It is half year earnings day for one of the giants of the UK’s insurance broking market,
Towergate – and the results are mixed.
The company reported a £12.4 million slump in income for the period – falling from £177.3 million in the equivalent period in 2015, down to £164.9 million in 2016, a 7% drop. Meanwhile, its operating expenses climbed from £35.0 million to £35.7 million, although it did reduce staff-related expenses by 5.2%.
Issuing a statement about the results, the company outlined that its income trends for the first six months of the year were broadly in line with expectations given the current stage of its transformation plan. It has now increased its cost savings target to £36 million – representing a rise from £30 million.
In the insurance broking area, Towergate insists that its turnaround plan is “building momentum”. It states that it has resolved a number of legacy challenges in SME businesses and is reinvesting cost savings into the front end with a new panel of six strategic insurers in place. Since the results period, the company has sold its majority interest in
Broker Network to Highbridge Principal Strategies in a move that it states will further strengthen its cash position.
Speaking about the results, Towergate chief executive officer David Ross outlined that there is a positive outlook.
“The business is coming together with an unwavering focus on execution,” he said. “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.”
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