distinctive. choice. 21 september 2010 jlt investor seminar
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21 SEPTEMBER 2010
Distinctive. Choice.
JLT Investor Seminar
21 SEPTEMBER 2010
Distinctive. Choice.
Growing Aerospace Business
Alan Griffin
Chairman/CEO, JLT Reinsurance Brokers Limited
Our world of “Aviation” – Size and Shape
Aircraft Operators • Large aircraft:
• Small aircraft:
25,814
9,393
16,092
439,253
39,981
72,658
- Jets
- Turboprops
- Bizjets
- Fixed Wing
- Helicopters
- Others
Manufacturing • Large aircraft:
• Small aircraft:
• Components:
33
21
100’s
1,000’s
- Airframe
- Engine
Service and Repair • Repairers: 1,436 (approx.)
Others • Airports: 9,300
Our world of “Aviation” – The Insurance Buyers
Premium Income (USD Bn)
In Scope (USD Bn)
Aircraft Operators• Commercial, private,
pleasure, corporate, agriculture, surveying, police, medivac, government
4.5 3.1
Manufacturing Service & Repair• Engines, Components
• Civil, Military, Space0.8 0.7
Others• Airports, Air traffic control,
Fuelling operations
• Banks, leasing companies and others
• War
0.7 0.7
6.0 4.5
Available Brokerage
• Estimated brokerage available from target sectors– USD 250 million (GBP 160 million)
Aerospace Brokers – A History
Big 3 dominatedFor the last 15 years Aon, Marsh and Willis have shared between 75% and 80% of the business
Small share pre-2004Prior to 2004, JLT had a market share of around 2.5%
JLT become 4th LargestAfter the acquisition of Heath Lambert Aviation in 2004, JLT became the fourth largest broker with a share of circa 10%
A Simple Objective
“To become the leading aviation insurance broker by any measure”
A Strong Springboard
• We had:– A recognised brand– A strong balance sheet– Shareholder pedigree– Recognised leadership– Senior management commitment– A reputation for delivery
Broker Comparison
Based on JLT airline database and known airline account moves
Airline Market Share
As at 1st January 2009
JLT
Strategic Investment Needed
• We lacked:
– Depth of resource
– Distribution
Today’s Global Team
• We have hired senior professionals with proven track records
• We have hired the “next generation” leadership
• Our total dedicated aerospace staff has increased by 40%
• Internationally we are expanding our distribution by having aviation expertise in Group offices (e.g. Singapore, Hong Kong, Taipei, Beijing, Sydney, Jakarta, Dubai, Madrid, Mexico, Rio, Lima, Vancouver, Calgary)
• In the USA we have dedicated Aerospace offices in Herndon, Chicago, Atlanta and Houston
New Wins Since April 2009
Broker Comparison
Based on JLT airline database and known airline account moves
Airline Market Share
As at 16th September 2010
As at 1st January 2009
JLT
Summary
We are on track to meet our objective:
“To become the leading aviation insurance broker by any measure”
“JLT came top in the aviation insurance class which is testament to our growing aviation practice which continues to go from strength to strength.”
21 SEPTEMBER 2010
Distinctive. Choice.
Delivering Sustainable Growth - Australia
Leo Demer
CEO, Australia & New Zealand
Australasian Operations
• Australasian operations have been a significant contributor to Group profits
Offices ~ 21Staff ~ 850
JLT Australia – Historical Profile
• Historically structured geographically within the region
• Very strong market position in public sector
• But low growth in highly competitive corporate risks business
The Opportunity
• Growing economy
• High-growth sectors including natural resources, which match JLT’s specialist strengths
• Potential to increase penetration in the corporate sector
• Increasing opportunity to market innovative solutions in employee benefits
How JLT is Targeting the Opportunities
1. Restructuring to deliver specialist expertise to high-growth segments, building on the success of London Market initiatives
- Energy and mining
- Aviation
- Financial institutions
- Construction
2. Leveraging strong public sector capabilities to drive growth in corporate sector (e.g. workers’ compensation)
3. Increased focus on employee benefits, transferring UK capabilities including Benpal
Australia Business Mix 2009 Pro Forma revenue
Thistle 23%
Specialty 26% Echelon 10%
Public Sector 38%
Employee Benefits 3%
Opportunities by Operating Division
• Public Sector– Leveraging off our strength in the Local
Authority area to more directly appeal to State and Federal Government instrumentalities. Retains a geographical base.
