (152 ) $ (178 )

	March 31, 2008			December 31, 2007
	(millions)
Net foreign currency translation adjustment	$	37		$	16
Net unrealized holding loss		(1	)		(1	)
FAS 158 pension funding adjustment		(167	)		(166	)
Net unrealized loss on derivative instruments		(2	)		(2	)

Accumulated other comprehensive loss, net of tax	$	(133	)	$	(153	)

9.10. SEGMENT INFORMATION

~~Willis has~~During the periods presented, the Company operated through three segments: Global; North America and International. Global provides specialist brokerage and consulting services to clients worldwide for specific industrial and commercial activities and is organized by specialism. North America and International predominantly comprise our retail operations which provide services to small, medium and major corporates, accessing Global's specialist expertise when required.

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

10. SEGMENT INFORMATION (Continued)

The Company evaluates the performance of its operating segments based on organic revenue growth and operating income. For internal reporting and segmental reporting, the following items are excluded from segmental expenses as they are not directly controlled by segment management:

~~(i)~~i): gains and losses on the disposal of operations and major properties;

ii)

foreign exchange hedging activities;

~~(ii)~~iii): amortization of ~~intangibles;~~intangible assets;
iv): significant legal and regulatory settlements which are managed centrally; and
~~(iii)~~v): ~~Shaping our Future expenditure for 2006.~~2008 expense review costs.

With effect from January 1, 2008, the Company changed its basis of segmental allocation for central costs. In particular, all accounting adjustments for hedging transactions are now held at the Corporate level, together with certain legal costs. As a result of this change, an additional $1 million net operating loss for full year 2007, previously reported within Corporate, has been allocated to the operating segments.

The accounting policies of the operating segments are consistent with those described in Note 2. There are no inter-segment revenues, with segments operating on a revenue-sharing basis equivalent to that used when sharing business with other third-party brokers.

Effective January 1, 2007, the Company's UK and Irish retail operations, which were previously reported within Global, are reported within International which now incorporates all the Company's retail operations outside North America. Comparative data have been adjusted accordingly.

Selected information regarding the Company's operating segments is as follows:

	Three months ended September 30, 2007												Three months ended March 31, 2008
	Commissions and Fees		Investment Income		Total Revenues		Depreciation and Amortization		Operating Income		Interest in Earnings of Associates, net of tax		Commissions and Fees		Investment Income		Other Income⁽¹⁾		Total Revenues		Depreciation and Amortization		Operating Income			Interest in Earnings of Associates, net of tax
	(millions)												(millions)
Global	$	161	$	12	$	173	$	4	$	36	$	—	$	277	$	8	$	—	$	285	$	3	$	133		$	—
North America		185		5		190		3		31		—		191		4		1		196		3		27			—
International		203		8		211		6		26		5		304		10		—		314		7		104			26

Total Retail		388		13		401		9		57		5		495		14		1		510		10		131			26

Total Operating Segments		549		25		574		13		93		5		772		22		1		795		13		264			26
Corporate and Other⁽¹⁾⁽²⁾		—		—		—		3		—		—		—		—		—		—		3		(39	)		—

Total Consolidated	$	549	$	25	$	574	$	16	$	93	$	5	$	772	$	22	$	1	$	795	$	16	$	225		$	26

(1): Prior to January 1, 2008, the Company reported "Other Income" within "Commissions and Fees", as described in Note 2. Comparatives have been adjusted accordingly.
(2): Corporate and Other includes the costs of the holding company; ~~certain foreign exchange hedging activities; amortization of intangible assets; net gains and losses on disposal of operations and the net gain on disposal of the Company's London headquarters.~~

Three months ended September 30, 2006

Commissions
and Fees
Investment
Income
Total
Revenues
Depreciation
and
Amortization
Operating
Income
Interest in
Earnings of
Associates,
net of tax

(millions)

Global $ 160 $ 13 $ 173 $ 3 $ 42 $ —

North America

180

5

185

3

27

—
International 179 6 185 6 18 6

Total Retail 359 11 370 9 45 6

Total Operating Segments 519 24 543 12 87 6
Corporate and Other⁽¹⁾ — — — 5 10 —

Total Consolidated $ 519 $ 24 $ 543 $ 17 $ 97 $ 6

~~(1)~~: ~~Corporate and Other includes the costs of the holding company; certain~~ foreign exchange hedging activities; amortization of intangible assets; net gains and losses on disposal of operations; ~~$99~~certain legal costs; and the $33 million ~~gain on disposal of~~charge for the ~~Company's London headquarters and $84 million of expenditure on Shaping our Future initiatives which were held centrally.~~2008 expense review.

Nine months ended September 30, 2007

Commissions
and Fees
Investment
Income
Total
Revenues
Depreciation
and
Amortization
Operating
Income
Interest in
Earnings of
Associates,
net of tax

(millions)

Global $ 608 $ 34 $ 642 $ 12 $ 218 $ —

North America

570

15

585

9

106

—
International 689 23 712 18 160 20

Total Retail 1,259 38 1,297 27 266 20

Total Operating Segments 1,867 72 1,939 39 484 20
Corporate and Other⁽¹⁾ — — — 10 (15 ) —

Total Consolidated $ 1,867 $ 72 $ 1,939 $ 49 $ 469 $ 20

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

10. SEGMENT INFORMATION (Continued)

	Three months ended March 31, 2007
	Commissions and Fees		Investment Income		Other Income⁽¹⁾		Total Revenues		Depreciation and Amortization		Operating Income		Interest in Earnings of Associates, net of tax
	(millions)
Global	$	261	$	11	$	—	$	272	$	2	$	122	$	—
North America		184		5		4		193		3		27		—
International		266		8		—		274		8		87		19

Total Retail		450		13		4		467		11		114		19

Total Operating Segments		711		24		4		739		13		236		19
Corporate and Other⁽²⁾		—		—		—		—		3		2		—

Total Consolidated	$	711	$	24	$	4	$	739	$	16	$	238	$	19

(1): Prior to January 1, 2008, the Company reported "Other Income" within "Commissions and Fees", as described in Note 2. Comparatives have been adjusted accordingly.
(2): Corporate and Other includes the costs of the holding company; ~~certain foreign exchange hedging activities; amortization of intangible assets; net gains and losses on disposal of operations and the net gain on disposal of the Company's London headquarters.~~

Nine months ended September 30, 2006

Commissions
and Fees
Investment
Income
Total
Revenues
Depreciation
and
Amortization
Operating
Income
Interest in
Earnings of
Associates,
net of tax

(millions)

Global $ 586 $ 33 $ 619 $ 9 $ 224 $ —

North America

548

15

563

9

71

—
International 609 16 625 17 122 20

Total Retail 1,157 31 1,188 26 193 20

Total Operating Segments 1,743 64 1,807 35 417 20
Corporate and Other⁽¹⁾ — — — 11 3 —

Total Consolidated $ 1,743 $ 64 $ 1,807 $ 46 $ 420 $ 20

~~(1)~~: ~~Corporate and Other includes the costs of the holding company; certain~~ foreign exchange hedging activities; amortization of intangible assets; net gains and losses on disposal of operations; ~~$99 million gain on disposal of the Company's London headquarters~~ and ~~$84 million of expenditure on Shaping our Future initiatives which were held centrally.~~certain legal costs.

The ~~Company does not routinely evaluate the~~following table reconciles total ~~asset position by segment, and the following allocations have been made based on reasonable estimates and assumptions:~~

September 30,
2007
December 31,
2006

(millions)

Total assets:
Global $ 10,054 $ 9,607

North America

1,632

1,771
International 1,468 1,679

Total Retail 3,100 3,450

Total Operating Segments 13,154 13,057
Corporate and Eliminations 238 321

Total Consolidated $ 13,392 $ 13,378

~~Operating segment revenue by product is~~consolidated operating income, as ~~follows:~~

Three months ended September 30,

2007
2006
2007
2006
2007
2006
2007
2006

Global
North America
International
Total

(millions)

Commissions and fees:
Retail insurance services $ — $ — $ 185 $ 180 $ 203 $ 179 $ 388 $ 359
Specialty insurance services 161 160 — — — — 161 160

Total commissions and fees 161 160 185 180 203 179 549 519

Investment income

12

13

5

5

8

6

25

24

Total Revenues $ 173 $ 173 $ 190 $ 185 $ 211 $ 185 $ 574 $ 543

Nine months ended September 30,

2007
2006
2007
2006
2007
2006
2007
2006

Global
North America
International
Total

(millions)

Commissions and fees:
Retail insurance services $ — $ — $ 570 $ 548 $ 689 $ 609 $ 1,259 $ 1,157
Specialty insurance services 608 586 — — — — 608 586

Total commissions and fees 608 586 570 548 689 609 1,867 1,743

Investment income

34

33

15

15

23

16

72

64

Total Revenues $ 642 $ 619 $ 585 $ 563 $ 712 $ 625 $ 1,939 $ 1,807

~~Information regarding the Company's geographic locations is as follows:~~

Nine months ended September 30,

2007
2006

(millions)

Commissions and fees⁽¹⁾
UK $ 639 $ 628
US 704 671
Other⁽²⁾ 524 444

Total $ 1,867 $ 1,743

September 30,
2007
December 31,
2006

(millions)

Long-lived assets⁽³⁾
UK $ 159 $ 89
US 90 48
Other⁽²⁾ 30 30

Total $ 279 $ 167

~~(1)~~: ~~Commissions and fees are attributed to countries based upon the location of the subsidiary generating the revenue.~~
~~(2)~~: ~~Other than~~disclosed in the ~~United Kingdom~~operating segment tables above, to consolidated income before income taxes, interest in earnings of associates and the United States, the Company does not conduct business in any country in which its commissions and fees and/or long-lived assets exceed 10 percent of consolidated commissions and fees and/or long-lived assets, respectively.
~~(3)~~: ~~Long-lived assets include identifiable fixed assets.~~

minority interest:

	Three months ended March 31,
	2008			2007
	(millions)
Total consolidated operating income	$	225		$	238
Interest expense		(16	)		(12	)

Income before income taxes, interest in earnings of associates and minority interest	$	209		$	226

~~10.~~11. SHARE BUYBACKS

On November 1, 2007, the Board authorized a new share buyback program for $1 billion. This ~~replaces~~replaced the previous $1 billion buyback program and its remaining $308 million authorization. The program is an open-ended plan to repurchase the Company's shares from time to time in the open market or through negotiated sales with persons who are not affiliates of the Company.

During the ~~nine~~three months ended ~~September 30, 2007,~~March 31, 2008, the Company repurchased ~~through its accelerated share repurchase program 11.5 million shares, bringing total share repurchases under the previous program to date to 16.9~~2.3 million shares, for ~~a total consideration~~$75 million, at an average price of ~~$669 million.~~$33.12. Repurchased shares were subsequently canceled.

~~Accelerated Share Repurchase Programs~~

During the nine months ended September 30, 2007, the Company completed the $150 million November 2006 accelerated share repurchase program, started and completed a $50 million accelerated share repurchase program and started a $400 million accelerated share repurchase program. This program completed on October 18, 2007 with a final settlement of $23 million.

~~The details of the various programs as at September 30, 2007, are as follows:~~

Start date	Finish date	No. of shares purchased	Initial price			Fees and price adjustment⁽¹⁾
November 2006	February 2007	3,786,922	$	39.61	$	40.63	$	3.9 million
March 2007	March 2007	1,274,210	$	39.26	$	39.66	$	0.5 million
March 2007		10,240,655	$	39.06			$	3.7 million

Start date
Finish date
No. of
shares
purchased
Initial
price
Adjusted
price on
completion⁽¹⁾
Fees and
price
adjustment⁽¹⁾
November 2006 February 2007 3,786,922 $ 39.61 $ 40.63 $ 3.9 million
March 2007 March 2007 1,274,210 $ 39.26 $ 39.66 $ 0.5 million
March 2007 10,240,655 $ 39.06 $ 3.7 million

⁽¹⁾: ~~Under the terms of the programs, the shares were subject to a price adjustment based on the volume weighted average share price of Willis' stock and dividend payments during the term of the program.~~

The $458 million excess of the initial purchase price over nominal price for the two 2007 programs, together with the price adjustments in respect of the completed November 2006 and March 2007 programs has been charged to stockholders' equity; $409 million was charged against additional paid-in capital and $49 million against retained earnings.

~~11. ADDITIONAL PAID-IN CAPITAL~~

~~The following table reconciles additional paid-in capital including the effects of the accelerated share repurchase programs as described above in Note 10.~~

September 30,
2007
September 30,
2006

(millions)

Additional paid-in capital:
Beginning of period, January 1 $ 388 $ 557
Issue of common shares under employee stock compensation plans and related tax benefits 29 15
Repurchase of shares (409 ) (32 )
Issue of common shares for acquisitions 15 2
Share-based compensation 26 15
Gains on sale of treasury stock 1 2

End of period $ 50 $ 559

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

12. ~~RETAINED EARNINGS~~

~~The following table reconciles retained earnings including the effects of the accelerated share repurchase programs as described above in Note 10.~~

September 30,
2007
September 30,
2006

(millions)

Retained earnings:
Beginning of period, January 1 $ 1,250 $ 948
Adoption of FIN 48 adjustment (Note 2) (4 ) —

1,246 948
Net income 314 301
Dividends (107 ) (111 )
Repurchase of shares (49 ) —

End of period $ 1,404 $ 1,138

~~13.~~ FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES

On July 1, 2005, Willis North America Inc. ("Willis North America") issued debt securities totaling $600 million under its April 2003 registration statement. On March 28, 2007, Willis North America issued further debt securities totaling $600 million under its June 2006 registration statement (Note 6)7). The debt securities are jointly and severally, irrevocably and fully and unconditionally guaranteed by Willis Group Holdings, Willis Group Limited, Trinity Acquisition Limited, TA I Limited, TA II Limited, TA III Limited and TA IV Limited.

Presented below is condensed consolidating financial information for: i) Willis Group Holdings, which ~~will be~~is a guarantor, on a parent company only basis; ii) the Other Guarantors which are all 100% owned subsidiaries of the parent; iii) the Issuer, Willis North America; iv) Other, which are the non-guarantor subsidiaries, on a combined basis; v) Eliminations; and vi) Consolidated Company and subsidiaries. The equity method has been used for all investments in subsidiaries.

The entities included in the Other Guarantors column are Willis Group Limited, Trinity Acquisition Limited, TA I Limited, TA II Limited, TA III Limited and TA IV Limited.

Prior to the year ended December 31, 2006 the Company reported inter-company dividends received and paid on a net basis in the condensed consolidating statement of cash flows within the financial information for parent guarantor, other guarantor subsidiaries and non-guarantor subsidiaries. Inter-company dividends received and paid are now reported on a gross basis within the operating activities and the financing activities sections of the cash flow statement respectively. Prior year information has been adjusted to conform to this presentation.

