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About Lockton
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Chairman's Letter
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We live in turbulent times. Our clients face a tight credit market, commodity inflation, weak consumer spending and widespread uncertainty. There is no better time for Lockton to perform. Our business exists to help our clients solve business risks in an uncertain environment.
TURBULENT TIMES, STEADFAST SERVICE
In 2007-08, Lockton’s professionals delivered on our commitment to steadfast service, turning in another record performance. Despite a soft insurance market, Lockton generated double-digit organic growth and remarkable client retention while making long-term investments to support our clients.
RECORD REVENUES
Lockton's global revenues grew 11 percent to more than $742 million in fiscal 2008, a record for Lockton Companies and triple the growth rates of our global brokerage competitors.
Consistent growth is tied directly to retaining the loyalty of our clients. In the past year, our client retention rate in the U.S. remained at 95 percent compared with a typical industry rate of 85 percent. Client retention rates are also rising in our international operations since their acquisition in late 2006. From Fortune 1000 and FTSE 250 giants to neighborhood businesses, enterprises of all sizes value our expertise and performance.
INVESTMENTS FOR CLIENTS
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Revenue
Total Associates
Organic Growth (%)
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Recruiting talented professionals is central to our goal of being the best place to do business and the best place to work. In the past year, we have added more than 100 senior level professionals around the world to expand our client service capabilities in executive risks, professional liability, employee benefits, property, risk management and risk finance.
GLOBAL GROWTH
International, our London-based global operation acquired in 2006, our business model and client service culture have enabled us to create a dynamic team of longtime Associates mixed with talented recruits. A recent Global Broker & Underwriter survey said London respondents described Lockton as "innovative" with "charismatic leadership" and "strong staff morale."
Corporate Risk Solutions, Real Estate and Construction, Lockton Affinity and ProFin teams in the UK have attracted new talent and new clients such as the UK Dental Practitioners Association, who selected Lockton Affinity to serve its 2,500 members with a new professional indemnity insurance program. Our new Leeds office in the north of England serves a growing client base in that region. We also plan to move our London offices in 2010 to the new St. Botolph’s building, one of London’s new developments.
Expanding our reinsurance capabilities grew revenues by more than 40 percent this year. Innovations in technology help speed and streamline client service.
HEALTHY BENEFITS
Lockton Benefit Group consulting revenues grew 24 percent in 2007-08. Our unique team of physicians, wellness experts, data analysts, actuaries and compliance attorneys help develop practical client solutions to create healthier, more productive workforces while controlling healthcare spending.
More clients are calling on our expertise in retirement, executive benefits and investment advisory services. We launched Lockton Investment Advisors, LLC and Lockton Financial Advisors, LLC and support our investment clients with a half dozen new advisors across the country.
Despite challenges in the merger and acquisition market, our Private Equity and Corporate Acquisition Practice marked its busiest year ever. We have expanded the team to San Francisco, Philadelphia and London.
BENCH STRENGTH
We have made additions to teams serving our construction, healthcare and legal communities. In five years, Lockton Financial Services have added more than 60 specialists who advise and manage the myriad risks faced by executives and boards of directors. This team is quickly being recognized by the legal, underwriting and corporate communities as the "go to" firm for results. For example, Lockton recently managed the Directors and Officers Liability insurance placement for the world’s largest IPO.
Our Lockton Affinity team in the U.S. continues to create innovative insurance programs for associations, franchises and other trade groups. Habitat for Humanity, a nonprofit ministry that has provided more than one million people with safe, affordable housing, selected Lockton Affinity to administer its affiliate insurance program. With more than 1,600 affiliates, Habitat and Lockton Affinity have launched a series of new online programs to protect volunteers, increase safety and help reduce their cost of risk. Looking to the future, Lockton Affinity is poised to launch a variety of new specialized employee benefit programs and other new products to support our growing client base.
BUSINESS OR PROFESSION?
Lockton does its best work for clients when times are tough. We always have. No one does more to help clients control their total cost of risk.
Because we view insurance as a profession, not merely a business, Lockton has become the most attractive place in the world for insurance professionals to build their careers. We want to earn a reputation with our clients as the best place to do business. That has been our goal since my brother Jack founded the firm in 1966. And it is why we will remain an independent, privately held company.
Your Lockton team is committed to doing everything in our power to keep Lockton Companies focused on nurturing the profession of insurance.
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