– Utilising expertise to drive growth in the private sector
– Exploiting opportunities for Australia to export its expertise in public sector type business to other parts of the Group (e.g. Canada)
38%
Opportunities by Operating Division
• Echelon– Exploiting the intellectual capital
developed in the Public Sector for Private Sector including:
• Risk Management• Claims Management• Workers’ Comp /
Employers’ Liability• Loss adjusting
10%
Opportunities by Operating Division
• Specialty– Aligning capabilities to high growth
segments and building out resource
– Re-enforcing collaboration across the Group including joint venture initiatives (e.g. energy)
– Providing clients with access to greater resources and intellectual capital
– Working with other offices to develop a new “Service Approach” which provides 9 tools and services
26%
Opportunities by Operating Division
• Thistle– High volume, low value
business capable of being placed into Thistle underwriting facilities
– The introduction of the Thistle business model
– Expanding affinity marketing products in Australia with new products developed in the UK
23%
Opportunities by Operating Division
• Employee Benefits– Roll-out of innovative
solutions such as BenPal– Transfer of EB expertise to
Australia from the UK– Ambition to add further
resource, both individuals and potentially by acquisition
3%
21 SEPTEMBER 2010
Distinctive. Choice.
JLT Latin America - Brazil
Vyvienne Wade
CEO, Latin America
JLT Latin America
JLT Offices
JLT Brasil, Rio de JaneiroJLT Brasil, São Paulo
# JLT Sterling Mexico
JLT Colombia Retail, Medellín JLT Colombia Re, Bogotá
JLT Colombia Retail, Cali
JLT Peru Re, Lima
JLT Peru Retail, Lima
JLT Colombia Retail Bogotá
JLT Retail Brazil, Ribeirão Preto
# Lorant
JLT Re Brazil
# - Associates not subsidiaries
Regional Economic Features:
1. Economic Growth – impact of recession, banking crisis
2. Political stability
3. Growing middle class (2002-2008 40m Latin Americans of a total population of 580m lifted out of poverty)
4. Produce commodities and food
5. Main countries Brazil, Mexico, Colombia, Peru and Chile (75% GDP, 70% population)
Latin America
-8
-6
-4
-2
0
2
4
6
8
10
12
2006
2007
2008
2009
2010
*
2011
*
2012
*
Brazil
Colombia
Mexico
PeruFigures in %
* Forecast
GDP growth in JLT LATAM Countries
Peru Brazil Mexico Colombia
ConstructionIndustry/Manufacture
Energy
Group Health/Group Life
Agriculture
Energy
Construction
Industry/Manufacture
Energy
Group Health/Group Life
AgricultureAviation
Energy
ConstructionIndustry/Manufacture
Mining
Oil & Gas
Group Health/Group Life
Mining
Mining
Oil & Gas
Group Health/Group LifeMiningOil & Gas
Power Oil & GasPower
Telecoms PowerTransport/Roads/Infra
Tourism Telecoms Tourism Structure
Major Economic Sectors within Territories. All economies which have strong growth sector match with JLT Specialisms
for subsidiary LATAM business (Historic)
REINSURANCEAll figures in £ ‘000’sOperation Brazil Peru Colombia Mexico Peru Colombia LATAM REGION
Rev. Actual ’07
Trading Profit ’07
Profit Margin ’07
2,265
261
11.5%
1,910
75
3.9%
4,783
413
8.6%
2,374
(923)
N/A
579
218
37.6%
4,164
1,309
31.4%
16,075
1,353
8.4%
Rev. Actual’08
Trading Profit ’08
Profit Margin ’08
2,920
380
13.0%
2,584
310
11.9%
6,270
567
9.0%
2,564
(457)
N/A
1,061
313
29.5%
5,401
2,205
40.8%
20,800
3,318
16.0%
Rev. Actual ’09
Trading Profit ’09
Profit Margin ’09
3,400
330
9.7%
3,833
730
19.0%
7,617
1,044
13.6%
3,257
20
0.6%
1,926
787
40.1%
6,244
2,285
36.6%
28,521
5,976
21%
Headcount ’07
Headcount ’08
Headcount ’09
68
64
58
114
82
88
216
230
210
47
31
31
12
13
14
56
52
56
513
472
489
20
07
20
08
20
09
CONSOLIDATED
RETAIL
Brazil Re
N/A
N/A
2,244
780
34.8%
N/A
N/A
32
Additional LATAM revenue to London businesses: 2009 £7.7 million, 12 months to 30/06/2010 £9.1 million.
