Jardine Lloyd Thompson, the insurance broker, yesterday reported an 8 per cent rise in its first-half profits as it benefited from rising insurance premiums, and said it would be 2005 before rates start to fall.
Steve McGill, the chief executive, said turnover was up 11 per cent to £216m and profit before tax increased 8 per cent to £57.3m. Excluding exceptional items, profits were up 16 per cent. "JLT has been building on record results achieved in 2002," Mr McGill said. "We have achieved strong growth in the first half and we continue to believe rates will not soften significantly before 2005, reflecting the investment climate and the need for industry capital to be rebuilt."
The broker has enjoyed a surge in the premiums insurers have demanded in the past 18 months, following the World Trade Centre attacks and the war in Iraq. As the cost of buying coverage rises, JLT has raked in higher fees for arranging insurance. Turnover in its risk and insurance brokerage was up 14 per cent, and Mr McGill said he was expecting another bumper year of profits.
But premiums in some areas of insurance are starting to weaken, and JLT said rates for the property, energy and aviation risks had begun to slow. Rates for casualty insurance are up on last year but the company said there had been some levelling off since the start of the year.
Insurance rates for directors and officers liability and medical malpractice are continuing to rise, which is helping to offset the slowdown elsewhere. The board declared an interim dividend of 8.5p a share, up 13 per cent on last year. Its shares ended down 19p at 571p.
The company also revealed that a major shareholder, the French insurance broker Siaci, was selling its 5.2 per cent stake in JLT. The stock was placed with institutions at 570p a share, raising £59m for the French broker, which is planning a financial restructuring. JLT said it would keep its 31 per cent stake in Siaci and the pair's partnership would not be affected.
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