~~Condensed Consolidating Statement of Operations~~

Three months ended September 30, 2007

Willis
Group
Holdings
The Other
Guarantors
The
Issuer
Other
Eliminations
Consolidated

(millions)

REVENUES
Commissions and fees $ — $ — $ — $ 549 $ — $ 549
Investment income — — 6 48 (29 ) 25

Total revenues — — 6 597 (29 ) 574

EXPENSES
Salaries and benefits — — — (357 ) 5 (352 )
Other operating expenses (1 ) 7 7 (145 ) 16 (116 )
Depreciation expense and amortization of intangible assets — — (4 ) (11 ) (1 ) (16 )
Gain on disposal of London headquarters — — — 3 — 3

Total expenses (1 ) 7 3 (510 ) 20 (481 )

OPERATING (LOSS) INCOME (1 ) 7 9 87 (9 ) 93
Investment income from Group undertakings 425 2,424 119 90 (3,058 ) —
Interest expense (2 ) (51 ) (16 ) (40 ) 92 (17 )

INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST 422 2,380 112 137 (2,975 ) 76
INCOME TAXES — (6 ) 1 (44 ) 37 (12 )

INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST 422 2,374 113 93 (2,938 ) 64
INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX — — — 5 — 5
MINORITY INTEREST, NET OF TAX — — — — (2 ) (2 )
EQUITY ACCOUNT FOR SUBSIDIARIES (355 ) (2,903 ) (134 ) — 3,392 —

NET INCOME (LOSS) $ 67 $ (529 ) $ (21 ) $ 98 $ 452 $ 67

~~Condensed Consolidating Statement of Operations~~WILLIS GROUP HOLDINGS LIMITED

Three months ended September 30, 2006

Willis
Group
Holdings
The Other
Guarantors
The
Issuer
Other
Eliminations
Consolidated

(millions)

REVENUES
Commissions and fees $ — $ — $ — $ 519 $ — $ 519
Investment income — — 4 36 (16 ) 24

Total revenues — — 4 555 (16 ) 543

EXPENSES
Salaries and benefits — — — (386 ) 3 (383 )
Other operating expenses — 3 (3 ) (144 ) 6 (138 )
Depreciation expense and amortization of intangible assets — — (3 ) (12 ) (2 ) (17 )
Gain on disposal of London headquarters — — — 99 — 99
Net loss on disposal of operations — — — (7 ) — (7 )

Total expenses — 3 (6 ) (450 ) 7 (446 )

OPERATING INCOME (LOSS) — 3 (2 ) 105 (9 ) 97
Investment income from Group undertakings — 53 4 23 (80 ) —
Interest expense (1 ) (48 ) (16 ) (30 ) 86 (9 )

(LOSS) INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST (1 ) 8 (14 ) 98 (3 ) 88
INCOME TAXES — 10 7 (31 ) 11 (3 )

(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST (1 ) 18 (7 ) 67 8 85
INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX — — — 6 — 6
MINORITY INTEREST, NET OF TAX — — — — (2 ) (2 )
EQUITY ACCOUNT FOR SUBSIDIARIES 90 59 20 — (169 ) —

NET INCOME $ 89 $ 77 $ 13 $ 73 $ (163 ) $ 89

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

12. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Statement of Operations

			Nine months ended September 30, 2007																				Three months ended March 31, 2008
			Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated					Willis Group Holdings		The Other Guarantors			The Issuer			Other			Eliminations			Consolidated
			(millions)																				(millions)
REVENUES	REVENUES																				REVENUES
																					Commissions and fees		$	—	$	—		$	—		$	772		$	—		$	772
	Commissions and fees		$	—		$	—		$	—		$	1,867		$	—		$	1,867		Investment income			—		—			5			76			(59	)		22
	Investment income			—			—			16			132			(76	)		72		Other income			—		—			—			1			—			1

	Total revenues			—			—			16			1,999			(76	)		1,939			Total revenues		—		—			5			849			(59	)		795

EXPENSES	EXPENSES																				EXPENSES
	Salaries and benefits			—			—			—			(1,102	)		13			(1,089	)	Salaries and benefits			—		—			—			(414	)		3			(411	)
	Other operating expenses			(1	)		19			1			(389	)		29			(341	)	Other operating expenses			—		3			(5	)		(152	)		5			(149	)
	Depreciation expense and amortization of intangible assets			—			—			(7	)		(34	)		(8	)		(49	)	Depreciation expense and amortization of intangible assets			—		—			(2	)		(11	)		(3	)		(16	)
	Gain on disposal of London headquarters			—			—			—			9			—			9		Gain on disposal of London headquarters			—		—			—			6			—			6

		Total expenses		(1	)		19			(6	)		(1,516	)		34			(1,470	)		Total expenses		—		3			(7	)		(571	)		5			(570	)

OPERATING (LOSS) INCOME				(1	)		19			10			483			(42	)		469
OPERATING INCOME (LOSS)																					OPERATING INCOME (LOSS)			—		3			(2	)		278			(54	)		225
	Investment income from Group undertakings			552			2,542			222			155			(3,471	)		—		Investment income from Group undertakings			83		87			50			9			(229	)		—
	Interest expense			(7	)		(150	)		(60	)		(123	)		292			(48	)	Interest expense			—		(50	)		(19	)		(86	)		139			(16	)

INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST	INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			544			2,411			172			515			(3,221	)		421		INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			83		40			29			201			(144	)		209
INCOME TAXES				—			(12	)		16			(138	)		18			(116	)
Income taxes																					Income taxes			—		(4	)		7			(48	)		(15	)		(60	)

INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST	INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			544			2,399			188			377			(3,203	)		305		INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			83		36			36			153			(159	)		149
INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX	INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX			—			—			—			20			—			20		INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX			—		—			—			26			—			26
MINORITY INTEREST, NET OF TAX	MINORITY INTEREST, NET OF TAX			—			—			—			(2	)		(9	)		(11	)	MINORITY INTEREST, NET OF TAX			—		—			—			(3	)		(6	)		(9	)
EQUITY ACCOUNT FOR SUBSIDIARIES	EQUITY ACCOUNT FOR SUBSIDIARIES			(230	)		(3,152	)		(260	)		—			3,642			—		EQUITY ACCOUNT FOR SUBSIDIARIES			83		37			(53	)		—			(67	)		—

NET INCOME (LOSS)	NET INCOME (LOSS)		$	314		$	(753	)	$	(72	)	$	395		$	430		$	314		NET INCOME (LOSS)		$	166	$	73		$	(17	)	$	176		$	(232	)	$	166

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

12. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Statement of Operations

			Nine months ended September 30, 2006																				Three months ended March 31, 2007
			Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated					Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated
			(millions)																				(millions)
REVENUES	REVENUES																				REVENUES
																					Commissions and fees		$	—		$	—		$	—		$	711		$	—		$	711
	Commissions and fees		$	—		$	—		$	—		$	1,743		$	—		$	1,743		Investment income			—			—			5			40			(21	)		24
	Investment income			—			—			11			88			(35	)		64		Other income			—			—			—			4			—			4

		Total revenues		—			—			11			1,831			(35	)		1,807			Total revenues		—			—			5			755			(21	)		739

EXPENSES	EXPENSES																				EXPENSES
	Salaries and benefits			—			—			—			(1,092	)		10			(1,082	)	Salaries and benefits			—			—			—			(385	)		8			(377	)
	Other operating expenses			(1	)		23			(3	)		(413	)		43			(351	)	Other operating expenses			—			2			(3	)		(115	)		5			(111	)
	Depreciation expense and amortization of intangible assets			—			—			(5	)		(33	)		(8	)		(46	)	Depreciation expense and amortization of intangible assets			—			—			(1	)		(12	)		(3	)		(16	)
	Gain on disposal of London headquarters			—			—			—			99			—			99		Gain on disposal of London headquarters			—			—			—			3			—			3
	Net loss on disposal of operations			—			—			—			(7	)		—			(7	)
																						Total expenses		—			2			(4	)		(509	)		10			(501	)
		Total expenses		(1	)		23			(8	)		(1,446	)		45			(1,387	)

OPERATING (LOSS) INCOME				(1	)		23			3			385			10			420
OPERATING INCOME																					OPERATING INCOME			—			2			1			246			(11	)		238
	Investment income from Group undertakings			—			162			49			89			(300	)		—		Investment income from Group undertakings			127			62			97			35			(321	)		—
	Interest expense			(1	)		(145	)		(46	)		(79	)		244			(27	)	Interest expense			(1	)		(48	)		(18	)		(41	)		96			(12	)

(LOSS) INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST				(2	)		40			6			395			(46	)		393
INCOME TAXES				—			(6	)		17			(115	)		3			(101	)
INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST																					INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			126			16			80			240			(236	)		226
Income taxes																					Income taxes			—			4			7			(54	)		(25	)		(68	)

(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST				(2	)		34			23			280			(43	)		292
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST																					INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			126			20			87			186			(261	)		158
INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX	INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX			—			—			—			20			—			20		INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX			—			—			—			19			—			19
MINORITY INTEREST, NET OF TAX	MINORITY INTEREST, NET OF TAX			—			—			—			(2	)		(9	)		(11	)	MINORITY INTEREST, NET OF TAX			—			—			—			(2	)		(6	)		(8	)
EQUITY ACCOUNT FOR SUBSIDIARIES	EQUITY ACCOUNT FOR SUBSIDIARIES			303			243			(17	)		—			(529	)		—		EQUITY ACCOUNT FOR SUBSIDIARIES			43			(120	)		(106	)		—			183			—

NET INCOME			$	301		$	277		$	6		$	298		$	(581	)	$	301
NET INCOME (LOSS)																					NET INCOME (LOSS)		$	169		$	(100	)	$	(19	)	$	203		$	(84	)	$	169

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

12. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Balance Sheet

			As at September 30, 2007																As at March 31, 2008
			Willis Group Holdings		The Other Guarantors		The Issuer			Other		Eliminations			Consolidated				Willis Group Holdings		The Other Guarantors		The Issuer			Other			Eliminations			Consolidated
			(millions)																(millions)
ASSETS	ASSETS																ASSETS
																	Cash and cash equivalents		$	—	$	—	$	—		$	195		$	—		$	195
	Cash and cash equivalents		$	1	$	—	$	62		$	147	$	—		$	210	Fiduciary funds—restricted			—		—		96			1,696			—			1,792
	Fiduciary funds—restricted			—		—		62			1,628		—			1,690	Short-term investments			—		—		—			38			—			38
	Accounts receivable			129		2,888		3,826			10,296		(8,535	)		8,604	Accounts receivable			483		2,693		4,224			11,863			(9,172	)		10,091
	Fixed assets			—		—		26			253		—			279	Fixed assets			—		—		26			319			—			345
	Goodwill and other intangible assets			—		—		—			276		1,451			1,727	Goodwill			—		—		—			151			1,503			1,654
	Investments in associates			—		—		—			241		(46	)		195	Other intangible assets			—		—		—			74			—			74
	Net deferred tax assets			—		—		1			103		(59	)		45	Investments in associates			—		—		—			333			(73	)		260
	Pension benefits asset			—		—		—			313		—			313	Pension benefits asset			—		—		—			451			—			451
	Other assets			1		92		28			187		21			329	Other assets			1		100		8			299			(82	)		326
	Equity accounted subsidiaries			1,408		2,055		720			2,636		(6,819	)		—	Equity accounted subsidiaries			1,039		2,331		708			2,686			(6,764	)		—

TOTAL ASSETS	TOTAL ASSETS		$	1,539	$	5,035	$	4,725		$	16,080	$	(13,987	)	$	13,392	TOTAL ASSETS		$	1,523	$	5,124	$	5,062		$	18,105		$	(14,588	)	$	15,226

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY																LIABILITIES AND STOCKHOLDERS' EQUITY
	Accounts payable		$	203	$	3,593	$	3,516		$	11,020	$	(8,521	)	$	9,811	Accounts payable		$	45	$	4,086	$	3,526		$	12,823		$	(9,200	)	$	11,280
	Deferred revenue and accrued expenses			1		2		2			359		(13	)		351	Deferred revenue and accrued expenses			1		—		—			305			(15	)		291
	Income taxes payable			—		123		—			39		(59	)		103	Net deferred tax liabilities			—		—		(2	)		(41	)		56			13
	Long-term debt			—		—		1,200			—		—			1,200	Income taxes payable			—		98		—			44			(60	)		82
	Liability for pension benefits			—		—		—			20		—			20	Long-term debt			—		—		1,415			—			—			1,415
	Other liabilities			38		—		29			454		49			570	Liability for pension benefits			—		—		—			45			—			45
																	Other liabilities			40		—		42			471			52			605
		Total liabilities		242		3,718		4,747			11,892		(8,544	)		12,055
																		Total liabilities		86		4,184		4,981			13,647			(9,167	)		13,731
	MINORITY INTEREST			—		—		—			3		37			40
	STOCKHOLDERS' EQUITY			1,297		1,317		(22	)		4,185		(5,480	)		1,297
MINORITY INTEREST																	MINORITY INTEREST			—		—		—			6			52			58
STOCKHOLDERS' EQUITY																	STOCKHOLDERS' EQUITY			1,437		940		81			4,452			(5,473	)		1,437

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,539	$	5,035	$	4,725		$	16,080	$	(13,987	)	$	13,392	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,523	$	5,124	$	5,062		$	18,105		$	(14,588	)	$	15,226

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

12. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Balance Sheet

			As at December 31, 2006																As at December 31, 2007
			Willis Group Holdings		The Other Guarantors		The Issuer			Other		Eliminations			Consolidated				Willis Group Holdings		The Other Guarantors		The Issuer		Other			Eliminations			Consolidated
			(millions)																(millions)
ASSETS	ASSETS																ASSETS
																	Cash and cash equivalents		$	1	$	—	$	73	$	126		$	—		$	200
	Cash and cash equivalents		$	2	$	65	$	46		$	175	$	—		$	288	Fiduciary funds—restricted			—		—		37		1,483			—			1,520
	Fiduciary funds—restricted			—		—		72			1,700		—			1,772	Short-term investments			—		—		—		40			—			40
	Accounts receivable			15		2,534		4,056			10,529		(8,378	)		8,756	Accounts receivable			494		2,703		4,074		9,699			(8,729	)		8,241
	Fixed assets			—		—		20			147		—			167	Fixed assets			—		—		26		289			—			315
	Goodwill and other intangible assets			—		—		—			258		1,398			1,656	Goodwill			—		—		—		186			1,462			1,648
	Investments in associates			—		—		—			209		(36	)		173	Other intangible assets			—		—		—		78			—			78
	Net deferred tax assets			—		—		5			126		(59	)		72	Investments in associates			—		—		—		241			(48	)		193
	Pension benefits asset			—		—		—			166		—			166	Pension benefits asset			—		—		—		404			—			404
	Other assets			—		54		1			393		(120	)		328	Other assets			2		56		4		199			48			309
	Equity accounted subsidiaries			1,543		2,275		864			2,534		(7,216	)		—	Equity accounted subsidiaries			927		2,124		700		2,620			(6,371	)		—

TOTAL ASSETS	TOTAL ASSETS		$	1,560	$	4,928	$	5,064		$	16,237	$	(14,411	)	$	13,378	TOTAL ASSETS		$	1,424	$	4,883	$	4,914	$	15,365		$	(13,638	)	$	12,948

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY																LIABILITIES AND STOCKHOLDERS' EQUITY
	Accounts payable		$	68	$	3,295	$	4,286		$	10,778	$	(8,365	)	$	10,062	Accounts payable		$	37	$	4,030	$	3,570	$	10,339		$	(8,711	)	$	9,265
	Deferred revenue and accrued expenses			—		1		2			419		8			430	Deferred revenue and accrued expenses			1		2		3		378			4			388
	Income taxes payable			—		132		1			27		(106	)		54	Net deferred tax liabilities			—		—		1		(55	)		59			5
	Long-term debt			—		—		800			—		—			800	Income taxes payable			—		50		—		1			(8	)		43
	Liability for pension benefits			—		—		—			34		—			34	Long-term debt			—		—		1,250		—			—			1,250
	Other liabilities			38		—		52			390		22			502	Liability for pension benefits			—		—		—		43			—			43
																	Other liabilities			39		—		51		417			52			559
		Total liabilities		106		3,428		5,141			11,648		(8,441	)		11,882
																		Total liabilities		77		4,082		4,875		11,123			(8,604	)		11,553

MINORITY INTEREST	MINORITY INTEREST			—		—		—			2		40			42	MINORITY INTEREST			—		—		—		3			45			48
STOCKHOLDERS' EQUITY	STOCKHOLDERS' EQUITY			1,454		1,500		(77	)		4,587		(6,010	)		1,454	STOCKHOLDERS' EQUITY			1,347		801		39		4,239			(5,079	)		1,347

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,560	$	4,928	$	5,064		$	16,237	$	(14,411	)	$	13,378	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,424	$	4,883	$	4,914	$	15,365		$	(13,638	)	$	12,948

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

12. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Statement of Cash Flows

			Nine months ended September 30, 2007																				Three months ended March 31, 2008
			Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated					Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated
			(millions)																				(millions)
NET CASH PROVIDED BY OPERATING ACTIVITIES			$	544		$	2,413		$	139		$	184		$	(3,047	)	$	233
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES																					NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	83		$	39		$	(19	)	$	17		$	(111	)	$	9

CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES																				CASH FLOWS FROM INVESTING ACTIVITIES
	Additions to fixed assets			—			—			(10	)		(125	)		—			(135	)	Proceeds on disposal of fixed and other intangible assets			—			—			—			1			—			1
	Acquisitions of subsidiaries, net of cash acquired			(36	)		—			—			(40	)		—			(76	)	Additions to fixed assets			—			—			(2	)		(42	)		—			(44	)
	Investments in associates			—			—			—			(1	)		—			(1	)	Acquisitions of subsidiaries, net of cash acquired			—			—			—			(5	)		—			(5	)
	Proceeds on disposal of fixed and intangible assets			—			—			—			21			—			21		Investments in associates			—			—			—			(31	)		—			(31	)
	Other			—			—			—			12			—			12		Proceeds on disposal of short-term investments			—			—			—			3			—			3

		Net cash used in investing activities		(36	)		—			(10	)		(133	)		—			(179	)		Net cash used in investing activities		—			—			(2	)		(74	)		—			(76	)

CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES																				CASH FLOWS FROM FINANCING ACTIVITIES
	Repayment of debt			—			—			(200	)		—			—			(200	)	Proceeds from draw down of revolving credit facility			—			—			165			—			—			165
	Senior notes issued, net of debt issuance costs			—			—			594			—			—			594		Repurchase of shares			(75	)		—			—			—			—			(75	)
	Repurchase of shares			(457	)		—			—			—			—			(457	)	Amounts owed by and to Group undertakings			26			65			(217	)		126			—			—
	Amounts owed by and to Group undertakings			38			394			(507	)		75			—			—		Excess tax benefits from share-based payment arrangements			—			—			—			2			—			2
	Proceeds from issue of shares			17			—			—			3			—			20		Dividends paid			(36	)		(104	)		—			(7	)		111			(36	)
	Excess tax benefits from share-based payment arrangements			—			—			—			8			—			8		Proceeds from issue of shares			1			—			—			—			—			1
	Dividends paid			(107	)		(2,872	)		—			(175	)		3,047			(107	)
																						Net cash (used in) provided by financing activities		(84	)		(39	)		(52	)		121			111			57
		Net cash used in financing activities		(509	)		(2,478	)		(113	)		(89	)		3,047			(142	)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(1	)		(65	)		16			(38	)		—			(88	)	(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(1	)		—			(73	)		64			—			(10	)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents			—			—			—			10			—			10		Effect of exchange rate changes on cash and cash equivalents			—			—			—			5			—			5
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			2			65			46			175			—			288		CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			1			—			73			126			—			200

