Interim Results. for the six months ended 30 th June th JULY Distinctive. Choice.

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1 Interim Results for the six months ended 30 th June th JULY 2010 Distinctive. Choice. Good morning Ladies and Gentlemen and welcome to our 2010 interim results presentation. My colleagues are now well known to most of you here, Jim Rush our Group Finance Director. This will be Jim s last presentation before he steps down from the Board on 6th August returning to Australia with his family shortly thereafter. Simon Mawson, our new Finance Director, has already joined us and is here today, Simon could you please stand up, Simon will be formally appointed Group Finance Director on 6th August. Next to Jim is Mark Drummond-Brady who is International Chairman of our Risk & Insurance activities. And next to him is William Nabarro, the Group Commercial Director. William also leaves us on 30th August, having made the decision to leave the City to pursue a career in teaching in the north of England. Before starting the presentation I would like to thank both Jim and William; each has made a considerable contribution to JLT. We are pleased to be able to present a strong set of results today. 0

2 2010 Interims Organic turnover growth of 6% Market leading growth Employee Benefits Successful integration of HSBC Actuaries & Consultants and iimia Wealth Management acquisitions Business Transformation Programme On track Adding power to the JLT international brand Building the JLT International Network capabilities, international roll-out of specialisms, Thistle, Employee Benefits Continuing investment to maintain strategic momentum Driving our underlying revenue has been market-leading organic turnover growth of 6%. This follows organic growth of 5% in 2009 and 6% in These results are a commendable achievement when set against the weak global economic environment, plus further softening of insurance rates in the second quarter and continued low levels of investment income earned due to very low interest rates. During the first half of the year we have made good progress integrating our two recent Employee Benefits acquisitions, HSBC Actuaries & Consultants Limited, which I shall refer to as HACL, and iimia, our wealth management business. Our Business Transformation Programme is on track and benefits are starting to flow through as anticipated with incremental savings in the 2010 full year now projected at 8million. We continue to add power to the JLT international brand. This includes a number of important initiatives: The expansion of the JLT International Network which we announced earlier this week The global roll-out of our industry specialisms The establishing of Thistle operations overseas And the internationalisation of our Employee Benefits business Each of which I will cover in more detail later. JLT s standing and established strategic position as the leading specialty broker is enabling us to continue to retain and attract top class talent to the organisation. The momentum continues to build at JLT. 1

3 2010 Interim highlights Six months to June ( M) Growth Actual CRE Organic Total revenue* % 13% 6% Underlying trading profit** % 3% Trading margin 18.7% 18.5% Underlying PBT** % Reported PBT % Underlying EPS (diluted)** 23.6p 19.3p 22% Reported EPS (diluted) 27.0p 19.9p 36 % Dividend per share 8.8p 8.5p * Total revenue comprises fees and commissions and Investment Income * * Underlying results exclude exceptional and non-recurring items CRE is constant rates of exchange Organic growth is on fees and commissions excluding acquisitions, disposals and the impact of currency The Group achieved a 21% increase in total revenue, or 13% at constant rates of exchange. Underlying EPS increased by 22%. A pleasing performance in absolute terms and underlines how the business is winning market share and seeing the benefits coming through from the investments made. The growth was complemented by positive exchange rate movements but also the contribution from strong organic growth of 6%. As I outlined in March we are now including investment income within our total revenue number. This is in response to the market s desire for comparison between brokers. Our revenue growth is made up of four key components: - underlying organic growth - growth from acquisitions - the impact of currency - and investment income Whilst we have not shown all these components in the main body of our presentation, if you turn to the Supplementary slides you will see all these numbers set out for you for each of our business areas. Organic revenue growth is the principal metric we track because it shows the real underlying growth of the business. I am pleased to say that in the first six months we delivered organic growth of 6%. Underlying trading profit was up by 22% actual from 57.8 million in 2009 to 70.7 million. Growth on a CRE basis was 3%. This lower rate of growth was due in part to the recent investment in key hires, acquisitions and system developments. We have been successful in recruiting senior professionals across the whole group from Sydney to Sao Paulo to London and throughout our specialist segments including Aerospace, Financial Risks, Mining to Oil & Gas through to Employee benefits and Thistle. We anticipate the benefits of these investments coming through in the second half of 2010 and more fully in Underlying EPS was 23.6p up 22% from 19.3p in Our reported EPS was higher at 27.0p. This reflects the benefit of a number of exceptional and non-recurring items, including a tax credit of 11.0 million. Jim will go into this in more detail later. The interim dividend is increased to 8.8p. 2

