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Distinctive. Choice. 21 SEPTEMBER 2010 JLT Investor Seminar.

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Presentation on theme: "Distinctive. Choice. 21 SEPTEMBER 2010 JLT Investor Seminar."— Presentation transcript:

1 Distinctive. Choice. 21 SEPTEMBER 2010 JLT Investor Seminar

2 Distinctive. Choice. 21 SEPTEMBER 2010 Growing Aerospace Business Alan Griffin Chairman/CEO, JLT Reinsurance Brokers Limited

3 Our world of Aviation – Size and Shape Aircraft Operators Large aircraft: Small aircraft: 25,814 9,393 16, ,253 39,981 72,658 - Jets - Turboprops - Bizjets - Fixed Wing - Helicopters - Others Manufacturing Large aircraft: Small aircraft: Components: s 1,000s - Airframe - Engine Service and Repair Repairers:1,436(approx.) Others Airports:9,300

4 Our world of Aviation – The Insurance Buyers Premium Income (USD Bn) In Scope (USD Bn) Aircraft Operators Commercial, private, pleasure, corporate, agriculture, surveying, police, medivac, government Manufacturing Service & Repair Engines, Components Civil, Military, Space Others Airports, Air traffic control, Fuelling operations Banks, leasing companies and others War

5 Available Brokerage Estimated brokerage available from target sectors –USD 250 million (GBP 160 million)

6 Aerospace Brokers – A History Big 3 dominated For the last 15 years Aon, Marsh and Willis have shared between 75% and 80% of the business Small share pre-2004 Prior to 2004, JLT had a market share of around 2.5% JLT become 4 th Largest After the acquisition of Heath Lambert Aviation in 2004, JLT became the fourth largest broker with a share of circa 10%

7 A Simple Objective To become the leading aviation insurance broker by any measure

8 A Strong Springboard We had: –A recognised brand –A strong balance sheet –Shareholder pedigree –Recognised leadership –Senior management commitment –A reputation for delivery

9 Broker Comparison Based on JLT airline database and known airline account moves Airline Market Share As at 1st January 2009 JLT

10 Strategic Investment Needed We lacked: –Depth of resource –Distribution

11 Todays Global Team We have hired senior professionals with proven track records We have hired the next generation leadership Our total dedicated aerospace staff has increased by 40% Internationally we are expanding our distribution by having aviation expertise in Group offices (e.g. Singapore, Hong Kong, Taipei, Beijing, Sydney, Jakarta, Dubai, Madrid, Mexico, Rio, Lima, Vancouver, Calgary) In the USA we have dedicated Aerospace offices in Herndon, Chicago, Atlanta and Houston

12 New Wins Since April 2009

13 Broker Comparison Based on JLT airline database and known airline account moves Airline Market Share As at 16th September 2010 As at 1st January 2009 JLT

14 Summary We are on track to meet our objective: To become the leading aviation insurance broker by any measure

15 JLT came top in the aviation insurance class which is testament to our growing aviation practice which continues to go from strength to strength.

16 Distinctive. Choice. 21 SEPTEMBER 2010 Delivering Sustainable Growth - Australia Leo Demer CEO, Australia & New Zealand

17 Australasian Operations Australasian operations have been a significant contributor to Group profits Offices ~ 21 Staff ~ 850

18 JLT Australia – Historical Profile Historically structured geographically within the region Very strong market position in public sector But low growth in highly competitive corporate risks business

19 The Opportunity Growing economy High-growth sectors including natural resources, which match JLTs specialist strengths Potential to increase penetration in the corporate sector Increasing opportunity to market innovative solutions in employee benefits

20 How JLT is Targeting the Opportunities 1.Restructuring to deliver specialist expertise to high- growth segments, building on the success of London Market initiatives - Energy and mining - Aviation - Financial institutions - Construction 2.Leveraging strong public sector capabilities to drive growth in corporate sector (e.g. workers compensation) 3.Increased focus on employee benefits, transferring UK capabilities including Benpal

