But broking division beats rivals on organic growth again
Broking group Jardine Lloyd Thompson (JLT) made an underlying profit before tax of £170.1m in 2015, down 7% on the £183m it made in 2014.
JLT said the drop was caused by “specific challenges” in its UK and Ireland employee benefits division, as well as a £20.4m net investment in building its US specialty broking business.
The group said the UK and Ireland employee benefits division suffered a “significant slowdown” in project work and new business because of the uncertainty created by government-led changes to the UK occupational pensions market.
In addition, JLT said the Retail Distribution Review had hit commission revenues, as insurers “opportunistically” chose to end commission payments in advance of the expected 2016 deadline.
As a result, the UK and Ireland employee benefits unit’s revenue fell 9% to £167.4m and underlying trading profit fell 64% to £12.8m (2014: £36m).
JLT warned in November that it expected a lower profit from its UK employee benefits business.
The company added that it expects to spend £12m on restructuring that business.
On a positive note, JLT’s insurance broking business, Risk & Insurance, again beat its rivals on organic growth. The unit reported organic growth of 6%, which compared favourably with the 3.6%, 3%, 3% and 3.2% reported by Arthur J Gallagher, Aon, MMC and Willis’s broking units respectively.
Underlying trading profit for Risk & Insurance increased by 4.3% to £160.9m (2014: £154.3m).
JLT chief executive Dominic Burke (pictured) said: “The group faces a number of external headwinds as we go into 2016. However, our focus remains on those factors that we can control and on maintaining the revenue momentum and cost control established over the last 10 years.
“We remain confident in our strategy, our platform and our continued ability to grow.”