4 Total revenue & trading profit Six months to June ( M) Total Revenue Trading Profit Trading Margin 2010 Growth CRE Organic 2010 CRE CRE 2009 Retail % 11% 9% % 24% 20% London Market % 4% 5% % 23% 25% Risk & Insurance % 7% 7% % 23% 23% Employee Benefits % 50% 4% % 14% 15% Thistle Insurance Services % 11% - (0.8) (0.8) (0.1) (5%) (5%) (1%) Central Costs (12.8) (12.8) (6.1) % 13% 6% % 17% 18% Our retail businesses around the world combined to deliver a 24% revenue increase with organic growth of 9%. Our London Market businesses performed well with an 11% increase in revenues and organic growth of 5%. In our Employee Benefits business, revenues increased by 50% due primarily to the acquisitions of HACL at the end of 2009 and iimia in early The organic growth rate achieved was 4% for the period. We are reporting the results of Thistle Insurance Services separately for the first time reflecting the important strategic shift we are making with regard to our non-advisory business. This growing underwriting operation includes insurantz.com, our online businesses, SME-focused operations and the Ingham business acquired last year. In the first half of the year, Thistle has performed in line with our expectations at what is a formative stage and I shall talk more about its development shortly. 3

5 Retail Six months to June ( M) Total Revenue Trading Profit Trading Margin 2010 Growth CRE Organic 2010 CRE CRE 2009 Australasia % 2% 2% % 31% 28% Asia % 12% 11% % 21% 24% Latin America % 42% 22% % 30% 16% Canada % 7% 7% % 14% 6% Continental Europe % 22% 24% (0.4) 12% 12% (5%) Insurance Management 2.3 (4%) (2%) (2%) (0.1) (0.1) (0.1) (4%) (4%) (4%) % 11% 9% % 24% 20% Australasia continues to perform strongly, producing a trading profit margin of some 31%. The normal first half, second half balance of this business means that their trading margin will fall back in the second half of the year. Asia delivered strong revenue growth of some 14% with organic growth of 11%. LATAM continues to trade impressively with good results from Colombia, Peru and Brazil producing organic growth of 22%. In May we restructured our representation in Mexico and reinforced our relationship with LMS, our long-term partner. As a consequence of this change, our Mexican operations are being reported in the associates line from June this year. Canada saw an improved performance in the first half of 2010 producing 7% organic growth and much improved profitability. Continental Europe performed well. This business area no longer includes our UK retail business following the transfer of its advisory business into JLT Limited and its non-advisory business into Thistle. The 2009 figures have been amended to reflect these changes. 4

6 Jardine Lloyd Thompson Limited Six months to June ( M) Total Revenue Trading Profit Trading Margin 2010 Growth CRE Organic 2010 CRE CRE 2009 Jardine Lloyd Thompson Ltd % 4% 6% % 24% 25% Lloyd & Partners % 3% 4% % 24% 24% JLT Re % 4% 5% % 18% 24% % 4% 5% % 23% 25% Jardine Lloyd Thompson Limited achieved revenue growth of 10%, including organic growth of 6%. As I just mentioned, these results include a contribution from the advisory UK retail operations which transferred into JLT Limited from the beginning of The integration of the business has been completed and a strategy is being implemented to increase earnings based on promoting JLT Limited s specialist capabilities throughout the UK. In previous years JLT Limited s margin has fallen back in the second half of the year. We do not however expect this to be so pronounced in We anticipate that JLT Limited will be able to achieve its target of 20% trading profit margin in 2010, one year earlier than we had previously indicated. 5