21 Australia Business Mix 2009 Pro Forma revenue

22 Opportunities by Operating Division Public Sector –Leveraging off our strength in the Local Authority area to more directly appeal to State and Federal Government instrumentalities. Retains a geographical base. –Utilising expertise to drive growth in the private sector –Exploiting opportunities for Australia to export its expertise in public sector type business to other parts of the Group (e.g. Canada) 38%

23 Opportunities by Operating Division Echelon –Exploiting the intellectual capital developed in the Public Sector for Private Sector including: Risk Management Claims Management Workers Comp / Employers Liability Loss adjusting 10%

24 Opportunities by Operating Division Specialty –Aligning capabilities to high growth segments and building out resource –Re-enforcing collaboration across the Group including joint venture initiatives (e.g. energy) –Providing clients with access to greater resources and intellectual capital –Working with other offices to develop a new Service Approach which provides 9 tools and services 26%

25 Opportunities by Operating Division Thistle –High volume, low value business capable of being placed into Thistle underwriting facilities –The introduction of the Thistle business model –Expanding affinity marketing products in Australia with new products developed in the UK 23%

26 Opportunities by Operating Division Employee Benefits –Roll-out of innovative solutions such as BenPal –Transfer of EB expertise to Australia from the UK –Ambition to add further resource, both individuals and potentially by acquisition 3%

27 Distinctive. Choice. 21 SEPTEMBER 2010 JLT Latin America - Brazil Vyvienne Wade CEO, Latin America

28 JLT Latin America JLT Offices JLT Brasil, Rio de Janeiro JLT Brasil, São Paulo # JLT Sterling Mexico JLT Colombia Retail, Medellín JLT Colombia Re, Bogotá JLT Colombia Retail, Cali JLT Peru Re, Lima JLT Peru Retail, Lima JLT Colombia Retail Bogotá JLT Retail Brazil, Ribeirão Preto # Lorant JLT Re Brazil # - Associates not subsidiaries Regional Economic Features: 1.Economic Growth – impact of recession, banking crisis 2.Political stability 3.Growing middle class ( m Latin Americans of a total population of 580m lifted out of poverty) 4.Produce commodities and food 5.Main countries Brazil, Mexico, Colombia, Peru and Chile (75% GDP, 70% population)

29 Latin America Figures in % * Forecast GDP growth in JLT LATAM Countries PeruBrazilMexicoColombia Construction Industry/ Manufacture Energy Group Health/Group Life Agriculture Energy Construction Industry/ Manufactu re Energy Group Health/Gro up Life Agriculture Aviation Energy Construction Industry/ Manufacture Mining Oil & Gas Group Health/ Group Life Mining Oil & Gas Group Health/Group Life Mining Oil & Gas PowerOil & Gas Power TelecomsPower Transport/ Roads/Infra TourismTelecomsTourismStructure Major Economic Sectors within Territories. All economies which have strong growth sector match with JLT Specialisms

30 for subsidiary LATAM business (Historic) REINSURANCE All figures in £ 000s Operation BrazilPeruColombiaMexicoPeruColombiaLATAM REGION Rev. Actual 07 Trading Profit 07 Profit Margin 07 2, % 1, % 4, % 2,374 (923) N/A % 4,164 1, % 16,075 1, % Rev. Actual08 Trading Profit 08 Profit Margin 08 2, % 2, % 6, % 2,564 (457) N/A 1, % 5,401 2, % 20,800 3, % Rev. Actual 09 Trading Profit 09 Profit Margin 09 3, % 3, % 7,617 1, % 3, % 1, % 6,244 2, % 28,521 5,976 21% Headcount 07 Headcount 08 Headcount CONSOLIDATED RETAIL Brazil Re N/A 2, % N/A 32 Additional LATAM revenue to London businesses: 2009 £7.7 million, 12 months to 30/06/2010 £9.1 million. Profit Margin = Trading Project Margin 1 st half 2010 results – showed continuing progress at revenue and pbt line Regional Financial Statistics

