Shares in Jardine Lloyd Thompson fell more than 15 per cent yesterday, as the insurance broker unveiled a worse-than-expected 20 per cent drop in underlying pre-tax profits and warned of more tough times over the year ahead.
The executive chairman Ken Carter, reporting annual results for the last time before his retirement in April, said the fall in profits was mainly due to the negative impact of currency transactions over the year.
But he said the group had also sacrificed profits after its decision to stop accepting controversial contingent commissions, which were at the centre of an investigation into the insurance broking sector carried out by the New York attorney general Eliot Spitzer 18 months ago.
Contrary to recent predictions by many insurers, Mr Carter said he believed 2006 was likely to be another challenging year for the insurance sector, with continued downward pressure on premiums. Most UK insurance companies have been bullish about the outlook for 2006 in recent weeks, claiming that last autumn's US hurricane season - the most expensive on record - would help push up premiums across all lines of insurance.
But Mr Carter said that although there had been some modest premium inflation for catastrophe insurance, he believed most insurers had overestimated the effects on other areas of the industry.
Dominic Burke, JLT's new chief executive, admitted the group's results were not as strong as he would have liked, adding that he has already begun a thorough review of the business to increase levels of profitability over the years ahead. "We're not satisfied with the current levels of profitability," he said.Reuse content