7 Lloyd & Partners Six months to June ( M) Total Revenue Trading Profit Trading Margin 2010 Growth CRE Organic 2010 CRE CRE 2009 Jardine Lloyd Thompson Ltd % 4% 6% % 24% 25% Lloyd & Partners % 3% 4% % 24% 24% JLT Re % 4% 5% % 18% 24% % 4% 5% % 23% 25% Lloyd & Partners revenue grew by 12%, with organic growth of 4%. The business has been supported by growth in two areas: Firstly, Energy, where we have seen significant new business. We began to see some rate hardening at the end of the first half for Gulf-exposed risks as capacity has reduced following the Deepwater Horizon disaster. And secondly, Cargo, which has benefited from rising commodity prices and new business wins. 6

8 JLT Re Six months to June ( M) Total Revenue Trading Profit Trading Margin 2010 Growth CRE Organic 2010 CRE CRE 2009 Jardine Lloyd Thompson Ltd % 4% 6% % 24% 25% Lloyd & Partners % 3% 4% % 24% 24% JLT Re % 4% 5% % 18% 24% % 4% 5% % 23% 25% At JLT Re, which is comprised of our reinsurance broking and aerospace insurance broking activities, total revenue increased by 12%, with organic growth of 5%. Our non-marine reinsurance book continues to make progress in both the UK and the US. However we saw this partly offset by a decline in our energy book which has suffered due to cedents purchasing less reinsurance for Gulf of Mexico wind exposures. In our Aerospace business, we are beginning to see the positive impact of the plan we launched in the Spring of 2009 to become one of the leading brokers in the sector. During the last fifteen months we have hired some twenty-three additional aerospace professionals. To date we have received appointments from thirty new clients spread throughout Asia, Europe and the Americas. As a number of these new appointments do not attach until the second half of the year we have not yet seen the full benefit in our results. Nonetheless, our UK aerospace business reported organic turnover growth of 14% for the half year. 7

9 Employee Benefits Six months to June ( M) Total Revenue Trading Profit Trading Margin 2010 Growth Organic Employee Benefits % 4% % 15% Our Employee Benefits business delivered a 50% increase in revenues. This was substantially as a result of the acquisitions of HACL and iimia, plus organic growth of 4%. The trading margin has fallen back from 15% to 14%. This is in line with our expectations as we integrated HACL and iimia which have been re-branded and are trading as projected. The integration is on track and we believe it will be substantially completed by the end of the year, with further benefits to the bottom line starting to show through in the second half of 2010 and more fully in The Employee Benefits market continues to be focused on de-risking Defined Benefit pension schemes and developing Defined Contribution arrangements for the future. BenPal has now been commissioned by 30 clients, including Esure and Commerzbank. We believe further progress will be made by BenPal over the balance of the year. 8

10 Thistle is an underwriting and distribution company Writing small-ticket high-volume business It is a marketing led organisation focusing on the design, underwriting and distribution of Thistle branded products It distributes direct, through affinities, via third party brokers and online The Group s s balance sheet is not used to underwrite risk Thistle, the Group s MGU, is an underwriting and distribution Company which markets products on a non-advisory basis. Its activities focus on writing small-ticket highvolume business. It is a marketing-led organisation focusing on the distribution of a broad range of insurance products including Thistle branded products. It distributes direct, through affinities, via third party brokers and online and provides end-to-end service from design, underwriting, quotation and marketing through to claims. It includes JLT Online and Insurantz.com. As previously highlighted we do not use the Group s balance sheet to underwrite risk. 9

11 Six months to June ( M) Total Revenue Trading Profit Trading Margin Total Revenue 2010 Growth Trading Profit Trading Margin Growth Thistle Insurance Services % (0.8) (0.1) (5%) (1%) The formation of Thistle has led to a restructuring of our non-advisory business in the UK with significant investment in an underwriting capability with specialist personnel, new technology and the development of a major service centre in Gloucester which will provide call centre and online service capability. We have re-evaluated Thistle s existing relationships with insurers that provide capacity for its products and the terms on which that capacity is provided. As previously highlighted, our earnings model will see the relative importance of our percentage share in underwriting profit progressively increasing by comparison to the initial fees and commissions. This should result in an overall increase in earnings. But we anticipate that the increase will come through later as underwriting profits are recognised. Thistle has retained underwriting integrity despite extremely aggressive competition amongst the major composites and we believe that our strategy will produce superior returns over time. This is a segment which is gaining momentum as we continue to build out its offerings, underwriting capabilities and means of distribution. It is too early to give meaningful guidance on the future potential of this business other than to say we remain very excited by the Thistle initiative. I will now pass you to Jim. 10

