Reinsurance division reports ‘satisfactory’ results to June 2010

Lloyd’s broker Towers Watson (Re)insurance Brokers Ltd, formerly known as Denis M Clayton & Co, turned in a “satisfactory” performance in the 18 months to 30 June 2010, according to the directors’ report of its results filing.

The broker made a profit of £11m on turnover of £57.9m over the period. The company paid a £6m dividend on 11 December 2009, having paid none in the 2008 financial year.

The company had previously reported annually to 31 December, but changed the reference date to 30 June. While the previous reporting period, the 12 months to 31 December 2008, is not directly comparable to the 18 months to 30 June 2010, it is clear that the company’s performance has improved. Profit for the 2008 financial year was £2.4m from revenues of £30.3m.

Profits improved in the most recent period despite a sharp reduction in investment income. The figure of £1.8m for 2008, which is only for 12 months, is more than double the £633,118 it made in the 18 months to 30 June 2010.

Towers Watson attributed the increase in revenue to its recruitment of new production staff and organic growth, and put the drop in investment income down to the sharp decline in interest rates. The company added that insurance premium rates and exchange rates had remained relatively stable over the period.

“The directors consider the result for the period and the position at the period-end to be satisfactory,” the directors’ report said, adding that continued growth was expected. “The directors anticipate future trading will be profitable.”

Towers Watson declined to comment further on the results, as they are divisional rather than group-level figures.

Towers Watson (Re)insurance Brokers’ staff costs for the 18 months to 30 June were £30.7m, compared with £18.9m in the 12 months to 31 December 2008.

Of this, £25.1m was for wages and salaries in 2009/2010, compared with £15.8m in 2008. Total administrative expenses for 2009/2010 were £42.8m, compared with £28.1m for 2008.

Towers Watson has continued hiring to its UK reinsurance division since 30 June, appointing three new brokers to the team last October.

Actuarial consultancy Towers Perrin bought Denis M Clayton in 2002. The Lloyd’s broker changed its name to Towers Watson (Re)insurance Brokers in March 2010 following Towers Perrin’s merger with fellow consultancy Watson Wyatt in January, which formed Towers Watson.