Profit Margin = Trading Project Margin
1st half 2010 results – showed continuing progress at revenue and pbt line
Regional Financial Statistics
Main Developments since the Beginning of 2009
• Mexico
– restructured ownership of reinsurance business – joined with our retail partners– acquired a small stake in our long term retail partners
• Peru
– continued to improve profit margin– increased market share– innovation – Gas Taxi Finance Scheme (Harvard Business Review)
• Colombia Retail
– continued shift of focus of portfolio towards private accounts– continued to increase market share– continued improvement in profit margin
• Colombia Reinsurance
– recruitment of a couple of senior producers, succession – dominant position for construction risks – won all major construction projects in Colombia in
last 12 months (Reficar US$4.5bn, Hidrosigamoso US$1.5bn, Porce 4 US$1bn, Hidro Ituango US$2.5bn)
– deployment of captives to win and retain large accounts
BrazilMacroeconomic Overview
Key Facts
• 10th largest economy in the world (2009 GDP of US$1.6tn) forecast to be 5 th by the end of the decade
• Population: 192 million – (life expectancy 1980, 61.5 – 2010, 72.3)• High levels of inward and outward FDI (from January to May 2010, US$11.2bn was invested
abroad by Brazilian companies)
Growth Drivers
• Preconditions for growth– Low and stable inflation– Stable currency– Interest rates low by historical standards– Political stability
• Fundamentals– Growing middle class – fuelling domestic demand– Natural resource wealth (oil, gas, agriculture)– Stable democracy– Vibrant private sector following privatisation of major industries (e.g. telecoms, banking) a
decade ago
BrazilGrowth Enablers Match JLT Capabilities
Oil Reserves
• Current Proven Reserves of circa 14bn barrels
• Estimated pre-salt reserves of 50bn barrels
Renewable Energy
• World’s largest producer of ethanol
• Hydro and biomass significant parts in energy mix
Infrastructure Projects
• 857 projects scheduled by 2030 – investments of US$3.8tn
• Government to invest US$492bn through public infrastructure initiatives
• World Cup 2014 and Olympic Games 2016 expected to generate more than US$60bn in investment
Agrobusiness
• 77mn ha cultivated, additional potential 100mn ha
• Largest global producer of sugar, coffee, soya extract, ethanol
Growing Middle Class
• Over 20 million people have moved into “class C” since 2005
• 46% of population middle class
• Rising average incomes
• Significant potential for credit expansion given relatively low levels of consumer borrowing
Specialist Risk & Insurance Expertise
• Opportunities to leverage JLT’s specialist industry expertise in areas such as oil and gas, energy, construction and renewables (e.g. GCube) construction
Innovative Distribution Solutions
• Opportunities to provide innovative distribution solutions for commoditised products (e.g. Thistle)
Employee Benefits
• Opportunities to develop employee benefits presence to serve growing demands for private healthcare from middle-class employees and ageing population
• GDP Growth
• Rising insurance penetration
• Effective regulation (SUSEP)
Brazil: Insurance Market:Low Insurance Penetration: Opportunity
Insurance Penetration (% of GDP)
Sources: Brazil figures from Fenaseg (national insurance association), SUSEP, ANS, IPEADATA. Figures for other countries from Swiss Re.
