55JLT Reinsurance Brokers Limited Where we are today…JLT Reinsurance Brokers Limited(300)JLT Re (205)Business Research (20)JLT Aerospace(75)Europe (128)North America(55)Bermuda(2)Asia(20)UK(58)North America(17)Including staff numbers
59Estimated Global Market JLT Re Started Life as…JLT Re 2006 PortfolioNon-Marine (24%)Marine(61%)Aviation(15%)A medium-size broking team imbedded in an insurance broking operationNo recognised reinsurance brandPortfolio dominated by marine and energy businessLack of analytical and risk modelling capabilitiesEssentially, a London-based operationEstimated Global MarketNon-Marine (94%)Marine(4%)Aviation(2%)
60JLT Re Strategic Plan 2006 – 2010Focus on risk and capital management, not just reinsurance/risk transferBalanced business mix reflecting market opportunitiesInternational brandSingle, client-centred global entityEffective international network with “centres of excellence” in key marketsEfficient business processes – a 21st century operationInnovative advisory services and thought leadership
61To date we have :Made a significant investment in analytical expertiseEstablished a presence in USA/BermudaEstablished Non-Marine Treaty practice in London through hires and acquisition of HWSWe continue to:Hire individuals/teamsConsider acquisitions
62Estimated Global Market JLT Re Business MixEstimated Global MarketNon-Marine (94%)Marine (4%)Aviation (2%)200649%40%11%200824%15%61%33%53%14%2007MarineAviationNon-Marine
66JLT Aerospace Acknowledged number 4 Broker in Class Blue Chip client listOpportunities for growth :AsiaUSA2nd and 3rd tier operators, general aviation
67Providing a real alternative to clients. TodayJLT Re & JLT AerospaceProviding a real alternative to clients.
68John Lloyd Chairman & CEO Lloyd & PartnersJohn LloydChairman & CEO
69What is Lloyd & Partners? Wholesale brokerage firm providing specialised transactional / service solutions for independent brokers, worldwide but particularly in the USA and JLT retail operations, worldwide but particularly in Australasia / Canada and South America.Operating from London and Bermuda (JLT Park)240 Staff:London: 210Bermuda: 30
70Casualty, Healthcare & Professional lines Key Disciplines:Energy & MarineCargo, Fine Art & SpeciePropertyCasualty, Healthcare& Professional LinesCasualty, Healthcare & Professional lines26%Property22%Cargo, Fine Art & Specie22%Energy & Marine30%
71“A sustainable growth story” Achievement in last two years:Acquisition of Park Ltd in Bermuda to create more complete product offerings – Casualty, Financial Lines & Property.Strengthening Property capability with particular focus on mining industry. (3 hires)Creation of Fine, Art & Specie capability to add diversification to Cargo offering. (3 hires)Creation of facultative R/I capability to Energy team to create better value on premium handled. (3 hires)Acquisition of Craven & Partners to broaden Marine and Onshore Energy capability and more Cargo resource. (15 hires)Expansion of Property programme team to enhance capability. (2 hires, to date)
72“A sustainable growth story” Revenue: £41.2 million Revenue: £47.1 millionTrading Margin: 17% Trading Margin: 17%Goal is continued double digit top line growthand improved trading margin.
