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About Lockton
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David Lockton, Chairman
John Lumelleau, President & CEO
Mike Hammond, Lockton International Chairman
Mike Frost, Chief Operating Officer
(pictured left to right)
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Delivering Results
Our clients count on Lockton Associates around the globe to help them deal with
some of their most difficult business issues.
Workplace safety. Spiraling healthcare costs. Network security. Recovering after
a storm.
Our clients tell us they value what Lockton delivers. Advocacy. Innovation. Expertise.
Solutions. It is an honor to highlight the stories of seven successful clients in
this year’s annual report.
This year’s report notes the achievements of our 40th year in business, a year in
which Lockton posted record revenue and Associate growth, bolstered our global capabilities,
and delivered results for our clients. We continue our industry-leading record of
95 percent client retention even amidst shifting insurance market dynamics.
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Dramatic Growth
Lockton generated $667.1 million in revenues for the year ending April 30, 2007—a
63 percent increase over last year. This record growth was driven by 14 percent
organic growth in our US business and by the acquisition of Alexander Forbes International
Risk Services, which accounted for $205 million of total revenue.
Our US organic growth has outpaced our peer group of leading global insurance brokers
for many years. This year, we continued to outpace our competitors despite the challenges
of a softening property and casualty insurance market.
There is no secret to our success, just a simple formula: Lockton Associates are
among the finest in the world at winning and serving clients. The team that meets
with a client during the selection process is the same team that serves that client
on an ongoing basis.
For Lockton Associates, professional advancement means following the path of serving
our clients, not moving away from clients into a staff function or internal management
role.
The addition of 60 senior-level Associates to our US team in the past year meant
expansion of our services in management liability, property, private equity, and
risk management. We have added recognized industry experts in construction, energy,
marine and transportation. In our Employee Benefits practice, medical directors
have joined to help clients make informed decisions about managing their health
and welfare programs. We expanded our Benefits Compliance team to provide clients
with expert advice on the complexities of benefits law, and we created an international
benefits team to counsel our US-based clients on overseas expansion.
We will continue to recruit top talent, enhancing our Property & Casualty and Employee
Benefits practices. For insurance professionals with energy, expertise and an entrepreneurial
spirit, Lockton continues to be an attractive place to grow professionally. |
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Going Global
Lockton has gone global with the acquisition of Alexander Forbes International Risk Services to create Lockton International, providing clients global perspective and local expertise. As a valued business partner, the Alexander Forbes International Risk Services team helped us serve hundreds of clients for more than a decade, so we are working with familiar, trusted colleagues. Lockton now offers our clients access to 1,600 more Lockton risk professionals around the world. When combined with our equity partnership in EOS RISQ, we can serve clients from virtually anywhere in the world.
With the complexity and nature of ever-changing risks, our international expansion provides clients with the highest level of service wherever they are in the world. We now have a platform that would have taken at least 20 years to build organically. While many competitors grow through acquisition, Lockton has focused almost single-mindedly on organic growth. We will maintain that approach going forward. Our aim for our international operation is to grow the way Lockton always has—by earning the loyalty of our clients.
Mike Hammond, Chairman of Lockton International, is leading our new international Associates through the early phases of transition, and we are pleased with the progress. In the first six months we have attracted top talent to lead business development, added expertise in cyber and corporate risks, opened a new office in Bermuda, and won business from dozens of clients including FTSE 500 firms. We expect to continue implementation of the Lockton culture in the coming months, positioning our firm for sustained long-term global growth and building on our reputation for client service.
As we expand to an international stage, our client base has grown with us. We now represent 118 Fortune 1000 companies and our global risk management expertise has become a vital asset for these large clients. Now, we have the ability to expand our remarkable team in the years ahead. The future holds exciting growth opportunities for a global broker that offers the attention to detail and passion for service rendered to all of our clients.
Shifting Market Dynamics
The dynamics of the insurance market have shifted, with prices softening in nearly all lines, but most dramatically in directors’ and officers’ liability and both primary and excess casualty. Clients are benefiting from these improved terms and conditions. For example, we structured and placed a comprehensive insurance program for a global firm with a large vehicle fleet, reducing the rate more than 15 percent and significantly lowering the attachment points while expanding coverage.
Firms with large "red zone" property holdings on the US Gulf Coast or in California’s earthquake zones still face challenges with insufficient insurance capacity. Our teams have applied our expertise to overcome these challenges and, in some cases, we are seeing some signs of underwriting flexibility. For example, in early 2007, we began working with a leading retailer that had significant claims from Hurricane Katrina. This client still wanted to reduce their insurance costs, so they needed a solution. With a creative program structure, an effective loss prevention approach and dogged advocacy with insurers, we exceeded our client’s $4 million cost reduction target.
A Look Back and a Look Ahead
In the late 1960s, just a couple of years after my late brother Jack started our firm, a friend suggested that he needed a logo to identify and promote the business. Jack agreed, and the logo he selected included an image of a globe. Even though he was just getting established, Jack had a powerful vision for the future. I’d like to think that, even then, Jack had a dream that Lockton would do extraordinary things on the world stage.
Today, that Lockton globe means much more than ever. It represents a significant, new chapter in our company’s history. We are the world’s largest privately held, independent insurance broker and now we have the resources to deliver the best possible global solutions for each of our client’s individual needs.
We Live Service
We are passionate about what we do, but we are even more passionate about the clients we serve. Lockton was started on the premise of being able to deliver the best service in the industry. More than 40 years later, that premise continues to define Lockton. Now more than ever, we are able to deliver seamless service to clients around the globe.
A relatively new client recently told us, "In the 45 days I’ve been at my firm and doing business with your office, I have received better service than I ever got in 17 years with other brokers."
That story and the stories that follow in this annual report demonstrate that Lockton offers a different experience. I hope that these stories will give you a sense of why we do what we do and why I am so honored to be a part of this unique firm.
-- David Lockton, Chairman
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