Broker warns of tough market conditions
Broking group Jardine Lloyd Thompson (JLT) made an after tax profit of £60.5m for the 6 months to June 30 2010, up 39% on the £43.5m it made in the same period of 2009.
Fees and commissions increased 21% to £375.6m in the first half of 2010 from £309.7m in last year’s first half. However, investment income fell to £2.2m from £3.3m.
Contributing to the after tax profit increase was a lower tax bill in the first half of 2010. JLT paid £9.4m in tax in the first half of 2010, compared with £17.8m in last year’s first half. Profit before tax was £70m, up 14% from £61.3m in 2009.
Revenue at JLT’s Risks & Insurance division, which represents 78% of the broker’s overall revenue, increased by 16% to £296.4m. Underlying trading profit increased by 30% to £75.2m in the period. Trading margin was 25%, up from 23% in the first half of 2009.
"Trading activity in the first half of 2010 continued to be encouraging and this, coupled with the increasing benefits from the broad range of investments being made, comprising key hires, acquisitions and systems developments, gives us the confidence that we will continue to make financial progress for the full year," said Dominic Burke, JLT’s chief executive, in a statement.
However, the firm warned that market conditions continue to be tough, with ban increasingly soft insurance rating environment across most sectors. The firm said in its April interim management statement that the US general property/casualty market in particular was the softest it had seen since the events of September 11 2001. “At the end of July the situation remains largely unchanged, with the exception of specialty areas of the aviation and offshore energy markets which are not representative of the market as a whole,” the company said.
However, it added: “The group's trading performance in the first half of 2010 has been encouraging and this, coupled with the increasing benefits being yielded from the broad range of investments being made in key hires, acquisitions and systems developments, gives the board confidence that JLT will continue to make financial progress for the full year.”