78Investments 2008 Real Estate Core Risks Middle East & North Africa Retail PowerTransportation/UtilitiesFutureGCubeClaims/EchelonPI, E&O & D&OGRS – Major AccountsFurther Bolt-ons
79Brian Carpenter Chairman JLT Asia PacificBrian CarpenterChairman
80Asia Trading Performance ₤ 2008: Revenue 40, % Trading Profit 8, % PBIT 8, % 4 Year Average Ratio 2005/08 Trading Ratio 20.17% PBIT/Revenue 21.50%
81JLT Asia Historically major P&C activities 2008 review, introduction of specialties under matrix structureObjectivesGrow business organically and through bolt-on acquisitionsReduce volatilityFocus on emerging wealth of AsiaFocus on products and services to the mass populations and small to mid-corporates
82Opportunities for JLT in Asia Creation/Enhancement of specialist teams that focus on the Asian growth driversPrivate Client ServicesAffinitySMEPersonal LinesFinancial InstitutionsAviationCapital and Political RisksEnergyConstructionEmployee Benefits82
83Affinity Short-term Long-term Opportunities Mixture of challenge and opportunity in the short-termLong-termGrowth opportunities within certain business linesDelivering insurance products efficiently and effectively at points of sale to support consumer purchasesOpportunitiesInsurance products to support motor vehicle sales and service (China automobile market; Indonesia motorcycle market; extended warranty)China crop insurancePersonal Accident & Health83
84AviationExpect significant increase in aircraft deliveries to Asia over next 20 yearsAsia is a leader in new aircraft ordersAviation risks are transferred to insurance market – no self insuranceJLT building regional capabilities to focus on aviation and ancillary insurance
85EnergyDirect link between energy demand and population/economic growthGrowth in energy demand and power generation in Asia: 6.9% CAGR in power generation forecast through 2018*Plans in place to develop high net worth energy productsAsia upstream energy projects: 75 upstream projects with total value of USD104bn in next 5 years***Source: BMI China Power Report Q1 2009**Source: Energy Industries Council (EIC)
86Employee Benefits Retirement consulting, administration and products Ageing population low birth ratesNormal retirement age increasingTrend away from DB to DC plansIncreasingly complex benefits structuresHealthcareRising medical care costs; increase in “lifestyle” diseasesAgeing populations, health risks, new technologies, pharmaceuticals, consumer demandGovernment sponsored plans on the riseGrowing interest from employers in managing EB programs effectively and economically
88Strong Business BaseApproximately 60% of PBIT is derived from non-transactional clientsGovernment InstrumentalitiesProvide insurance/risk management services to over 90% of Australian local councilsAdministration of self-insured fundsState and Federal entitiesEchelon ConsultantsClaims managementEnterprise risk managementEnvironmental risk managementOHS/rehabilitation servicesLoss adjusting
89Strong Business Base Affinity Group schemes for sporting organisations, trade associations and common interest groupsDeveloping opportunities with Trade UnionsManagement of discretionary trustsEmployee benefits: life/health care
90General Broking - Segments Corporate:National new business structureRecruitment of high profile executivesCulture transformation from transactional to business advisorInvestment in risk modelling softwareNatural Resources and ConstructionNew business team employedBroader set of skills introduced to existing/new clients
91General Broking - Segments SME:Business re-engineeringDelivery channelsNational centralisationJLT Online opportunitiesRegional Network:Expansion of offices in TownsvilleNew offices in Darwin/Gold Coast
92Asia Pacific Summary Re-engineering existing key segments Identified new products/segmentsRecruiting specialists from Brokers/UnderwritersInvesting in training/educationMinimizing cost baseSeeking acquisitions
93Mark Drummond Brady International Chairman, Risk & Insurance International FlowsMark Drummond BradyInternational Chairman, Risk & Insurance
94International Chairman’s Role Breaking down barriers – internal and with The MarketDeveloping collaboration throughout the GroupManaging and developing our Global NetworkExpanding distribution and Global FlowsPromoting and defending the JLT brand globally
95International Collaboration - Brazil Early identification of seismic market shiftSelection of local partner / formation of JLT ReEducation of Markets / Lloyd’s obtains reinsurance licenceFlows emanate from local retail operations to local reinsurance office, to London and international marketsFlows emanate from all over JLT Network™ to Brazil
96JLT Network™Retail network – we also have Wholesale, Reinsurance and Specialist businesses around the worldOwned offices: more than 100, in 36 countriesNetwork partners in 120 countriesGlobal Support Unit in LondonNetwork Managing Director
97US Broker Sales Initiative JLT has long been a Champion for the independent sectorLondon, Bermuda and International Markets for Wholesale and Surplus LinesThe Network is a USP for JLT with brokers with international or multi-national clientsSales drive operates at all levels of the Group35% increase in sales in ’08, over ‘07
98A Sustainable Growth Story JLT Investor SeminarA Sustainable Growth Story
100What is JLT Latin America? Why is Latin America important to JLT?
