JLT Investor Seminar
21 SEPTEMBER 2010
Distinctive. Choice.

Growing Aerospace Business
Alan Griffin
Chairman/CEO, JLT Reinsurance Brokers Limited
21 SEPTEMBER 2010
Distinctive. Choice.

Our world of “Aviation” – Size and Shape
Aircraft Operators
• Large aircraft:
25,814 - Jets
9,393 - Turboprops
16,092 - Bizjets
• Small aircraft:
439,253 - Fixed Wing
39,981 - Helicopters
72,658 - Others
• Large aircraft:
33 - Airframe
21 - Engine
100’s
Manufacturing
• Small aircraft:
• Components:
1,000’s
Service and Repair
• Repairers:
1,436 (approx.)
Others
• Airports:
9,300
Our world of “Aviation” – The Insurance Buyers
Aircraft Operators
Manufacturing Service & Repair
Others
Premium Income
(USD Bn)
In Scope
(USD Bn)
•
Commercial, private,
pleasure, corporate,
agriculture, surveying,
police, medivac,
government
4.5
3.1
•
•
Engines, Components
Civil, Military, Space
0.8
0.7
•
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 dominated
For the last 15 years Aon, Marsh and
Willis have shared between 75% and
80% of the business
Small share pre-2004
Prior to 2004, JLT had a market share of
around 2.5%
JLT become 4th Largest
After 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
Airline Market Share
As at 1st January 2009
JLT
Based on JLT airline database and known airline account moves
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
•
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
Our total dedicated aerospace staff has increased by
40%
New Wins Since April 2009
Broker Comparison
Airline Market Share
As at 1st January 2009
As at 16th September 2010
JLT
Based on JLT airline database and known airline account moves
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.”
Delivering Sustainable Growth - Australia
Leo Demer
CEO, Australia & New Zealand
21 SEPTEMBER 2010
Distinctive. Choice.

Australasian Operations
•
Australasian operations have been a significant contributor
to Group profits
Offices ~ 21
Staff ~ 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 highgrowth 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
Employee
Benefits 3%
Thistle 23%
Specialty
26%
Public Sector
38%
Echelon 10%
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%
JLT Latin America - Brazil
Vyvienne Wade
CEO, Latin America
21 SEPTEMBER 2010
Distinctive. Choice.