CASH AND CASH EQUIVALENTS, END OF PERIOD	CASH AND CASH EQUIVALENTS, END OF PERIOD		$	1		$	—		$	62		$	147		$	—		$	210		CASH AND CASH EQUIVALENTS, END OF PERIOD		$	—		$	—		$	—		$	195		$	—		$	195

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

12. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Statement of Cash Flows

			Nine months ended September 30, 2006																				Three months ended March 31, 2007
			Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated					Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated
			(millions)																				(millions)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES			$	(2	)	$	39		$	(3	)	$	92		$	(51	)	$	75
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES																					NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	126		$	45		$	75		$	(17	)	$	(149	)	$	80

CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES																				CASH FLOWS FROM INVESTING ACTIVITIES
	Additions to fixed assets			—			—			(6	)		(29	)		—			(35	)
	Acquisitions of subsidiaries, net of cash acquired			—			—			—			(47	)		—			(47	)
	Investments in associates			—			—			—			(25	)		—			(25	)
	Net cash proceeds from disposal of operations, net of cash disposed			—			—			—			4			—			4		Additions to fixed assets			—			—			(2	)		(24	)		—			(26	)
	Proceeds on disposal of fixed and intangible assets			—			—			—			58			—			58		Acquisitions of subsidiaries, net of cash acquired			—			—			—			(5	)		—			(5	)
	Other			—			—			—			10			—			10		Proceeds on disposal of short-term investments			—			—			—			4			—			4

		Net cash used in investing activities		—			—			(6	)		(29	)		—			(35	)		Net cash used in investing activities		—			—			(2	)		(25	)		—			(27	)

CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES																				CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from drawdown on revolving credit facility			—			—			35			—			—			35		Repayments of debt			—			—			(200	)		—			—			(200	)
	Repurchase of shares			(32	)		—			—			—			—			(32	)	Senior notes issued, net of debt issuance costs			—			—			595			—			—			595
	Amounts owed by and to Group undertakings			136			(81	)		(25	)		(30	)		—			—		Repurchase of shares			(457	)		—			—			—			—			(457	)
	Proceeds from issue of shares			6			—			—			6			—			12		Amounts owed by and to Group undertakings			365			18			(478	)		95			—			—
	Excess tax benefits from share-based payment arrangements			—			—			—			8			—			8		Proceeds from issue of shares			2			—			—			2			—			4
	Dividends paid			(108	)		—			—			(51	)		51			(108	)	Excess tax benefits from share-based payment arrangements			—			—			—			5			—			5
																					Dividends paid			(36	)		(128	)		—			(21	)		149			(36	)
		Net cash provided by (used in) financing activities		2			(81	)		10			(67	)		51			(85	)
																						Net cash (used in) provided by financing activities		(126	)		(110	)		(83	)		81			149			(89	)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			—			(42	)		1			(4	)		—			(45	)	(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			—			(65	)		(10	)		39			—			(36	)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents			—			—			—			6			—			6		Effect of exchange rate changes on cash and cash equivalents			—			—			—			1			—			1
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			1			42			19			131			—			193		CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			2			65			46			175			—			288

CASH AND CASH EQUIVALENTS, END OF PERIOD	CASH AND CASH EQUIVALENTS, END OF PERIOD		$	1		$	—		$	20		$	133		$	—		$	154		CASH AND CASH EQUIVALENTS, END OF PERIOD		$	2		$	—		$	36		$	215		$	—		$	253

WILLIS GROUP HOLDINGS LIMITED

~~14.~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

13. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES

The Company filed a shelf registration on Form S-3 on June 21, 2006 under which Willis Group Holdings may offer debt securities, preferred stock, common stock and other securities. In addition, Trinity Acquisition Limited may offer debt securities ("the Subsidiary Debt Securities"). The Subsidiary Debt Securities, if issued, will be guaranteed by certain of the Company's subsidiaries.

Presented below is condensed consolidating financial information for: i) Willis Group Holdings, which will be a guarantor, on a parent company only basis; ii) the Other Guarantors, which are all ~~100%~~wholly owned subsidiaries of the parent; iii) the Issuer, Trinity Acquisition Limited; iv) Other, which are the non-guarantor subsidiaries, on a combined basis; v) Eliminations; and vi) Consolidated Company and subsidiaries. The equity method has been used for all investments in subsidiaries.

The entities included in the Other Guarantors column are TA I Limited, TA II Limited and TA III Limited.

~~Condensed Consolidating Statement of Operations~~

Three months ended September 30, 2007

Willis
Group
Holdings
The Other
Guarantors
The
Issuer
Other
Eliminations
Consolidated

(millions)

REVENUES
Commissions and fees $ — $ — $ — $ 549 $ — $ 549
Investment income — — — 54 (29 ) 25

Total revenues — — — 603 (29 ) 574

EXPENSES
Salaries and benefits — — — (357 ) 5 (352 )
Other operating expenses (1 ) — (1 ) (130 ) 16 (116 )
Depreciation expense and amortization of intangible assets — — — (15 ) (1 ) (16 )
Gain on disposal of London headquarters — — — 3 — 3

Total expenses (1 ) — (1 ) (499 ) 20 (481 )

OPERATING (LOSS) INCOME (1 ) — (1 ) 104 (9 ) 93
Investment income from Group undertakings 425 1,352 490 791 (3,058 ) —
Interest expense (2 ) (3 ) (9 ) (95 ) 92 (17 )

INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST 422 1,349 480 800 (2,975 ) 76
INCOME TAXES — 1 (13 ) (37 ) 37 (12 )

INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST 422 1,350 467 763 (2,938 ) 64
INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX — — — 5 — 5
MINORITY INTEREST, NET OF TAX — — — — (2 ) (2 )
EQUITY ACCOUNT FOR SUBSIDIARIES (355 ) (1,879 ) (978 ) — 3,212 —

NET INCOME (LOSS) $ 67 $ (529 ) $ (511 ) $ 768 $ 272 $ 67

~~Condensed Consolidating Statement of Operations~~WILLIS GROUP HOLDINGS LIMITED

Three months ended September 30, 2006

Willis
Group
Holdings
The Other
Guarantors
The
Issuer
Other
Eliminations
Consolidated

(millions)

REVENUES
Commissions and fees $ — $ — $ — $ 519 $ — $ 519
Investment income — — — 40 (16 ) 24

Total revenues — — — 559 (16 ) 543

EXPENSES
Salaries and benefits — — — (386 ) 3 (383 )
Other operating expenses — — — (144 ) 6 (138 )
Depreciation expense and amortization of intangible assets — — — (15 ) (2 ) (17 )
Gain on disposal of London headquarters — — — 99 — �� 99
Net loss on disposal of operations — — — (7 ) — (7 )

Total expenses — — — (453 ) 7 (446 )

OPERATING INCOME — — — 106 (9 ) 97
Investment income from Group undertakings — — 41 39 (80 ) —
Interest expense (1 ) — (9 ) (85 ) 86 (9 )

(LOSS) INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST (1 ) — 32 60 (3 ) 88
INCOME TAXES — — (11 ) (3 ) 11 (3 )

(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST (1 ) — 21 57 8 85
INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX — — — 6 — 6
MINORITY INTEREST, NET OF TAX — — — — (2 ) (2 )
EQUITY ACCOUNT FOR SUBSIDIARIES 90 77 62 — (229 ) —

NET INCOME $ 89 $ 77 $ 83 $ 63 $ (223 ) $ 89

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

13. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Statement of Operations

			Nine months ended September 30, 2007																				Three months ended March 31, 2008
			Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated					Willis Group Holdings		The Other Guarantors			The Issuer			Other			Eliminations			Consolidated
			(millions)																				(millions)
REVENUES	REVENUES																				REVENUES
																					Commissions and fees		$	—	$	—		$	—		$	772		$	—		$	772
	Commissions and fees		$	—		$	—		$	—		$	1,867		$	—		$	1,867		Investment income			—		—			—			81			(59	)		22
	Investment income			—			—			—			148			(76	)		72		Other income			—		—			—			1			—			1

		Total revenues		—			—			—			2,015			(76	)		1,939			Total revenues		—		—			—			854			(59	)		795

EXPENSES	EXPENSES																				EXPENSES
	Salaries and benefits			—			—			—			(1,102	)		13			(1,089	)	Salaries and benefits			—		—			—			(414	)		3			(411	)
	Other operating expenses			(1	)		—			(3	)		(366	)		29			(341	)	Other operating expenses			—		—			(1	)		(153	)		5			(149	)
	Depreciation expense and amortization of intangible assets			—			—			—			(41	)		(8	)		(49	)	Depreciation expense and amortization of intangible assets			—		—			—			(13	)		(3	)		(16	)
	Gain on disposal of London headquarters			—			—			—			9			—			9		Gain on disposal of London headquarters			—		—			—			6			—			6

		Total expenses		(1	)		—			(3	)		(1,500	)		34			(1,470	)		Total expenses		—		—			(1	)		(574	)		5			(570	)

OPERATING (LOSS) INCOME	OPERATING (LOSS) INCOME			(1	)		—			(3	)		515			(42	)		469		OPERATING (LOSS) INCOME			—		—			(1	)		280			(54	)		225
	Investment income from Group undertakings			552			1,353			570			996			(3,471	)		—		Investment income from Group undertakings			83		27			33			86			(229	)		—
	Interest expense			(7	)		(5	)		(26	)		(302	)		292			(48	)	Interest expense			—		(8	)		(3	)		(144	)		139			(16	)

INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST	INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			544			1,348			541			1,209			(3,221	)		421		INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			83		19			29			222			(144	)		209
INCOME TAXES				—			1			(30	)		(105	)		18			(116	)
Income taxes																					Income taxes			—		3			(38	)		(10	)		(15	)		(60	)

INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST	INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			544			1,349			511			1,104			(3,203	)		305		INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			83		22			(9	)		212			(159	)		149
INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX	INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX			—			—			—			20			—			20		INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX			—		—			—			26			—			26
MINORITY INTEREST, NET OF TAX	MINORITY INTEREST, NET OF TAX			—			—			—			(2	)		(9	)		(11	)	MINORITY INTEREST, NET OF TAX			—		—			—			(3	)		(6	)		(9	)
EQUITY ACCOUNT FOR SUBSIDIARIES	EQUITY ACCOUNT FOR SUBSIDIARIES			(230	)		(2,102	)	��	(1,235	)		—			3,567			—		EQUITY ACCOUNT FOR SUBSIDIARIES			83		51			87			—			(221	)		—

NET INCOME (LOSS)			$	314		$	(753	)	$	(724	)	$	1,122		$	355		$	314
NET INCOME																					NET INCOME		$	166	$	73		$	78		$	235		$	(386	)	$	166

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

13. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Statement of Operations

			Nine months ended September 30, 2006																			Three months ended March 31, 2007
			Willis Group Holdings			The Other Guarantors		The Issuer			Other			Eliminations			Consolidated					Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated
			(millions)																			(millions)
REVENUES	REVENUES																			REVENUES
																				Commissions and fees		$	—		$	—		$	—		$	711		$	—		$	711
	Commissions and fees		$	—		$	—	$	—		$	1,743		$	—		$	1,743		Investment income			—			—			—			45			(21	)		24
	Investment income			—			—		—			99			(35	)		64		Other income			—			—			—			4			—			4

		Total revenues		—			—		—			1,842			(35	)		1,807			Total revenues		—			—			—			760			(21	)		739

EXPENSES	EXPENSES																			EXPENSES
	Salaries and benefits			—			—		—			(1,092	)		10			(1,082	)	Salaries and benefits			—			—			—			(385	)		8			(377	)
	Other operating expenses			(1	)		—		(3	)		(390	)		43			(351	)	Other operating expenses			—			—			—			(116	)		5			(111	)
	Depreciation expense and amortization of intangible assets			—			—		—			(38	)		(8	)		(46	)	Depreciation expense and amortization of intangible assets			—			—			—			(13	)		(3	)		(16	)
	Gain on disposal of London headquarters			—			—		—			99			—			99		Gain on disposal of London headquarters			—			—			—			3			—			3
	Net loss on disposal of operations			—			—		—			(7	)		—			(7	)
																					Total expenses		—			—			—			(511	)		10			(501	)
		Total expenses		(1	)		—		(3	)		(1,428	)		45			(1,387	)

OPERATING (LOSS) INCOME				(1	)		—		(3	)		414			10			420
OPERATING INCOME																				OPERATING INCOME			—			—			—			249			(11	)		238
	Investment income from Group undertakings			—			—		120			180			(300	)		—		Investment income from Group undertakings			127			—			39			155			(321	)		—
	Interest expense			(1	)		—		(26	)		(244	)		244			(27	)	Interest expense			(1	)		—			(9	)		(98	)		96			(12	)

(LOSS) INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST				(2	)		—		91			350			(46	)		393
INCOME TAXES				—			—		(35	)		(69	)		3			(101	)
INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST																				INCOME BEFORE INCOME TAXES, INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			126			—			30			306			(236	)		226
Income taxes																				Income taxes			—			—			(1	)		(42	)		(25	)		(68	)

(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST				(2	)		—		56			281			(43	)		292
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST																				INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES AND MINORITY INTEREST			126			—			29			264			(261	)		158
INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX	INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX			—			—		—			20			—			20		INTEREST IN EARNINGS OF ASSOCIATES, NET OF TAX			—			—			—			19			—			19
MINORITY INTEREST, NET OF TAX	MINORITY INTEREST, NET OF TAX			—			—		—			(2	)		(9	)		(11	)	MINORITY INTEREST, NET OF TAX			—			—			—			(2	)		(6	)		(8	)
EQUITY ACCOUNT FOR SUBSIDIARIES	EQUITY ACCOUNT FOR SUBSIDIARIES			303			277		236			—			(816	)		—		EQUITY ACCOUNT FOR SUBSIDIARIES			43			(100	)		(124	)		—			181			—

NET INCOME			$	301		$	277	$	292		$	299		$	(868	)	$	301
NET INCOME (LOSS)																				NET INCOME (LOSS)		$	169		$	(100	)	$	(95	)	$	281		$	(86	)	$	169

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

13. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Balance Sheet

			As at September 30, 2007															As at March 31, 2008
			Willis Group Holdings		The Other Guarantors		The Issuer		Other		Eliminations			Consolidated				Willis Group Holdings		The Other Guarantors		The Issuer		Other			Eliminations			Consolidated
			(millions)															(millions)
ASSETS	ASSETS															ASSETS
																Cash and cash equivalents		$	—	$	—	$	—	$	195		$	—		$	195
	Cash and cash equivalents		$	1	$	—	$	—	$	209	$	—		$	210	Fiduciary funds—restricted			—		—		—		1,792			—			1,792
	Fiduciary funds—restricted			—		—		—		1,690		—			1,690	Short-term investments			—		—		—		38			—			38
	Accounts receivable			129		425		1,644		14,941		(8,535	)		8,604	Accounts receivable			483		106		1,724		16,950			(9,172	)		10,091
	Fixed assets			—		—		—		279		—			279	Fixed assets			—		—		—		345			—			345
	Goodwill and other intangible assets			—		—		—		276		1,451			1,727	Goodwill			—		—		—		151			1,503			1,654
	Investments in associates			—		—		—		241		(46	)		195	Other intangible assets			—		—		—		74			—			74
	Net deferred tax assets			—		—		—		104		(59	)		45	Investments in associates			—		—		—		333			(73	)		260
	Pension benefits asset			—		—		—		313		—			313	Pension benefits asset			—		—		—		451			—			451
	Other assets			1		1		—		306		21			329	Other assets			1		5		—		402			(82	)		326
	Equity accounted subsidiaries			1,408		1,419		731		5,445		(9,003	)		—	Equity accounted subsidiaries			1,039		1,708		1,015		5,495			(9,257	)		—

TOTAL ASSETS	TOTAL ASSETS		$	1,539	$	1,845	$	2,375	$	23,804	$	(16,171	)	$	13,392	TOTAL ASSETS		$	1,523	$	1,819	$	2,739	$	26,226		$	(17,081	)	$	15,226

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY															LIABILITIES AND STOCKHOLDERS' EQUITY
	Accounts payable		$	203	$	528	$	760	$	16,841	$	(8,521	)	$	9,811	Accounts payable		$	45	$	879	$	815	$	18,741		$	(9,200	)	$	11,280
	Deferred revenue and accrued expenses			1		—		—		363		(13	)		351	Deferred revenue and accrued expenses			1		—		—		305			(15	)		291
	Income taxes payable			—		—		68		94		(59	)		103	Net deferred tax liabilities			—		—		—		(43	)		56			13
	Long-term debt			—		—		—		1,200		—			1,200	Income taxes payable			—		—		75		67			(60	)		82
	Liability for pension benefits			—		—		—		20		—			20	Long-term debt			—		—		—		1,415			—			1,415
	Other liabilities			38		—		—		483		49			570	Liability for pension benefits			—		—		—		45			—			45
																Other liabilities			40		—		—		513			52			605
		Total liabilities		242		528		828		19,001		(8,544	)		12,055
																	Total liabilities		86		879		890		21,043			(9,167	)		13,731
	MINORITY INTEREST			—		—		—		3		37			40
	STOCKHOLDERS' EQUITY			1,297		1,317		1,547		4,800		(7,664	)		1,297	MINORITY INTEREST			—		—		—		6			52			58
																STOCKHOLDERS' EQUITY			1,437		940		1,849		5,177			(7,966	)		1,437