12 Financial Review for the six months ended 30 th June 2010 Jim Rush Group Finance Director Distinctive. Choice. 11

13 Profit and Loss Six months to June ( M) 1H H 2009 Change Underlying trading profit Associates after tax Net underlying finance costs (0.6) (1.0) 0.4 Underlying PBT Net exceptional (costs)/gains (3.6) 1.6 (5.2) PBT Underlying tax expense (20.4) (17.7) (2.7) Non-recurring tax credit 11.0 (0.1) 11.1 Minority interests (2.0) (1.0) (1.0) PAT (after minorities) Underlying PAT (after minorities) Diluted EPS 27.0p 19.9p 7.1p Underlying diluted EPS 23.6p 19.3p 4.3p Interim dividend per share 8.8p 8.5p 0.3p Thank you Dominic and good morning. The Group achieved good growth in the first half with all businesses meeting or exceeding our expectations. Group underlying trading profit was up by 12.9 million to 70.7 million representing a 22% increase. Similarly, underlying PBT increased by 13.9 million to 73.6 million, an increase of 23%. Net exceptional costs were 3.6 million primarily relating to our business transformation programme and acquisition integration costs. After deducting these exceptional items, PBT increased by 8.7 million to 70 million. Underlying tax expense was 20.4 million representing an underlying tax rate of 27.8%. This was partly offset by a non-recurring tax credit of 11 million primarily relating to the successful resolution with tax authorities of various tax matters which go back over a number of years. Due to the material size of the tax credit, it is disclosed separately as a non-recurring item. Profit after tax and minorities increased by 16.1 million to 58.6 million, resulting in a diluted EPS of 27.0 pence. Excluding the net exceptional costs and the non-recurring tax credit, underlying profit after tax and minorities increased by 10.1 million to 51.2 million. 12

14 Underlying diluted EPS Six months to June Pence p + 8% 19.3p + 12% 23.6p + 22% Interim dividend per share increased to 8.8p in 2010 from 8.5p in 2009 This represents a 22% increase in the underlying diluted EPS to 23.6 pence. The Board has decided to increase the 2010 interim dividend to 8.8 pence per share from 8.5 pence in The full year 2010 dividend will be recommended by the Board in March 2011 in view of the full year s financial performance and outlook. 13

15 Business Transformation Programme Twelve months to December ( M) Full Year Actual F cast F cast F cast Cost savings: Additional benefit achieved in the year Recurring benefit Exceptional one-off costs: Cost in the year (7) (8) (3) Cumulative cost (7) (15) (18) Our Business Transformation Programme is on track. There are no material changes to the guidance provided in March, being total forecast recurring cost savings of 14 million by 2011 resulting from cumulative one-off costs of 18 million. Due to the material size of this non-recurring expenditure, we are treating the project costs as exceptional. The benefit of this programme will be efficiency gains and the opportunity to continue to enhance the services we provide to our clients. We are achieving this by freeing up client facing professionals whose time has been absorbed by processing that can be more readily handled by other colleagues. To achieve this, we are making use of our Mumbai office where we now have over 400 staff. In 2010 the additional cost savings are forecast to be 8 million. The one-off costs in 2010 are also forecast to be 8 million comprising some 3 million in the first half and 5 million in the second half. 14

16 Underlying operating cost ratio Six months to June ( M) Change Fees and commissions % % 66 Operating costs: Staff costs % % 37 Premises % % 2 IT costs % % 2 Travel & entertainment % % 2 Other operating costs % % % % 52 The operating cost ratio continues to improve with a decrease from 82.4% to 81.8% in the first half. This needs to be seen in the context of the HACL acquisition, where it was only in the second quarter that we were able to bring to bear a fresh commercial approach to the HACL business and start to re-engineer the cost base of the combined businesses. As Dominic mentioned earlier, we continue to recruit leading market practitioners right across all of our businesses and have had a notable number of new joiners in the first half. We would expect to see further progress in bringing down the operating cost ratio in the second half of

