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JLT Investor Seminar 21 SEPTEMBER 2010.

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

1 JLT Investor Seminar 21 SEPTEMBER 2010

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

3 Our world of “Aviation” – Size and Shape
Aircraft Operators Large aircraft: Small aircraft: 25,814 9,393 16,092 439,253 39,981 72,658 - Jets - Turboprops - Bizjets - Fixed Wing - Helicopters - Others Manufacturing Components: 33 21 100’s 1,000’s - 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 4.5 3.1 Manufacturing Service & Repair Engines, Components Civil, Military, Space 0.8 0.7 Others Airports, Air traffic control, Fuelling operations Banks, leasing companies and others War 6.0

5 Estimated brokerage available from target sectors
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 4th Largest After the acquisition of Heath Lambert Aviation in 2004, JLT became the fourth largest broker with a share of circa 10%

7 “To become the leading aviation insurance broker by any measure”
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 Airline Market Share JLT As at 1st January 2009
Based on JLT airline database and known airline account moves

10 Strategic Investment Needed
We lacked: Depth of resource Distribution

11 Today’s 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 Airline Market Share JLT As at 1st January 2009
As at 16th September 2010 JLT Based on JLT airline database and known airline account moves

14 “To become the leading aviation insurance broker by any measure”
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 Delivering Sustainable Growth - Australia
Leo Demer CEO, Australia & New Zealand 21 SEPTEMBER 2010

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 JLT’s 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
3% 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

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

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

29 GDP growth in JLT LATAM Countries
Latin America GDP growth in JLT LATAM Countries Major Economic Sectors within Territories. All economies which have strong growth sector match with JLT Specialisms Peru Brazil Mexico Colombia Construction Industry/ Manufacture Energy Group Health/Group Life Agriculture Group Health/Group Life Aviation Mining Oil & Gas Group Health/ Group Life Power Telecoms Transport/ Roads/Infra Tourism Structure Figures in % * Forecast

30 Regional Financial Statistics
for subsidiary LATAM business (Historic) RETAIL REINSURANCE CONSOLIDATED All figures in £ ‘000’s Operation Brazil Peru Colombia Mexico LATAM REGION Rev. Actual ’07 Trading Profit ’07 Profit Margin ’07 2,265 261 11.5% 1,910 75 3.9% 4,783 413 8.6% 2,374 (923) N/A 579 218 37.6% 4,164 1,309 31.4% 16,075 1,353 8.4% Rev. Actual’08 Trading Profit ’08 Profit Margin ’08 2,920 380 13.0% 2,584 310 11.9% 6,270 567 9.0% 2,564 (457) 1,061 313 29.5% 5,401 2,205 40.8% 20,800 3,318 16.0% Rev. Actual ’09 Trading Profit ’09 Profit Margin ’09 3,400 330 9.7% 3,833 730 19.0% 7,617 1,044 13.6% 3,257 20 0.6% 1,926 787 40.1% 6,244 2,285 36.6% 28,521 5,976 21% Headcount ’07 Headcount ’08 Headcount ’09 68 64 58 114 82 88 216 230 210 47 31 12 13 14 56 52 513 472 489 Brazil Re N/A 2,244 780 34.8% 32 2007 2008 2009 Additional LATAM revenue to London businesses: 2009 £7.7 million, 12 months to 30/06/2010 £9.1 million. Profit Margin = Trading Project Margin 1st half 2010 results – showed continuing progress at revenue and pbt line

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 10th largest economy in the world (2009 GDP of US$1.6tn) forecast to be 5th 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 World’s 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 2005 46% 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 JLT’s 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 Brazil: Insurance Market: Low Insurance Penetration: Opportunity
GDP Growth Rising insurance penetration Effective regulation (SUSEP) Attractive insurance industry growth prospects Insurance Penetration (% of GDP) Sources: Brazil figures from Fenaseg (national insurance association), SUSEP, ANS, IPEADATA. Figures for other countries from Swiss Re.

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

36 JLT Brazil Progress to date… Next steps… 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 Warren Merritt CEO, Jardine Lloyd Thompson Asia
Asia Financial Review Warren Merritt CEO, Jardine Lloyd Thompson Asia 21 SEPTEMBER 2010

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

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

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 JLT’s Solution

42 Strong financial performance
Financial Highlights Revenue: 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 Trading Profit:

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

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

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 Group’s 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 2011 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 Thistle Administration charge 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 Chart not to scale

48 Capacity 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 Lloyd’s syndicate Binder year Accounting year 2009 2010 2011 2012 2009/10 20% 20% 50% 10%

49 Key drivers Target Market Technology Underwriting Distribution Process
High volume, low premium Technology Web based, automated quotes with flexibility to refer to underwriting Underwriting Thistle where appropriate. If not common financial model Distribution Third Party Brokers and within JLT direct and via Affinities Process 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

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

51 International aspirations
UK Australia Canada Asia Latin America UK Australia Canada Asia UK Australia Canada UK Australia UK

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

54 UK Market – a brief overview UK Market – BenPal positioning
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. Case Study: Technology Company Case Study: Insurance Company 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 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
EB Network development Approach 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

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
Case Study: Benefits Management System Case Study: BenPal deployed to increase awareness of Reward Package 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 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

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

61 JLT International Network

62 JLT International Network
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 JLT International Network
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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