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JLT Investor Seminar. Growing Aerospace Business. Alan Griffin Chairman/CEO, JLT Reinsurance Brokers Limited. Our world of “Aviation” – Size and Shape. Our world of “Aviation” – The Insurance Buyers. Available Brokerage. Estimated brokerage available from target sectors

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growing aerospace business

Growing Aerospace Business

Alan Griffin

Chairman/CEO, JLT Reinsurance Brokers Limited

available brokerage
Available Brokerage
  • Estimated brokerage available from target sectors
    • USD 250 million (GBP 160 million)
a simple objective
A Simple Objective

“To become the leading aviation insurance broker by any measure”

a strong springboard
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

As at 1st January 2009

Broker Comparison

Airline Market Share

JLT

Based on JLT airline database and known airline account moves

strategic investment needed
Strategic Investment Needed
  • We lacked:
    • Depth of resource
    • Distribution
today s global team
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
broker comparison13

As at 16th September 2010

As at 1st January 2009

Broker Comparison

Airline Market Share

JLT

Based on JLT airline database and known airline account moves

summary
Summary

We are on track to meet our objective:

“To become the leading aviation insurance broker by any measure”

slide15

“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

Delivering Sustainable Growth - Australia

Leo Demer

CEO, Australia & New Zealand

australasian operations
Australasian Operations
  • Australasian operations have been a significant contributor to Group profits

Offices ~ 21

Staff ~ 850

jlt australia historical profile
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
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
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

opportunities by operating division
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 division23
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 division24
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 division25
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 division26
Opportunities by Operating Division

3%

  • 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
jlt latin america brazil

JLT Latin America - Brazil

Vyvienne Wade

CEO, Latin America

jlt latin america
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 Re Brazil

JLT Peru Re, Lima

JLT Retail Brazil, Ribeirão Preto

JLT Brasil, Rio de Janeiro

JLT Brasil, São Paulo

  • Regional Economic Features:
  • Economic Growth – impact of recession, banking crisis
  • Political stability
  • Growing middle class (2002-2008 40m Latin Americans of a total population of 580m lifted out of poverty)
  • Produce commodities and food
  • Main countries Brazil, Mexico, Colombia, Peru and Chile (75% GDP, 70% population)

# - Associates not subsidiaries

JLT Offices

latin america
Latin America

Major Economic Sectors within Territories. All economies

which have strong growth sector match with JLT Specialisms

GDP growth in JLT LATAM Countries

Figures in %

* Forecast

regional financial statistics
Regional Financial Statistics

for subsidiary LATAM business (Historic)

REINSURANCE

RETAIL

CONSOLIDATED

All figures in £ ‘000’s

2007

2008

2009

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

main developments since the beginning of 2009
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
brazil macroeconomic overview
BrazilMacroeconomic Overview

Key Facts

  • 10th largest economy in the world (2009 GDP of US$1.6tn) forecast to be 5th 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
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
brazil insurance market low insurance penetration opportunity
Brazil: Insurance Market:Low Insurance Penetration: Opportunity
  • Attractive insurance industry growth prospects
  • GDP Growth
  • Rising insurance penetration
  • Effective regulation (SUSEP)

Insurance Penetration (% of GDP)

Sources: Brazil figures from Fenaseg (national insurance association), SUSEP, ANS, IPEADATA. Figures for other countries from Swiss Re.

brazilian insurance market premium
Brazilian Insurance Market Premium

Total Premium ~ US$ 49 billion

Non-Life ~ 22% of total

Life & Affinity ~ 78% of total

(2004 – 2009 13% ave. annual premium growth)

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)

jlt brazil
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

Asia Financial Review

Warren Merritt

CEO, Jardine Lloyd Thompson Asia

strong asia presence
Strong Asia Presence

Asian Opportunities

  • Combined Population: >2 billion
  • Combined GDP: US$12.9 trillion
  • Estimated Combined Non-Life Premiums: US$166.7 billion

Korea: 23

Japan: 29

China: 56

Taiwan: 23

Hong Kong/Macau: 162

Philippines: 48

Thailand: 47

Vietnam: 7

Malaysia: 46

Present in 12 territories across Asia.

