JLT warns on £20m double whammy

INSURANCE broker Jardine Lloyd Thompson dealt investors another blow today by warning that the weak US dollar and the fallout from the Spitzer probe could cost the group more than £20 million this year.

Executive chairman Ken Carter conceded the business faced a tough 2005 as he posted its first fall in annual pre-tax profits since its creation eight years ago.

Underlying profits for the 12 months to December slipped to £92.1m from £106.7m, in line with revised forecasts made after a profit warning in November that led to Steve McGill's resignation as chief executive.

The shares today dropped 12p, or 3%, to 370p.

Carter said Jardine had been caught out by the softening in the insurance market - 'we set our revenue expectations too high' - and problems at its Risk Solutions reinsurance arm.

The weakening dollar will wipe £15m more than expected off profits this year while the ending of contingent commissions in the marketplace will cost £8m.

Carter said the effects of New York Attorney General Eliot Spitzer's probe into kickbacks in the market would last 'for several years'.