The AA is celebrating a significant turnaround for its business today – however, its insurance sales have remained flat.
During the first half of 2016, revenue for AA Insurance Services stood at £64 million – that’s exactly the same number as the first half of the previous year. Indeed its policy numbers in force actually slipped – down from 2.1 million to 1.9 million, promoted by a 7% slip in car insurance policies.
Still, that didn’t stop the company reversing a decline in its paid membership, which it stated was largely due to a new marketing drive. Overall, the company enjoyed a 2.2% increase in sales at £467 million with pre-tax profits standing at £48 million compared to a loss of £69 million during the same period in the previous year.
“We are extremely encouraged by the reversal of the decline in paid personal members over the last few months,” said chief executive Bob Mackenzie.
The AA is now in the second year of a turnaround plan and boasts more than 3.3 million members with numbers consistently rising since May when it adjusted its marketing away from TV and on to outdoor ads and member discounts. Its roadside assistance business saw an increase in sales of 3.1% to stand at £370 million.
Speaking to The Telegraph
, Toby Reeks at Morgan Stanley said the AA had been blighted by “unrealistic expectations” but that new members should help it boost cash flow and lower debt.
“AA is the most financially geared in the sector [but] customer retention rates are making a more meaningful and faster recovery than we have modelled,” he said.
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