101JLT LATIN AMERICA Network Members JLT Offices Subsidiary Operations in 4 countries – Peru, Mexico, Colombia and Brazil Network partners represent in the rest of the major economies in Latin America.JLT MexicoJardine Lloyd Thompson & Valencia e Iragorri, BogotáJLT Corredores de Seguros & JLT Valencia e Iragorri, MedellínJLT Re Colombia, BogotáJLT Valencia e Iragorri, CaliRisk Solutions Venezuela, CaracasCorporacion Continental, PanamaMariateguí JLT Corredores de Seguros, LimaSeguransa Meta CA, CaracasJLT do Brasil, Ribeirão PretoJLT Corredores de Reaseguros, LimaJLT Brasil (Retail and Reinsurance), Rio de JaneiroProdese, QuitoJLT Brasil (Retail and Reinsurance), São PauloKieffer & Associados SA, La PazRisk Solutions Group, SantiagoNetwork MembersMiddle Sea/AMR SA, Buenos AiresJLT Offices
102OUR LATIN AMERICAN REGIONAL FINANCIAL STATISTICS for subsidiary LATAM businessesRETAILREINSURANCE*CONSOLIDATEDAll figures in £ ‘000’sOperationBrazilPeruColombiaMexicoLATAM REGION#Rev. Actual ’07Trading Profit ’07Trading Margin ’072,26526111.5%1,910753.9%4,7834138.6%2,374(923)N/A57921837.6%4,1641,30931.4%16,0751,2958.1%Rev. Actual ’08Trading Profit ’08Trading Margin ’082,92038013%2,58432112.5%6,27062910%2,628(375)1,06131529.7%5,4012,30142.6%20,8643,60317.3%Headcount ’07Headcount ’0868641148221623047311213565251347220072008*JLT Brazil Re – new venture for 2008/2009 so not included in these numbers.#There are one or two central adjustments so the consolidated number is not the simple sum of these 6 businesses.
103JLT LATIN MARKET POSITIONS Shareholder StructurePartnership with strong local minority long term shareholder management partners
104REGIONAL ECONOMIC ENVIRONMENT Growth economicsGDP GrowthPeruBrazilMexicoColombia20067.5%3.7%5.1%6.9%20079%5.9%3.3%20089.8%1.3%2.5%2009 (forecast) GDP3.8%3%(-4%)2%GDP 2008US$129billionUS$1.58 trillionUS$893billionUS$242billionPopulation 200828.4million191million106.7million47.6millionMajor Economic Sectors within Territories. All economies which have strong growth sector match with JLT SpecialismsPeruBrazilMexicoColombiaConstructionIndustry/ManufactureAgricultureAviationMiningOil & GasPowerTelecomsTransport/Roads/InfraTourismStructure
105JLT COLOMBIA Market Position JLT both a retailer and a facultative reinsurance broker in ColombiaLargest reinsurance broker & 4th largest retail brokerAll figures in £ ‘000’sRETAILREINSURANCEJLT Areas of focus: Public Sector, Financial Institution, Construction, Utilities, Oil & Gas & Employment BenefitsJLT Opportunities: Construction, Oil, Aviation (General), Oil & Gas sector, Employment BenefitsOperationRev. Actual ’07Trading Profit ’07Trading Margin ’07Rev. Actual ’08Trading Profit ’08Trading Margin ’08Headcount ’07Headcount ’08Colombia4,7834138.6%6,27062910%216230Colombia4,1641,30931.4%5,4012,30142%5652
106JLT MEXICOJLT Position: A facultative reinsurance broker only focusing on complex risk with international placement requirements.JLT Focus Areas: Aviation, Construction, Power & Industrial, complex risk.Market Position: 6th or 7th largest in revenue terms.All figures in £ ‘000’sREINSURANCEOperationRev. Actual ’07Trading Profit ’07Trading Margin ’07Rev. Actual ’08Trading Profit ’08Trading Margin ’08Headcount ’07Headcount ’08Mexico2,374(923)N/A2,628(375)(N/A)4731Turn Around: Lost much major business in 2006/2007, rebuilding, good growth forecast for 2009 and a return to profitability.Strategy: to seek a retail broking partner and to ‘leverage’ facultative reinsurance capability.
