Towergate Insurance sees income tumble

Company claims “milestone moment”, however, as it establishes business despite job loss reports

Towergate Insurance sees income tumble

Insurance News

By Paul Lucas

A quick glance at Towergate Insurance’s full year 2016 results would suggest a difficult year for the brokerage giant as income slipped in both its insurance broking and underwriting arms. However, chief executive David Ross believes that the results reflect a “milestone” in the company’s history – for the right reasons – despite reports earlier in the week of around 133 job losses due to a restructure.

“Today is a milestone moment for Towergate as we close off a hugely significant year for the company,” he noted. “We have grappled with some enormously complex legacy and infrastructure challenges while laying the foundations for growth which returned in the fourth quarter.”

Results, released this morning, show that Towergate Group’s income fell by £15 million for 2016 compared to the prior year, slipping from £339.6 million to £324.6 million. Its insurance broking arm saw income fall by £8.1 million to £207.7 million; while its underwriting arm fell by £6.6 million to £68.2 million.

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However, the firm can point to growth in its adjusted earnings before interest, tax, depreciation and amortization (EBITDA) as a sign that things are heading in the right direction – it rose by 33.7% (£9.6 million) for its insurance broking arm to stand at £38.1 million, although its underwriting result slipped by 5.7% to stand at £16.6 million. The company said there had been “significant challenges” in the underwriting market due to “tough conditions.”

Towergate also claimed a strong performance from its Paymentshield arm with the number of household policies rising for the first time in over six years, increasing by c. 20% in 2016.

“I am delighted to report that we have delivered what we set out to do; stabilising the entire business, including people, customers, market relationships, infrastructure and finance,” continued Ross. “Fixing our infrastructure has created the chassis that will hold everything together and provide a platform for everything else we are building. This is borne out in our second consecutive quarter of year-on-year adjusted EBITDA growth and the steady stream of talented income producers who have chosen to join us.”

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