17 Underlying operating costs by business Six months to June ( M) 2010 Actual CRE 2009 Change Change Actual Actual CRE Retail % 5 5% London Market % 7 7% Employee Benefits % 19 51% Thistle Insurance Services % 2 16% Central Costs % 7 108% % 40 16% Total operating costs increased by 52 million to 307 million, an increase of 20%, or 16% at constant rates of exchange. The most significant change occurred within Employee Benefits, reflecting the impact of the acquisition of HACL in December 2009 and iimia in January Central costs increased by 7 million to 13 million, including increased litigation and E&O costs expensed and settled in the first half of

18 Breakdown of exceptional and non-recurring items Six months to June ( M) Net exceptional costs: 2010 Business Transformation Programme costs (2.9) Integration of acquisitions (2.7) Other exceptional and non-recurring items 2.0 (3.6) Exceptional and non-recurring tax credits: Tax saving on net exceptional and non-recurring costs 0.7 Tax settlement credit Net exceptional costs comprise 2.9 million for the Business Transformation Programme and 2.7 million for the integration of the HACL and iimia acquisitions, offset by 2.0 million of net exceptional and non-recurring gains. The non-recurring tax credit in the first half was 11 million comprising a 10.3 million for the tax settlement credit and 0.7 million tax saving impact on net exceptional costs. 17

19 USD/GBP achieved FX rates Six months to June 1H H 2009 Actual Hedging rates achieved as at 30 June 2010 $1.54 $1.72 Revenue % hedged 85% 85% Average market rates $1.53 $1.59 Revenue % unhedged 15% 15% Actual achieved rates after hedging $1.54 $1.72 Revenue % hedged + unhedged 100% 100% Value of $135m revenue in M 88m 78m Approx YOY revenue impact in M 10m Our London market businesses benefited from a stronger dollar. The achieved blended rate after hedging was improved at $1.54 compared to $1.72 in Based on US dollar revenue in the first half of approximately $135 million dollars, the year-on-year increase in revenue was some 10 million in the first half. 18

20 USD/GBP hedging positions Twelve months to December Full Year Projections Actual Forward rates Average market rates Hedging rates achieved as at 27 July 2010 $1. 72 $1.55 $1.51 $1.53 Revenue % hedged 100% 85% 80% 70% Market forward rates as at 27July 2010 $1.55 $1.55 $1.54 Revenue % unhedged 15% 20% 30% Blended rates after hedging $1.55 $1.52 $1.54 Revenue % hedged + unhedged 100% 100% 100% Actual achieved rates after hedging $1.72 $1.55 $1.52 $1.54 Value of $260M revenue in M 152m 168m 171m 169m Approx YOY revenue impact in M 16m 3m ( 2m) We continue to have a prudent US dollar rolling hedging programme to smooth out the volatility caused by a changing exchange rate on US dollar revenue earned in our London Market businesses. This means our achieved rate is significantly less volatile than the market rate. As a guide, each one cent movement in our achieved rate has a revenue impact of approximately 1 million and a corresponding impact on trading profit of approximately 65% of the revenue change. Based on prevailing exchange rates and estimated full year US dollar revenue of $260 million, we expect our achieved rate for 2010 will be approximately $1.55, resulting in 16 million of additional revenues in 2010, compared to Our latest currency positions are: 85% hedged for 2010 at a rate of US$1.55, 80% hedged for 2011 at US$1.51 and 70% hedged for 2012 at $1.53. We have also commenced hedging for 2013 and are 40% hedged at $

21 Cash flow Six months to June ( M) Underlying EBITDA Less: exceptional items paid (4) - EBITDA Net interest & other (4) (12) Net working capital (84) (47) Tax paid (9) (15) Normal capex (14) (10) Acquisitions (8) (10) Dividends paid (28) (25) Foreign exchange 1 (6) Net cash outflow (60) (52) There was a net cash outflow of 60 million in the 1 st half of This was in line with expectations and is consistent with the usual 1 st half trend of outflows for significant increases in working capital, to be followed by decreases in working capital in the 2 nd half as cash is collected from June revenues. Normal capital expenditure increased by 4 million to 14 million as we continue to invest in IT, upgrading our infrastructure using smarter applications to become more automated and location independent. 20