107JLT PERUAll figures in £ ‘000’sRETAILREINSURANCEOperationRev. Actual ’07Trading Profit ’07Trading Margin ’07Rev. Actual ’08Trading Profit ’08Trading Margin ’08Headcount ’07Headcount ’08Peru1,910753.9%2,58432112.5%11482Peru57921837.6%1,06131529.7%1213JLT Position: 3rd largest combined insurance/reinsurance broker: (2nd largest reinsurance broker, 3rd/4th largest insurance broker, largest Employment Benefits broker).JLT Peru Retail Focus Areas: Employment Benefits, Mining, Construction, Power, Energy, Aviation.JLT Peru Reinsurance Focus Areas: Mining, Construction, Power, Energy, Aviation.Opportunities: Growing economy, government infrastructure investment, and inwards investment. Close working alliance between the retail and reinsurance businesses.
108JLT BRAZIL Opportunity Largest economy of South America: 191 million people: GDP US$1.58 trillionGrowing foreign investment: US$18 billion 2006; US$33 billion 2007; US$45 billion 2008.Opening of the reinsurance market, previous monopoly on reinsurance placements of IRB dismantled. Local admitted reinsurer ‘monopoly’ reduced to 60% in 2008, 40% in 2011 and 0% in 2012.OperationRev. Actual ’07Trading Profit ’07Trading Margin ’07Rev. Actual ’08Trading Profit ’08Trading Margin ’08Headcount ’07Headcount ’08Brazil2,26526111.5%2,92038013%6864JLT Brazil RetailEstablished for 20 years. Focus post opening of the market on developing a strong retail business in Brazil.New MD recruited. JLT targeting both organic and acquisition growth within its retail business.Focus areas: construction, agriculture (particularly ethanol/ sugar) power, oil & gas, industrial and employee benefits.Opportunities: closer alignment with JLT reinsurance operation working together to win major accounts. Business sector areas for focus Construction, Oil & Gas, Power, together with Employee Benefits and potentially Online/Affinity.JLT Brazil ReinsuranceA relatively new start up in Brazil combining previous partners. Strong first 9 months of trading and already a market leader.Focus areas: Construction, Oil & Gas, Treaty Reinsurance, aviation and specie.Opportunities: new products – opening of the market, alignment with a stronger JLT retail business in Brazil, Complex risk, Construction, Oil & Gas, Power.
109WHY LATIN AMERICA FOR JLT? Our subsidiary operations are strong profitable businesses in their own right with strong market positions within their own territory.JLT employees within Latin America are high calibre recognised professionals.The JLT Latin American shareholder structure – long term economic alignment between senior staff/local shareholders and JLT.The economies of the countries in which JLT has operations, are growing economies generally.The Latin America territories have economies which are growing in areas which coincide with JLT’s specialties: eg construction, mining, oil and energy, power, aviation, telecoms.Large complex risks and catastrophe exposures with limited local capacity give rise to business flows to JLT in London and Bermuda generating significant revenues.These are fully brokered insurance markets where the role of the broker is accepted and the norm.The middle class is growing within the Latin American territories which gives rise to good opportunities for employee benefits, affinity and potentially online insurance products.Brazil: opening of the reinsurance market – opportunities for new products in a very large economy in the most sophisticated insurance culture within the BRIC countries combined with economic growth potential thus providing many opportunities.A sustainable growth story
111What do we do?We are a Composite Broker, with business operating in two main areas:-Non advisorySingle policies, no advice.Individuals and SME’sSimple Products.On line or Tele-salesand service.DivisionAdvisoryClientsFull service, independent advice.Mid market & Specialist RisksProductsComplex Products.Service deliveryFace to face withclient.Slide firstOur Advisory business which is in the main fee based, represents some 58% of the business with Non Advisory being predominantly brokerage based and representing some 42%
112European Retail - Income growth £m’sAs you can see, the past four years has seen good growth increasing some 45% from £47m to £67m.Whilst we have made some small acquisitions, including Pavillion and The Siaci business in 2007, organic growth figures predominantly with 6% being achieved in 2008.Despite recessionary pressures we expect further growth in 2009
113Last year’s financials Actual2007Actual2008Growthon 2007Revenue60,05167,24212%Trading Profit10,30211,116In 2008 we again showed growth in revenue and profit.Whilst the margin is reasonable we are developing plans to improve this over the course of the next two years by making better use of technology both traditional and online.Trading Margin17%17%
114Geographic locations United Kingdom Poland Ireland Italy Spain Norway BirminghamCoventryGloucesterLeedsLiverpoolLondonMaidenheadManchesterSouthamptonPolandWarsawIrelandDublinCorkItalyMilanTurinSpainMadridNorwayOsloSwedenStockholmThe key office locations by size would beLondonBirminghamGloucesterCoventryDublinMilanAll link into the JLT Network supporting Group clients around the World
115Income breakdownPersonal Lines is the final part of our Non Advisory sector and is represented throughout Europe.This will include Household and Motor along with specific products such as motor cycle, pedal cycle or musical instruments insurance. Distribution is both traditional and online, this being where our Online business sits.Again we offer quality, competitive products and our earnings are on a brokerage basis. I will talk more about our Online business shortly.