• Attractive insurance industry growth prospects
3.1% 3.1% 3.1% 3.2%3.6%
12.9%
8.0%
5.2%
3.9%3.4%3.3%
2004 2005 2006 2007 2008 2009 UK US India Chile China
Brazil
Broker MarketBy law brokers must intermediate all insurance/reinsurance
Competitive : 65,000 + brokers
Largest 3: Aon, Marsh, MDS/Lazam – JLT 8th Position Retail (1st Reinsurance)
Total Premium ~ US$ 49 billionNon-Life ~ 22% of total
Life & Affinity ~ 78% of total(2004 – 2009 13% ave. annual premium growth)
Brazilian Insurance Market Premium
JLT Brazil
Progress to date…• extensive new hirings
• increase insurance market awareness of JLT
• restructured business model – no co-brokers
• focus on Employee Benefits and deployment of BenPal
• alignment of reinsurance and retail business
Next steps…• more hirings of specialist experts
• bolt on acquisitions in key areas (likely EB, construction, cargo)
• use of Thistle Model
• develop EB/health insurance business: broaden service product offering and BenPal – unique selling point
Broking market competitive but JLT now well positioned
21 SEPTEMBER 2010
Distinctive. Choice.
Asia Financial Review
Warren Merritt
CEO, Jardine Lloyd Thompson Asia
Strong Asia Presence
Asian Opportunities
Total Asia: 727
Japan: 29Korea: 23
China: 56
Taiwan: 23Hong Kong/Macau: 162
Philippines: 48
Vietnam: 7
Thailand: 47
Indonesia: 45
Malaysia: 46
Singapore: 241
Present in 12 territories across Asia.
• Combined Population: >2 billion
• Combined GDP: US$12.9 trillion
• Estimated Combined Non-Life Premiums: US$166.7 billion
Continued investment in specialist lines
Specialist strengths of JLT Asia
• Reinvigoration and new investment;
• Hubs in HK and Singapore - FIFO;
• Alignment with growing wealth in Asia;
• Increasing buyer sophistication and demand;
• In-house IT solutions, creating value.
Affinity: • Motor• Phones• Computers
Aviation:• Strong presence• Major growth
Capital Risks:• Bank relationships
• Terrorism
Corporate Risks:• Increasing regional and global needs
Captives:• 9 Captives under management
JLTi:• Leading in house IT developer
Employee Benefits:• RM approach• IT solutions• Hyper Inflation
Energy: • Strong Const Development
• CIA / JIA
Marine:• Marine strategy being formulated
SMEs:• Schemes and facilities developed.
Property:• Major market in Singapore;
• Increasing assets (Int / Reg)
Risk Management:
• Increasing sophistication
• ARC Support
Construction: • Major global projects from KIA, CIA & JIA
Life• Increase in No of HNWI
ProEx:• Emerging local banks• RM focus (M Bar)
Jardine Matheson
The Jardine Matheson Group also includes Jardine Pacific and Jardine Strategic, which are holding companies.
