(Reuters) - Insurance and reinsurance broker Jardine Lloyd Thompson (JLT) (JLT.L) said jobs would be cut as it reorganises into three divisions — reinsurance, specialty and employee benefits — to try to simplify its business.
JLT also reported a 35 percent jump in pretax profit to 181.6 million pounds last year.
“Inevitably there will be a reduction in the workforce. It is across the globe and what the transformation really is seeking to do is create operational efficiency, with clear financial benefits,” CEO Dominic Burke told Reuters.
JLT employs 11,000 people across 42 countries, Burke said, without specifying how many positions would be cut.
The reorganisation, effective April 1, would generate annualised savings of 40 million pounds by 2020, with a one-off cost of 45 million pounds spread across 2018 and 2019, the group said.
“Investing in business efficiency is good but this announcement smacks of the ‘jam tomorrow’ theme ... and may frustrate some,” said Keefe, Bruyette & Woods analysts, who rate JLT as “market perform”.
JLT’s shares were down 2.3 percent at 1334 pence at 0933 GMT.
JLT also took a more conservative stance than its rivals on rising insurance rates after a catastrophic 2017.
Helped by higher margins and a number of substantial client wins, full-year profit rose 40 percent at JLT’s UK employee benefits business. The unit was hurt in 2016 by a structural shift away from commissions within the UK employee benefits market and reforms.
“The business has got its mojo back and its structured now to support the gig economy ... able to grow in relation to the new demands of employers as work force shift from traditional blue collar workers to the gig economy,” Burke said.
In the gig economy people tend to work for multiple firms without fixed contracts.
Insurance premiums, pressured by tough competition, are now rising after the industry faced record bills from hurricanes, earthquakes and wildfire of over $135 billion (£97.2 billion) last year globally.
Rivals Beazley BEZG.L, Lancashire (LRE.L) and Hiscox (HSX.L) highlighted that insurers can claw back some of their losses by raising premiums for customers, with Beazley looking forward to double-digit premium growth in 2018.
“Is it now a hard market where rate rises? I’m saying its too early to make that call. I certainly think there has been a change, and the change is that the market has moderated,” Burke said.
“When you say we are different (from our rivals), I would say we are just more accurate.”
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri and Gopakumar Warrier