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,539	$	1,845	$	2,375	$	23,804	$	(16,171	)	$	13,392	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,523	$	1,819	$	2,739	$	26,226		$	(17,081	)	$	15,226

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

13. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Balance Sheet

			As at December 31, 2006															As at December 31, 2007
			Willis Group Holdings		The Other Guarantors		The Issuer		Other		Eliminations			Consolidated				Willis Group Holdings		The Other Guarantors		The Issuer		Other			Eliminations			Consolidated
			(millions)															(millions)
ASSETS	ASSETS															ASSETS
																Cash and cash equivalents		$	1	$	—	$	—	$	199		$	—		$	200
	Cash and cash equivalents		$	2	$	—	$	—	$	286	$	—		$	288	Fiduciary funds—restricted			—		—		—		1,520			—			1,520
	Fiduciary funds—restricted			—		—		—		1,772		—			1,772	Short-term investments			—		—		—		40			—			40
	Accounts receivable			15		24		1,576		15,519		(8,378	)		8,756	Accounts receivable			494		157		1,684		14,635			(8,729	)		8,241
	Fixed assets			—		—		—		167		—			167	Fixed assets			—		—		—		315			—			315
	Goodwill and other intangible assets			—		—		—		258		1,398			1,656	Goodwill			—		—		—		186			1,462			1,648
	Investments in associates			—		—		—		209		(36	)		173	Other intangible assets			—		—		—		78			—			78
	Net deferred tax assets			—		—		—		131		(59	)		72	Investments in associates			—		—		—		241			(48	)		193
	Pension benefits asset			—		—		—		166		—			166	Pension benefits asset			—		—		—		404			—			404
	Other assets			—		—		—		448		(120	)		328	Other assets			2		2		—		257			48			309
	Equity accounted subsidiaries			1,543		1,498		897		5,337		(9,275	)		—	Equity accounted subsidiaries			927		1,486		773		5,428			(8,614	)		—

TOTAL ASSETS	TOTAL ASSETS		$	1,560	$	1,522	$	2,473	$	24,293	$	(16,470	)	$	13,378	TOTAL ASSETS		$	1,424	$	1,645	$	2,457	$	23,303		$	(15,881	)	$	12,948

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY															LIABILITIES AND STOCKHOLDERS' EQUITY
	Accounts payable		$	68	$	22	$	782	$	17,555	$	(8,365	)	$	10,062	Accounts payable		$	37	$	844	$	806	$	16,289		$	(8,711	)	$	9,265
	Deferred revenue and accrued expenses			—		—		—		422		8			430	Deferred revenue and accrued expenses			1		—		—		383			4			388
	Income taxes payable			—		—		99		61		(106	)		54	Net deferred tax liabilities			—		—		—		(54	)		59			5
	Long-term debt			—		—		—		800		—			800	Income taxes payable			—		—		36		15			(8	)		43
	Liability for pension benefits			—		—		—		34		—			34	Long-term debt			—		—		—		1,250			—			1,250
	Other liabilities			38		—		—		442		22			502	Liability for pension benefits			—		—		—		43			—			43
																Other liabilities			39		—		—		468			52			559
		Total liabilities		106		22		881		19,314		(8,441	)		11,882
																	Total liabilities		77		844		842		18,394			(8,604	)		11,553
	MINORITY INTEREST			—		—		—		2		40			42
	STOCKHOLDERS' EQUITY			1,454		1,500		1,592		4,977		(8,069	)		1,454	MINORITY INTEREST			—		—		—		3			45			48
																STOCKHOLDERS' EQUITY			1,347		801		1,615		4,906			(7,322	)		1,347
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,560	$	1,522	$	2,473	$	24,293	$	(16,470	)	$	13,378
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY																TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,424	$	1,645	$	2,457	$	23,303		$	(15,881	)	$	12,948

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

13. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Statement of Cash Flows

			Nine months ended September 30, 2007																				Three months ended March 31, 2008
			Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated					Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated
			(millions)																				(millions)
NET CASH PROVIDED BY OPERATING ACTIVITIES			$	544		$	1,349		$	540		$	847		$	(3,047	)	$	233
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES																					NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	83		$	20		$	30		$	(13	)	$	(111	)	$	9

CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES																				CASH FLOWS FROM INVESTING ACTIVITIES
	Additions to fixed assets			—			—			—			(135	)		—			(135	)	Proceeds on disposal of fixed and other intangible assets			—			—			—			1			—			1
	Acquisitions of subsidiaries, net of cash acquired			(36	)		—			—			(40	)		—			(76	)	Additions to fixed assets			—			—			—			(44	)		—			(44	)
	Investments in associates			—			—			—			(1	)		—			(1	)	Acquisitions of subsidiaries, net of cash acquired			—			—			—			(5	)		—			(5	)
	Proceeds on disposal of fixed and intangible assets			—			—			—			21			—			21		Investments in associates			—			—			—			(31	)		—			(31	)
	Other			—			—			—			12			—			12		Proceeds on disposal of short-term investments			—			—			—			3			—			3

		Net cash used in investing activities		(36	)		—			—			(143	)		—			(179	)		Net cash used in investing activities		—			—			—			(76	)		—			(76	)

CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES																				CASH FLOWS FROM FINANCING ACTIVITIES
	Repayment of debt			—			—			—			(200	)		—			(200	)	Proceeds from draw down of revolving credit facility			—			—			—			165			—			165
	Senior notes issued, net of debt issuance costs			—			—			—			594			—			594		Repurchase of shares			(75	)		—			—			—			—			(75	)
	Repurchase of shares			(457	)		—			—			—			—			(457	)	Amounts owed by and to Group undertakings			26			84			(30	)		(80	)		—			—
	Amounts owed by and to Group undertakings			38			103			(90	)		(51	)		—			—		Excess tax benefits from share-based payment arrangements			—			—			—			2			—			2
	Proceeds from issue of shares			17			—			—			3			—			20		Dividends paid			(36	)		(104	)		—			(7	)		111			(36	)
	Excess tax benefits from share-based payment arrangements			—			—			—			8			—			8		Proceeds from issue of shares			1			—			—			—			—			1
	Dividends paid			(107	)		(1,452	)		(450	)		(1,145	)		3,047			(107	)
																						Net cash (used in) provided by financing activities		(84	)		(20	)		(30	)		80			111			57
		Net cash used in financing activities		(509	)		(1,349	)		(540	)		(791	)		3,047			(142	)

DECREASE IN CASH AND CASH EQUIVALENTS	DECREASE IN CASH AND CASH EQUIVALENTS			(1	)		—			—			(87	)		—			(88	)	DECREASE IN CASH AND CASH EQUIVALENTS			(1	)		—			—			(9	)		—			(10	)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents			—			—			—			10			—			10		Effect of exchange rate changes on cash and cash equivalents			—			—			—			5			—			5
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			2			—			—			286			—			288		CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			1			—			—			199			—			200

CASH AND CASH EQUIVALENTS, END OF PERIOD	CASH AND CASH EQUIVALENTS, END OF PERIOD		$	1		$	—		$	—		$	209		$	—		$	210		CASH AND CASH EQUIVALENTS, END OF PERIOD		$	—		$	—		$	—		$	195		$	—		$	195

WILLIS GROUP HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

13. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Statement of Cash Flows

			Nine months ended September 30, 2006																			Three months ended March 31, 2007
			Willis Group Holdings			The Other Guarantors		The Issuer			Other			Eliminations			Consolidated					Willis Group Holdings			The Other Guarantors			The Issuer			Other			Eliminations			Consolidated
			(millions)																			(millions)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES			$	(2	)	$	—	$	90		$	38		$	(51	)	$	75
NET CASH PROVIDED BY OPERATING ACTIVITIES																				NET CASH PROVIDED BY OPERATING ACTIVITIES		$	126		$	—		$	60		$	43		$	(149	)	$	80

CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES																			CASH FLOWS FROM INVESTING ACTIVITIES
	Additions to fixed assets			—			—		—			(35	)		—			(35	)
	Acquisitions of subsidiaries, net of cash acquired			—			—		—			(47	)		—			(47	)
	Investment in associates			—			—		—			(25	)		—			(25	)
	Net cash proceeds from disposal of operations, net of cash disposed			—			—		—			4			—			4		Additions to fixed assets			—			—			—			(26	)		—			(26	)
	Proceeds on disposal of fixed and intangible assets			—			—		—			58			—			58		Acquisitions of subsidiaries, net of cash acquired			—			—			—			(5	)		—			(5	)
	Other			—			—		—			10			—			10		Proceeds on disposal of short-term investments			—			—			—			4			—			4

		Net cash used in investing activities		—			—		—			(35	)		—			(35	)		Net cash used in investing activities		—			—			—			(27	)		—			(27	)

CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES																			CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from drawdown on revolving credit facility			—			—		—			35			—			35		Repayments of debt			—			—			—			(200	)		—			(200	)
	Repurchase of shares			(32	)		—		—			—			—			(32	)	Senior notes issued, net of debt issuance costs			—			—			—			595			—			595
	Amounts owed by and to Group undertakings			136			—		(93	)		(43	)		—			—		Repurchase of shares			(457	)		—			—			—			—			(457	)
	Proceeds from issue of shares			6			—		—			6			—			12		Amounts owed by and to Group undertakings			365			128			(60	)		(433	)		—			—
	Excess tax benefits from share-based payment arrangements			—			—		—			8			—			8		Proceeds from issue of shares			2			—			—			2			—			4
	Dividends paid			(108	)		—		—			(51	)		51			(108	)	Excess tax benefits from share-based payment arrangements			—			—			—			5			—			5
																				Dividends paid			(36	)		(128	)		—			(21	)		149			(36	)
		Net cash provided by (used in) financing activities		2			—		(93	)		(45	)		51			(85	)
																					Net cash used in financing activities		(126	)		—			(60	)		(52	)		149			(89	)

DECREASE IN CASH AND CASH EQUIVALENTS	DECREASE IN CASH AND CASH EQUIVALENTS			—			—		(3	)		(42	)		—			(45	)	DECREASE IN CASH AND CASH EQUIVALENTS			—			—			—			(36	)		—			(36	)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents			—			—		—			6			—			6		Effect of exchange rate changes on cash and cash equivalents			—			—			—			1			—			1
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			1			—		3			189			—			193		CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			2			—			—			286			—			288

CASH AND CASH EQUIVALENTS, END OF PERIOD	CASH AND CASH EQUIVALENTS, END OF PERIOD		$	1		$	—	$	—		$	153		$	—		$	154		CASH AND CASH EQUIVALENTS, END OF PERIOD		$	2		$	—		$	—		$	251		$	—		$	253

Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations

EXECUTIVE SUMMARY

This discussion includes references to non-GAAP financial measures as defined in Regulation G of SEC rules. We present such non-GAAP financial measures, as we believe such information is of interest to the investment community because it provides additional meaningful methods of evaluating certain aspects of the Company's operating performance from period to period on a basis that may not be otherwise apparent on a GAAP basis. These financial measures should be viewed in addition to, not in lieu of, the Company's condensed consolidated financial

statements ~~of operations~~ for the three ~~and nine~~ months ended ~~September 30, 2007.~~March 31, 2008.

This discussion includes forward-looking statements, including under the heading "Summary—2008 Expense Review" and "—Financial Targets". Please see "Information Concerning Forward-Looking Statements" for certain cautionary information regarding forward-looking statements and a list of factors that could cause actual results to differ materially from those predicted in the forward-looking statements.

SUMMARY

Overview

The difficult market conditions in ~~first half~~ 2007 have continued into ~~the third~~first quarter ~~2007~~2008 with further rate decreases across most sectors of the market in which we operate. We believe premium rate declines ~~are~~were between 1510 to 2040 percent in the United States and 5 to 20 percent ~~elsewhere.~~elsewhere during first quarter 2008.

In the reinsurance market, we ~~have seen~~continue to see a combination of declining rates ~~a reduction in amounts reinsured~~ and other changes, including recent changes in Florida legislation which significantly increased capacity and reduced prices. Although premium rates have declined by between 5 and 10 percent on average, the most significant impact on reinsurance growth has been higherhigh retentions at the primary ~~underwriters. We expect the reinsurance market to continue to soften in light of favorable loss trends and the strong reserves and returns on equities achieved by the insurance companies.~~underwriter level.

Despite these difficult trading conditions, we reported 43 percent organic commissions and ~~fee~~fees growth ~~for the three and nine months ended September 30, 2007 and a 1 percentage point increase in~~spread across our operating margin for the nine months ended September 30, 2007 compared with 2006. We continue to execute on our Shaping our Future strategy to deliver productivity improvements and profitable growth. This has contributed to improved margins in our North America and International retail businesses and mitigated the margin decrease in our Global operations which reflected investments made in analytics and capital market capabilities in our reinsurance operations and an adverse impact from foreign exchange.

~~Results for third quarter 2007~~

~~Total revenues at $574 million for third quarter 2007 were $31 million, or 6 percent, higher than in 2006 mainly reflecting strong net new business in International.~~businesses.

Operating margin for first quarter 2008 was 1628 percent, 4 percentage points lower than in 2007 with the decrease primarily attributable to a $33 million charge for ~~third quarter 2007 compared with 18 percent for the same period in 2006. The year on year movement in third quarter margin reflected:~~

•: ~~the gain on disposal of~~ our ~~London headquarters in 2006 (equivalent to approximately a 18 percentage point reduction in margin);~~
•: ~~the $84 million expenditure in third quarter 2006 to launch our Shaping our Future strategy (equivalent to approximately a 15 percentage point increase in margin);~~
•: ~~the benefit of 2007 cost savings relating to our Shaping our Future strategy, a lower pension charge and good~~2008 expense ~~control; and~~
•: ~~an adverse year on year impact from foreign currency translation (equivalent to approximately a 1 percentage point decrease in margin).~~

review, discussed below, partly mitigated by improved productivity.

Results

Net income ~~for third~~in first quarter ~~2007~~2008 was ~~$67~~$166 million, or ~~$0.46~~$1.16 per diluted share, compared with ~~$89~~$169 million, or ~~$0.56~~$1.10 per diluted share, in ~~2006. Net income in 2006 was significantly affected~~2007 as the benefits of increased revenues, a lower tax rate and an increased contribution from associates were more than offset by the ~~$91 million post-tax gain on~~impact of the ~~disposal of our London headquarters (equivalent to $0.57 per diluted~~

~~share)~~lower margin and ~~the $59 million post-tax expenditure to launch our Shaping our Future strategy (equivalent to $0.37 per diluted share).~~increased interest expense.

~~Results for the nine months ended September 30, 2007~~

~~Net income for the nine months ended September 30, 2007 was $314 million, or $2.12 per diluted share, compared with $301 million, or $1.89 per diluted share, in 2006.~~ Total revenues at ~~$1,939~~$795 million were ~~$132~~$56 million, or 78 percent, higher than in ~~2006~~first quarter 2007 of which 5 percent was attributable to foreign currency translation. Organic revenue growth was 3 percent reflecting net new business ~~largely arising in our International~~growth of 4 percent and ~~North America operations.~~a 1 percent negative impact from declining rates and other market factors.

Operating margin at 28 percent was 4 percentage points lower than in first quarter 2007 with the decrease mainly reflecting:

•

the $33 million charge for the ~~nine months ended September 30, 2007 was 24 percent compared with 23 percent~~2008 expense review discussed below, equivalent to approximately 4 percentage points;

•

increased property costs relating to our new buildings; and

•

further investments in ~~2006.~~

Shaping our Future initiatives;

partly offset by

•: increased productivity, with revenues per full time employee ("FTE") increasing to $188,000 on a trailing 12 month basis compared with $186,000 for full year 2007, equivalent to approximately 1 percentage point; and
•: good cost control, the realization of savings from last year's Shaping our Future initiatives, and lower pension costs.