Innovation in Employee Benefits
A major publicly listed bank in Indonesia
• Large Indonesian bank
• 25,000 employees including subsidiary Adira Finance
About the Client
• Increasing costs, particularly relating to medical cover
• Inefficient administration
• Insufficient information
• Lack of RM/Consultancy approach – “Direct”
General Situation
• PHaRMa
• Efficient online administration
• Online administration
• RM via in house medical professionals
• Interactive data mining
• Delivery of cost solution within budget
JLT’s Solution
Strong financial performance
£51.0
£33.6£31.7£29.6
£40.8
£0
£10
£20
£30
£40
£50
£60
2005 2006 2007 2008 2009
£m
Trading Profit: 2005 - 2009
£7.4£6.8
£6.0
£8.4
£10.5
£0
£2
£4
£6
£8
£10
£12
2005 2006 2007 2008 2009
£m
Revenue: 2005 - 2009Financial Highlights
• Consistent growth in a difficult economic environment in contrast to our major competitors
• Revenue increased by 25% while trading profit increased by 29% at Actual Rates and 8% and 13% at CRE respectively (2008 - 2009)
• 1H 2010 on track
• Geographic and Specialty traction with further investments in Human Resources
JLT Investor SeminarSeptember 21st 2010
Adrian GirlingThistle Insurance Services
UK Retail Insurance Broking activities
(JLT Limited)
Non-Advisory division
Advisory operations
Creation of Thistle
2009 Revenues of
£32m
Thistle proforma annualised 2009 revenues of £35m
2009 Revenues of
£20m
Principal aims
• To change the business model- To be an underwriting and facilities distribution
business- Targeting scheme, affinity and small P&C business
• We are not operating as a Broker - The Group’s balance sheet is not used to underwrite
risk
• We will be a marketing led business focusing on the design, underwriting and distribution of insurance products
- Direct, via Affinities and Third Party Brokers- Online, call centre and traditional distribution
• We aim to become an International business of scale, the third leg of the Group
Defining the opportunity
• UK start- But with global ambitions- 2011 target GWP to This is £100 million
• JLT's embedded business- Already identified and transferring- Selective in our approach
• Non JLT brokers- Significant network
• More product to be developed and distributed
• Target client base is growing- Scheme and affinity business
• Acquisitions- We will remain alert for acquisition opportunities
Typical financial model
Introducing BrokerCommission
Insurer Return on capital
Net Written Premium
Thistle typically shares 50% of difference between claims costs and Net Written Premium. Thistle does not share in any losses
ThistleAdministration charge
Chart not to scale
• Capacity for main This facility is provided by Brit- But will be expanded to include additional markets
• MGA facilities continue where appropriate
• MGU Facility year starts 1/6- Profit share accounting treatment as below
• Potential of This is to become Lloyd’s syndicate
Capacity
2009/10 20% 10%50%20%
Binderyear 2009 201220112010
Accounting year
Target Target MarketMarket High volume, low premiumHigh volume, low premium
TechnologyTechnology
UnderwritinUnderwritingg
DistributionDistribution
ProcessProcess
Web based, automated quotes with flexibility to refer to underwritingWeb based, automated quotes with flexibility to refer to underwriting
Third Party Brokers and within JLT direct and via AffinitiesThird Party Brokers and within JLT direct and via Affinities
System enabled with input by brokers/JLT and automated outputs quotes, documentation and claimsSystem enabled with input by brokers/JLT and automated outputs quotes, documentation and claims
CapacityCapacity Insurers but longer term potential to move towards own capital managementInsurers but longer term potential to move towards own capital management
Key drivers
Thistle where appropriate. If not common financial modelThistle where appropriate. If not common financial model
• Managed locally but collaborating internationally
• Sharing processes, operating platforms and underwriting procedures and disciplines established in the UK
International Protocols International Protocols DocumentDocument27th May 2010
International aspirations
International aspirations
UKUK
Australia
UK
Australia
Canada
UK
Australia
Canada
Asia
UK
Australia
Canada
Asia
Latin America
• An Underwriting and Facilities distribution business
• A non advisory business – not a broker• Accessing the full range of distribution
channels- affinity - direct- via third party brokers
• Complemented by strength in online
• Over time of significant economic advantage to JLT.
21 SEPTEMBER 2010
Distinctive. Choice.
