Broker stands by Thistle MGA despite H1 losses
Exclusive deals for Lloyd’s business, such as the one struck by Aon and Berkshire Hathaway, are not in clients’ best interests, according to Jardine Lloyd Thompson (JLT) executive director Mark Drummond Brady.
Speaking to Insurance Times following the release of JLT’s first-half results, Drummond Brady said: “We view these types of arrangements as an attempt by brokers to commoditise their offering, to shrink the number of insurers they direct premium towards to better dominate them, and then to automate the broking process. In our view, this is not in the clients’ or the market’s long-term interests.”
JLT reported 7% organic growth for the first half of 2013, beating Aon, which reported 3% growth, and Willis, with 5.1%. Drummond Brady said this showed JLT’s ability to take market share from its rivals.
Market tactics
He added: “We are doing that by working in partnership with the whole market and not trying to commoditise and reduce the panel to a few that are paying higher levels of commission.”
Aon revealed in March that it had made a deal with Berkshire Hathaway, under which Berkshire would get an automatic 7.5% share of any business Aon placed into Lloyd’s. Willis is working on a similar initiative, called Willis 360.
The deals have attracted criticism from rival brokers and Lloyd’s underwriters alike, with some suggesting they will take business away from smaller Lloyd’s businesses.
However, Aon Risk Solutions chief executive Steve McGill argued at the time that his company’s deal gave clients fast access to Berkshire’s capacity, which is rated AA+, and could result in Aon placing more business in Lloyd’s.
Standing by Thistle
JLT had a strong first half. In addition to the 7% organic growth, total revenues increased 10% to £487.2m and profit after tax rose 3% to £59.2m.
One negative point, however, was JLT’s UK managing general agency, Thistle, which reported a trading loss of £1.3m despite a 2% increase in revenue to £15.4m.
But JLT group commercial director James Twining said Thistle, which accounts for about 3% of group revenues, was “absolutely” part of the broker’s UK strategy .
Twining said: “Thistle is the part of the group most exposed to the UK high street. That continues to be a very challenging environment, with businesses going bust and shops being boarded up.
“We had a big affinity scheme with photography retailer Jessops, which went under, and we have had to replace that income.”
He added that the loss had been driven by the fact that new Thistle head Paul Matthews is investing in “new capabilities and technology” that are critical for Thistle’s long-term success.
Twining said: “We are backing his vision for how he wants to take the business forward.”
No comments yet