22 Balance sheet ( M) 30 June June 2009 Change 31 Dec 2009 Change Goodwill and intangibles Fixed assets Associates and investments Net working capital and other Hedging contracts after deferred tax (2) 13 (15) 8 (10) Net pension deficit after deferred tax (83) (62) (21) (67) (16) Other deferred net tax assets Net debt (102) (61) (41) (42) (60) Net assets The balance sheet shows that JLT is in a strong financial position. In line with previous years, net working capital materially increased in the first half to 93 million. This was largely due to increased receivables on the back of higher fees and brokerage. It is pleasing that the aging profile for uncollected brokerage and fees as at 30th June 2010 has improved on last year despite fees and brokerage income increasing by some 21%. The net pension deficit after tax is higher at 83 million primarily due to the discount rate used to value UK pension liabilities moving from 5.7% as at 31st December 2009 to 5.36% as at 30th June We continue to work closely with the Trustees to investigate ways to further mitigate the risks. The pension assets returned 4% in the first half of 2010 with 65% of the assets invested in long-term AA corporate bonds. Net debt is 102 million reflecting the acquisitions made in the Employee Benefits business. The Group has committed bank facilities equivalent to 258 million to December We benefit from strong banking relationships and are continually reviewing our long term committed debt facilities which we are confident will be successfully refinanced well ahead of expiry, with new maturities going out at least 5 years. Group net assets representing total equity increased in the 6 months to 30th June 2010 by a further 21 million to 260 million. I will now hand you back to Dominic. 21

23 Dominic Burke Group Chief Executive Distinctive. Choice. 22

24 Adding power to our international brand I would like to spend a couple of minutes talking to you about how we are taking a number of important strategic actions to add power to JLT s international brand. I spoke earlier about the restructuring of the UK retail insurance broking activities that used to be undertaken by JLT UK IB and the integration of its advisory broking activity into the specialist disciplines of JLT Limited. The early signs are that this combination is proving very successful. JLT Limited s industry specialist strength adds an additional dimension to our traditional UK retail broking business. It is a valuable point of differentiation in a marketplace where the offering is increasingly seen as a commodity and decisions made on price alone. By taking advantage of JLT Limited's deep-rooted knowledge of the client industries on which we concentrate, our colleagues who have moved from JLT UK to JLT Limited are better equipped to address the needs of our clients - and they take pride in being part of a world-leading, international specialist broking firm. 23

25 Adding power to our international brand Industry specialisation - a global principle UK Australasia Canada Asia Creating the world s leading specialty broker A similar development is now underway in our other retail broking businesses around the world. No longer will JLT have operations that could be characterised as 'generic mid-market broking'. Since the preliminary announcement in March, structural changes have been set in motion in Australasia, Canada and, most recently, in Asia. Our businesses are no longer managed and reported 'City-by-City' in these regions. Instead, all activities which involve the provision of full advisory broking services are structured according to the client industry served and are operated nation or regionwide. The consequence is to raise the professional standing of our operations and open up new sales opportunities supporting further strong organic growth in the future. In addition - and without detracting in any way from the Group-wide organisational principle that management is by country and regional units - this industry specialist focus is facilitating more open, extensive and timely coordination between our internationally-spread retail operations and our core specialist teams which are for the most part located in London or Singapore. This ready collaboration between brokers on the ground and members of specialist teams operating world-wide is what enables JLT to offer an optimal service to our clients. It is no accident that some of the industries in which our specialist teams are strongest - such as Construction and Oil & Gas - are also particularly important to the Australasian, Asian and Canadian economies and to our retail businesses located there. 24

26 Adding power to our international brand Thistle Insurance Services Underwriting & distribution of branded, uniform products, targeting high volume, lower value risks. Broad distribution through affinity marketing, direct, via third party brokers and online. Thistle originated in the UK and is now being established in Australia, Canada and Asia Managed locally but collaborating internationally Sharing processes, operating platforms and underwriting procedures and disciplines established in the UK The 'other half' of our UK retail insurance broking activities, being the non-advisory operations, engaged in the sale of insurance products, often with a low unit price and sold to individuals or small businesses, has been combined with Thistle. Again, our intention is to progressively establish Thistle operations in all the other parts of the world in which JLT operates as a retailer. Work is already underway towards this objective in Australia and Canada. The Thistle businesses in these countries will continue to form part of their local management units; however, the processes, operating platforms and underwriting procedures and disciplines that Thistle has established in the UK will provide a professional framework for developments internationally. 25

