Lloyd’s broker still ‘needs to do more’ to hit 20% profit margin target, says chief executive

Simon Rice, Lonmar

Growth in Lonmar Global Risks’s UK business has helped the Lloyd’s broker boost its 2012 profit after tax  more than three times to £3.2m (2011: £1m).

However, chief executive Simon Rice (pictured) said the company still has more to do to hit its target operating profit margin of 20%.

Underlying improvement

Lonmar’s 2012 profit after tax was helped by a one-off £2.5m gain from the sale of its MediCare International managing general agency to French medical insurance broker APRIL.

Its 2011 profit was similarly boosted by a one-off £2.3m sum relating to the transfer of Lonmar’s casualty and exceptional risks teams to rival Arthur J Gallagher.

But the operating result before exceptional items, which excludes these one-off gains, moved to a profit of £1.2m from a loss of £348,000.

Lonmar’s 2012 revenue of £14.1m was 7.8% down on 2011’s £15.3m, largely as a result of the MediCare sale.

However, underlying revenue, stripping out the Medicare business and contributions of the departed casualty and exceptional risks teams, increased by 5.3% to £14m (2011: £13.2m).  

Rice said the growth was “due in no uncertain terms to the growth in the UK business, as well as growth in the US, accident and health marine and fine art divisions.”

He added: “I have been delighted with the success of our UK business to date.”

Rice explained that leads generated from the hire of a UK consultant in October 2011 had helped bost the UK business in 2012. “The opportunities started coming in in 2012 and that is continuing in 2013, and we have had additional hires this year.”

Lonmar appointed Towergate London Market managing director Martin Hughes in January to help with its UK growth.

The UK business is mainly made up of binding authorities and schemes, but Rice said that the company was looking at starting transactional wholesale broking in the UK as well.

Profit margin target

Despite the improved results, Lonmar is still some way from its 20% operating profit margin target. The operating profit margin for continuing operations in 2012 was 8.4%.

Rice said: “We are going in the right direction, but we need to do more, and we will.”

He added that the company hopes to hit its 20% target “in the next two to three years”.

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