25 August 2016

“Unwavering focus on fixing the business continues”

Towergate Insurance (the “Group”), one of the leading independent insurance intermediaries in the UK, today releases its Half-Year (“H1”) results statement covering the six months to 30 June 2016.

Commenting on the results, Towergate Chief Executive David Ross said: “Our turnaround is ahead of schedule as we continue to address our legacy issues and build on our unique platform as the last remaining independent broker with national clout.”

 

Key Highlights

  • Income trends in H1 results broadly in line with expectations given current stage of transformation plan and prevailing market conditions
  • Cost savings target increased to £36m (Q1 2016: £30m), with over 80% either delivered or underway
  • Stabilised, engaged staff base driving improved customer metrics and retention rates; a number of key hires in Q2 reflect Towergate’s increasing ability to attract the best talent
  • The turnaround plan for Insurance Broking is building momentum. Having resolved a number of legacy challenges in SME businesses, Towergate is reinvesting cost savings into the front end. A new panel of six key strategic insurers is in place, supporting our drive for sustainable growth.
  • Underwriting environment remains challenging and highly competitive. Whilst headwinds following the financial restructure are dissipating, corrective action is being taken on specific lines of business.  Retention in core commercial business has returned to pre restructure levels and agriculture sub-division has strong organic new business growth.
  • Paymentshield back book decline slowing with year-on-year improvement in retention rates. Strong growth in Household Panel with new business up 20% over 2015. New capacity with RSA deal being extended to 2023, securing long term revenue stability

 

Post period events

  • Sale of majority interest in Broker Network to Highbridge Principal Strategies (“HPS”) completed on 01 July 2016: provides a strong platform for growth for Broker Network and further strengthens Towergate’s cash position
  • Legacy item closed following the conclusion of an investigation by the UK Financial Conduct Authority ("FCA") into certain breaches of the FCA’s Rules and Principles concerning the treatment of client and insurer money during the period June 2005 to December 2013.
     

Towergate Chief Executive Officer David Ross added:

“The business is coming together with an unwavering focus on execution. 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.”
 

Segmental Performance

 

*Adjusted EBITDA represents management view of underlying profitability, calculated as EBITDA adjusted for exceptional items plus run-rate savings from middle & back office cost saving initiatives initiated during the current and/or preceding reporting periods

Copies of Towergate’s HY report and investor presentation are available to view and download on www.towergate.com/investor-relations


Notes to Editors

About Towergate

Launched in 1997 Towergate is one of the leading insurance intermediaries in the UK. Towergate 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

Investor Relations Contacts

Lois Hutchings - Group FP&A and Investor Relations Analyst

Towergate Insurance Limited

Email: Investor.Relations@towergate.co.uk

Media Queries External Contact

Justin Griffiths or Victoria Heslop - PR advisers to Towergate

Powerscourt

Email: towergate@powerscourt-group.com