27 Adding power to our international brand Internationalisation of Employee Benefits Employee Benefits solutions for multi-national companies The emergence of JLT as an international Employee Benefits Consultancy is progressing and a further example of JLT adding power to its international brand. Firstly, BenPal, our online employee benefits software platform, is well suited for deployment in many countries around the world and, in particular, to meet the requirements of multi-national companies looking for information and control in relation to the EB programmes operated by their subsidiaries around the world. Secondly, across many parts of the world, we have a strong and extensive range of capabilities in health cover provided through the employee/employer relationship. The opportunity for JLT is to ensure that we position our EB operations internationally to derive full benefit from our strength in this field. 26

28 Adding power to our international brand You will have seen that earlier this week we announced our investment in a 20% holding in GrECo, the leading Austrian-based broker with strong representation in Eastern and South Eastern Europe, and our further development with GrECo, Ecclesia in Germany and Siaci Saint Honore in France, of the JLT International Network. Each of our partners is a leading independent broker in their respective countries of operation. We have all agreed to branding and exclusive trading arrangements far more extensive than those characteristic of traditional 'broker associations'. We have no doubt that this further development of the JLT International Network will add markedly to JLT's ability to deploy our industry specialist skills to serve clients in regions where our partners are strongly represented and have well established relationships with leading companies. 27

29 The JLT International Network It will also enhance the value of the international JLT retail proposition to multi-national companies and to US independent brokers with multi-national clients. With this development in Europe at the heart of the JLT International Network, our positioning, as the distinct alternative to the big 3 brokers, uniquely able to provide multi-national corporations wherever headquartered, with retail services, specialist expertise and access to international insurance markets is considerably enhanced. 28

30 Market Update The general property and casualty market remains very soft with excess capacity continuing to chase market share. The exception being off-shore energy market which is seeing increases of 10% to 50%. At the time of our interim management statement in April we stated that we were seeing an increasingly soft insurance rating environment across most sectors. We highlighted that the US domestic insurance market for general property & casualty risks was the softest we had seen since the events of 11th September Today the situation remains very similar, with excess capacity still chasing market share in the commercial property and casualty market. There seems little likelihood of the situation changing in the foreseeable future. As I mentioned earlier, the one exception to this, is the offshore energy market which is seeing upward pressure on rates following the deepwater horizon disaster, where rates on offshore energy have increased in the range of 10% to 50%. Turning briefly to contingent commissions. Recently there has been significant debate amongst the global brokers around the reintroduction of contingent commissions in different guises as an additional source of revenue. At JLT our primary focus will always remain on our clients; it is through our continued success at winning and retaining business that we see the greatest opportunity to continue JLT s track record of delivering market leading rates of organic growth. We will of course continue to observe, monitor and analyse the ongoing debate. 29

31 Outlook Trading activity in the first half of 2010 continued to be encouraging and this, coupled with the increasing benefits from the broad range of investments being made, comprising key hires, acquisitions and systems developments, gives us the confidence that we will continue to make financial progress for the full year. The momentum at JLT is continuing to build Much has been achieved in the first half of 2010 : Across the Group, our trading has been consistently in line with our expectations and our strong track record of delivering good organic growth is continuing We are successfully integrating acquisitions which have added materially to our EB capabilities. Our Business Transformation Programme is on track and delivering the expected benefits - with more to come. We have taken positive steps to further enhance our JLT International Network. And today, JLT s standing and strategic position is enabling it to retain and attract leading professionals across all the disciplines of the JLT Group. The momentum at JLT is continuing to build. Trading activity in the first half of 2010 continued to be encouraging and this, coupled with the increasing benefits from the broad range of investments being made, comprising key hires, acquisitions and systems developments, gives us the confidence that we will continue to make financial progress for the full year. Thank you and we will now take questions. 30