Towergate releases its Q3 Results

Towergate Insurance (the “Group”)* today releases its interim management statement covering the nine months to 30 September 2015.

David Ross, Chief Executive Officer said “Our financial performance has been impacted by a well documented period of instability. However, Towergate has proven to be incredibly resilient, with a significant number of clients retained and signs now that the business is stabilising, giving us a strong base to build on. We have seen improving revenue trends in both our Broking and Direct divisions and a healthy cash balance in excess of £84 million. We expect retention and new business to improve as focus on the front end of the business increases.

Our new Executive Team is now in place and with the uncertainty and distraction of senior vacancies and interim management behind us, we can focus on accelerating investment, growing the business, strengthening the infrastructure and managing cost.

Less than one month into my role as Chief Executive Officer it is obvious to me that the foundations are in place to build a better business; we have great people, clients who value our expertise and we are a market leading broker and MGA in the UK.

In meeting many of my new colleagues over the past three weeks, I have been struck by the huge passion that they have for this business, explaining why so many have stayed with us on this difficult journey. This is what we want to build on, to support our brokers and underwriters on the front line, so that they can compete confidently and profitably, whilst making Towergate a great place to work.

The result of all of these things of course is that we will improve our customer journey; make it more efficient and more effective to ensure that our clients, many of whom have shown real loyalty, will receive the very best in service and advice.

It is clear that challenges in infrastructure are going to take some time to fix, but we are a long way down the road in developing a clear set of priorities and with supportive long term investment secured, I and the rest of my team firmly believe that we can build a sustainable, integrated business.”

Group Financial Highlights**

                                                           Quarter 3                                        YTD    

                                             Income      Adjusted EBITDA       Income      Adjusted EBITDA                                 

                                        2015     2014     2015     2014         2015     2014    2015     2014 

Insurance Brokers         36.3       39.2       4.5         8.1         115.2    127.3    19.5       30.9  

Direct                               18.1       17.9        6.5        7.3           52.6      53.3     19.2       22.0

Underwriting                   17.4       21.6        4.0        7.5           57.5      62.6     15.8       23.1

Paymentshield                12.4      15.2        9.0       11.6           35.8      44.0     25.1       33.2

Network                            2.8        3.1        0.6         0.8             9.5      10.4        2.8         4.0

Central costs                    0.0        0.0       (11.5)      (9.1)           0.1        2.0     (30.3)     (21.7)

Total                                 87.0      97.0      13.0       26.1         270.6   299.6     52.1       91.5

Divisional Overview:

- Improving income trends in our Broking and Direct businesses quarter on quarter

- Manchester Small Business Unit (‘SBU’) has been a challenge, with income down 36% YTD impacting the overall broking numbers

- A number of headwinds following the financial restructure are working through our Underwriting business but the ongoing impact will be minimal by the middle of next year

- Paymentshield and Broker Network have performed in line with or ahead of expectations

- Central costs are predominately higher due to investment in IT and finance and timing of bonus accruals

Insurance Brokers

Plans are already underway to consolidate SBU within our Direct business, leveraging on internal best practices and industry benchmarks. We are creating a new leadership team to drive growth and first class customer service across all of our telephony sites, focusing on improving retention and on enhancing the customer journey.

Our advisory businesses retain a strong position in the specialty SME insurance market with confidence quickly returning following the disruption associated with the financial restructuring. A decline in organic income has continued to slow down. New business performance has stabilised and we have successfully hired additional income producers with a significant number of recruits still in the pipeline. Our internal sales and marketing initiative “Towergate Way” has been revamped and relaunched to help improve client retention through a focus on service and reward.


Positive trends seen in the first half of the year have continued, with signs of growth driven by ongoing investment in marketing and excellent customer service in all the sites. Double digit growth in gross new business has been driven by key product lines including Property, Classic Car and Online SME. Retention is improving quarter on quarter, year on year. We have seen improved quality assurance and customer rating scores across our product lines.


Our Underwriting division continues to be a market leading MGA. It has faced some headwinds following the financial restructure, impacting both new business and renewals. We continue to operate in a soft market but we are starting to see improving operating metrics in certain key product lines, particularly with regards to our Commercial business.

Adrian Brown was appointed Chief Executive Officer of Underwriting in November and the new divisional leadership is already implementing several strategic initiatives focused on maintaining first class underwriting performance and increasing sales and pricing capabilities in our most profitable product niches. In addition, we have brought our Fusion and Arista Underwriting businesses together to create a more powerful underwriting proposition for our broking customers.


Despite the continuing impact of a decline in Mortgage Payment Protection Insurance (‘MPPI’), our Paymentshield business remains highly profitable due to increased organic income and a changing mix of Household business. Our combined Household business has grown for six consecutive months, with year to date quotes and new business submissions from networks up 8% and 46% year on year respectively. Our focus is on accelerating the development of the Household account in the core mortgage adviser channel and adjacent markets.

Broker Network

Broker Network has seen an overall shortfall in income compared to 2014. This has been largely driven by non-repeating income, including discontinued insurer deals, received in 2014. Core income is slowing in decline, and is starting to reflect a more stable membership base and an increase in business placed with our partner insurers.

* The Group includes TIG Finco plc.

**Notes to the Accounts

- The figures relate to TIG Topco Plc (Topco) as disclosed in the Quarterly Report. To present a two year financial track-record, adjustments have been made in respect of inclusion of the trading results of Towergate Insurance Limited for the period 1 Jan 2014 to 1 April 2015 and subtraction of the results for disposals: Hayward, Towergate Financial and Folgate. The figures have been adjusted for additional costs associated with the Group board, primarily directors’ fees for the period prior to 1 April 2015.

- Divisional results for prior periods have been restated following a number of small business transfers between divisions, to enable a like-for-like comparison.