2008 expense review
~~In the nine months ended September 30, 2007 we have continued to execute on the~~Our Shaping our Future strategy ~~that~~is a series of initiatives designed to deliver profitable growth. As previously announced, we ~~initiated in 2006. This strategy aims to drive profitable growth over the next few years. Achievements to date include:~~have decided:
•
~~the delivery~~to invest in further key hires and initiatives in 2008 and 2009;
and, in order to fund a portion of our Eclipse technology, the new end-to-end process for our London Market businesses, with benefits to date in excess of $6 million. This was successfully implemented in Aerospace, our pilot division, at the beginning of April 2007 and will be rolled out to our Global Markets and Financial Institutions businesses by the end of 2007;

these initiatives,
•
~~realized benefits~~to conduct a thorough review in 2008 of ~~$10~~all businesses to identify additional opportunities to rationalize our expense base.
In first quarter 2008, we incurred a pre-tax charge of $33 million ~~from our International efficiency programs;~~($23 million net of tax, equivalent to $0.16 per diluted share) in connection with this expense review comprising:
•
$15 million of severance costs relating to approximately 150 positions which have been, or are in the process of being, eliminated; and

•
~~a $15~~$18 million of other operating expenses, primarily relating to property and systems rationalization costs.
We expect that we will incur additional pre-tax charges in the remainder of 2008 and currently estimate that total charges for the 2008 expense review will be approximately $65 to $85 million.
We anticipate that these charges will lead to cost savings in the range of $25 million to $35 million in 2008, rising in 2009. These savings are in addition to the anticipated annualized net benefit from the 2006 Shaping our Future charges of $101 million. The net benefit from these charges is currently estimated to ~~date from our client profitability program. This program is now being rolled out to our retail network, including North America, Australia~~be approximately $30 million in 2008 and ~~our major European operations.~~
$45 million by 2009.
~~Future outlook~~Financial targets
~~For full year 2007,~~Excluding the charge for the 2008 expense review, we ~~expect:~~
•
~~that there will be continued organic growth in commissions and fees;~~

•
continue to ~~expand our~~expect an adjusted operating margin (operating margin excluding net gains and losses on disposals and other one-time items) toof approximately 24 percent ~~compared with 23~~in 2008, as underlying business growth and cost savings are reinvested. We also continue to expect adjusted operating margins to expand in 2009 to 26 percent ~~for full year 2006.~~ and in 2010 to reach our previously stated goal of 28 percent or more.
In ~~particular,~~addition, we also expect ~~the 2006 expenditure on Shaping our Future initiatives~~ to ~~generate a benefit, net of incremental real estate costs relating to our new US and UK headquarters buildings, of approximately $20 million in 2007;~~

•
~~that, given current exchange rates and the foreign exchange gains we recognized last year, there will be a negative impact on 2007 earnings compared with 2006 due to foreign exchange;~~

•
that our underlying tax rate, excluding the tax effects of the disposal of our London headquarters, and share-based compensation, and the release of tax provisions relating to the resolution of prior period tax positions, will be approximately 31 percent on the assumption that there is no material change in the geographical mix of our profits; and

•
~~our~~deliver adjusted diluted earnings per ~~diluted~~ share ~~(earnings~~(diluted earnings per ~~diluted~~ share excluding net gains and losses on disposals and other one-time items) ~~for full year 2007 will be~~ in the range of ~~$2.60 to $2.70.~~
~~We announced at our Investor Day on November 2, 2007 that, following the tangible results of our Shaping our Future strategy, we expect to invest further in key profitable growth initiatives in 2008.~~

~~Therefore, we expect adjusted operating margin to remain at 24 percent~~$2.85-$2.95 in 2008, ~~and then expand~~$3.30-$3.40 in 2009, and ~~2010 to reach our previously stated goal of 28 percent or more for full year 2010.~~
We also announced our long-term financial goals at our Investor Day relating to adjusted earnings per diluted share: specifically we announced our goal to deliver adjusted earnings per diluted share in the range of $2.85 to $2.95 in 2008, $3.30 to $3.40 in 2009, and $4.00 to $4.10$4.00-$4.10 in 2010. These figures ~~assume $0.15~~include minimal accretion in 2008 from share buybacks increasing to $0.30 by ~~2010 as a result of share buybacks.~~2010.
Acquisitions
~~In second quarter 2007,~~On January 2, 2008 we ~~acquired Chicago-based InsuranceNoodle and~~purchased an additional 174 percent ~~stake~~of the voting rights in ~~Coyle Hamilton Willis,~~Gras Savoye for $31 million, bringing our ~~Irish subsidiary.~~
InsuranceNoodle is an internet distributor of US small business property-casualty insurance with annual revenues of approximately $6 million. We believe that InsuranceNoodle's web-enabled business model, combined with its strong carrier relationships and distribution through over 2,500 agents across the United States, offers us a greatly improved, lower-cost waytotal voting rights to ~~reach and service this key US market.~~42 percent.
~~Cash and financing~~Share buybacks
Cash at September 30, 2007 was $210 million; $78 million lower than at December 31, 2006. Net cash from operating activities of $233 million, together with cash brought forward, were used to fund dividend payments of $107 million; fixed asset additions of $135 million of which $85 million related to our new US and UK headquarters buildings; and acquisitions of $77 million.
Total long-term debt at September 30, 2007 was $1,200 million (December 31, 2006: $800 million) and total stockholders' equity was $1,297 million (December 31, 2006: $1,454 million) giving a capitalization ratio (total long-term debt to total long-term debt and stockholders' equity) of 48 percent at September 30, 2007 compared with 35 percent at December 31, 2006. The increase in this ratio was principally attributable to a $600 million debt issue and share repurchases totaling $458 million in 2007.
In March 2007, we issued $600 million of 10 year senior notes at 6.20 percent. We used the proceeds of the notes to fund share buybacks in the period and to repay outstanding borrowings of $200 million under our revolving credit facility.
On November 1, 2007, the Board authorized a new share buyback program for $1 billion. This ~~replaces~~replaced our previous $1 billion buyback program and its remaining $308 million authorization. In first quarter 2008, we repurchased 2.3 million shares at a cost of $75 million under the new authorization.
~~In addition,~~Share buybacks will continue to be a key part of our capital management strategy, absent a significant acquisition with a very strong strategic fit.
Cash and financing
Cash at March 31, 2008 was $195 million, $5 million lower than at December 31, 2007. Net cash from operating activities of $9 million, together with a $165 million drawdown on ~~November 7, 2007, we amended~~ our revolving credit facility, were used to ~~increase the permitted leverage~~fund: share buybacks of $75 million; dividend payments of $36 million; fixed asset additions of $44 million of which $28 million related to our new UK headquarters building; and acquisitions of $36 million.
Total long-term debt at March 31, 2008 was $1,415 million (December 31, 2007: $1,250 million) and total stockholders' equity was $1,437 million (December 31, 2007: $1,347 million) giving a capitalization ratio ~~(defined as net indebtedness~~(total long-term debt to ~~consolidated EBITDA for the prior four quarters) from 2.5:1.0 to 3.0:1.0. At September 30, 2007, our leverage ratio was approximately 1.4:1.0, up from 0.8:1.0~~total long-term debt and stockholders' equity) of 50 percent at March 31, 2008 compared with 48 percent at December 31, ~~2006. We believe~~

2007. The increase in this ~~amendment provides us with flexibility to increase~~ratio principally reflects the $75 million of share buybacks and the $165 million drawdown under our ~~leverage and that we can manage our capital efficiently whilst maintaining our investment grade~~revolving credit ~~ratings.~~facility.
We continue to generate strong operating cash flows on an annual basis and we believe that these allow us flexibility in our capital planning. ~~Our investment grade credit ratings were reaffirmed when we issued the $600 million of notes in the latter part of March 2007.~~
~~Reporting structure~~London headquarters
~~Effective January 1,~~We completed the move from Ten Trinity Square into our new London headquarters on Lime
Street in April 2008. We entered into an agreement to lease the Lime Street building in November 2004, and took control of the building in June 2007, under a 25 year lease. Annual rentals are $41 million per year and we ~~changed our reporting structure. Our UK~~have subleased or agreed to sublease approximately 25 percent of the site under leases up to 15 years long. The outstanding contractual obligation for lease rentals at March 31, 2008 was $941 million and ~~Irish retail operations, Willis UK and Ireland, which~~the amounts receivable from committed subleases were previously reported within our Global division, are now reported with our other international units as a single International segment which incorporates all our retail operations outside North America.$158 million.

BUSINESS AND MARKET OVERVIEW
We provide a broad range of insurance brokerage and risk management consulting services to our worldwide clients.
Our core Global businesses include Aerospace; ~~Captives;~~Energy; Marine; Construction; ~~Employee Benefits; Energy; Engineering~~Financial and ~~Consultancy; Financial Institutions;~~Executive Risks; Fine Art, Jewelry and Specie; ~~Healthcare; Marine; Programs; Real Estate; Reinsurance;~~Special Contingency Risks; and ~~Sports Entertainment.~~Reinsurance. Our North America and International retail businesses provide services to small, medium and major corporate clients, accessing Global's specialist expertise when required.
In our capacity as an advisor and insurance broker, we act as an intermediary between our clients and insurance carriers by advising our clients on their risk management requirements, ~~assisting~~helping clients to determine the best means of managing risk, and negotiating and placing insurance risk with insurance carriers through our global distribution network.
We derive most of our revenues from commissions and fees for brokerage and
consulting services and we do not determine the insurance premiums on which our commissions are generally based.
From ~~the late 1980s~~2000 through ~~late 2000, insurance~~2003 we benefited from a hard market with premium rates generally trended downwards as a result of a number of factors. However, following several years of underwriting losses, the declines in world equity markets and lower interest rates, many insurance carriers began to increase premium rates in 2000. The tragic events of September 11, 2001 acted as a catalyst, especially in areas such as aerospace, and rates generally continued to rise through 2003.stable or increasing.
During 2004, we saw a rapid transition from a hard market ~~with premium rates stable or increasing,~~ to a soft market, with premium rates falling in most markets. The soft market continued ~~throughout~~through 2005 ~~although the rate of decline moderated in the latter part of the year. During~~and 2006 ~~the insurance market remained highly competitive and, outside of catastrophe-exposed markets,~~with rates declining in most sectors, ~~continued to decline.~~with the exception of catastrophe exposed markets.
In 2007, the market ~~has~~ softened further and this has continued into first quarter 2008 with year on year premium rate decreases in ~~many~~North America of ~~the market sectors in which we operate, including declines of~~between 10 and 40 percent and between 5 and 20 percent ~~in many territories.~~elsewhere.

OPERATING ~~RESULTS~~RESULTS—GROUP
Revenues

Change attributable to:

Three months ended March 31,

Change attributable to:

Three months ended September 30,
2007
2006⁽ⁱ⁾
%
change
Foreign
currency
translation
Acquisitions
and
disposals
Market
remuneration
Organic
revenue
growth⁽ⁱⁱ⁾

Three months ended March 31,
% change
Foreign
currency
translation
Acquisitions
and
disposals
Organic
revenue
growth⁽ⁱⁱ⁾

(millions)

(millions)

Global $ 161 $ 160 1 % (1 )% 0 % 0 % 2 % $ 277 $ 261 6 % 4 % — % 2 %
North America 185 180 3 % 0 % 1 % 0 % 2 % 191 184 4 % — % 1 % 3 %
International 203 179 13 % 6 % 0 % 0 % 7 % 304 266 14 % 9 % — % 5 %

Commissions and fees $ 549 $ 519 6 % 2 % 0 % 0 % 4 % $ 772 $ 711 9 % 6 % — % 3 %

Investment income 25 24 4 % 9 % 1 % 0 % (6 )% 22 24 (8 )%
Other income⁽ⁱ⁾ 1 4 (75 )%

Total revenues $ 574 $ 543 6 % 2 % 1 % 0 % 3 % $ 795 $ 739 8 %

Nine months ended September 30,

Global $ 608 $ 586 4 % 1 % 1 % 0 % 2 %
North America 570 548 4 % 0 % 0 % 0 % 4 %
International 689 609 13 % 6 % 0 % 0 % 7 %

Commissions and fees $ 1,867 $ 1,743 7 % 2 % 1 % 0 % 4 %
Investment income 72 64 13 % 8 % 1 % 0 % 4 %

Total revenues $ 1,939 $ 1,807 7 % 2 % 1 % 0 % 4 %

(i)
~~Effective~~Other income represents gains on disposals of intangible assets, including books of business. Prior to January 1, ~~2007 we changed our management structure. Our UK~~2008 these gains were reported within total commissions and ~~Irish retail operations, Willis UK and Ireland, which~~fees but were ~~previously within our Global division, have been combined~~excluded from organic revenue growth with ~~our other international units to create~~effect from April 1, 2007. As a ~~single International segment (Q3 2006 revenue reclassification~~result of ~~$69~~this change, $4 million ~~Q3 YTD 2006 $214 million). The new International~~

~~segment incorporates all our retail operations outside North America. Our energy business~~of income previously reported ~~in our~~as North America ~~division is now reported within our Global division (Q3 2006 revenue reclassification of $5 million, Q3 YTD 2006 $13 million). Our prior period revenue analysis~~commissions and fees in first quarter 2007, has been ~~adjusted~~transferred to ~~reflect our new internal reporting structure.~~
other income.

(ii)
Organic revenue growth excludes the impact of foreign currency translation, acquisitions and disposals, investment income and ~~market remuneration~~other income from reported revenues. We use organic growth as a measure of business growth generated by operations that were part of the Group at the end of the period. Our method of calculating this measure may differ from that used by other companies and therefore comparability may be limited.
~~Third~~
Our first quarter ~~2007~~2008 revenues at ~~$574~~$795 million were ~~$31~~$56 million, or 68 percent, higher than in ~~third quarter 2006~~2007 of which 25 percent was attributable to foreign currency translation and 1 percent to net acquisitions and disposals. Revenues for the nine months ended September 30, 2007 were $1,939 million, or 7 percent, higher than in 2006 of which 2 percent was attributable to foreign currency translation and 1 percent to net acquisitions and disposals.translation.
Our International and Global operations earn a significant portion of their revenues in currencies other than the US dollar. ~~For the three and nine months ended September 30, 2007,~~In first quarter 2008, reported revenues in International and Global benefited significantly from the year on year effect of foreign currency translation, in particular due to the weakening of the dollar against ~~sterling and~~ the ~~euro,~~Euro, compared with ~~2006.~~first quarter 2007.
Net acquisitions and disposals added ~~a net~~ 1 percent to ~~total revenues for the nine months ended September 30, 2007 which was~~North America's commissions and fees, primarily attributable to ~~Willis Gras Savoye Re, a new venture with Gras Savoye, whose revenues to date were mainly earned~~the acquisition of InsuranceNoodle in ~~the first~~second quarter ~~of the year.~~2007.
Organic growth in commissions and fees in 2008 was 43 percent ~~for both third quarter 2007 and the nine months ended September 30, 2007~~ compared with ~~2006, mainly reflecting~~ 2007 reflecting:
•
net new business growth of 64 percent which was spread across the businesses. Net new

business growth benefited from a 1 percentage point improvement in client retention rates to 91 percent in ~~third~~first quarter ~~2007 and 5~~2008 compared with 90 percent for ~~the nine months ended September 30, 2007, together with the benefit of maintaining client retention levels in excess of 90 percent.~~full year 2007;
~~Organic growth in commissions and fees for third quarter 2007 included~~ partly offset by
•
a negative 21 percent impact from premium rates and other market factors ~~with~~as the impact of the significant rate decreases was largely offset by the benefit of other market factors, including higher commission rates, client profitability analyses, higher insured values and changes in limits or exposures. ~~There was a negative 1 percent impact from rates and other market factors on organic growth in the nine months ended September 30, 2007.~~
~~Global:~~    In our Global operations, which comprise our reinsurance and global specialties businesses, organic revenue growth was 2 percent for both third quarter 2007 and the nine months ended September 30, 2007 compared with 2006. Third quarter 2007 revenue growth in Global Specialties was offset by negative growth in reinsurance.
Global Specialties reported double digit revenue growth in third quarter 2007, reflecting the benefit of one-time income from satellite launches, together with good performances from Energy, Financial Institutions, Construction and Niche. This revenue growth was achieved despite significant rate reductions, with Aerospace and Marine rates decreasing by some 20 percent year on year and Financial Institutions, Energy and Niche experiencing year on year decreases of some 10 to 15 percent.
Reinsurance organic revenue growth was negative in third quarter 2007 and broadly neutral for the nine months ended September 30, 2007 and was adversely impacted by a combination of declining rates, a reduction in amounts reinsured and other changes, including recent changes in Florida legislation which significantly increased capacity and reduced prices. Although premium rates have declined by between 5 and 10 percent on average, the most significant impact on reinsurance growth has been higher retentions at the primary underwriters. Client retention rates, however, remain high. We expect the reinsurance market to continue to soften in the light of favorable loss trends, and the strong reserves and returns on equities achieved by the insurance companies.

~~North America:~~    North America reported 2 percent year on year organic growth for third quarter 2007 and 4 percent for the nine months ended September 30, 2007. Rates continue to decline in the United States: MarketScout data for third quarter 2007 showed property and casualty rate declines for each month, with an average decline of about 14 percent for the quarter. Despite the declining rates, we saw good growth in the Southeast, Central, West and New York regions and in programs business this quarter.
The rate of organic revenue growth in our North America operations has moderated this year compared to previous years as we moderated the pace of hiring compared with 2005 and have concentrated on profitable growth: over the last two years we have increased our revenue per full-time-equivalent ("FTE") employee to approximately $250,000 which has contributed to margin expansion.
~~International:~~Organic revenue growth by segment is discussed further in commissions and fees was 7 percent for both third quarter 2007 and for the nine months ended September 30, 2007 compared with 2006 despite declining rates in most countries, with decreases of between 5 and 20 percent."Operating Results—Segment Information" below.
We have seen consistent growth in our International business over the last two years, with the last six quarters all showing growth of 6 percent or higher. This continues to be driven by very strong growth in the emerging markets, particularly Latin America, Russia, China and Asia, all of which continue to generate strong double-digit growth. The emerging market growth was complemented by high single digit growth in mainland Europe, especially in eastern Europe. However, there was a modest third quarter decline in our UK and Irish operations revenues compared with 2006 primarily due to the declining rates environment, with decreases averaging between 15 and 20 percent.

