Benfield Group Limited said it would see a short-term hit to its profit margin as it invests in an infrastructure expansion.
The London-based reinsurance broker said it anticipates its 2005 results to be flat, but expects to see an increase in revenues in 2006 and 2007.
The broker said it expects recruitment costs will add approximately ?12 million ($22 million U.S.) to expenses this year. Benfield said an additional ?8 million ($14 million) of net investment will go into development of a specialist insurance broking business in the energy, marine and power sectors.
Benfield went on to say that revenues from its U.S. operations were disrupted by the ongoing investigations into contingent fee abuses that have hit the industry. However, it said it sees "long-term opportunities."
The broker also announced that Paul Karon, 42, formerly president and chief operating officer of Benfield U.S., was named chief executive officer of the U.S. division. He is also a board director of Benfield Group. Mr. Karon has been with the firm for five years.
He replaces Rod Fox, who took a leave of absence from Benfield in March to attend to personal matters. Mr. Fox still remains an employee with the firm, a spokesman said.
Rob Bredahl, 42, was appointed president of Benfield U.S. and Ralph Flum, 51, appointed chief operating officer of the division.
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