8 November 2016 Insurance

JLT bullish on specialty and reinsurance despite headwinds

Re/insurance brokerage Jardine Lloyd Thompson (JLT) plans to build out its specialty business in 2016 in spite of challenging market conditions, it said in its interim management statement for the period from July 1 through to November 7, 2016.

It added that its reinsurance segment, JLT Re, had traded well in the period, citing strength in the US and Asia. It remains on track to increasing its operating marine to 20 percent in 2016, it said.

JLT Specialty is expected to deliver good levels of organic growth in 2016, the firm said, stating it will have invested £6 million in it in 2016 – above what it invested in 2015.

The figure reflects the combined effect of the additional investment announced at the interim statement in July and the negative impact of foreign exchange movements, according to JLT.

Within JLT Specialty, divisional performance in certain sectors such as energy and marine continued to reflect the impact of depressed commodity prices and reduced activity in these sectors, while other divisions, such as aviation and construction, JLT said had performed well.

Across JLT’s other risk and insurance businesses – including Latin America, Asia, and Australia & New Zealand – performance remained steady in the period.

The interim report suggested JLT’s overall performance continued to be impacted by movement in foreign exchange rates following the EU Referendum in June.

If sterling/US dollar rates were to remain at current rates of exchange, JLT now estimates a further £4 million benefit, for a total of £16 million on a full-year basis.

“The build-out of our US Specialty business continued in line with our plans. Total investment spend for this year will be approximately £6 million above that of 2015, reflecting the combined effect of the additional investment announced at the interim statement in July and the negative impact of foreign exchange movements,” the statement said.

“The trading environment is anticipated to remain challenging for the remainder of the year. Despite these conditions we continue to invest across the group to drive future growth, improve margins and win market share. We are confident that our specialty-focussed strategy will continue to deliver good levels of organic revenue growth.”

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