General and administrative expenses

Three months ended
September 30,
Nine months
ended
September 30,
Three months ended March 31,

2007
2006
2007
2006
2008
2007

(millions, except percentages)

(millions, except percentages)

Salaries and benefits $ 352 $ 383 $ 1,089 $ 1,082 $ 411 $ 377
(after charging share-based compensation of 8 7 26 15 )
Other 116 138 341 351 149 111

General and administrative expenses $ 468 $ 521 $ 1,430 $ 1,433 $ 560 $ 488

Salaries and benefits as a percentage of revenues 61 % 71 % 56 % 60 %
Compensation ratio or salaries and benefits as a percentage of revenues 52 % 51 %

Other as a percentage of revenues 19 % 15 %

~~Third quarter 2007~~
General and administrative expenses at ~~$468~~$560 million for first quarter 2008 were ~~$53~~$72 million, or 1015 percent, ~~lower~~higher than in ~~third quarter 2006 despite a negative 3 percent impact from foreign currency translation.~~2007. This ~~decrease~~increase was mainly attributable to:
•
the $33 million charge for the 2008 expense review discussed above, equivalent to ~~third quarter 2006 strategic initiative expenditure of $75 million relating to the launch of our Shaping our Future strategy,~~7 percentage points, of which ~~$43~~$15 million related to salaries and benefits and ~~$32~~$18 million to other ~~operating expenses.~~
expenses; and

•
a 5 percentage point adverse impact from foreign currency translation.
Salaries and benefits were 6152 percent of ~~third~~first quarter ~~2007~~2008 revenues, compared with 7151 percent in ~~third quarter 2006,~~2007, with the ~~decrease~~increase reflecting:
•
~~the $43~~$15 million ~~benefit as a result~~ of ~~third quarter 2006 strategic initiative expenditure,~~severance costs, equivalent to approximately 82 percentage ~~points;~~points, relating to approximately 150 positions that have been, or are in the process of being, eliminated as part of the 2008 expense review;

•
an adverse impact from foreign currency translation, equivalent to approximately 2 percentage points; and

•
continued hiring in targeted development areas;
partly offset by
•
increased productivity: for the twelve months ended March 31, 2008 average revenues per

employee were approximately $188,000 compared with $186,000 for full year 2007;
•
benefits of cost controls and ~~our~~previous Shaping our Future initiatives; and

•
a $9$4 million reduction in pension charges, equivalent to approximately 21 percentage ~~points.~~point. This decrease was mainly attributable to an increase in the ~~increased~~expected return on assets in the UK plan reflecting higher asset levels due to the significant additional contributions we made in ~~2006;~~2007 and 2006.
~~partly offset by~~Other expenses were 19 percent of revenues in first quarter 2008 compared with 15 percent in 2007, with the increase reflecting:
•
an$18 million of costs relating to the 2008 expense review, equivalent to 2 percentage points, primarily relating to property and systems rationalization costs;

•
a 1 percentage point adverse impact from foreign currency ~~translation, equivalent to approximately 3 percentage points;~~translation; and

•
~~continued hiring~~an additional $11 million in ~~targeted development areas, including energy, construction, marine, financial institutions, reinsurance analytics and employee benefits. Our past experience shows that~~rental expense, mainly relating to our new brokers generally take 18 to 24 months before they are profitable. The compensation ratio is therefore adversely impacted by the elapse of time between the higher salaries and recruitment costs and the benefit of the incremental revenue streams.London headquarters;
Net headcount on a full time equivalent ("FTE") basis was approximately 13,000 at both September 30, 2007 and December 31, 2006. For the twelve months to September 30, 2007 revenues per FTE employee were approximately $192,000 compared with $182,000 per FTE employee for the twelve months to September 30, 2006, an increase of 5 percent. This increase reflected the benefit of improvements in our retail operations in North America and International. Revenues per FTE employee in our Global operations were broadly in line with 2006, with the benefit of productivity improvements largelypartly offset by ~~lower revenues in reinsurance reflecting the difficult trading environment.~~
Other expenses were 20 percent of revenues in third quarter 2007 compared with 25 percent in 2006. This decrease reflects an improvement of 6 percentage points attributable to the non-recurrence of our third quarter 2006 strategic initiative expenditure, together with
•
the benefits of our continued focus on cost ~~control, partly offset by the rental on our new London headquarters and the impact of foreign currency translation.~~
Other expenses in third quarter 2007 include $3 million of rent on our existing London headquarters building, following its sale and leaseback in September 2006. We expect to terminate this lease by the end of September 2008. Of the $121 million pre-tax gain on the sale of the building, $22 million was deferred and is being recognized over the expected two year life of the lease, of which $3 million was recognized in third quarter 2007.
Practical completion of our new London building occurred at the end of June 2007 giving us control of the building. Rent has to be expensed from when we took control of the building rather than from when we occupy the building. Therefore, we recognized additional rental expense in respect of our new building of $8 million in third quarter 2007.
~~Nine months ended September 30, 2007~~
General and administrative expenses at $1,430 million for the nine months ended September 30, 2007 were $3 million lower than in 2006 despite a 4 percent adverse impact from foreign currency translation.
Salaries and benefits were $1,089 million, or 56 percent of revenues, in the first nine months of 2007 compared with $1,082 million, or 60 percent of revenues in 2006. The decrease in the compensation ratio (salaries and benefits as a percentage of revenues) was mainly attributable to:
•
~~the $43 million expenditure on strategic initiatives in third quarter 2006, equivalent to approximately 2 percentage points;~~control.

•
a $25 million reduction in the pension charge, equivalent to approximately 1 percentage point. This decrease was mainly attributable to the increased return on assets in the UK plan reflecting higher asset levels due to the significant additional contributions we made in 2006; and

•
~~cost controls and the benefits of our 2006 expenditure on Shaping our Future initiatives;~~
~~partly offset by~~
•
~~an adverse impact from foreign currency translation, equivalent to approximately 4 percentage points; and~~

•
~~continued hiring in targeted development areas, including energy, construction, marine, financial institutions, reinsurance analytics and employee benefits.~~
~~Other expenses at $341 million were $10 million, or 3 percent lower, than in 2006 despite a 1 percent adverse impact from foreign currency.~~
Other expenses were 18 percent of revenues in the first nine months of 2007 compared with 19 percent in 2006 with the decrease reflecting the benefits of good cost control partly offset by increased property costs, including the rental on our new London headquarters building and the $9 million rent on our existing London headquarters building, following its sale and leaseback in September 2006.
Operating income and margin (operating income as a percentage of revenues)

Three months ended September 30,

2007
2006

Revenues
Operating
Income
Operating
margin
Revenues
Operating
Income
Operating
margin

(millions)

(millions)

Global $ 173 $ 36 21 % $ 173 $ 42 24 %

North America

190

31

16
%

185

27

15
%
International 211 26 12 % 185 18 10 %

Total Retail

401

57

14
%

370

45

12
%
Corporate & other⁽¹⁾ — — n/a — 10 n/a

Total Consolidated $ 574 $ 93 16 % $ 543 $ 97 18 %

Nine months ended September 30,

2007
2006

Revenues
Operating
Income
Operating
margin
Revenues
Operating
Income
Operating
margin

(millions)

(millions)

Global $ 642 $ 218 34 % $ 619 $ 224 36 %

North America

585

106

18
%

563

71

13
%
International 712 160 22 % 625 122 20 %

Total Retail

1,297

266

21
%

1,188

193

16
%
Corporate & other⁽¹⁾ — (15 ) n/a — 3 n/a

Total Consolidated $ 1,939 $ 469 24 % $ 1,807 $ 420 23 %

~~(1)~~
Corporate & other includes the costs of our holding company; certain foreign exchange hedging activities; amortization of intangibles; net gains and losses on the disposal of operations; and, in 2006, the $99 million profit on disposal of our London headquarters and the $84 million expenditure on Shaping our Future initiatives which were held centrally.

Three months ending March 31,

2008
2007

(millions, except percentages)

Revenues $ 795 $ 739
Operating income 225 238
Operating margin or operating income as a percentage of revenues 28 % 32 %

~~Third quarter 2007~~
Operating margin at 28 percent was ~~16 percent~~4 percentage points lower than in ~~third~~first quarter 2007 ~~compared~~ with ~~18 percent in third quarter 2006. This~~the decrease ~~reflected the impact of:~~mainly reflecting:
•
the ~~$99~~$33 million ~~pre-tax gain on~~charge in Corporate for the ~~sale of our London headquarters in 2006 (equivalent~~2008 expense review mainly relating to 18severance and property and systems rationalizations, equivalent to approximately 4 percentage ~~points); and~~points;

partly offset by
•
~~a 300 basis point margin reduction in our~~improved margins for Global ~~operations, mainly~~and International reflecting the ~~difficult reinsurance trading environment,~~benefit of productivity initiatives, good cost control and lower pension costs, partly offset by ~~the benefit of our productivity initiatives and the benefit of a lower pension charge in our UK operations;~~
~~partly offset by~~
•
~~the $84 million of expenditure to launch our Shaping our Future strategic initiatives in third quarter 2006 (equivalent to 15 percentage points); and~~

•
~~a 200 basis point improvement in our retail margin, reflecting increased margins in both International and North America as a result of our focus~~spending on new productivity and ~~profitable growth, together with the benefit of a lower pension charge~~other initiatives.
Operating segment margins are discussed further in ~~our UK and US operations.~~
"Operating Results—Segment Information" below.
~~Nine months ended September 30, 2007~~Income taxes

Three months ended March 31,

2008
2007

(millions, except percentages)

Income before taxes $ 209 $ 226
Income taxes 60 68
Effective tax rate 29 % 30 %
~~Operating margin for the nine months ended September 30, 2007~~
The effective tax rate in first quarter 2008 was 2429 percent compared with 2330 percent in ~~2006. This increase reflected the impact of:~~2007,
•
~~the $88 million of expenditure in 2006 in support of our Shaping our Future strategic initiatives; and~~

•
~~a 500 basis point improvement in our retail margin, reflecting the increased margins in both North America and International as a result of our focus on productivity and profitable growth, together~~
with the ~~benefit of a lower pension charge in our UK and US operations;~~
~~partly offset by~~
•
~~the $99 million pre-tax gain on the sale of our London headquarters; and~~

•
~~a 200 basis point reduction in Global's operating margin~~decrease mainly reflecting ~~the difficult reinsurance trading environment, partly offset by the benefit of our productivity initiatives and the benefit of a lower pension charge in our UK operations.~~
~~Income taxes~~

Three months ended
September 30,
Nine months ended
September 30,

2007
2006
2007
2006

(millions, except percentages)

Income before taxes $ 76 $ 88 $ 421 $ 393
Income taxes 12 3 116 101
Effective tax rate 16 % 3 % 28 % 26 %
~~Third quarter 2007~~
The effective tax rates for both third quarter 2007 and 2006 benefited from the release of tax provisions relating to prior tax periods following the resolution of tax issues surrounding prior debt refinancings. In addition, the third quarter 2006 effective tax rate benefited from a low tax rate on the sale of our London headquarters.

~~Nine months ended September 30, 2007~~
The increase in the effective tax rate from 26 percent in 2006 to 28 percent in 2007 mainly reflected the low rate of tax on the disposal of our London headquarters in 2006 partly offset by the implementation of tax strategies in 2007 and a change in the geographical mix of ~~income.~~profits.
Net income and diluted earnings per ~~diluted~~ share

Three months ended
September 30,
Nine months ended
September 30,
Three months ended March 31,

2007
2006
2007
2006
2008
2007

(millions, except per share data)

(millions, except per share data)

Net income $ 67 $ 89 $ 314 $ 301 $ 166 $ 169
Earnings per diluted share $ 0.46 $ 0.56 $ 2.12 $ 1.89
Diluted earnings per share 1.16 1.10
Average diluted number of shares outstanding 145 159 148 159 143 154
~~Third quarter 2007~~
Net income for ~~third~~first quarter ~~2007~~2008 was ~~$67~~$166 million ~~or $0.46 per diluted share,~~ compared with ~~$89~~$169 million ~~or $0.56 per diluted share,~~ in ~~2006~~2007 with the ~~movement~~small decrease mainly reflecting the impact of:
•
the ~~$91~~$13 million ~~post-tax gain on the sale of our London headquarters~~decrease in ~~third quarter 2006 (equivalent to $0.57 per diluted share); and~~operating income, discussed above;

•
a $6$4 million increase in ~~post-tax~~ interest ~~expense~~principally reflecting increased ~~long term~~long-term borrowing to

fund share buybacks and additional pension ~~contributions (equivalent to $0.04 per diluted share);~~contributions;
partly offset by
•
an $8 million decrease in the ~~$59 million post-tax impact~~tax charge as the result of ~~expenditure~~a change in ~~2006 to launch our Shaping our Future strategic initiatives (equivalent to $0.37 per diluted share);~~the geographical mix of profits; and

•
a $7 million increase in our interest in earnings of associates which mainly reflected an increased ~~revenues~~contribution from Gras Savoye due to our increased ownership, improved earnings and the ~~improved margin~~benefit of foreign currency translation.
Despite the decrease in ~~third~~net income, diluted earnings per share increased by $0.06 in first
quarter 2008 compared with 2007 mainly reflecting the benefit of the share buybacks in 2007.
Average diluted shares outstanding decreased from 154 million in first quarter 2007 ~~as discussed above.~~
~~Foreign currency translation had a $0.02 adverse year on year impact on earnings per diluted share.~~
~~Average sharecount reduced from 159~~to 143 million in ~~third~~first quarter ~~2006 to 145 million in third quarter 2007~~2008 primarily reflecting the 15impact of the 11.5 million shares repurchased under accelerated share repurchase programs in ~~November 2006 and March~~first quarter 2007. After taking into account incremental funding costs, there was a ~~$0.02 benefit to third quarter 2007 diluted earnings per share from these share buybacks.~~
~~Nine months ended September 30, 2007~~
Net income for the nine months ended September 30, 2007 was $314 million, or $2.12 per diluted share, compared with $301 million, or $1.89 per diluted share, in 2006 with the improvement mainly reflecting the impact of:
•
~~the $59 million post-tax impact of expenditure in 2006 to launch our Shaping our Future strategic initiatives (equivalent to $0.37 per diluted share); and~~

•
~~increased revenues and the improved margin in 2007 as discussed above;~~
~~partly offset by~~
•
~~the $91 million post-tax gain on the sale of our London headquarters in third quarter 2006 (equivalent to $0.57 per diluted share); and~~

•
~~a $15 million post-tax increase in interest expense reflecting increased long term borrowing to fund share buybacks and additional pension contributions (equivalent to $0.10 per diluted share).~~
~~Foreign currency translation had a $0.01 negative year on year impact on earnings per diluted share.~~
Average sharecount reduced from 159 million in the first nine months of 2006 to 148 million in the first nine months of 2007 primarily reflecting the impact of the 15 million shares repurchased under accelerated share repurchase programs in November 2006 and March 2007. After taking into account incremental funding costs, there was a $0.07$0.06 benefit to diluted earnings per share from these share buybacks for first quarter 2008.
Foreign currency translation had a $0.08 positive year on year impact on diluted earnings per share in first quarter 2008.
OPERATING RESULTS—SEGMENT INFORMATION
We organize our business into three segments: Global, North America and International. Our Global business provides specialist brokerage and consulting services to clients worldwide for risks arising from specific industries and activities. North America and International
comprise our retail operations and provide services to small, medium and major corporates.
The following table is a summary of our operating results by segment for the quarters ended March 31, 2008 and 2007:

Three months ended March 31, 2008
Three months ended March 31, 2007⁽ⁱ⁾

Revenues
Operating Income
Operating Margin
Revenues
Operating Income
Operating Margin

(millions)

(millions)

Global $ 285 $ 133 47 % $ 272 $ 122 45 %

North America

196

27

14
%

193

27

14
%
International 314 104 33 % 274 87 32 %

Total Retail 510 131 26 % 467 114 24 %
Corporate & Other⁽ⁱⁱ⁾ — (39 ) n/a — 2 n/a

Total Consolidated $ 795 $ 225 28 % $ 739 $ 238 32 %

(i)
With effect from January 1, 2008, we changed the basis of segmental allocations for certain costs. In particular, all accounting adjustments for hedging transactions are now held at the Corporate level, together with certain legal costs. As a result of this change, an additional $15 million net operating loss for first ~~nine months~~quarter 2007, previously reported within Corporate, has been allocated to the operating segments.

(ii)
Corporate and Other includes the costs of the holding company; foreign exchange hedging activities; amortization of intangible assets; net gains and losses on disposal of operations and properties; certain legal costs; and, in first quarter 2008, the $33 million charge for the 2008 expense review.