31 Main Developments since the Beginning of 2009 Mexico –restructured ownership of reinsurance business – joined with our retail partners –acquired a small stake in our long term retail partners Peru –continued to improve profit margin –increased market share –innovation – Gas Taxi Finance Scheme (Harvard Business Review) Colombia Retail –continued shift of focus of portfolio towards private accounts –continued to increase market share –continued improvement in profit margin Colombia Reinsurance –recruitment of a couple of senior producers, succession –dominant position for construction risks – won all major construction projects in Colombia in last 12 months (Reficar US$4.5bn, Hidrosigamoso US$1.5bn, Porce 4 US$1bn, Hidro Ituango US$2.5bn) –deployment of captives to win and retain large accounts

32 Brazil Macroeconomic Overview Key Facts 10 th largest economy in the world (2009 GDP of US$1.6tn) forecast to be 5 th by the end of the decade Population: 192 million – (life expectancy 1980, 61.5 – 2010, 72.3) High levels of inward and outward FDI (from January to May 2010, US$11.2bn was invested abroad by Brazilian companies) Growth Drivers Preconditions for growth –Low and stable inflation –Stable currency –Interest rates low by historical standards –Political stability Fundamentals –Growing middle class – fuelling domestic demand –Natural resource wealth (oil, gas, agriculture) –Stable democracy –Vibrant private sector following privatisation of major industries (e.g. telecoms, banking) a decade ago

33 Brazil Growth Enablers Match JLT Capabilities Oil Reserves Current Proven Reserves of circa 14bn barrels Estimated pre-salt reserves of 50bn barrels Renewable Energy Worlds largest producer of ethanol Hydro and biomass significant parts in energy mix Infrastructure Projects 857 projects scheduled by 2030 – investments of US$3.8tn Government to invest US$492bn through public infrastructure initiatives World Cup 2014 and Olympic Games 2016 expected to generate more than US$60bn in investment Agrobusiness 77mn ha cultivated, additional potential 100mn ha Largest global producer of sugar, coffee, soya extract, ethanol Growing Middle Class Over 20 million people have moved into class C since % of population middle class Rising average incomes Significant potential for credit expansion given relatively low levels of consumer borrowing Specialist Risk & Insurance Expertise Opportunities to leverage JLTs specialist industry expertise in areas such as oil and gas, energy, construction and renewables (e.g. GCube) construction Innovative Distribution Solutions Opportunities to provide innovative distribution solutions for commoditised products (e.g. Thistle) Employee Benefits Opportunities to develop employee benefits presence to serve growing demands for private healthcare from middle-class employees and ageing population

34 GDP Growth Rising insurance penetration Effective regulation (SUSEP) Brazil: Insurance Market: Low Insurance Penetration: Opportunity Insurance Penetration (% of GDP) Sources: Brazil figures from Fenaseg (national insurance association), SUSEP, ANS, IPEADATA. Figures for other countries from Swiss Re. Attractive insurance industry growth prospects

35 Broker Market By law brokers must intermediate all insurance/reinsurance Competitive : 65,000 + brokers Largest 3: Aon, Marsh, MDS/Lazam – JLT 8 th Position Retail (1 st Reinsurance) Total Premium ~ US$ 49 billion Non-Life ~ 22% of total Life & Affinity ~ 78% of total (2004 – % ave. annual premium growth) Brazilian Insurance Market Premium

36 JLT Brazil Progress to date… extensive new hirings increase insurance market awareness of JLT restructured business model – no co-brokers focus on Employee Benefits and deployment of BenPal alignment of reinsurance and retail business Next steps… more hirings of specialist experts bolt on acquisitions in key areas (likely EB, construction, cargo) use of Thistle Model develop EB/health insurance business: broaden service product offering and BenPal – unique selling point Broking market competitive but JLT now well positioned

37 Distinctive. Choice. 21 SEPTEMBER 2010 Asia Financial Review Warren Merritt CEO, Jardine Lloyd Thompson Asia

38 Strong Asia Presence Asian Opportunities Total Asia: 727 Japan: 29 Korea: 23 China: 56 Taiwan: 23 Hong Kong/Macau: 162 Philippines: 48 Vietnam: 7 Thailand: 47 Indonesia: 45 Malaysia: 46 Singapore: 241 Present in 12 territories across Asia. Combined Population: >2 billion Combined GDP: US$12.9 trillion Estimated Combined Non-Life Premiums: US$166.7 billion

