27 April 2017

“Milestone moment as profits improve”

Towergate Insurance (the “Group”), one of the leading independent insurance intermediaries in the UK, today releases its full year results statement covering the 12 months to 31 December 2016.

Commenting on the results, Towergate Chief Executive David Ross said: Today is a milestone moment for Towergate as we close off a hugely significant year for the company.  We have grappled with some enormously complex legacy and infrastructure challenges whilst laying the foundations for growth which returned in the fourth quarter.

“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. 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.

“These results are a testament to the huge effort made by the individuals and teams across Towergate who have focused relentlessly on transforming the business and pursuing opportunities for growth. In addition, the unwavering support from our shareholders HPS Investment Partners and Madison Dearborn Partners, who remain steadfastly committed to both Towergate and indeed to the UK General Insurance sector, has enabled our focused pursuit of the fix.”

Group Financial Highlights

 
Key Highlights

  • Strong Adjusted EBITDA* performance, up £9m or 12% from 2015, with Q4 being the second quarter of positive year on year growth
  • Significant progress made on planned efficiency initiatives enabling Towergate to deliver £21m of annualised savings in 2016, with further savings identified in the period
  • Income in Q4 grew versus the prior year. This reflects a significant amount of underlying activity across the Group to successfully stem the adverse income trends inherited from 2015
  • Insurance Broking continues to make substantial progress. Advisory reported a strong performance with retention levels rising and good organic growth returning in the final quarter of 2016.  Solid underlying performance in Retail, although income impacted by complex legacy SME integration, provides a stronger platform for the business in 2017 and beyond
  • In Underwriting there have been significant challenges due to tough market conditions, which impacted the first half. However, a high level of remedial activity was undertaken in 2016 and income recovery is now being seen
  • Paymentshield had a strong performance in 2016, driven by revised profit shares, improved retention and continued growth in new business. The number of Household policies grew for the first time in over six years, increasing by c. 20% in 2016

 

Post period end

  • Successfully raised new money via a rights issue (£40m) and convertible loan facility (£17m) backed by existing shareholders, underlying their continued commitment to support Towergate and accelerating the investment programme

 

Segmental Performance


*Adjusted EBITDA represents management’s view of underlying profitability, calculated as EBITDA adjusted for exceptional items plus run-rate savings from middle & back office cost saving initiatives expected to be completed by the end of the following financial year

** Includes £18.1m profit on disposal of the sale of Broker Network

 


Notes to Editors

About Towergate

Towergate is one of the leading insurance intermediaries in the UK. It is an important distribution channel for a significant range of insurance products and a key strategic partner for the UK’s largest insurers. 

Towergate’s scale, customer insight and distribution relationships make it a unique business and a leader in the markets in which it operates. Its combination of distribution and underwriting gives it unparalleled consumer data and market insight.

 

Disclaimer

This document may contain forward looking statements in relation to certain of Towergate’s plans and current goals and expectations, in particular but not limited to its future financial condition, performance and results.  These forward looking statements can be identified by the use of forward looking terminology, including the words “aims”, “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will”, “plans”, “predicts”, “assumes”, “shall”, “continue” or “should” or, in each case, their negative or other variations or comparable terminology or by discussions of strategies, plans, objectives, targets, goals, future events or intentions. By their very nature, all forward looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Towergate’s control, including but not limited to insurance pricing, interest and exchange rates, inflation, competition and market structure, acquisitions and disposals, and regulation, tax and other legislative changes in those jurisdictions in which Towergate, its subsidiaries and affiliates operate. As a result, Towergate’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set out in any forward looking statement made by Towergate. Towergate has no obligation to update any forward looking statement contained in this document or any other document or any other forward looking statement Towergate may make. All subsequent written or oral forward looking statements attributable to Towergate or to persons acting on its behalf should be interpreted as being qualified by the cautionary statements included herein.  As a result, undue reliance on these forward looking statements should not be placed.

Past performance cannot be relied upon as a guide to future performance.

No representation or warranty, express or implied, is or will be made in relation to the accuracy, fairness or completeness of the information or opinions made in this document, which information and opinions should not be relied or acted on, whether by persons who do not have professional experience in matters relating to investments or persons who do have such experience. The information and opinions contained in this document have not been audited or necessarily prepared in accordance with international financial reporting standards and are subject to change without notice. No responsibility or liability whatsoever is or will be accepted by Towergate, its subsidiaries or affiliates or by any of its officers, directors, employees or agents for any loss howsoever arising, directly or indirectly, from any use of this document or its contents or attendance at any associated presentation.

 

Media Queries Internal Contact

Kelly-Ann Knight - Corporate Communications Director

Towergate Insurance Limited

Email: kelly-ann.knight@towergate.co.uk

Media Queries External Contact

Justin Griffiths or Victoria Heslop - PR advisers to Towergate

Powerscourt

Email: towergate@powerscourt-group.com

Investor Relations Contacts

Lois Hutchings - Group FP&A and Investor Relations Analyst

Towergate Insurance Limited

Email: Investor.Relations@towergate.co.uk