JLT Latin America
# JLT Sterling Mexico
# Lorant
JLT Colombia Retail,
Medellín
JLT Colombia Retail Bogotá
JLT Colombia Re, Bogotá
JLT Colombia Retail, Cali
JLT Peru Retail, Lima
JLT Peru Re, Lima
JLT Re Brazil
JLT Retail Brazil, Ribeirão Preto
JLT Brasil, Rio de Janeiro
JLT Brasil, São Paulo
Regional Economic Features:
# - Associates not
subsidiaries
JLT Offices
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
Major Economic Sectors within Territories. All economies
which have strong growth sector match with JLT Specialisms
GDP growth in JLT LATAM Countries
12
10
8
6
4
* Forecast
Mexico
Colombia
Construction
Industry/
Manufacture
Agriculture
Industry/
Manufactu
re
Agriculture
Aviation
Energy
Energy
Energy
Energy
Group Health/Group
Life
Construction
Group
Health/Gro
up Life
Construction
Industry/
Manufacture
Mining
Group Health/
Group Life
Mining
Oil & Gas
Mining
Oil & Gas
Group
Health/Group
Life
Mining
Oil & Gas
Power
Oil & Gas
Power
Telecoms
Power
Transport/
Roads/Infra
Tourism
Telecoms
Tourism
Structure
*
-6
-8
Figures in %
Brazil
20
12
*
20
11
*
10
20
09
20
08
20
07
20
20
-2
-4
06
2
0
Peru
Brazil
Colombia
Mexico
Peru
Regional Financial Statistics
for subsidiary LATAM business (Historic)
2007
2008
2009
REINSURANCE
RETAIL
All figures in £ ‘000’s
Operation
Brazil
Peru
Colombia
Mexico
Peru
Colombia
Rev. Actual ’07
2,265
1,910
4,783
2,374
579
4,164
Trading Profit ’07
261
75
413
(923)
218
1,309
Profit Margin ’07
11.5%
3.9%
8.6%
N/A
37.6%
31.4%
Rev. Actual’08
2,920
2,584
6,270
2,564
1,061
5,401
Trading Profit ’08
380
310
567
(457)
313
2,205
Profit Margin ’08
13.0%
11.9%
9.0%
N/A
29.5%
40.8%
Rev. Actual ’09
3,400
3,833
7,617
3,257
1,926
6,244
Trading Profit ’09
330
730
1,044
20
787
2,285
Profit Margin ’09
9.7%
19.0%
13.6%
0.6%
40.1%
36.6%
Headcount ’07
68
114
216
47
12
56
Headcount ’08
64
82
230
31
13
52
Headcount ’09
58
88
210
31
14
56
CONSOLIDATED
Brazil Re
16,075
N/A
1st half 2010 results – showed continuing progress at revenue and pbt line
1,353
8.4%
20,800
N/A
3,318
16.0%
2,244
780
34.8%
28,521
N/A
N/A
32
513
Additional LATAM revenue to London businesses: 2009 £7.7 million, 12 months to 30/06/2010 £9.1 million.
Profit Margin = Trading Project Margin
LATAM REGION
5,976
21%
472
489
Main Developments since the Beginning of 2009
•
Mexico
–
–
•
Peru
–
–
–
•
continued to improve profit margin
increased market share
innovation – Gas Taxi Finance Scheme (Harvard Business Review)
Colombia Retail
–
–
–
•
restructured ownership of reinsurance business – joined with our retail partners
acquired a small stake in our long term retail partners
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
Brazil
Macroeconomic 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
Brazil
Growth 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$60bn in investment
Agrobusiness
• 77mn ha cultivated, additional potential 100mn ha
• Largest global producer of sugar, coffee, soya extract, ethanol
Growing Middle Class
• Over 20 million people have moved into “class C” since 2005
• 46% of population middle class
• Rising average incomes
• Significant potential for credit expansion given relatively low
levels of consumer borrowing
Specialist Risk & Insurance Expertise
• Opportunities to leverage JLT’s
specialist industry expertise in
areas such as oil and gas, energy,
construction and renewables (e.g.
GCube) construction
Innovative Distribution Solutions
• Opportunities to provide innovative
distribution solutions for
commoditised products (e.g.
Thistle)
Employee Benefits
• Opportunities to develop employee
benefits presence to serve growing
demands for private healthcare from
middle-class employees and ageing
population
Brazil: Insurance Market:
Low Insurance Penetration: Opportunity
•
GDP Growth
•
Rising insurance penetration
•
Effective regulation (SUSEP)
•
Attractive insurance industry growth prospects
Insurance Penetration (% of GDP)
12.9%
8.0%
5.2%
3.1%
3.1%
3.1%
3.2%
2004
2005
2006
2007
3.3%
3.6%
2008
2009
3.9%
UK
US
Brazil
Sources: Brazil figures from Fenaseg (national insurance association), SUSEP, ANS, IPEADATA. Figures for other countries from Swiss Re.
India
Chile
3.4%
China
Brazilian Insurance Market Premium
Non-Life
Hull &
Marine
Financial
7%
Lines
4%
P&C
28%
Distribution
Non-Life
Life
Auto
61%
22%
78%
Life & PA
12%
Total Premium ~ US$ 49 billion
Non-Life ~ 22% of total
Life & Affinity ~ 78% of total
(2004 – 2009 13% ave. annual premium growth)
Pension ( TPA / SelfVGBL) Insurance
6%
7%
Life & Affinity
Medical
Cooperative
20%
Pension
Fund
(PGBL)
26%
Broker Market
By law brokers must intermediate all insurance/reinsurance
Competitive : 65,000 + brokers
Largest 3: Aon, Marsh, MDS/Lazam – JLT 8th Position Retail (1st Reinsurance)
0%
Dental
1%
Health
Insurance
11%
H.M.O.
16%
Health
Foundation
1%
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
Asia Financial Review
Warren Merritt
CEO, Jardine Lloyd Thompson Asia
21 SEPTEMBER 2010
Distinctive. Choice.

