26 May 2016

Towergate Insurance (the “Group”), a leading independent insurance intermediary in the UK, today releases its Q1 results statement covering the three months to 31 March 2016.

Commenting on the results, Towergate Chief Executive Officer David Ross said: “Our underlying performance is ahead of expectations and we are making solid progress towards fixing the infrastructure and legacy issues of our business.”

 

  • Cost saving initiative benefits increased from £23m to £30m; delivery ahead of schedule with £16m of this latest target already achieved
  • Significant progress made on resolving legacy issues in finance and IT. Legacy Resolution Unit established, encompassing redress programmes and ongoing simplification of our legal entity structure
  • Insurance Broking division has had a strong start to the year, both in terms of underlying income and cost control. Excluding SME call centres, the performance was broadly in line with 2015 but with steadily improving retention and new business rates. Costs savings achieved to date have enabled reinvestment in more than 30 sales staff
  • Underwriting income for the period continued to be impacted by a challenging rate environment and competitive landscape, particularly on new business, in addition to previously disclosed headwinds which we expect to abate during the second half of the year. The team has made progress towards stabilising the core business, with significant improvements in retention in our commercial business and has signed a number of new capacity deals
  • Paymentshield income shortfalls have been driven by declining back books, in line with expectations. However, new business volumes have grown by 13% overall with over 25% growth in new business across our panel, following an investment in sales resources in Q4 2015
  • Management focus now turning to future growth initiatives and revenue opportunities, including the creation of a new Speciality London Markets underwriting division and new leadership in our London wholesale operations

 

Towergate Chief Executive Officer David Ross added:

“Our underlying performance is ahead of expectations with these results impacted by well-known legacy issues. I am pleased that the encouraging progress across the business that we reported at the full year has continued into the first quarter of 2016.

“Delivery of our cost saving initiatives is ahead of schedule, and to date we have already completed over half of the new £30m target identified.

“We are making solid progress towards fixing the infrastructure and legacy issues of our business whilst ensuring we rebuild and grow a Towergate of which we can all be proud. There’s plenty more to do and our focus remains on making sustainable improvements over time.

“Just this week, we announced the appointment of Paul Longhurst to Towergate London Market and further hires to create a new speciality underwriting capability, entering a space we’ve never played in before. We see this as a key opportunity for the company going forward. These appointments demonstrate a continuing flow of new talent joining a stabilising workforce and building foundations for growth. 

“I’ve had the privilege of travelling around the UK to meet 2,500 of our people across our Underwriting, Insurance Broking and Paymentshield offices. Their dedication to doing what’s best for their customers remains the organisation’s most valuable asset.”

 

Segmental Performance

*Adjusted EBITDA represents management view of underlying profitability, calculated as EBITDA adjusted for IFRS 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 Q1 report and investor presentation are available to view and download on http://www.towergate.com/investor-relations/results-presentations 

 


Notes to Editors

About Towergate

Launched in 1997 Towergate is the UK’s largest independently owned insurance intermediary.

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.