JARDINE Lloyd Thompson's marine and energy reinsurance business last year struggled with deteriorating market conditions, prompting the broker to focus investments on other activities.

The London Stock Exchange-listed group posted an overall 5% rise in pre-tax profits to £95m ($188.6m) for 2007, nofollowing a recent acquisition spree that included last year’s tie-up with derivatives specialist ICAP.

JLT group chief executive Dominic Burke said that, although still early in the year, the company expected “further profitable growth in 2008”.

However, the world’s number three insurance broker reported that London market business, JLT Reinsurance Brokers, had grappled with tough market conditions and a weak dollar.

“The headwinds of a soft market, increased retentions and continued weakness of the dollar has impacted our traditional areas of strength, being marine and energy and aviation,” JLT added.

Turnover for the JLT Re business, which has been strong in the marine and energy sectors, was £43m for the year, down 8% from a year earlier, while overall group turnover increased 5% to £473m.

“Albeit in marine and energy, we made up most of the loss through new production,” the broker added.

JLT has broadened its reinsurance activities since the beginning of 2005 and said that its decision to invest in non-marine activities had expanded its book year on year by 20%. Mr Burke said that growth in the reinsurance business had gone according to plan and was concentrated in north America.

The London market businesses saw turnover shrink 2% — or 1% at constant exchange rates — although the trading margin for this business improved from 12%-14%.

US dollar-dominated revenues generated by the London market amounted to $220m or 25% of group turnover, exposing the group to changes in the sterling-dollar exchange rate.

JLT’s wholesale insurance broker Lloyd & Partners, which provides independent retail brokers with access to specialist London, European and Bermudian markets, saw turnover fall 5% to £41m.

London market business JLT Ltd reported a turnover up 2% to £108m with a trading margin up to 14%, which the group said was a significant recovery.

Mr Burke said that insurance market conditions remained “very competitive” with insurers competing for market share.

He said: “We see no reason to believe that this is going to change in the short or even medium term while there remains an excess of capital combined with the recent relatively benign claims experience.

“That said, the reinsurance renewal season was more disciplined than some had predicted. In addition, there remains intense competition between brokers to win and retain business.”

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