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JLT targets US expansion

Weak insurance premium rates have not held back JLT, which still managed modest growth.
July 29, 2015

Despite continued weakness in insurance premium rates, broker Jardine Lloyd Thompson (JLT) put in a respectable performance during the first half of the year. However, the numbers were certainly helped by the disposal of JLT's stake in Siaci St Honore for £80.2m, which easily offset acquisition-related costs and start-up expenses in the US.

IC TIP: Hold at 1000p

JLT Speciality, which provides risk management and insurance broking services, grew revenues by 5 per cent during the first-half to £139m, as it continues to integrate Lloyd & Partners. However, organic revenue growth was depressed by softening premium rates, which drive down insurers' commissions. And potential client numbers are being reduced due to further consolidation in the oil and gas sector.

The group’s performance in the emerging markets segment was mixed: JLT Latin America grew organic revenues by almost a fifth to £28.4m, but they were broadly flat for JLT Asia.

Revenues and trading profits were squeezed at the group's employee benefits business due to weakness in the UK and Irish markets. There's an added problem in that insurers have chosen to end commission payments in advance of the 2015 retail distribution review deadline.

Analysts at Numis Securities expect adjusted EPS of 52.1p this year, up from 47.8p in 2014.

JARDINE LLOYD THOMPSON (JLT)

ORD PRICE:1,000pMARKET VALUE:£2.2bn
TOUCH:996-1000p12-MONTH HIGH:1,112pLOW: 815p
DIVIDEND YIELD:2.9%PE RATIO:19
NET ASSET VALUE:139p*NET DEBT:142%

Half-year to 30 JuneTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201456098.430.310.6
201559210233.711.1
% change+6+3+11+5

Ex-div: 3 Sep

Payment: 1 Oct

*Includes intangible assets of £581m, or 265p a share