21 SEPTEMBER 2010
Delivering Sustainable GrowthEmployee Benefits – UK & International
Duncan Howorth
International Chairman of Employee Benefits
Agenda
• UK Market – a brief overview
• UK Market – BenPal positioning
• International development– Our network capabilities and management– Development strategy– Key market opportunities– Case study
UK Market Overview
• £1 trillion of assets across 7,000 schemes
• De-risking remains major area of activity
• Market consolidation of advisers continues
• Pensions regulator focus on funding and governance
• Investment solutions increasingly sought from Trustees and Sponsors
Defined Benefits Defined Contribution
• £500 billion of assets; increasing contribution flows; £ 27 bn estimated
• Prime areas of business opportunity are technology, governance and investment solutions
• Membership expansion anticipated on back of auto enrolment
• Increased responsibility for retirement planning on individuals
• Increasingly forming part of a flexible benefit programme
BenPalUK Pensions and Benefit Market Positioning
An enhanced member experience helps employees make more of their benefit programmes, and improves returns on investment for the employer.
• Existing Trust based offline DC scheme for “head office/corporate” staff
• 20% take up; low engagement
• Limited investment opportunities
• New GPP launched with BenPal system
– On-line enrolment, email alerts
– 60% take-up
– Broad investment options
– Strong, positive employee feedback
– Plan now to extend to retail staff
Case Study: Technology Company Case Study: Insurance Company
• New scheme required following sale from a Banking Group
• New GPP launched with BenPal system
– 62% take-up
– Strong employee feedback on new pension plan launch
– BenPal seen by management as core part of setting new employer employee relationship around benefits and reward
International EB Network Development
Network and business development will be lead by:
• Focus on our areas of strength – both capability and geographic
• International BenPal deployment lead by client and market demand
• Close collaboration with JLT International Network
• Risk and Insurance clients will be targeted for business opportunity
EB Network development Approach
International Employee BenefitsKey areas of Opportunity
• Multinational benefits management
• Emerging market health insurance / services
• Multinational benefits services
• International client consulting
Opportunity Description
• Benefits increasingly being coordinated or controlled centrally; BenPal can manage multi country benefits
• Healthcare cover represents 75% of benefit provision spend in some emerging markets
• Multinational pooling and other services targeted
• Services will include audit, stewardship, bench marking, design
Example of International EB Opportunities
• Existing UK BenPal clients 7,000 employees across Europe
• Requirements to extend BenPal into France, Belgium and Holland
• Values a coordinated, single brand benefits strategy with local provision of benefits
• System will deliver global data and management information
Case Study: BenPal deployed to increase awareness of Reward Package
• Implementation of BenPal to promote value of Reward package in Brazil
• Appointment underpins existing EB adviser relationship in respect of Risk and Health
• Anticipate that BenPal will be rolled our regionally
Case Study: Benefits Management System
21 SEPTEMBER 2010
Distinctive. Choice.
JLT International Network
Mark Drummond Brady
International Chairman of Risk & Insurance
JLT International Network
JLT International Network
Facts:
• We have owned operations in 36 countries worldwide including 14 of the top 20 largest economic markets and in total, our International Network members are present in 130 countries around the world
• A truly international platform
• JLT International Network Partners provide the core of the whole International Network
• Emphasis on flexibility of service model
JLT International Network
In comparison with other worldwide broker networks
Company estimates taken from public information
JLT International Network
JLT shareholding = 20%
JLT International Network
JLT shareholding = 20%
JLT International Network
JLT International Network
• Total exclusivity
• Ring-fencing agreement
• New era in S2H relationship
• Co-branding
• New standard for Network
• Expand to include Employee Benefits
JLT International Network
Our Global Service Team:
• Specialise in the co-ordination of global programmes
• Act as a focal point to the overseas broker network/ client overseas
• Extensive knowledge of international compliance
• Advice on insurance legislation/practices
• Global reviews
• Multilingual capability
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