Top insurance brokers: Jardine Lloyd Thompson Group P.L.C.Posted On: Jul. 20, 2014 12:00 AM CST
A focus on being a specialist in insurance, reinsurance and em-ployee benefits helped London-based insurance brokerage Jardine Lloyd Thompson Group P.L.C. increase its brokerage revenue in 2013.
The acquisition last fall of Towers Watson & Co.'s reinsurance brokerage business to establish JLT Towers Re helped JLT boost its 2013 brokerage revenue by 20.9% to $1.06 billion, moving it up two notches to No. 5 in Business Insurance's 2014 ranking of the world's largest insurance brokers.
The $250 million deal was “transformational” for JLT, said Eamonn Flanagan, a director at investment adviser Shore Capital Group Ltd. in Liverpool, England.
It provided JLT with a large reinsurance staff as well as access to analytics, making the broker a “serious player” in the reinsurance market, Mr. Flanagan said.
Since JLT set up a reinsurance arm in 2006, it has grown steadily, and the record purchase of the Towers Watson business was a highlight of 2013 for JLT, said Dominic Burke, the broker's group CEO.
“We had made it clear for some time that we were committed to reinsurance,” Mr. Burke said of the purchase of the Towers Watson business.
For the year ended June 2013, Towers Watson's reinsurance brokerage posted revenues of $166.2 million. Combined with JLT Re's $99.3 million revenues for the same period, the enlarged unit would rank as the fourth-largest reinsurance brokerage in the world, according to a company statement.
Despite having earmarked the Towers Watson operation as a potential takeover target, JLT declined to bid when it was put up for sale, as it does not take part in auctions, Mr. Burke said. An auction process is incompatible with a “people business” such as broking, he said.
“However, we clearly did have an interest in the business and had started to build relationships within the business and garner support,” he said. “So when an opportunity presented itself in September, we were able to successfully engage with (Towers Watson) ... and explained the rationale of JLT as an acquirer.”
With a positive client reception, the combined JLT Towers Re launched in November and “is as busy as it could hope to be,” with integration efforts progressing well, Mr. Burke said.
The reception from large reinsurance buyers to the deal has been very favorable, said Shore Capital's Mr. Flanagan.
JLT, however, is not “deal crazy” and seeks to retain its culture of being a specialist people business despite its increasing size, Mr. Burke said.
Yet retaining its reputation as a specialist while offering large clients access to the services they need could be a challenge for JLT, Mr. Flanagan said.
During 2013, JLT moved its headquarters to the new St. Botolph Building in the City of London, the city's financial district, to house nearly 3,000 staff members, Mr. Burke said. JLT also has active training and mentoring programs to attract and retain talented staff while it also seeks to grow organically, he said.
JLT posted 8.5% organic growth in 2013 vs. 7% in 2012.
“We are confident in our ability as a firm to be able to grow organically,” Mr. Burke said as JLT seeks to deepen its specialty offerings “in areas of the world where our clients” are located.
The company is seeking to complement its strong base in the United Kingdom with operations in Asia and Latin America, predominantly in health care business, he said.
For example, JLT in January acquired 75% of SCK Corretora e Administradora de Seguros, a Rio de Janeiro-based employee benefits and insurance brokerage operation, he noted.
Employee benefits continues to be a growth area and now accounts for about 20% of the company's revenue, Mr. Burke said.
While insurance rates are falling for many lines because of abundant capacity, “JLT has shown itself to be able to grow in all market conditions,” Mr. Burke said.