Singapore: 241

Total Asia: 727

Indonesia: 45

continued investment in specialist lines
Continued investment in specialist lines

Specialist strengths of JLT Asia

  • Affinity:
  • Motor
  • Phones
  • Computers
  • Aviation:
  • Strong presence
  • Major growth
  • Captives:
  • 9 Captives under management
  • 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.
  • Capital Risks:
  • Bank relationships
  • Terrorism
  • Construction:
  • Major global projects from KIA, CIA & JIA
  • Energy:
  • Strong Const Development
  • CIA / JIA
  • Employee Benefits:
  • RM approach
  • IT solutions
  • Hyper Inflation
  • JLTi:
  • Leading in house
  • IT developer
  • Corporate Risks:
  • Increasing
  • regional and
  • global needs
  • Marine:
  • Marine strategy being formulated
  • SMEs:
  • Schemes and facilities developed.
  • ProEx:
  • Emerging local banks
  • RM focus (M Bar)
  • Property:
  • Major market in Singapore;
  • Increasing assets (Int / Reg)
  • Life
  • Increase in No
  • of HNWI
  • Risk Management:
  • Increasing sophistication
  • ARC Support
jardine matheson
Jardine Matheson

The Jardine Matheson Group also includes Jardine Pacific and Jardine Strategic, which are holding companies.

innovation in employee benefits

About the Client

JLT’s Solution

General Situation

  • PHaRMa
  • Efficient online administration
  • Online administration
  • RM via in house medical professionals
  • Interactive data mining
  • Delivery of cost solution within budget
  • Large Indonesian bank
  • 25,000 employees including subsidiary Adira Finance
  • Increasing costs, particularly relating to medical cover
  • Inefficient administration
  • Insufficient information
  • Lack of RM/Consultancy approach – “Direct”
Innovation in Employee Benefits

A major publicly listed bank in Indonesia

strong financial performance
Strong financial performance

Financial Highlights

Revenue: 2005 - 2009

  • 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

Trading Profit: 2005 - 2009

jlt investor seminar september 21 st 2010

JLT Investor SeminarSeptember 21st 2010

Adrian Girling

Thistle Insurance Services

creation of thistle
Creation of Thistle

UK Retail Insurance Broking activities

Advisory operations

Non-Advisory division

(JLT Limited)

2009 Revenues of £20m

2009 Revenues of £32m

Thistle proforma

annualised 2009

revenues of £35m

principal aims
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
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
Typical financial model

Introducing Broker

Commission

Thistle

Administration charge

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

Chart not to scale

capacity
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
  • Potential of This is to become Lloyd’s syndicate

Binder

year

Accounting year

2009

2010

2011

2012

2009/10

20%

20%

50%

10%

key drivers

Target Market

Technology

Underwriting

Distribution

Process

Capacity

Key drivers

High volume, low premium

Web based, automated quotes with flexibility to refer to underwriting

Thistle where appropriate. If not common financial model

Third Party Brokers and within JLT direct and via Affinities

System enabled with input by brokers/JLT and automated outputs quotes, documentation and claims

Insurers but longer term potential to move towards own capital management

international aspirations
International aspirations
  • Managed locally but collaborating internationally
  • Sharing processes, operating platforms and underwriting procedures and disciplines established in the UK
international aspirations51
International aspirations

UK

Australia

Canada

Asia

Latin America

UK

Australia

Canada

Asia

UK

Australia

Canada

UK

Australia

UK

slide52
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

Delivering Sustainable GrowthEmployee Benefits – UK & International

Duncan Howorth

International Chairman of Employee Benefits

21 SEPTEMBER 2010

agenda
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
UK Market Overview

Defined Contribution

Defined Benefits

  • £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
  • £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
benpal uk pensions and benefit market positioning
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.

Case Study: Insurance Company

Case Study: Technology Company

  • 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
  • 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
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
International Employee BenefitsKey areas of Opportunity

Description

Opportunity

  • Multinational benefits management
  • Emerging market health insurance / services
  • Multinational benefits services
  • International client consulting
  • 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
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
  • 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
  • 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
jlt international network

JLT International Network

Mark Drummond Brady

International Chairman of Risk & Insurance

jlt international network62
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 network63
JLT International Network

In comparison with other worldwide broker networks

Company estimates taken from public information

jlt international network64
JLT International Network

JLT shareholding = 20%

jlt international network65
JLT International Network

JLT shareholding = 20%

jlt international network67
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 network68
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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