Strong Asia Presence
Asian Opportunities
•
Korea: 23
Japan: 29
•
China: 56
Taiwan: 23
Hong Kong/Macau: 162
Philippines: 48
Thailand: 47
•
Combined Population:
>2 billion
Combined GDP:
US$12.9 trillion
Estimated Combined
Non-Life Premiums:
US$166.7 billion
Vietnam: 7
Malaysia: 46
Singapore: 241
Total Asia: 727
Indonesia: 45
Present in 12 territories
across Asia.
Continued investment in specialist lines
Affinity:
• Motor
• Phones
• Computers
Construction:
• Major global
projects from
KIA, CIA & JIA
Corporate Risks:
• Increasing
regional and
global needs
Captives:
• 9 Captives
under
management
Employee
Benefits:
• RM approach
• IT solutions
• Hyper Inflation
ProEx:
• Emerging local banks
• RM focus (M Bar)
Property:
• Major market in
Singapore;
• Increasing assets
(Int / Reg)
Specialist strengths
of JLT Asia
Aviation:
• Strong presence
• Major growth
Energy:
• Strong Const
Development
• CIA / JIA
Capital Risks:
• Bank
relationships
• Terrorism
JLTi:
• Leading in house
IT developer
Marine:
• Marine strategy
being formulated
SMEs:
• Schemes and
facilities
developed.
•
•
•
•
•
Risk Management:
• Increasing
sophistication
• ARC Support
Life
• Increase in No
of HNWI
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.
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
About the Client
•
•
Large Indonesian bank
25,000 employees
including subsidiary
Adira Finance
JLT’s Solution
General Situation
•
•
•
•
Increasing costs,
particularly relating to
medical cover
Inefficient
administration
Insufficient information
Lack of
RM/Consultancy
approach – “Direct”
•
•
•
•
•
•
PHaRMa
Efficient online
administration
Online administration
RM via in house
medical professionals
Interactive data mining
Delivery of cost
solution within budget
Strong financial performance
Financial 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
Revenue: 2005 - 2009
£m
£60
£50
£51.0
£40
£40.8
£30
£29.6
£31.7
£33.6
2005
2006
2007
£20
£10
£0
2008
Trading Profit: 2005 - 2009
£m
£12
£10
• Geographic and Specialty traction
with further investments in Human
Resources
2009
£10.5
£8
£8.4
£6.8
£6
£7.4
£6.0
£4
£2
£0
2005
2006
2007
2008
2009
JLT Investor Seminar
September 21st 2010
Adrian Girling
Thistle Insurance Services
Creation of Thistle
UK Retail Insurance Broking
activities
Advisory
operations
Non-Advisory
division
(JLT Limited)
2009
Revenues of
2009
Revenues of
£20m
£32m
Thistle proforma
annualised 2009
revenues of £35m
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 Broker
Commission
Thistle
Administration charge
Insurer
Return on capital
Net Written Premium
Chart not to scale
Thistle typically shares
50% of difference
between claims costs
and Net Written
Premium. Thistle does
not share in any
losses
Capacity
•
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
•
Accounting year
Binder
year
2009
2010
2011
2012
2009/10
20%
20%
50%
10%
Potential of This is to become Lloyd’s syndicate
Key drivers
Target Market
High volume, low premium
Technology
Web based, automated quotes with flexibility to refer
to underwriting
Underwriting
Thistle where appropriate. If not common financial
model
Distribution
Third Party Brokers and within JLT direct and via
Affinities
Process
System enabled with input by brokers/JLT and
automated outputs quotes, documentation and claims
Capacity
Insurers but longer term potential to move towards
own capital management
International aspirations
•
Int ernat ional Prot ocols
Document
27 t h May 2010
•
Managed locally
but collaborating
internationally
Sharing
processes,
operating
platforms and
underwriting
procedures and
disciplines
established in the
UK
International aspirations
UK
UK
UK
UK
Australia
UK
Australia
Canada
Australia
Canada
Asia
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.
Delivering Sustainable Growth
Employee Benefits – UK & International
Duncan Howorth
International Chairman of Employee Benefits
21 SEPTEMBER 2010
Distinctive. Choice.

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
Defined Benefits
Defined Contribution
• £1 trillion of assets across 7,000
schemes
• £500 billion of assets; increasing
contribution flows; £ 27 bn estimated
• De-risking remains major area of
activity
• Prime areas of business opportunity
are technology, governance and
investment solutions
• Market consolidation of advisers
continues
• Pensions regulator focus on funding
and governance
• Investment solutions increasingly
sought from Trustees and Sponsors
• Membership expansion anticipated
on back of auto enrolment
• Increased responsibility for
retirement planning on individuals
• Increasingly forming part of a
flexible benefit programme
BenPal
UK 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.
Case Study: Technology Company
Case Study: Insurance Company
• Existing Trust based offline DC scheme
for “head office/corporate” staff
• New scheme required following sale from
a Banking Group
• 20% take up; low engagement
• New GPP launched with BenPal system
• Limited investment opportunities
– 62% take-up
• New GPP launched with BenPal system
– Strong employee feedback on new
pension plan launch
– On-line enrolment, email alerts
– 60% take-up
– Broad investment options
– Strong, positive employee feedback
– Plan now to extend to retail staff
– BenPal seen by management as
core part of setting new employer
employee relationship around
benefits and reward
International EB Network Development
EB Network development Approach
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
International Employee Benefits
Key areas of Opportunity
Opportunity
• Multinational benefits management
• Emerging market health insurance /
services
• Multinational benefits services
• International client consulting
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
Case Study: Benefits Management System
Case Study: BenPal deployed to increase
awareness of Reward Package
• Existing UK BenPal clients 7,000
employees across Europe
• Implementation of BenPal to promote
value of Reward package in Brazil
• Requirements to extend BenPal into
France, Belgium and Holland
• Appointment underpins existing EB
adviser relationship in respect of Risk
and Health
• Values a coordinated, single brand
benefits strategy with local provision of
benefits
• System will deliver global data and
management information
• Anticipate that BenPal will be rolled our
regionally
JLT International Network
Mark Drummond Brady
International Chairman of Risk & Insurance
21 SEPTEMBER 2010
Distinctive. Choice.

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
•
Emphasis on flexibility of service model
JLT International Network Partners provide the
core of the whole International Network
JLT International Network
In comparison with other worldwide broker networks
Number of countries
140
120
100
80
60
40
20
0
Assurex Lockton
Global
JLT
Total owned offices
WBN
Willis
Marsh
Aon
Total non-owned offices
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