2-8 Rue Ancelle, 92200 Neuilly-sur-Seine, France;

331/41/43-5000; fax: 331/41/43-5555

Internet: www.grassavoye.com

1997 1996

Gross revenues $247,950,000 $226,968,000

Brokerage revenues $244,230,750 $225,833,160

Brokerage retail 87.6% 86.7%

Reinsurance 1.8% 1.2%

Personal 7.4% 9.4%

Services 1.7% 2.2%

Investment income 1.2% 0%

Other 0.3% 0.5%

Employees 1,896 1,793

Rev./employee $128,814 $125,953

Offices 86 76

Converted at applicable exchange rates.

Gras Savoye & Cie., France's largest independent insurance broker, is quick to grant some of the credit for its 24% increase in brokerage revenues last year to its new alliance with the world's fourth-largest broker, Willis Corroon Group P.L.C.

An agreement for London-based Willis Corroon to buy 31.72% of voting rights in Gras Savoye was the most significant event of the year for the French broker. Willis Corroon also has indicated that it plans to increase its stake to a majority interest in the French broker over time.

As stated at the time of the investment, the aim of the partnership is to help the two brokers jointly secure leadership positions in chosen market sectors and to create a powerful combination in the French marketplaceÁand one that is especially capable of servicing multinational clients.

The alliance is all the more important to Gras Savoye after the collapse of the UNISON brokerage network, in which it was one of the leading members.

On a global basis, the new alliance combines Willis Corroon's presence in 74 countries with Gras Savoye's 33 foreign subsidiaries.

Gras Savoye, based in the Paris suburb Neuilly-sur-Seine, already serves about 5,000 corporate clients and approximately 1,000 local government authorities.

The investment by Willis Corroon renewed a long-standing relationship between the two brokers that had ended only in 1990, when Willis Corroon left the UNISON brokering network. Gras Savoye remained a member of UNISON until last year, when it dissolved after the acquisitions of its largest member, Johnson & Higgins, and many other members.

Gras Savoye's strong revenue growth last year outstripped the expectations even of its chairman and chief executive officer, Patrick Lucas, who a year ago had said he expected 1997's growth would not match the previous year's 14% improvement.

Gras Savoye's total gross revenues soared 25.2% to 1.45 billion French francs in 1997. Brokerage revenues increased 24% to 1.43 billion French francs.

When converted to U.S. dollars using average exchange rates, Gras Savoye's 1997 brokerage revenues totaled $244.2 million, up 8.1% from 1996, ranking it as the world's 10th-largest broker.

Mr. Lucas maintains that he had been overly conservative in his forecast last year because, at the time, competition was fierce, insurance rates were depressed and the French economy was having its share of problems, leaving him doubtful that the previous year's rate of growth could be maintained.

In fact, he said his forecast was correct, in a sense, because revenue growth from existing operations did amount to only 13% in 1997. Most of this increase came about through existing clients in all geographic locations placing more business with Gras Savoye.

However, approximately 11% of revenue growth came from acquisitions, including a 2.7% gain in gross revenues from Gras Savoye's absorption of Willis Corroon France S.A. in late 1997. In previous years, acquisitions had added only a few percentage points to Gras Savoye's annual revenue gains.

Other acquisitions last year include 100% of HIPCover, a French broker specializing in bloodstock insurance; 60% of Auxi Assurance, a French broker to medium-sized commercial clients; and 60% of OAAGA, a non-aviation retail broker. Gras Savoye previously had owned 40% of OAAGC, France's largest aviation insurance broker. In 1997, Gras Savoye also acquired a 35% stake in NSA, a French company that arranges warranties for used automobiles.

Mr. Lucas said that, with such acquisitions and its new links to Willis Corroon, Gras Savoye does not miss the UNISON network.

While he maintains that Gras Savoye's 23-year relationship with its UNISON partners had worked very well for the French broker, Mr. Lucas said one advantage of its association with Willis Corroon is that the U.K. broker provides it with much better access to the important London insurance market for its clients than did its previous UNISON partner, Johnson & Higgins.

J&H had "mainly concentrated on their U.S. business, which we were handling in France," he said.

Willis Corroon has been "extremely helpful, extremely reactive, extremely fast in responding to our needs," added Mr. Lucas.

In other markets, he cited Willis Corroon's acquisition of a substantial minority stake in the third-largest German broker, Jaspers Wuppesahl Industrie Assekuranz, and plans announced by Willis last month to acquire a 50% stake in Grupo Ital Brokers in Italy as signs of its partner's commitment to becoming one of the top three brokers in major countries where it operates.

