Broker Forum: JLT’s expansion plans

Broker Forum: JLT’s expansion plans

Jardine Lloyd Thompson (JLT) is already one of the strongest London market broking stalwarts. In recent years, the firm has shown consistent appetite for growth in its specialty and reinsurance strong suits. Its biggest avenue for growth has been a huge investment in the US in order to carve out new revenues from specialty placements and reinsurance.

About one third of JLT’s revenue growth has come from acquisitions over the past decade, its group CEO, Dominic Burke, told Reactions. He cited the acquisition of Towers Watson’s reinsurance broking arm as the most significant of these in recent times, although organic growth has in fact been the biggest factor.

“We’ve predominantly operated on an organic growth based strategy,” said Burke. “We make accretive bolt-on acquisitions where they bring growth to the group, but we’re not interested in acquisitions for bulk alone.”

His expansion plans are largely focused on the company’s specialty insurance and reinsurance broking strengths. “We’re not trying to be all things to all people, or plant a flag in every country,” said Burke.

JLT’s biggest growth project is the ambitious plan to build out its US specialty business. This, he noted, is by and large a story of organic growth for the broker. “It’s a unique situation in our industry,” said Burke. “Most firms grow by acquiring business, mostly at inflated values.”

The company’s US specialty business has recruited more than 220 new staff. It already places aviation, marine, oil and gas, cyber, real estate, entertainment, financial institutions and financial lines business, including directors’ and officers’ (D&O) and errors and omissions (E&O) liability.

To further boost its presence the broker also bought a 50.1% stake in New Jersey-based broker Construction Risk Partners (CRP) for $50m in January 2017. Burke noted that CRP produced around $24m in revenues in 2016.

He said the strategy to grow the US business is part of a broader strategy for the London-based broker, allowing for growth across the business globally as a specialty insurance and reinsurance broker.

“It was important to define that business prior to us going in on the ground,” said Burke. “The ambition there has been to become a significant specialty player on an international platform. Our goal has been to fulfil our clients’ risk transfer needs, and we’re starting to see real momentum.”

He used the example of US financial lines placements, which “work hand in glove” between colleagues around the globe within the broker’s European, Asian and Australian businesses. 

“We’re carving out opportunities to work together,” said Burke. “Our US colleagues are finding great access to capital, and to our international capabilities. That’s the strategy, which is self-evidently starting to work.”

Burke suggested that for big US and international specialty placements, JLT’s risk transfer proposition for clients came as a welcome alternative to the biggest two broking organisations in that market. “They’re frustrated by the almost duopoly of Marsh and Aon. They want another major player that gives them more choice,” he added.

Burke also highlighted the expansion of JLT’s advisory capabilities in recent years, bringing in additional technical expertise to put at clients’ disposal. “The more you do that, the more they will appoint you, retain you and reward you,” he said.

Burke cited two twin foundations as important in achieving his goals: a focus on culture and behaviour; and investing in people, to make sure the best possible skill sets are put in front of clients. “We seek to collaborate, to win new business, and to support our clients,” he added.

When speaking of expansionary goals, he was perhaps most passionate about acquiring talent. “We have an expansionary view on talent. I want to grab all the best talent in the marketplace,” said Burke.

“I’m really not that concerned about operating margins, but I’m far more concerned with having the right talent. Having that in place will achieve those margins for us,” he continued.

JLT’s expansion in recent years, driven by consistently buoyant organic growth figures, has been to take on the biggest brokers in the specialty market, and try to supplant them. Burke summed up his aim thus: “We aspire to be the world’s leading specialty insurance broker, defined by respect, capability, and deep-seated technical skills.”

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