JLT beats rivals again with 7% organic growth

Broking group Jardine Lloyd Thompson (JLT) posted 7% organic revenue growth in 2012, again beating rivals Aon, Marsh, Willis and Arthur J Gallagher.

This was despite slowing growth at the broker’s UK managing general agency (MGA), Thistle.

Total revenues for 2012 were £880.1m, compared with £818.8 in 2011.

JLT also boosted profit after tax by 19% to £106.4m (2011: £88.7m).

Underlying profit, which excludes £4.9m of one-off charges related to the business transformation programme that concluded in June 2012 was £110.3m, up 11% on 2011’s underlying profit of £99.4m.

JLT chief executive Dominic Burke said: ‘’We are pleased to be able once again to present a strong set of results, which demonstrate the success of our clearly articulated strategy of increasing our specialty focus and broadening our exposure to the higher growth economies of the world.

“This distinct strategy and our strong momentum give us the confidence in our ability to deliver year-on-year financial progress.”

In 2012, Aon reported organic growth of 4%, Marsh of 5%, Willis of 3.1% and Gallagher of 4.4%.

Divisional performance

Revenues in JLT’s risk and insurance business – its core broking operation – grew 8% at constant rates of exchange to £676.4m in 2012. This comprised 7% of organic growth and 1% of growth by acquisition.

The biggest rates of organic growth were seen in Latin America (22%) and Asia (13%).

Trading profit at the risk and insurance division increased 6% to £139.7m (2011: 131.9m). The trading margin was unchanged at 21%.

Revenues in the employee benefits division increased 10% to £203.7m in 2012. Organic growth was 8%.

Trading profit increased 8% to £43.3m (2011: £40.1m). However, the trading margin dipped slightly to 21% (2011: 22%).

Thistle slump

JLT’s group-wide improvements came despite poorer performance at the Thistle UK MGA. Revenues fell 4% to £34m, and trading profit was down 20% to £4m (2011: £5m).

JLT said the drop in performance was caused by several factors, including “continued weak UK consumer and business confidence”.

The company said: “The business continues to maintain underwriting discipline rather than pursue volume, but margins have been further impacted by claims inflation and aggressive competition.”

It added: “Notwithstanding these challenges, we have put new leadership in place in July 2012 to deliver on our strategy and drive the growth that we believe this business is capable of.”