116JLT Partnership Practice AccountantsJLT Corporate RecoveryLawyersJLT LawCapital ProvidersJLT Mergers & AcquisitionsAccountantsLawyersCapitalProvidersThis business is developing fast and is using relationships developed within our existing Corporate Recovery business to cross sell into other professionsWe have developed Corporate After The Event Insurance along with Legal & Contingency insurance for the legal professions and are providing support to a number of venture capital providersIt’s clients include the likes of PwC, Grant Thornton, KPMG and Eversheds.Corporate Recovery business remains the main driver and recent appointments have includedLehman Bros and1Car1 the leasing and self drive hire Company with 18,000The business saw growth of 95% in 2008 and we are expecting great things in 2009
117This is the Pavillion business that we bought in June 2007, now rebranded JLTOnline It is a fully transactional business that offersAbove average revenue growthAbove average marginsOur ambition is to develop a significant income stream, not only in the UK but elsewhere in our retail networkThe fact that over 80% of transactions are fully online means that the scaleability and enhancement of margin is significant
118We have continued to develop the existing brands What have we done?We have continued to develop the existing brandsPhotoguardCycleguardMusicguardHow do customers find us?
120Each of the three main products occupy the number one position in natural search
1212008 Growth year on year was at 27% JLT Online2008Growth yearon year wasat 27%In the first full year of operation we haveRebranded the businessImproved the platformDeveloped new complimentary productsLaunched into a totally new areaAnd we still produced good growth
122We have added new products Where do we want to go?We have added new productsPetsTouring caravansWe have entered the micro commercial market, defined by the DTI as having 1-9 employeesRepresents almost 25% of UK BusinessCirca 1.4 million businesses within sectorTarget market generates gross premiums in excess of £1 billion
123We have launched a new brand called What have we done?We have launched a new brand calledWe have the fastest, fully transactional web site, targeting the sectorI have already highlighted the fact that our three established products, Cycles, Camera Equipment and Musical Instruments are the top natural search result on Google.This is a sector where the search term Business Insurance is one of the most expensive pay per click phrases. We would prefer to generate business by natural search.There are currently 110,000 Business Insurance searches per month in the UK. That’s 1.35m per annum Natural search is therefore vital and we have been working hard on getting our site into a similar number one positionCurrently we are on page three ( out of circa pages) and climbing rapidlyThis is now an integral part of our overall UK Online initiative which has grown by some 55% in the first 4 months of 2009
124We have launched a new brand called What have we done?We have launched a new brand calledWe have the fastest, fully transactional web site, targeting the sectorWe are now planning launches into Italy and Ireland
125We believe that there is opportunity to improve margin In conclusionThis business has a new business culture where we retain around 93% of our clientsWe are exposed to the Economic pressures but we have some counter cyclical businessWe are targetting further organic growth and have some exciting opportunuitiesJLTOnlinePartnership PracticeWe believe that there is opportunity to improve marginThank you for your time.
