JLT’s chief executive and chairman talk about the opportunities for growth they are targeting and why service is their trump card
In the basement meeting area of Jardine Lloyd Thompson’s London headquarters, there is a discernible buzz. The area is a hive of activity, and laughter and chatter can be heard from the meeting rooms encircling the open space.
If JLT employees are feeling energised, who can blame them? At the beginning of March, they had learned that their company’s full-year 2011 organic growth of 7.3% had outstripped that of its three biggest rivals: Aon, Marsh and Willis.
One of the drivers of this growth is JLT Specialty, run by recently appointed chairman Adrian Girling and chief executive Martin Hiller, who has been at the helm for five years.
JLT Specialty is the largest operating unit within JLT’s London market operation, producing total revenue for the year of £206m. The division houses the company’s big-ticket global specialty lines, with a product list that looks a lot like that of a typical London broker: marine, energy, construction, aviation financial lines and political/credit risk.
Since 2010, it has also housed the business derived from the UK, which handles deals ranging from mid-market to big ticket from its seven UK offices, including the London headquarters.
Girling praises Hiller’s work over the past five years. “Under Martin’s leadership, this business has more than doubled in size in revenue terms, and profitability has improved dramatically in that period,” he says. He also points out that 2011’s 9% organic growth is not a one off, averaging 7% over the past three years.
The growth of the specialty business is why Girling was drafted in from his previous role, as chairman of JLT’s managing general agency Thistle, at the beginning of this year. Before Girling moved across, Hiller had been running the unit alone. “It’s a big business and therefore we felt there was a need to have a full-time chairman in place,” says Girling.
We see ourselves as an alternative platform’
The question for the two men now is whether and how they can continue the momentum that Hiller has built up, particularly in light of the tough times facing all brokers writing both UK and global specialty business.
Girling and Hiller acknowledge that continuing to grow will be tough, but insist there are opportunities to expand specialty as a whole, and the UK business within it, despite the cut-throat competition for UK mid-market business in particular.
Taking business from big three
For one, they believe JLT Specialty is well positioned to take business and people from the big three as well as the large broking consolidators with which their company frequently butts heads in the UK regions. The company has been able to take staff and business from its largest rivals elsewhere, argues Hiller, so why not the UK regions as well? “We see there is significant opportunity,” Hiller says. “The consolidator model is struggling. We see ourselves very much as an alternative platform to the consolidators or the big three outside London.”
Hiller and Girling believe JLT Specialty can beat its rivals on service. Hiller sees the levels of fee-based competition as evidence that the consolidators are struggling. “People are desperate to keep what they’ve got, and desperate to win business,” he says. “There are very aggressive approaches out in the regions. But that is the marketplace we are in, will respond to and be competitive in.”
Service over price
It could be argued that in today’s economic climate, a cheaper fee would trump better service. But Girling disagrees. “I have examples where business has been lost because of a cheaper fee, and has come back because the ex-client realises he is not getting the service he was before, the service he was promised and the service he wants.”
As part of its attack on the large national brokers in the UK regions, JLT Specialty has recently added to its UK branch network, opening up sales and service centres in Nottingham and Bristol. It could add more offices. “If there is an opportunity and good people available we will certainly consider it,” Girling says.
He adds that the company would also consider buying regional UK businesses. “We haven’t got anything in the works at the moment, but it is something we are interested in doing,” he says.
The JLT Specialty team believes that there is growth to be had in particular niches. One area where the division is focusing a lot of attention is food production and agriculture. The company acquired Irish broker FBD at the end of 2011, which derives around 85% of its business from the food and agriculture industries. “It is something we want to continue to develop and expand,” says Girling. “We have been winning food accounts throughout the UK.”
Another division earmarked for growth is financial risks. “We feel that will expand considerably in the course of 2012 and beyond,” Girling says.
Other gains will be made by improving elements of JLT Specialty’s book that are currently underperforming. While declining to be specific, Hiller says there is generally a small sub-segment of each of its main areas that could do better.
“There are businesses that require a turnaround in terms of profitability and growth, and there are other businesses where, if you look at our market share, we still see significant opportunity both in the UK and our network [outside the UK],” Hiller says.
Where UK growth falters, the geographic spread of the London-placed global specialty business can come to the rescue. For example, while construction and infrastructure development might slow down in the UK, they will continue apace in emerging economies such as the growth powerhouses of Brazil, Russia, India and China. “There are at least three or four opportune areas that give us confidence,” Hiller says.
There is little doubt that Hiller and Girling have their work cut out. As Hiller points out, the bigger JLT Specialty gets, the harder it will be to achieve the organic growth percentages of recent years. But the division has a clear plan of where it wants to go, and this has served it well in beating its competitors so far. With this plan, coupled with the continued enthusiastic buzz surrounding the company, it could pull it off.
THE MAN: Hiller
First job: Leslie & Godwin - marine hull
Family: Wife, five sons and a daughter
Interests: Water sports, running, travel and West Ham
In his own words:
‘People are desperate to keep what they’ve got, and desperate to win business’
THE MAN: Girling
Hogg Robinson (Birmingham)
Family: Wife and three children
Interests: Tennis, painting
In his own words:
‘If there is an opportunity and good people available we will certainly consider it’
UK offices: 8
Market view: A London market broker that has turned itself around and is now growing