This has been achieved in France, Germany and soon will be in Italy -- three of the major economies in Europe. Ascendancy should take place in Spain with the planned merger of the Gras Savoye and Willis Corroon operations there. Poland is another targeted country where merging the two companies' operations should strengthen the positions of both Gras Savoye and Willis Corroon.

Only this month, Willis Corroon unveiled an agreement that will expand the network further with its acquisition of a 30% stake in the leading Danish insurance broker and employee benefits consultant Assurandorgruppen, also with the right to increase the stake to a majority shareholding over time. Willis Corroon said, after this deal was announced, that it is among the top three brokers in each of the major economies of Western Europe.

Willis Corroon's stronger presence in North America is another benefit cited by Mr. Lucas. This is particularly useful in arranging coverage for the U.S. exposures of French multinational clients, although Mr. Lucas said Gras Savoye now expects to receive business handling the French accounts of Willis Corroon's North American clients.

Mr. Lucas maintains that this growing network of Gras Savoye and Willis Corroon is enough to keep them in competition against the major global brokers.

"If we see what has happened in the last six months, or since we have done this operation with Willis, obviously we have been able to continue our growth and get new business," he said.

Major clients also are satisfied with the Gras Savoye/Willis Corroon network, he believes. "They like the network as it is -- the clients, the market, insurance and reinsurance, and even competitors -- for some of them say that we have made a pretty good network with a lot of potential," Mr. Lucas stated.

As with its other recent acquisitions, Willis Corroon has ensured that it can increase its shareholding in Gras Savoye to a majority stake over time.

Under the terms of the July 1997 agreement with Gras Savoye, Willis Corroon can increase its shareholding to more than 50% after 12 years, though it can do so after three years with the consent of existing owners. These owners include the managing partners, Patrick Lucas, Emmanuel Gras and Daniel Naftalski, and family descendants of the founders, who together hold 43.36%.

Two French insurers, AXA Group and Athena Assurances, each hold 10.01%. The remaining 4.9% is held by GS Euro Finance, a Belgian company controlled by the owning families.

Mr. Lucas maintains that, with cooperation developing between the two brokers to the mutual advantage of all concerned, the prospect of Willis Corroon gaining control is not one that concerns him.

Nor, he maintains, does it worry Gras Savoye's clients.

"Our multinationals are extremely happy with the decision we have made. ...I've seen a number of them in the last month, as we do every year with our big clients, and they are all very pleased with the way the business has been developing for them," Mr. Lucas said.

Because Willis Corroon completed the acquisition of its stake in Gras Savoye only toward the end of 1997, Mr. Lucas maintains it is in 1998 that the real benefits of the partnership should become apparent.

While Mr. Lucas once again predicted that continued strong competition will not allow revenue growth this year to match last year's exceptional gains, he nevertheless expects Gras Savoye to produce "a nice increase in growth."

Among those areas where the partnership should start showing benefits, Mr. Lucas singled out Inspace France, an alliance with Willis Corroon that was launched in January. Inspace offers insurance and reinsurance brokerage services, as well as risk management consulting, for satellites and other space-related risks.

Mr. Lucas predicted that Inspace France will significantly enhance Gras Savoye's presence in the space insurance marketplace. Although hesitant to name new clients, he said a number are "in the pipeline."

On the reinsurance side, the merger of Gras Savoye's operations in France with Willis Corroon "gives a pretty good size and a pretty efficient team" and has resulted in an increase in business with the 1998 renewal round.

Mr. Lucas forecast that reinsurance brokering revenues could reach almost 40 million francs ($6.6 million) in 1998, nearly double their level for 1997 and well ahead of the 14 million francs ($2.7 million) achieved in 1996 by Gras Savoye Reassurances on its own.

Gras Savoye also has done considerable business this summer as brokers for France 98, the World Cup soccer competition that took place at stadiums throughout France during June and July.

The broker has considerable experience in arranging insurance for major sporting events and already was the broker for the new Stade de France sports stadium in Paris, which was the location for a number of this year's World Cup matches. For France 98, Gras Savoye arranged the insurance coverage on liability risks, property, the motor fleet used to ferry players and officials, and on spectators attending all the soccer games throughout the country.

Gras Savoye reported a total of 86 offices for 1997, up from 76 in 1996. Of those, it has 19 regional French offices, the same as a year ago. It increased the number of its overseas subsidiaries by four to 33. These include a 45% stake in Gestassur, a general commercial broker in Geneva, Switzerland, and three more African offices -- in Equatorial Guinea, Malawi and Niger -- to give it a total of 14 African offices.