Towergate Insurance reports Q3 financial results

“Stabilised underlying profitability; investing in a sustainable future”

Towergate Insurance (the “Group”) releases its Q3 results statement covering the nine months to 30th September 2016.

Commenting on the results, Towergate Chief Executive David Ross said: “Towergate has reached a milestone in its recovery, with our first quarter of positive year on year growth in adjusted EBITDA since our financial restructuring. This performance has been driven by a continued improvement in underlying profitability driven by strong cost control and stabilising income.”

Key Highlights:

  • First quarter of positive year on year growth in adjusted EBITDA* 5.9% up over Q3 2015
  • Fixing the business is well underway with continued investment in IT and other infrastructure upgrade projects. The ongoing technology investment ensures that our people have the necessary tools with which to thrive and better serve customers
  • Annualised cost saving initiatives have steadily increased quarter on quarter to a total of £39m, including a further £3m identified in Q3 (H1 2016: £36m); 90% of these annualised savings either delivered or underway
  • Revenue decline has slowed against the backdrop of challenging market conditions supported by improvements in staff retention and engagement. Strong retention across all areas of the business, with targeted actions underway to drive new business and a number of strategic new hires made across the Group
  • Insurance Broking is making considerable headway with its turnaround plan in a number of areas, underpinned by strong support from key insurance partners. The advisory panel is now in place and agreements finalised with the top 6 insurers which make up over 50% of the premiums
  • In Underwriting, actions are underway to ensure long-term sustainability of our business, including focusing on specialist product lines. In the quarter, we successfully re-broked £150m gross written premium of insurer capacity
  • Paymentshield revenue trends are improving, with strong retention rates slowing the back books decline and over 20% new business growth in Household Panel and Covéa Insurance in place as new provider for protection products. This, combined with the RSA Household extension announced at H1, gives an improved income profile and secure capacity going forward

Post period end:

Following the original disclosure on 23 March 2016 of planned funding initiatives, Towergate raised £26m in early November 2016 through a five-year facility secured by certain legacy assets of the Group that will largely be used to support Towergate’s transformation plan, including investing in substantial upgrades to its IT systems and infrastructure

Towergate Chief Executive Officer David Ross added:

“We have maintained our leading market position across many of our businesses despite tough market conditions and have achieved our first quarter of year-on-year growth in underlying profitability. These results demonstrate the strength of our business, our specialist knowledge, local footprint and strong customer relationships, all of which set Towergate apart.

“Our steadfast focus on our people is reflected by a further improvement in employee retention as we strive to make Towergate a better place to work and join up our culture and business strategy. We continue to recruit top talent to expand our market expertise and drive sustainable new business. This is exemplified by the launch of our new London market proposition, Bishopsgate, at the beginning of the month.

“Earlier this month I was delighted to announce that Madison Dearborn Partners had become our second largest shareholder following the success of their public tender offer. With MDP now on board alongside HPS and our other long term shareholders, Towergate has an ever more potent combination of corporate power and entrepreneurial spirit, which leaves us all very excited by the future that lies ahead.”