Margins flat but JLT Towers Re makes strong start
JLT Towers Re has made promising progress since its inception when the reinsurance unit of Jardine Lloyd Thompson (JLT) was combined with Towers Watson Re, JLT has said in its results for the first six months of 2014.
The company said the overall integration had progressed well and it has enjoyed encouraging support from cedants in the past six months. It said it expects its full year margin to be broadly flat, however, because of its ongoing investment in the business and the sharp decline in the reinsurance rating environment.
“JLT Towers Re has had a good start to its first period of trading. Organic revenue growth was 6 percent in the period and the enlarged business delivered an unchanged trading profit margin of 30 percent. Revenue for the combined JLT Towers Re for the period was £110 million,” the company said.
“Historically approximately 70 percent of our reinsurance revenues were booked in the first six months of the calendar year and we expect a similar pattern going forward for the merged business.
“The overall integration is progressing well. In North America we have seen high levels of client and people retention and are now actively engaged in recruiting both senior leaders and producers. In London both teams are fully merged and operating out of one building.
“The focus for the enlarged business is on building new business opportunities for 2015 and beyond and we are very encouraged both by the support of cedants and the strength of the developing pipeline.
“This is a business with an exciting long-term growth opportunity. There is strong client demand for a differentiated broker that can provide real choice and innovation. We now have the scale, capabilities and client access to win increasing market share and we are committed to making significant investments in our reinsurance businesses around the world, particularly in the USA, now and into the future.”
JLT as a whole, posted total revenues of £559.6 million in the first six months of 2014, an increase of 15 percent. Its pre-tax profit increased by 16 percent to £98.4 million after incurring net exceptional costs of £9 million, comprising acquisition and integration costs of £6.2 million and £2.8 million relating to a two year business transformation programme which concludes at the end of 2014.
