Major investments pay off for Charles Taylor

Improvements in firm’s financial performance from significant deals are giving leadership "a great deal of confidence for the future"

Major investments pay off for Charles Taylor

Insurance News

By Alicja Grzadkowska

Charles Taylor’s investments are finally paying off. After a few years of restructuring the business and making big deals in the market, which resulted in a mixed bag of financial results, the insurance services and technology company’s plans are coming to fruition.

In H1 2019, Charles Taylor InsureTech was close to breaking even in its operating result, and organic growth in its claims services division delivered an improved margin. Its insurance management wing meanwhile saw revenues that were marginally down, though there was an increase in profits. Altogether, the group’s revenue rose by 15% from 2018 to £141.7 million (around SG$241.3 million), its adjusted EBITDA increased by 81% from the previous year to £17 million (around SG$28.94 million), and adjusted profit before tax climbed by 26% to £7.3 million (around SG$12.43 million).

Statutory loss before tax was also slightly improved, at £2.1 million (around SG$3.57 million) from 2018’s £2.5 million (around US$3.1 million). The firm attributed an execution of larger investments as part of its strategy to develop capabilities and build the business as the main factor contributing to pre-tax loss.

“Looking at our results in the prior years, we were investing quite heavily and from our point of view when we invest, by and large it’s an expense that comes off the bottom line, and it definitely has held back our bottom line over the last couple of years,” said David Marock, group chief executive officer at Charles Taylor. “We made a conscious decision that that was an investment worth making. We felt that for the long-term success of the group, it was something we needed to do, and when we look at the wins we’re getting, it gives us a great deal of confidence for the future.”

He added: “It unquestionably has been painful but we think essential for the growth of the group, and to be able to satisfy our clients.”

A key benefit of these big moves has been Charles Taylor’s competitive advantage in the insurtech space, where the company offers services across the insurance marketplace, be it in life and health or P&C, as well as across different players in the market, from insurers to brokers and MGAs, as well as large corporate players.

In 2018, Charles Taylor InsureTech was awarded a five-country contract to implement INSIS, its operating platform, as the core operating platform of a major transformation program for Seguros SURA, a top life, general and health insurer in Latin America. It was also tapped by the London Market Group (LMG) for an ‘extendable’ three-year partnership, as part of the London Market Target Operating Model (LM TOM) modernisation project. The Charles Taylor subsidiary then snapped up insurance-focused technology consultancy and software provider Inworx in Latin America.

The insurtech play was something the company began to capitalise on a few years ago.

“We started to pick up a clear need from our clients for insurance solutions to solve problems that maybe historically they might have looked at purely on a servicing basis, and we then built up a range of technological solutions to meet all of the core needs. That’s core platforms for insurers, for brokers, for the frontend service, the quote-and-bind capability, and the tools to enable them to communicate between themselves because this is a highly networked market and being able to transfer large amounts of data efficiently and effectively is key,” said Marock. “I think our timing was just right. We’ve been building out our capabilities in the last 18 months and we’ve won a number of quite material contracts.”  

More recently, one of the big areas of growth for Charles Taylor InsureTech has been enabling companies to implement quote-and bind-capabilities, particularly for complex commercial lines products, and incorporate them into a solution where you can quote the business and bind the business online. That, for many insurers, brokers, and MGAs, says Marock, “is something that they’ve to date struggled to do or if they have done it, they’ve done it in a rather cumbersome and expensive way.”

It’s a good time to be in the insurtech business because the challenges in the insurance marketplace today are paving the way for insurance technology solutions.

“The pressures on profitability lead to a drive to achieve more cost efficiencies and that favours both the services we provide and the technology solutions we provide,” explained Marock. “Similarly, with the consolidation that we’re seeing among the insurers and brokers, we’ve been well-positioned to benefit from that because typically what we have found is that the larger insurers and brokers are more likely to look for counterparties that they feel match them, if you like, and can provide them with the service that they’re looking for in the way that they’re expecting it to be delivered. Our scale and professionalism, I think, positions us well to do that.”

Insurtech isn’t Charles Taylor’s only expertise. Recently, it was announced that Charles Taylor Managing Agency (CTMA) would be sold to a Premia Holdings Ltd subsidiary after a strategic review of the business. According to the H1 2019 results, the company plans to continue delivering “reliable and sustainable Charles Taylor Insurance Management revenues from major long-term clients.”

On the claims services side, Charles Taylor Adjusting acquired FGR Group, a loss adjusting and claims program management services company with locations in Chile and Peru, and a growing presence across Latin America. Its strategy has been to expand Charles Taylor Claims Services through “organic and acquired growth in loss adjusting and through bringing together the group’s claims handling activities into a joined-up business, which is winning new business.”

Looking ahead, Charles Taylor leadership plans on growing its three major businesses, and sees a ton of opportunities to do so.

“We see plenty of opportunity to grow our business across the globe, which we have been doing – we’ve been bringing on teams and we’ve been building out new capabilities,” said Marock. “On the insurance management side, where we’re managing insurance entities on behalf of clients, I think there it’s more about making sure that we’re supporting their long-term sustainable growth. It’s a tough environment out there, and it’s more about making sure we’re doing the right things to protect them and and help them grow.

“On the insurtech side, we’ve been investing heavily over the last couple of years, we’ve got the core IP in place, and now, it’s really about aggressively growing that business.”

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