Canadian Underwriter

JLT Group’s underlying profit down 7% to 170.1 million in 2015

March 1, 2016   by Canadian Underwriter

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Planned investment in its United States business contributed to Jardine Lloyd Thompson Group plc’s underlying profit before tax falling 7% to £170.1 million in 2015, preliminary results show, but the company reports its overall momentum was sustained despite the challenging trading environment.

JLT Group confident in momentum despite slip in underlying profit

Underlying profit before tax for the year ended Dec. 31, 2015 was £170.1 million compared to £183.0 million for 2014, notes a statement issued Tuesday from JLT Group, which has offices around the world, including in Canada.

Excluding the planned U.S. investment – net investment in JLT USA last year was £20.5 million compared to £2.7 million in 2014 – underlying profit before tax is up 3% to £190.6 million for 2015, states the company.

Reported profit before taxation was also down to £155.0 million, 3% lower than the £159.7 million in 2014. As for underlying trading profit, that amounted to £187.5 million in 2015 compared to £196.8 million in the previous year.

“This reduction in the Group’s trading profit reflects both our investment in building out our U.S. Specialty business and the specific challenges faced by our U.K. & Ireland Employee Benefits business,” the company reports.

“The Group faces a number of external headwinds as we go into 2016,” says group chief executive Dominic Burke. “However, our focus remains on those factors that we can control and on maintaining the revenue momentum and cost control established over the last 10 years. We remain confident in our strategy, our platform and our continued ability to grow,” Burke continues.

Looking at total revenues, JLT Group’s preliminary results show it grew 5% in 2015 to £1,155.1 million, or 6% at constant rates of exchange. Overall, organic revenue growth was 2% last year.

“This performance was delivered despite the weak insurance and reinsurance rating environment and the further deterioration in the macro-economic environment experienced over the year,” the company statement notes.

JLT Group’s Risk & Insurance businesses – which represent about 75% of the Group’s revenue – witnessed strong organic growth of 5% in 2015 and revenues that increased 6% to £866.6 million. “Both our Specialty and Reinsurance businesses achieved solid 19% trading margins,” the company points out.

Broken down, Specialty Businesses saw total revenue of £693.0 million in 2015, up 6%, while JLT Re had total revenue of £173.6 million, an increase of 5%.

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Risk & Insurance Revenue

With regard to Employee Benefits, while revenues increased by 2% overall, these reduced by 6% on an organic basis. JLT’s International Employee Benefits businesses achieved 21% revenue growth, or 7% on an organic basis.

Looking at Risk & Insurance total revenue by location, JLT Canada saw numbers slip by 1% to £20.4 million in 2015. Organic growth, however, was 8% and, overall, growth was 7%.

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Risk & Insurance by Location

JLT Specialty generated the largest chunk of revenues for JLT Group’s Risk & Insurance businesses, with £311.2 million in 2015, with revenue growth of 7%. “This as a strong result given the continued fall in insurance pricing, achieved in challenging market conditions, demonstrating the strategic and operational logic of the merger between JLT Specialty and Lloyd & Partners,” the company statement notes.

“We believe that the combined business is now a Specialty powerhouse with growing momentum, as evidenced by a significant number of client wins during the year,” the company reports. “Particularly notable has been the performance of our Aviation, Credit, Political & Security and Financial lines teams.”

In terms of reinsurance, JLT Re delivered a strong performance in 2015, with revenues increasing by 5% to almost £174 million and organic revenue growth of 2%. “Particularly noteworthy in 2015 has been the growth delivered in Asia as our capabilities and reputation in the region have grown,” the statement notes.

“This performance was pleasing when set against the continued decline in the reinsurance rating environment during the period. It is worth noting that, since acquiring the Towers Watson Re business just over two years ago, we have seen property catastrophe rates fall by over 30%.”