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LONDONThe chief executive of Jardine Lloyd Thompson Group in London has resigned after the firm warned that its 2004 profits would be 18.6% lower than analysts expected.
In a statement issued Friday, JLT announced net income before tax and exceptional items will likely be £92 million ($174.3 million) for 2004, £21 million ($39.8 million) less than the figure forecast by analysts.
The London-based brokerage also said it has accepted the resignation of Steve McGill as a result of the profit warning. Mr. McGill has been JLT's CEO since 2002, when he replaced Ken Carter.
JLT reported first-half net income before tax and exceptional items of £63.8 million ($115.6 million) in July, which means it expects to make only £28.2 million ($53.4 million) in the second half.
The company lowered its expectations because its risk consulting unit, which is part of its risk and insurance business, has experienced difficult trading after insurance rates softened faster than expected, the statement said.
Lower reinsurance revenues in the United States and the United Kingdom as insurers have opted to retain more risk and the weakness of the U.S. dollar have also had a negative impact, the statement added.
In a report on its interim results in July, Mr. Carter, the group's chairman, described the insurance market as being "more fragile and less stable" than at the beginning of the year.
In July, Mr. Carter also noted the group's prediction at the beginning of the year that a continuing weak U.S. dollar and a changing reinsurance environment would affect results but "that the benefits from recent recruitments and...acquisitions would become more apparent in the second half of 2004."
A JLT spokesman could not comment, though, on how the performance of newly recruited staff and the acquisition of new business contributed to the worse-than-expected second half.
Asked to comment further on reasons for the departure of Mr. McGillwho joined one of JLT's founder companies in 1989the spokesman said, "The fact is, Steve was bullish on the rating environment, and that turned out to be wrong and someone has to take responsibility."
As a result of Mr. McGill's departure, Mr. Carter has agreed to act as executive chairman for up to two years while the group recruits a new CEO.