Global

Three months ended March 31,

2008
2007

(millions, except percentages)

Commissions and fees $ 277 $ 261
Investment income 8 11
Other income — —

Total revenues $ 285 $ 272

Operating income $ 133 $ 122
Organic revenue growth⁽ⁱ⁾ 2 % 3 %
Operating margin 47 % 45 %
(i)
Organic revenue growth excludes the impact of foreign currency translation, acquisitions and disposals, investment income and other income from reported revenues. We use organic growth as a measure of business growth generated by operations that were part of the Group at the end of the period. Our method of calculating this measure may differ from that used by other companies and therefore comparability may be limited.
Our Global operations comprise Global Specialties and Reinsurance.
Revenue
Commissions and fees were $16 million, or 6 percent higher, in first quarter 2008 compared with 2007 of which 4 percent was attributable to foreign currency translation. Organic revenue growth was 2 percent in first quarter 2008 with the benefit of good growth in Global Specialties offset by more modest growth in Reinsurance. Client retention levels increased to 90 percent compared with 88 percent a year ago.
Global Specialties revenue growth reflected the benefit of good growth in Construction, Marine, Energy and Financial Institutions. This revenue growth was achieved despite significant rate reductions in the range of 5 to 20 percent.
Organic revenues in Reinsurance in first quarter 2008 were only modestly higher than in 2007 and
continue to be adversely impacted by a combination of declining rates and a reduction in amounts reinsured. On average premium rates have declined by approximately 10 percent. We continue to make investments in Reinsurance to strengthen capital markets and analytics capabilities, which we believe will drive future growth opportunities.
Operating margin
Operating margin in our Global operations was 47 percent in first quarter 2008 compared with 45 percent in 2007. This improvement reflected strong contributions from Marine, Construction and Financial Institutions, together with improved margins in Reinsurance. Lower pension costs also contributed to the improvement.

North America

Three months ended March 31,

2008
2007

(millions, except percentages)

Commissions and fees $ 191 $ 184
Investment income 4 5
Other income⁽ⁱ⁾ 1 4

Total revenues $ 196 $ 193

Operating income $ 27 $ 27
Organic revenue growth⁽ⁱⁱ⁾ 3 % 4 %
Operating margin 14 % 14 %
(i)
Other income represents gains on disposals of intangible assets, including books of business. Prior to January 1, 2008 these gains were reported within total commissions and fees but were excluded from organic revenue growth with effect from April 1, 2007. As a result of this change, $4 million of income previously reported as North America commissions and fees in first quarter 2007, has been transferred to other income.

(ii)
Organic revenue growth excludes the impact of foreign currency translation, acquisitions and disposals, investment income and other income from reported revenues. We use organic growth as a measure of business growth generated by operations that were part of the Group at the end of the period. Our method of calculating this measure may differ from that used by other companies and therefore comparability may be limited.
Revenues
Commissions and fees in North America were $7 million, or 4 percent, higher in first quarter 2008 compared with 2007 of which 1 percent was attributable to net acquisitions and disposals, primarily relating to the acquisition of InsuranceNoodle in second quarter 2007.
Organic revenue growth was 3 percent and was achieved despite rates continuing to decline in most areas, with decreases of between 10 and 40 percent. Despite the declining rates, we saw good growth in most of our retail regions, in particular the Northeast and Central regions. Client retention levels contributed to this growth and, compared with first quarter 2007, were 1 percentage point higher at 91 percent.
Producer headcount at March 31, 2008 was broadly in line with December 31, 2007 but productivity improved with a 2 percent rise in revenues per FTE since December 31, 2007.
We have recently stepped up our recruitment activity in key cities and growth areas, including the Central, Southeast and New York regions.
Operating margin
Operating margin at 14 percent in first quarter 2008 was in line with 2007, with the benefit of increased revenue per FTE, lower pension costs and other savings, offset by the investments in InsuranceNoodle and other initiatives.

International

Three months ended March 31,

2008
2007

(millions, except percentages)

Commissions and fees $ 304 $ 266
Investment income 10 8
Other income — —

Total revenues $ 314 $ 274

Operating income $ 104 $ 87
Organic revenue growth⁽ⁱ⁾ 5 % 8 %
Operating margin 33 % 32 %
(i)
Organic revenue growth excludes the impact of foreign currency translation, acquisitions and disposals, investment income and other income from reported revenues. We use organic growth as a measure of business growth generated by operations that were part of the Group at the end of the period. Our method of calculating this measure may differ from that used by other companies and therefore comparability may be limited.
Revenues
Commissions and fees in International were $38 million, or 14 percent, higher in first quarter 2008 compared with 2007. Some 9 percent of this increase was attributable to foreign currency translation as a significant part of International's revenues are earned in currencies that have strengthened against the dollar on a year on year basis, in particular the Euro. Organic growth of 5 percent was achieved despite declining rates in most countries, with decreases of between 10 and 15 percent in most areas, and higher decreases in some emerging market countries.
We have seen consistent growth in our International business over the last two years, with the last ten quarters all showing growth of 5 percent or higher. Average client retention
levels across International remained high at 92 percent.
Emerging markets continued to make a strong contribution with Latin America, China, Indonesia, Singapore, Poland and Russia all generating double-digit growth. The emerging market growth was complemented by good growth in Spain and Denmark.
Operating margin
Operating margin in International was 33 percent in first quarter 2008 compared with 32 percent in 2007, with the improvement reflecting the strong organic revenue growth. In particular, there was strong profit growth in Latin America and the emerging markets countries, together with the United Kingdom, Spain and Germany.
CRITICAL ACCOUNTING ESTIMATES
The accounting estimates or assumptions that management considers to be the most important to the presentation of the Company's financial condition or operating performance were
discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2006.~~2007. There were no significant additions or changes to these assumptions in first quarter 2008.

NEW ACCOUNTING STANDARDS
There were no new accounting standards issued during the first ~~nine months of 2007.~~quarter 2008 that would have a
significant impact on the Company's reporting.
LIQUIDITY AND CAPITAL RESOURCES
On
In November 1, 2007, the Board authorized a new share buyback program for $1 billion. This ~~replaces~~replaced our previous $1 billion buyback program and its remaining $308 million authorization. We repurchased 2.3 million shares totaling $75 million under this authorization in first quarter 2008.
In ~~March 2007, we issued $600 million of 10 year senior notes at 6.20%. We used~~first quarter 2008, the ~~proceeds of the notes to fund share buybacks~~credit markets remained volatile and there were only a few debt issuances in the ~~period and to repay outstanding borrowings of $200 million under our revolving credit facility.~~
Under our previous $1 billion share buyback authorization, we repurchased 11.5 million shares at a cost of $458 million in the first nine months of 2007 through accelerated share repurchase programs. A $400 million accelerated share repurchase program that commenced in March 2007 was completed on October 18, 2007 with a final settlement of $23 million. We currently have no outstanding accelerated share repurchase programs.
~~On November 7, 2007, we executed an amendment to our revolving credit facility which increases our covenant leverage ratio from 2.5:1 to 3.0:1.~~
~~We continue to generate strong cash flows and we believe that these and the amendment to our revolving credit facility allow us flexibility~~US financial services sector in our ~~capital planning.~~ rating category.
Our credit ratings are investment grade ~~credit ratings~~and were reaffirmed when we issued the $600 million of notes in March 2007. We believe that these ratings and our consistent generation of cash, together with the ~~latter~~amendment to our revolving credit facility in November 2007, which increased our permitted leverage ratio from 2.5:1 to 3.0:1, allow us flexibility in our capital planning.
Absent a significant acquisition with a very strong strategic fit, share buybacks will remain a key part of our capital planning strategy.
Fiduciary funds
As an intermediary, we hold funds generally in a fiduciary capacity for the account of third parties, typically as the result of premiums received from clients that are in transit to insurers and claims due to clients that are in transit from insurers. We report premiums, which are held on account of, or due from, clients as assets with a corresponding liability due to the insurers. Claims held by, or due to, us which are due to clients are also shown as both assets and liabilities. All these balances due or payable are included in accounts receivable and accounts payable on the balance sheet. We earn interest on these funds during the time between the receipt of the cash and the time the cash is paid out. Fiduciary cash must be kept in certain regulated bank accounts subject to guidelines,
which generally emphasize capital preservation and liquidity, and is not generally available to service our debt or for other corporate purposes.
Own funds
As of March ~~2007.~~31, 2008, we had cash and cash equivalents of $195 million, compared with $200 million at December 31, 2007, and $85 million of our $300 million revolving credit facility remained available to draw.
Operating activities
Net cash provided by operations, which excludes fiduciary cash movements, was ~~$233~~$9 million in ~~the~~ first ~~nine months of 2007~~quarter 2008 compared with ~~$75~~$80 million in ~~2006. The $158 million increase reflects an $89 million increase~~first quarter 2007, with the decrease being primarily attributable to the timing of cash collections and other working capital movements in ~~net income before gains relating to investment activities and~~our seasonally lowest cash quarter of the ~~benefit of a $69 million reduction in incremental contributions to our UK and US defined benefit pension funds.~~year.
Investing activities
Total net cash used in investing activities was ~~$179~~$76 million ~~for the~~in first ~~nine months of 2007~~quarter 2008 compared with ~~$35~~$27 million ~~a year ago.~~ in the same period of 2007.
The ~~$144~~net increase in cash used in investing activities of $49 million ~~increase~~ was mainly attributable to:
•
the $31 million acquisition of a ~~$100 million increased investment~~further 4 percent of voting rights in ~~fixed assets primarily reflecting capital spend on~~Gras Savoye & Cie, our ~~new US and UK headquarters buildings;~~French associate; and

•
~~cash proceeds~~additional spend of $20 million on ~~disposal of~~ fixed ~~and intangible~~ assets ~~of $21 million in the first nine months of 2007 compared with $58 million in 2006 which included $49 million~~ relating to the ~~first~~

~~installment on the sale~~fit-out of our ~~London headquarters. The remaining proceeds on the sale of our~~new London headquarters ~~of $153 million were received~~which is now in ~~November 2006.~~
full occupancy.
Financing activities
Cash ~~used in~~provided by financing activities amounted to ~~$142~~$57 million in first quarter 2008, a net increase of $146 million over the $89 million used in same quarter 2007.

Long-term debt
In first ~~nine months of 2007 with the $594~~quarter 2008, we drew down $165 million ~~proceeds, net of costs, of the March 2007 debt issue being more than offset by the $457 million repurchase of shares and the $200 million repayment~~ on our revolving credit ~~facility.~~
~~Cash dividends paid in the first nine months of 2007 were $107 million compared with $108 million a year ago as the cost of an increased dividend per~~facility, primarily to fund share ~~was offset by an 11 million reduction in basic shares outstanding, principally as a result of~~buybacks and fixed asset additions related to our ~~share buyback program.~~new London headquarters building. In February 2007, the quarterly cash dividend declared was increased by 6 percent to $0.250 per share, an annual rate of $1.00 per share. At this rate, the expected annual cost of dividends payable in 2007 will be approximately $143 million. We have funded dividends from cash generated internally by operations and expect to do so in the future.
As of September 30, 2007, we had cash and cash equivalents of $210 million, compared with $288 million at December 31, 2006, and all of our $300 million revolving credit facility remained available to draw.
~~Contractual obligations~~
~~Our contractual obligations at September 30, 2007 were:~~

Due within

Obligations
Total at
September 30,
2007
Due after
48 months
12 months
12–36 months
36–48 months

(millions)

5.125% Senior Notes due 2010 $ 250 $ — $ 250 $ — $ —
5.625% Senior Notes due 2015 350 — — — 350
6.200% Senior Notes due 2017 600 — — — 600
Interest on Senior Notes 550 70 139 114 227
Operating leases 1,300 72 119 128 981
Pensions 395 153 229 13 —
Put options relating to subsidiaries and associates⁽ⁱ⁾ 508 427 69 — 12

Total contractual obligations $ 3,953 $ 722 $ 806 $ 255 $ 2,170

~~(i)~~
~~Based on the earliest dates on which options could be exercised.~~
On March ~~28,~~ 2007, we issued $600 million of 10 year senior notes at ~~6.20%.~~6.20 percent. We used the proceeds of the notes to fund share buybacks and to repay ~~outstanding borrowings of~~ $200 million ~~under~~on our revolving credit facility.
In November 2004, we entered into a 25 year agreement with British Land plc relating to our new UK headquarters in London. Construction commenced in early 2005 and our occupancy is targeted for early 2008.Share buybacks
Following changes to UK pensions legislation in 2005, we are now required to agree a funding strategy for our UK defined benefit plan with the plan's trustees. In July 2007, we agreed to make full year contributions of $153 million for 2007, 2008 and 2009 and $51 million of full year contributions for 2010.

In connection with many of our investments in less than wholly-owned subsidiaries and associates, we retain rights to increase our ownership percentage over time, typically to a majority or 100 percent ownership position. In addition, in certain instances, the other owners have a right, typically at a price calculated pursuant to a formula based on revenues or earnings, to put some or all of their shares to us.
As part of the 1997 acquisition of our initial 33 percent shareholding of Gras Savoye, we entered into a put arrangement, whereby the other shareholders in Gras Savoye (primarily two families, two insurance companies and Gras Savoye's executive management team) could put their shares to us. Until 2011, we will be obligatedWe continued to buy back shares in 2008, repurchasing 2.3 million shares for $75 million of
cash during the quarter compared with 11.5 million shares of certain shareholders to the extent those shareholders put their shares, potentially increasing our ownership from 38 percent to 90 percent if all shareholders put their shares, at a price determined by a contractual formula based on earnings and revenue. We acquired an additional 5 percent of Gras Savoye at a cost of ~~$25~~$458 million ~~under these arrangements~~ in ~~September 2006. Management shareholders~~first quarter 2007.
Dividends
Cash dividends paid in first quarter 2008 were $36 million compared with $36 million in the same period 2007. In February 2008, the quarterly cash dividend declared was increased by 4 percent to $0.26 per share, an annual rate of ~~Gras Savoye (representing approximately 10 percent of shares) do not~~$1.04 per share.
CONTRACTUAL OBLIGATIONS
Except for the following, there have ~~general put rights before 2011, but have certain put rights on their death, disability or retirement from which payments, at~~been no material changes in our contractual obligations since December 31, ~~2006 based~~2007.
In first quarter 2008, we drew down an additional $165 million on ~~the formula would not have exceeded $64 million. The shareholders may put their shares individually~~our revolving credit
facility which expires in October 2010, taking our outstanding balance under this facility to $215 million as at ~~any time during the put period.~~March 31, 2008.
OFF-BALANCE SHEET TRANSACTIONS
We believe that, should the aggregate amount of Gras Savoye shares be put to us, sufficient funds would be available to satisfy this obligation. In addition, we have a call option to move to majority ownership under certain circumstances and in any event by December 2009. Upon exercising this call option, the remaining Gras Savoye shareholders have a put option.
~~Off-balance sheet transactions~~
Apart from commitments, guarantees and contingencies, as disclosed in Note ~~5 of Notes~~6 to the Condensed Consolidated Financial Statements, the Company has no off-balance sheet
arrangements that have, or are reasonably likely to have, a material effect on the Company's financial condition, results of operations or liquidity.

Item 3—Quantitative and Qualitative Disclosures about Market Risk
~~Except as disclosed below, there~~There has been no material change with respect to market risk from that described in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2006.~~2007.
On March 28, 2007, the Company issued $600 million of 10 year senior notes at 6.20 percent, with a fair value as at September 28, 2007, of $603 million. The proceeds of the note issue, together with cash on hand, were used to fund $457 million of share repurchases during the first quarter and to repay the $200 million outstanding under the Company's revolving credit facility.
During the nine months ended September 30, 2007, we reviewed and refined our foreign exchange hedging policy. Our primary foreign exchange rate risk arises from changes in the exchange rate between US dollars and pounds sterling as our UK operations earn revenues in a mixture of currencies and incur expenses predominantly in pounds sterling.

