Press Release November 2000 - Jardine Lloyd Thompson Group plc expands outsourcing capability through acquisition of Abbey National Benefit Consultants Ltd
Jardine Lloyd Thompson Group plc (JLT) announces the acquisition of Abbey National Benefit Consultants Ltd (ANBC), the pension administration and consultancy division of Abbey National Group plc, for the sum of £22.5m which will be payable in cash from JLT’s own resources.
This deal follows JLT’s strategy of investing in areas where it is, or can become, the market leader and in this regard ANBC is an ideal strategic fit with JLT’s existing pension administration outsourcing and benefit consulting arm, Jardine Reeves Brown with which it will be merged. Both operate in the same markets, offering similar services and adopting similar business strategies. The combined business will provide JLT with a full geographical presence in the UK outsourced pension administration market and will specialise in two areas, namely stand alone pension administration for large employers and insurance companies and the provision of a combined consultancy, actuarial and administration service to UK corporates.
The market for outsourced third party pension administration is currently worth an estimated £200m in annual fees. This is expected to continue to grow considerably over the next few years as an increasing number of corporates and insurance companies seek to outsource pension administration. In 1995 there were 1000 pension schemes administered in-house; 200 of these have subsequently been outsourced (source: NAPF), leaving a further 800 schemes offering the potential to double the size of the existing market. The merged business will immediately command a leading position in this expanding market and would be well placed to further increase its market share.
ANBC has net assets of £5m and for 1999 recorded a profit before tax of approximately £1m on turnover of £18m, implying a margin on revenue of 5%. Trading in 2000 to October shows revenue growth in excess of 25% and an improved margin. Jardine Reeves Brown already achieves a significantly higher margin of around 14% and JLT anticipates an improvement in
the margin of the combined businesses to 15% by 2003, which will be achieved in part through a significant investment of approximately £1.7m, mainly in IT-related areas. The acquisition is expected to be earnings enhancing on a cash basis in 2001 and on an accounting basis ie. after amortisation of goodwill, in 2002.
Commenting on the acquisition, John Hastings-Bass, CEO JLT Corporate Risks & Services said:“In accordance with our strategy of aggressively developing our outsourcing business, this acquisition gives us a major position in the UK pension administration market. With an enhanced position in this important sector, we look forward to providing our clients with the highest levels of service and improved cost effectiveness”.
