Towergate Insurance publishes half year results 2016

Towergate Insurance first half year results 2016

“Unwavering focus on fixing the business continues”

Towergate Insurance (the “Group”), has released its Half-Year (“H1”) results statement covering the six months to 30th June 2016.

Commenting on the results, Towergate Chief Executive David Ross said: “Our turnaround is ahead of schedule as we continue to address our legacy issues and build on our unique platform as the last remaining independent broker with national clout.”

Key Highlights

- Income trends in H1 results broadly in line with expectations given current stage of transformation plan and prevailing market conditions

- Cost savings target increased to £36m (Q1 2016: £30m), with over 80% either delivered or underway

- Stabilised, engaged staff base driving improved customer metrics and retention rates; a number of key hires in Q2 reflect Towergate’s increasing ability to attract the best talent

- The turnaround plan for Insurance Broking is building momentum. Having resolved a number of legacy challenges in SME businesses, Towergate is reinvesting cost savings into the front end. A new panel of six key strategic insurers is in place, supporting our drive for sustainable growth.

- Underwriting environment remains challenging and highly competitive. Whilst headwinds following the financial restructure are dissipating, corrective action is being taken on specific lines of business.  Retention in core commercial business has returned to pre restructure levels and agriculture sub-division has strong organic new business growth.

- Paymentshield back book decline slowing with year-on-year improvement in retention rates. Strong growth in Household Panel with new business up 20% over 2015.  New capacity with RSA deal being extended to 2023, securing long term revenue stability

Post period events

- Sale of majority interest in Broker Network to Highbridge Principal Strategies (“HPS”) completed on 01 July 2016: provides a strong platform for growth for Broker Network and further strengthens Towergate’s cash position

- Legacy item closed following the conclusion of an investigation by the UK Financial Conduct Authority ("FCA") into certain breaches of the FCA’s Rules and Principles concerning the treatment of client and insurer money during the period June 2005 to December 2013

Towergate Chief Executive Officer David Ross added:

“The business is coming together with an unwavering focus on execution. Our costs saving initiatives are ahead of target while in tandem we continue to reinvest in our systems and people.

We have begun the transformational upgrade of our entire IT infrastructure, becoming one of the first in the insurance industry to move our IT services to the cloud. This major initiative will drive significant improvements for our business, colleagues and customers and will leave us uniquely placed to capitalise on future opportunities, unencumbered by legacy systems.

In a people business, the most important lead indicator is staff retention and recruitment. Across all segments, more people are choosing to stay at Towergate and to join us, resulting in increased customer satisfaction and retention, and helping us to build a better business.

The best people supported by the right systems is a potent combination.”

*Adjusted EBITDA represents management view of underlying profitability, calculated as EBITDA adjusted for exceptional items plus run-rate savings from middle & back office cost saving initiatives initiated during the current and/or preceding reporting periods