JLT ‘cautious’ about rest of year despite strong first half

Jardine Lloyd Thompson (JLT) chef executive Dominic Burke said he is “more cautious” about the rest of 2014 despite the broker reporting a 12.5% profit rise and 6% organic growth in the first half of the year.

Burke said: “We are confident that we can deliver year-on-year financial progress, but we are more cautious over the outlook for the remainder of the year given the marked decline in the insurance and reinsurance rating environment over the last quarter and the continued strength of sterling.”

Strong half

JLT made a profit after tax of £66.6m in the first half of 2014, up 12.5% on the £59.2m it made in the same period last year.

This was despite an £11.2m hit from exchange rate movements.

Total revenue was up 15% to £559.6m (H1 2013: £485.3m) and organic growth across the group was 6%.

JLT’s core broking division, Risk & Insurance, reported a trading profit of £94.9m, up 15% on the £82.7m it made in last year’s first half.

The broking division’s revenue increased 15.4% to £429.6m (H1 2013: £372.2m), and organic growth was 5%.

JLT Specialty dip

Despite the strong group performance, the tough trading conditions took their toll on some units. JLT Specialty, JLT’s main UK-based broking unit, suffered an 8% fall in trading profit to £16.4m (H1 2013: £17.8m) while growing revenues by 2% to £112.3m.

The company said that JLT Specialty “goes into the second half of the year in good shape in terms of both its underlying new business pipeline and the strength of its specialist teams in which we continue to invest”.

But it added: “We anticipate that the accelerating decline in insurance rates experienced in the second quarter combined with the continued strengthening of sterling will result in JLT Specialty’s overall financial performance in 2014 being broadly similar to 2013.

Thistle, JLT’s UK managing general agency division, narrowed its trading loss to £100,000 from £1.3m and grew revenues by 4% to £16.1m.

Burke said: “The strong organic revenue growth we achieved in the period, despite these challenges, demonstrates the success of our strategy of focusing on our areas of specialisation and higher growth economies.”