JLT sees US business turning a profit in two years
(Reuters) - Insurance broker Jardine Lloyd Thompson Group P.L.C. said it saw an improving outlook for its expanding U.S. specialty business, as oil exploration costs are falling and it expects President Donald Trump’s policies to boost the construction sector.
Investment in the United States last year crimped the earnings of JLT, which reported a 1% rise in 2016 pre-tax profit on Tuesday, but it said its U.S. business was on track to turn a profit in 2019.
“In the construction space, with Trump talking about the need to rebuild America and its infrastructure, that's obviously a very positive outlook,” Chief Executive Dominic Burke told Reuters by phone. “Oil prices are seen to be reasonably stable ... this is also coinciding with the cost of exploration coming down.”
Mr. Burke said he was confident that JLT’s organic revenue would grow around 6% this year, up from 2% last year, helped by the completion of a turnaround in its U.K. employee benefits business, as well as by U.S. expansion.
Insurance and reinsurance premiums continued to fall but at a slower pace, he said.
“There is not much room left for these rates to go any softer, it seems to be heading towards an inevitable turn in the market,” he said.
JLT said pretax profit totaled £172.6 million ($214 million) for the year ended Dec. 31, slightly below analysts’ forecasts.
Total revenue rose 9% to £1.26 billion ($1.57 billion).
JLT said in a statement that the trading environment had been challenging, with “sustained softness” in insurance and reinsurance prices.
KBW analysts described the results as a “fractional miss in a difficult trading environment,” reiterating their perform rating on the stock.
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