127Agenda UK Employee Benefits Group – a brief overview Market trends – Defined BenefitsMarket trends – Defined ContributionBenPal – The future for management of employee benefits programmes
128UK Employee Benefits – key data The Employee Benefits business has increased revenues by 72% since 2003.It makes a very significant contribution to the Group’s financial results and contributes 16% of the Group’s turnover.Turnover £MTrading margin %10017%17%20%17%16%8014%15%6010%40£59m£71m£76m£81m£88m5%200%20042005200620072008
129UK Employee Benefits – an overview AdviceOutsourcingGovernanceSystems/TechnologyPension consultingActuarial consultingInvestment ConsultingFlexible BenefitsHealthcare, Life and Income ProtectionAnnuity purchasesPrivate ClientsDefined BenefitsDefined ContributionPension and Annuity paymentFlexible BenefitsSIPPs and Group SIPPsIndependent TrusteeshipRisk and control managementData integrityOperational consultingAdministrationAccountingWeb deliveryContribution modellingFlexible BenefitsEmployee Benefits
130Market trends – Defined Benefits Pensions has become a boardroom issue with deficit and liability management and reduction key issues.Schemes close to new joinersCessation of all accrualInvestment strategyBuy out optionsLongevity hedgingThe existing DB market comprised 7,400 schemes with assets of £772 billion. Capital to support buy outs is less than 5% of this. Other forms of risk management and transfer will need to form part of long term run off.Aggregate deficit of FTSE 250 stood at £50 31st March 2009 according to research conducted by Pension Capital Strategies, a JLT Company. But the true number may be nearer £200bn when bond spreads return to more normal levels.
131Market trends – Defined Contribution After the initial establishment of DC schemes in response to Defined Benefit closure, attention is now turning to long term development of these schemesEmployer focusRegulator focusMarket solutionsScheme structure and management cost.Internal promotionInvestment optionsAuto enrolment and Personal AccountsGovernance frameworksMember educationChargesInvestment optionsAuto enrolmentIncreased deliveryMember “advice”Investment structuresCommunication strategies.
141productivity in HR/Finance/Mgt Why choose BenPal?Improveproductivity in HR/Finance/MgtReduce costsby outsourcing benefits adminConvertoffline Trust DC to online GPPReduce NI costswith salary sacrificeReduce costswith No-Fee optionAggregateall UK benefits on one platformReduce costsby rationalising legacy schemesEmpoweremployees in UK and internationally
142BenPal and JLT Unique More services New clients Revenue Scale to existing clientsNew clientsfrom different sectorsUniquepension/benefits solutionRevenuemix of commissions & recurring feesScalewith same headcountAlternativeto Personal Accounts‘Sticky’ businessTechnology-only optionEmpowerJLT international offices
143PENSION PLAN PENSION MODELLER Deploy key elements of BenPal systemGive members a personalised experienceRevitalise engagement with existing benefitsEMPLOYEE ENGAGEMENT SOFTWARECompany intranet or New pension micrositePENSION PLANOnline EnrolmentFund ValuationsAutomated MessagingPENSION MODELLERInteractive ToolPre-populated DataDB/DC/Contract Plans
144Deployment across JLT Admin Reward Flex Pension R&H Reward Flex
145Personal Account from 2012 ✓ ✓ ✓ ✗ ✓ ✗ ✓ PERSONAL ACCOUNT 0.5% (est) AUTO ENROLMENT✓ONLINE✓✓MEMBER CHARGE (AMC)0.5% (est)0.35%- 0.85%TYPE OF SCHEMEGeneric plan “Largest ever Trust scheme”Customised plan Fits each company profileSALARY SACRIFICE✗✓INTEGRATED BENEFITS✗✓“A COST”“AN INVESTMENT”
146Internationalisation of Employee Benefits William NabarroInternational Chairman, EB
147Developing Employee Benefits Internationally The ApproachActions: this year....Actions: ....and nextMeasures of success
148Developing Employee Benefits Internationally The ApproachAdding value through collaborationWithout complicating the management structureProgressing through projects
149Developing Employee Benefits Internationally Actions; this year....Clarify what we haveEngage all EB professionalsCreate marketing and internal communications networksConvert the immediate winsUtilise the BenPal investment