39 Continued investment in specialist lines Specialist strengths of JLT Asia Reinvigoration and new investment; Hubs in HK and Singapore - FIFO; Alignment with growing wealth in Asia; Increasing buyer sophistication and demand; In-house IT solutions, creating value. Affinity: Motor Phones Computers Aviation: Strong presence Major growth Capital Risks: Bank relationships Terrorism Corporate Risks: Increasing regional and global needs Captives: 9 Captives under management JLTi: Leading in house IT developer Employee Benefits: RM approach IT solutions Hyper Inflation Energy: Strong Const Development CIA / JIA Marine: Marine strategy being formulated SMEs: Schemes and facilities developed. Property: Major market in Singapore; Increasing assets (Int / Reg) Risk Management: Increasing sophistication ARC Support Construction: Major global projects from KIA, CIA & JIA Life Increase in No of HNWI ProEx: Emerging local banks RM focus (M Bar)

40 Jardine Matheson The Jardine Matheson Group also includes Jardine Pacific and Jardine Strategic, which are holding companies.

41 Innovation in Employee Benefits A major publicly listed bank in Indonesia Large Indonesian bank 25,000 employees including subsidiary Adira Finance About the Client Increasing costs, particularly relating to medical cover Inefficient administration Insufficient information Lack of RM/Consultancy approach – Direct General Situation PHaRMa Efficient online administration Online administration RM via in house medical professionals Interactive data mining Delivery of cost solution within budget JLTs Solution

42 Strong financial performance Trading Profit: Revenue: Financial Highlights Consistent growth in a difficult economic environment in contrast to our major competitors Revenue increased by 25% while trading profit increased by 29% at Actual Rates and 8% and 13% at CRE respectively ( ) 1H 2010 on track Geographic and Specialty traction with further investments in Human Resources

43 JLT Investor Seminar September 21 st 2010 Adrian Girling Thistle Insurance Services

44 UK Retail Insurance Broking activities (JLT Limited) Non-Advisory division Advisory operations Creation of Thistle 2009 Revenues of £32m Thistle proforma annualised 2009 revenues of £35m 2009 Revenues of £20m

45 Principal aims To change the business model - To be an underwriting and facilities distribution business - Targeting scheme, affinity and small P&C business We are not operating as a Broker - The Groups balance sheet is not used to underwrite risk We will be a marketing led business focusing on the design, underwriting and distribution of insurance products - Direct, via Affinities and Third Party Brokers - Online, call centre and traditional distribution We aim to become an International business of scale, the third leg of the Group

46 Defining the opportunity UK start - But with global ambitions target GWP to This is £100 million JLT's embedded business - Already identified and transferring - Selective in our approach Non JLT brokers - Significant network More product to be developed and distributed Target client base is growing - Scheme and affinity business Acquisitions - We will remain alert for acquisition opportunities

47 Typical financial model Introducing Broker Commission Insurer Return on capital Net Written Premium Thistle typically shares 50% of difference between claims costs and Net Written Premium. Thistle does not share in any losses Thistle Administration charge Chart not to scale

48 Capacity for main This facility is provided by Brit - But will be expanded to include additional markets MGA facilities continue where appropriate MGU Facility year starts 1/6 - Profit share accounting treatment as below Potential of This is to become Lloyds syndicate Capacity 2009/1020%10%50%20% Binder year Accounting year

49 Target Market High volume, low premium Technology Underwriting Distribution Process Web based, automated quotes with flexibility to refer to underwriting Third Party Brokers and within JLT direct and via Affinities System enabled with input by brokers/JLT and automated outputs quotes, documentation and claims Capacity Insurers but longer term potential to move towards own capital management Key drivers Thistle where appropriate. If not common financial model

50 Managed locally but collaborating internationally Sharing processes, operating platforms and underwriting procedures and disciplines established in the UK International aspirations

51 UK Australia UK Australia Canada UK Australia Canada Asia UK Australia Canada Asia Latin America

52 An Underwriting and Facilities distribution business A non advisory business – not a broker Accessing the full range of distribution channels - affinity - direct - via third party brokers Complemented by strength in online Over time of significant economic advantage to JLT.

