February 28, 2017 / 10:05 AM / 9 months ago

UPDATE 1-Insurance broker JLT sees positive outlook for U.S. business

(Wraps in CEO, analyst comments, share price reaction)

By Carolyn Cohn

LONDON, Feb 28(Reuters) - Insurance broker Jardine Lloyd Thompson (JLT) said it saw an improving outlook for its expanding U.S. specialty business, as oil exploration costs are falling and it expects President Donald Trump’s policies to boost the building sector.

Investment in the United States last year crimped the earnings of JLT, which reported a one percent rise in 2016 pre-tax profit on Tuesday, but it said its U.S. business was on track to turn a profit in 2019.

“In the construction space, with Trump talking about the need to rebuild America and its infrastructure, that’s obviously a very positive outlook,” Chief Executive Dominic Burke told Reuters by phone.

“Oil prices are seen to be reasonably stable ... this is also coinciding with the cost of exploration coming down.”

Burke said he was confident that JLT’s organic revenue would grow around 6 percent this year, up from 2 percent last year, helped by the completion of a turnaround in its UK employee benefits business, as well as by U.S. expansion.

Insurance and reinsurance premiums continued to fall but at a slower pace, he said.

“There is not much room left for these rates to go any softer, it seems to be heading towards an inevitable turn in the market.”

JLT said pretax profit totalled 172.6 million pounds ($214 million) in the year ended Dec. 31, slightly below forecasts from analysts at Panmure Gordon and RBC.

Total revenue rose nine percent to 1.26 billion pounds.

JLT said in a statement that the trading environment had been challenging, with “sustained softness” in insurance and reinsurance prices.

It said it would pay a final dividend of 20.6 pence per share, bringing the total dividend to 32.2 pence, up 5 percent from a year earlier.

KBW analysts described the results as a “fractional miss in a difficult trading environment”, reiterating their perform rating on the stock.

JLT’s shares were up 0.7 percent at 1,037 pence at 0955 GMT, compared with a 0.22 percent rise in the FTSE mid-cap index .

$1 = 0.8050 pounds Reporting by Carolyn Cohn and Noor Zainab Hussain; Editing by Simon Jessop and Susan Fenton

Our Standards:The Thomson Reuters Trust Principles.
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