~~Under the amended policy, this risk is hedged as follows:~~
•
To the extent that forecast pound sterling expenses exceed pound sterling revenues, we limit our exposure to this exchange rate risk by the use of forward contracts matched to specific, clearly identified cash outflows arising in the ordinary course of business; and

•
Our UK operations also earn significant revenues in Euros and Japanese Yen. We limit our exposure to changes in the exchange rate between the US dollar and these currencies by the use of forward contracts matched to a percentage of forecast cash inflows in specific currencies and periods.
Item 4—Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of ~~September 30, 2007,~~March 31, 2008, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Chairman and Chief Executive Officer and the Group Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive Officer and the Group Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in ensuring that the information required to be included in the Company's periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to them as appropriate to allow for timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
The Company introduced a new Broking system as part of the ~~'Shaping~~"Shaping our ~~Future' initiative~~Future" initiative. The roll-out of the system commenced in 2006 with one of the business ~~unit. The system went~~units going live on December 4, 2006, processing policies with inception dates after April 1, 2007 and consequently impacting financial periods commencing after April 1, 2007. During the fourth quarter ended December 31, 2007, the new Broking system was rolled-out to another Business unit. The new system has resulted in a change in the controls over initiation, authorization, recording, processing and reporting of ~~'revenue'~~"revenue" in the ~~one~~two business ~~unit.~~units. The system is intended, among other things, to enhance the Company's internal controls over financial reporting.
There have been no other changes in the Company's internal controls over financial reporting during the quarter ended ~~September 30, 2007~~March 31, 2008 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II—OTHER INFORMATION
Item 1—Legal Proceedings
The information set forth in Note 56 of Notes to the Condensed Consolidated Financial Statements, provided in Part I, Item 1 of this report, is incorporated herein by reference.
Item 1A—Risk Factors
There have been no material changes to the risk factors described in Part I, Item 1A "Risk Factors" included in the Form 10-K for the year ended December 31, ~~2006.~~2007.
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended ~~September 30, 2007,~~March 31, 2008, the Company issued a total of ~~7,641~~106,611 shares of common stock without registration under the Securities Act of 1933, as amended, in reliance upon the exemption under Section 4(2) of such Act relating to sales by an issuer not involving a public offering, none of which involved the sale of more than 1% of the outstanding common stock of the Company.
The following sales of shares related to part consideration for the acquisition of interest in the following companies:
Date of Sale
Number
of Shares
Acquisition
~~September 28, 2007~~February 21, 2008 ~~7,641~~94,430 ~~Burkart Risk Consulting~~Rontarca Prima, Willis, C.A.
March 13, 2008 12,181 Eyl & ~~Partner AG~~Gordon Insurance Brokers, Inc. d/b/a Gueits, Adams & Company
~~The Company did not repurchase any of its own common stock during the quarter covered by this report.~~
On November 1, 2007, the Board ~~of Directors~~ authorized a new share buyback program for $1 billion. This replaced the previous $1 billion buyback program and its remaining $308 million authorization. The program is an open-ended plan to ~~purchase,~~repurchase the Company's shares from time to time in the open market or through negotiated ~~trades~~sales with persons who are not affiliates of the ~~Company,~~Company.
The following shares of the Company's common stock ~~at an aggregate purchase price of up to $1 billion. This authorization replaced~~were repurchased by the ~~$308 million remaining under~~Company during the ~~Company's previously announced $1 billion repurchase plan.~~first quarter on a trade date basis:
Period
Total Number
of Shares Purchased
Average Price per Share
Total Number
of Shares Purchased as part of Publicly Announced Plans or Programs
Fees and Price Adjustments
Approximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs
January 1, to January 31, 2008 — — — $ — $ 1,000,000,000
February 1, to February 28, 2008 1,435,028 $ 33.31 1,435,028 $ 47,840,130 $ 952,159,870
March 1, to March 31, 2008 827,842 $ 32.71 827,842 $ 27,148,278 $ 925,011,592
Item 3—Defaults Upon Senior Securities
None.
Item 4—Submission of Matters to a Vote of Security Holders
~~None.~~The Company held its Annual General Meeting on April 23, 2008 at which shareholders elected Ms. Anna C. Catalano, Ms. Wendy E. Lane and Ms. Robyn S. Kravit and Messrs. William W. Bradley, Joseph A. Califano Jr., Eric G. Friberg, Sir Roy Gardner, Sir Jeremy Hanley, James F. McCann, Joseph J. Plumeri and Douglas B. Roberts to serve as directors until the next Annual General Meeting unless they are earlier removed or resign.

The table below sets out the number of votes cast for, against or withheld for each director:
Director
For
Against
Withheld
William W. Bradley 123,017,880 5,506,479 74,990
Joseph A. Califano, Jr. 122,582,934 5,947,899 68,516
Anna C. Catalano 123,038,744 5,484,289 76,316
Eric G. Friberg 123,062,951 5,461,502 74,896
Sir Roy Gardner 111,208,955 17,316,345 74,049
Sir Jeremy Hanley 122,684,390 5,837,863 77,096
Robyn S. Kravit 122,759,536 5,764,705 75,108
Wendy E. Lane 122,487,223 6,010,933 101,193
James F. McCann 117,214,201 11,305,447 79,701
Joseph J. Plumeri 122,862,871 5,670,939 65,539
Douglas B. Roberts 123,001,006 5,522,406 75,937
The shareholders also re-appointed Deloitte & Touche LLP as independent auditors until the conclusion of the next Annual General Meeting of shareholders. Of the shares voted, 128,457,182 were in favor, 56,488 voted against and 85,769 were withheld.
The shareholders also approved the adoption of the Willis Group Holdings Limited 2008 Share Purchase and Option Plan. Of the shares voted, 64,219,730 were in favor, 57,646,512 voted against and 399,327 were withheld.
The shareholders also approved an amendment to Clause 5 of the Company's Memorandum of Association with the substitution of the monetary value "$1,000" for "$12,000". Of the shares voted, 128,066,159 were in favor, 51,324 voted against and 481,866 were withheld.
The shareholders also approved an amendment to Bye-law 1(1) by the insertion of the following definition of "Treasury Shares"; "Treasury Shares" shall mean any Shares repurchased by the Company as treasury shares. Of the shares voted, 125,395,599 were in favor, 2,730,992 voted against and 472,758 were withheld.
The shareholders also approved the deletion of Bye-law 4(2) and its replacement with the following: "The Board may, at its discretion and without the sanction of a Resolution, authorize the purchase of its own Shares of any class at any price (whether at par or above or below) and so that any Shares of any class may be selected in any manner whatsoever, upon such terms as the Board may in its discretion determine, and that any Shares so purchased may be cancelled or held as treasury shares as the Board may in its discretion determine; provided always that such purchase is effected in accordance with the provisions of the Companies Acts". Of the shares voted, 125,395,599 were in favor, 2,730,992 voted against and 472,758 were withheld.
The shareholders also approved the deletion of Bye-law 7 and its replacement with the following: "Subject to the provisions of these Bye-laws, the unissued Shares of the Company and any Treasury Shares (whether forming part of the original capital or any increased capital) shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of or transfer them to such persons, at such times and for such consideration and upon such terms and conditions as the Board may determine, but no Share may be issued at a discount." Of the shares voted, 125,395,599 were in favor, 2,730,992 voted against and 472,758 were withheld.
Item 5—Other Information
None.

Item 6—Exhibits
~~10.1~~
First Amendment dated November 7, 2007 to $300 million Revolving Credit Agreement dated as of October 17, 2005 among Willis North America Inc., Willis Group Holdings Limited, Banc of America Securities Limited, Bank of America, N.A., and the lenders listed therein.
~~31.1~~
~~Certification Pursuant to Rule 13a-14(a)~~
~~31.2~~
~~Certification Pursuant to Rule 13a-14(a)~~
~~32.1~~
~~Certification Pursuant to 18 U.S.C. Section 1350~~
~~32.2~~
~~Certification Pursuant to 18 U.S.C. Section 1350~~
  3.1 Memorandum of Association of Willis Group Holdings Limited as amended April 23, 2008
  3.2 Bye-laws of Willis Group Holdings Limited as amended April 23, 2008
10.1 Fourth Amended and Restated Employment Agreement dated February 29, 2008, between Willis Group Holdings Limited, Willis North America Inc., and Joseph J. Plumeri (incorporated by reference to Exhibit 10.1 to Willis Group Holdings Limited's Form 8-K filed on February 29, 2008)
10.2 Form of Employment Agreement dated December 17, 2007 between Willis Limited and Tim Wright (incorporated by reference to Exhibit 10.2 to Willis Group Holdings Limited's Form 8-K filed on February 29, 2008)
10.3 Willis Group Holdings Limited 2008 Share Purchased and Option Plan
31.1 Certification Pursuant to Rule 13a-14(a)
31.2 Certification Pursuant to Rule 13a-14(a)
32.1 Certification Pursuant to 18 U.S.C. Section 1350
32.2 Certification Pursuant to 18 U.S.C. Section 1350

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WILLIS GROUP HOLDINGS LIMITED
(Registrant)

By:

/s/ PATRICK C. REGAN
Patrick C. Regan
Group Chief Operating Officer and
Group Chief Financial Officer
Dated: ~~November~~May 9, ~~2007~~2008

			September 30, 2007			December 31, 2006
			(millions, except share data)
			(unaudited)
ASSETS
	Cash and cash equivalents		$	210		$	288
	Fiduciary funds—restricted			1,690			1,772
	Short-term investments			48			58
	Accounts receivable, net of allowance for doubtful accounts of $34 million in 2007 and $32 million in 2006			8,604			8,756
	Fixed assets, net of accumulated depreciation of $212 million in 2007 and $202 million in 2006			279			167
	Goodwill and other intangible assets, net of accumulated amortization of $162 million in 2007 and $152 million in 2006			1,727			1,656
	Investments in associates			195			173
	Net deferred tax assets			45			72
	Pension benefits asset			313			166
	Other assets			281			270

TOTAL ASSETS			$	13,392		$	13,378

LIABILITIES AND STOCKHOLDERS' EQUITY
	Accounts payable		$	9,811		$	10,062
	Deferred revenue and accrued expenses			351			430
	Income taxes payable (Note 2)			103			54
	Long-term debt (Note 6)			1,200			800
	Liability for pension benefits			20			34
	Other liabilities			570			502

		Total liabilities		12,055			11,882

COMMITMENTS AND CONTINGENCIES (Note 5)
MINORITY INTEREST				40			42
STOCKHOLDERS' EQUITY
	Common shares, $0.000115 par value; Authorized: 4,000,000,000; Issued and outstanding, 142,842,327 shares in 2007 and 153,002,802 shares in 2006			—			—
	Additional paid-in capital (Note 11)			50			388
	Retained earnings (Note 12)			1,404			1,250
	Accumulated other comprehensive loss, net of tax (Note 8)			(152	)		(178	)
	Treasury stock, at cost, 89,017 shares in 2007 and 165,979 shares in 2006			(5	)		(6	)

		Total stockholders' equity		1,297			1,454

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	13,392		$	13,378

			Three months ended September 30,						Nine months ended September 30,
UK pension benefits			Three months ended September 30,						Nine months ended September 30,
UK pension benefits			2007			2006			2007			2006
			(millions)
Components of net periodic benefit cost:
	Service cost		$	12		$	13		$	35		$	38
	Interest cost			29			25			84			72
	Expected return on plan assets			(46	)		(36	)		(135	)		(105	)
	Amortization of unrecognized prior service gain			(1	)		—			(2	)		(2	)
	Amortization of unrecognized actuarial loss			1			3			3			10

		Net periodic benefit (income) cost	$	(5	)	$	5		$	(15	)	$	13

			Three months ended September 30,						Nine months ended September 30,
US pension benefits			Three months ended September 30,						Nine months ended September 30,
US pension benefits			2007			2006			2007			2006
			(millions)
Components of net periodic benefit cost:
	Service cost		$	5		$	5		$	16		$	15
	Interest cost			8			8			26			24
	Expected return on plan assets			(11	)		(10	)		(33	)		(30	)
	Amortization of unrecognized prior service gain			—			—			(1	)		—

		Net periodic benefit cost	$	2		$	3		$	8		$	9

	September 30, 2007		December 31, 2006
	(millions)
Total assets:
Global	$	10,054	$	9,607
North America		1,632		1,771
International		1,468		1,679

Total Retail		3,100		3,450

Total Operating Segments		13,154		13,057
Corporate and Eliminations		238		321

Total Consolidated	$	13,392	$	13,378

		September 30, 2007		December 31, 2006
		(millions)
Long-lived assets⁽³⁾
	UK	$	159	$	89
	US		90		48
	Other⁽²⁾		30		30

Total		$	279	$	167

			September 30, 2007			September 30, 2006
			(millions)
Additional paid-in capital:
	Beginning of period, January 1		$	388		$	557
		Issue of common shares under employee stock compensation plans and related tax benefits		29			15
		Repurchase of shares		(409	)		(32	)
		Issue of common shares for acquisitions		15			2
		Share-based compensation		26			15
		Gains on sale of treasury stock		1			2

	End of period		$	50		$	559

			September 30, 2007			September 30, 2006
			(millions)
Retained earnings:
	Beginning of period, January 1		$	1,250		$	948
		Adoption of FIN 48 adjustment (Note 2)		(4	)		—

				1,246			948
		Net income		314			301
		Dividends		(107	)		(111	)
		Repurchase of shares		(49	)		—

	End of period		$	1,404		$	1,138

							Change attributable to:								Three months ended March 31,						Change attributable to:
Three months ended September 30,	2007		2006⁽ⁱ⁾		% change		Foreign currency translation		Acquisitions and disposals		Market remuneration		Organic revenue growth⁽ⁱⁱ⁾		Three months ended March 31,
															Three months ended March 31,				% change		Foreign currency translation		Acquisitions and disposals		Organic revenue growth⁽ⁱⁱ⁾
															Three months ended March 31,				% change		Foreign currency translation		Acquisitions and disposals		Organic revenue growth⁽ⁱⁱ⁾
	(millions)														(millions)
Global	$	161	$	160	1	%	(1	)%	0	%	0	%	2	%	$	277	$	261	6	%	4	%	—	%	2	%
North America		185		180	3	%	0	%	1	%	0	%	2	%		191		184	4	%	—	%	1	%	3	%
International		203		179	13	%	6	%	0	%	0	%	7	%		304		266	14	%	9	%	—	%	5	%

Commissions and fees	$	549	$	519	6	%	2	%	0	%	0	%	4	%	$	772	$	711	9	%	6	%	—	%	3	%

Investment income		25		24	4	%	9	%	1	%	0	%	(6	)%		22		24	(8	)%
Other income⁽ⁱ⁾																1		4	(75	)%

Total revenues	$	574	$	543	6	%	2	%	1	%	0	%	3	%	$	795	$	739	8	%

Nine months ended September 30,
Global	$	608	$	586	4	%	1	%	1	%	0	%	2	%
North America		570		548	4	%	0	%	0	%	0	%	4	%
International		689		609	13	%	6	%	0	%	0	%	7	%

Commissions and fees	$	1,867	$	1,743	7	%	2	%	1	%	0	%	4	%
Investment income		72		64	13	%	8	%	1	%	0	%	4	%

Total revenues	$	1,939	$	1,807	7	%	2	%	1	%	0	%	4	%

	Three months ending March 31,
	2008			2007
	(millions, except percentages)
Revenues	$	795		$	739
Operating income		225			238
Operating margin or operating income as a percentage of revenues		28	%		32	%

	Three months ended March 31, 2008							Three months ended March 31, 2007⁽ⁱ⁾
	Revenues		Operating Income			Operating Margin		Revenues		Operating Income		Operating Margin
	(millions)							(millions)
Global	$	285	$	133		47	%	$	272	$	122	45	%
North America		196		27		14	%		193		27	14	%
International		314		104		33	%		274		87	32	%

Total Retail		510		131		26	%		467		114	24	%
Corporate & Other⁽ⁱⁱ⁾		—		(39	)	n/a			—		2	n/a

Total Consolidated	$	795	$	225		28	%	$	739	$	238	32	%

			Due within
Obligations	Total at September 30, 2007		Due within						Due after 48 months
Obligations	Total at September 30, 2007		12 months		12–36 months		36–48 months		Due after 48 months
	(millions)
5.125% Senior Notes due 2010	$	250	$	—	$	250	$	—	$	—
5.625% Senior Notes due 2015		350		—		—		—		350
6.200% Senior Notes due 2017		600		—		—		—		600
Interest on Senior Notes		550		70		139		114		227
Operating leases		1,300		72		119		128		981
Pensions		395		153		229		13		—
Put options relating to subsidiaries and associates⁽ⁱ⁾		508		427		69		—		12

Total contractual obligations	$	3,953	$	722	$	806	$	255	$	2,170

Date of Sale		Number of Shares		Acquisition
~~September 28, 2007~~February 21, 2008		~~7,641~~94,430		~~Burkart Risk Consulting~~Rontarca Prima, Willis, C.A.
March 13, 2008		12,181		Eyl & ~~Partner AG~~Gordon Insurance Brokers, Inc. d/b/a Gueits, Adams & Company

Period	Total Number of Shares Purchased	Average Price per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs	Fees and Price Adjustments		Approximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs
January 1, to January 31, 2008	—		—	—	$	—	$	1,000,000,000
February 1, to February 28, 2008	1,435,028	$	33.31	1,435,028	$	47,840,130	$	952,159,870
March 1, to March 31, 2008	827,842	$	32.71	827,842	$	27,148,278	$	925,011,592

Director	For	Against	Withheld
William W. Bradley	123,017,880	5,506,479	74,990
Joseph A. Califano, Jr.	122,582,934	5,947,899	68,516
Anna C. Catalano	123,038,744	5,484,289	76,316
Eric G. Friberg	123,062,951	5,461,502	74,896
Sir Roy Gardner	111,208,955	17,316,345	74,049
Sir Jeremy Hanley	122,684,390	5,837,863	77,096
Robyn S. Kravit	122,759,536	5,764,705	75,108
Wendy E. Lane	122,487,223	6,010,933	101,193
James F. McCann	117,214,201	11,305,447	79,701
Joseph J. Plumeri	122,862,871	5,670,939	65,539
Douglas B. Roberts	123,001,006	5,522,406	75,937

3.1		Memorandum of Association of Willis Group Holdings Limited as amended April 23, 2008
3.2		Bye-laws of Willis Group Holdings Limited as amended April 23, 2008
10.1		Fourth Amended and Restated Employment Agreement dated February 29, 2008, between Willis Group Holdings Limited, Willis North America Inc., and Joseph J. Plumeri (incorporated by reference to Exhibit 10.1 to Willis Group Holdings Limited's Form 8-K filed on February 29, 2008)
10.2		Form of Employment Agreement dated December 17, 2007 between Willis Limited and Tim Wright (incorporated by reference to Exhibit 10.2 to Willis Group Holdings Limited's Form 8-K filed on February 29, 2008)
10.3		Willis Group Holdings Limited 2008 Share Purchased and Option Plan
31.1		Certification Pursuant to Rule 13a-14(a)
31.2		Certification Pursuant to Rule 13a-14(a)
32.1		Certification Pursuant to 18 U.S.C. Section 1350
32.2		Certification Pursuant to 18 U.S.C. Section 1350

		WILLIS GROUP HOLDINGS LIMITED
(Registrant)
	By:		/s/ PATRICK C. REGAN Patrick C. Regan Group Chief Operating Officer and Group Chief Financial Officer