Jardine Lloyd Thompson posts solid 2017 results as reinsurance rates improve

Jardine Lloyd Thompson Group posted solid growth, including in its reinsurance unit JLT Re, and improved profits in its preliminary results for 2017.

The broker posted revenues of £1.4 billion, an increase of 10 percent on the same period a year earlier. Within this, it posted organic growth of 5 percent with JLT Re posting growth of 4 percent and its specialty business growth of 6 percent.

It posted an underlying pre-tax profit of £191.5 million, an increase of 11 percent.

JLT’s international specialty businesses together delivered revenues of £449.4 million, a headline increase of 21 percent or 13 percent at CRE, with organic revenue growth of 8 percent.

JLT Re delivered revenues of £217.1 million, an increase of 11 percent, reflecting organic revenue growth of 4 percent. This performance was delivered despite the continued decline in pricing across most lines of reinsurance business and in most geographies across the year. This was underlined by the 1 January 2017 renewals, which saw risk-adjusted global property-catastrophe pricing reduce by almost 6 percent.

JLT Re’s trading profit increased by 5 percent to £42.4 million. The trading margin was 20 percent in the year, reflecting what JLT Re called its continued investment in market leading talent across all of its geographies, increasing headcount by approximately 10 percent year on year. Organic revenue growth in Europe and North America was offset in part by Asia Pacific, which experienced significant headwinds from the rating environment combined with reductions in facultative buying activity, the company said.

The company also noted that after five consecutive years of falling reinsurance rates, global property catastrophe rates have experienced some upward pressure but with significant variances across regions driven in large part by the losses experienced following hurricanes Harvey, Irma and Maria.

“Across most lines and most classes of reinsurance and specialty, the trend of steady price reductions through a number of years seems to have moderated or ended. However, a consistent pattern is not evident and it would be premature to refer to a hardening market.

“In today’s market each risk needs the broker to demonstrate real understanding of the risk and real transactional expertise to secure appropriate cover on the optimum terms for the client.

“This is the specialist capability that JLT has built over the past decade and the Group is confident that JLT is well placed to grow and execute on its strategy. JLT has entered 2018 with real momentum but we do not expect a consistently hard insurance market. While the Group is positive with regards to the factors within its control, volatile currency markets present a risk. Therefore, taken together, JLT enters 2018 looking forward to continuing strong organic revenue growth and further financial progress.”

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