53 Distinctive. Choice. 21 SEPTEMBER 2010 Delivering Sustainable Growth Employee Benefits – UK & International Duncan Howorth International Chairman of Employee Benefits

54 Agenda UK Market – a brief overview UK Market – BenPal positioning International development –Our network capabilities and management –Development strategy –Key market opportunities –Case study

55 UK Market Overview £1 trillion of assets across 7,000 schemes De-risking remains major area of activity Market consolidation of advisers continues Pensions regulator focus on funding and governance Investment solutions increasingly sought from Trustees and Sponsors Defined Benefits Defined Contribution £500 billion of assets; increasing contribution flows; £ 27 bn estimated Prime areas of business opportunity are technology, governance and investment solutions Membership expansion anticipated on back of auto enrolment Increased responsibility for retirement planning on individuals Increasingly forming part of a flexible benefit programme

56 BenPal UK Pensions and Benefit Market Positioning An enhanced member experience helps employees make more of their benefit programmes, and improves returns on investment for the employer. Existing Trust based offline DC scheme for head office/corporate staff 20% take up; low engagement Limited investment opportunities New GPP launched with BenPal system –On-line enrolment, alerts –60% take-up –Broad investment options –Strong, positive employee feedback –Plan now to extend to retail staff Case Study: Technology Company Case Study: Insurance Company New scheme required following sale from a Banking Group New GPP launched with BenPal system –62% take-up –Strong employee feedback on new pension plan launch –BenPal seen by management as core part of setting new employer employee relationship around benefits and reward

57 International EB Network Development Network and business development will be lead by: Focus on our areas of strength – both capability and geographic International BenPal deployment lead by client and market demand Close collaboration with JLT International Network Risk and Insurance clients will be targeted for business opportunity EB Network development Approach

58 International Employee Benefits Key areas of Opportunity Multinational benefits management Emerging market health insurance / services Multinational benefits services International client consulting Opportunity Description Benefits increasingly being coordinated or controlled centrally; BenPal can manage multi country benefits Healthcare cover represents 75% of benefit provision spend in some emerging markets Multinational pooling and other services targeted Services will include audit, stewardship, bench marking, design

59 Example of International EB Opportunities Existing UK BenPal clients 7,000 employees across Europe Requirements to extend BenPal into France, Belgium and Holland Values a coordinated, single brand benefits strategy with local provision of benefits System will deliver global data and management information Case Study: BenPal deployed to increase awareness of Reward Package Implementation of BenPal to promote value of Reward package in Brazil Appointment underpins existing EB adviser relationship in respect of Risk and Health Anticipate that BenPal will be rolled our regionally Case Study: Benefits Management System

60 Distinctive. Choice. 21 SEPTEMBER 2010 JLT International Network Mark Drummond Brady International Chairman of Risk & Insurance

61 JLT International Network

62 Facts: We have owned operations in 36 countries worldwide including 14 of the top 20 largest economic markets and in total, our International Network members are present in 130 countries around the world A truly international platform JLT International Network Partners provide the core of the whole International Network Emphasis on flexibility of service model

63 JLT International Network In comparison with other worldwide broker networks Company estimates taken from public information

64 JLT International Network JLT shareholding = 20%

65 JLT International Network JLT shareholding = 20%

66 JLT International Network

67 Total exclusivity Ring-fencing agreement New era in S2H relationship Co-branding New standard for Network Expand to include Employee Benefits

68 JLT International Network Our Global Service Team: Specialise in the co-ordination of global programmes Act as a focal point to the overseas broker network/ client overseas Extensive knowledge of international compliance Advice on insurance legislation/practices Global reviews Multilingual capability

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