22 November 2016

“Stabilised underlying profitability; investing in a sustainable future”

 

Towergate Insurance (the “Group”), one of the leading independent insurance intermediaries in the UK, today releases its Q3 results statement covering the nine months to 30 September 2016.

Commenting on the results, Towergate Chief Executive David Ross said: “Towergate has reached a milestone in its recovery, with our first quarter of positive year on year growth in adjusted EBITDA since our financial restructuring. This performance has been driven by a continued improvement in underlying profitability driven by strong cost control and stabilising income.”

Key Highlights

  • First quarter of positive year on year growth in adjusted EBITDA* 5.9% up over Q3 2015
  • Fixing the business is well underway with continued investment in IT and other infrastructure upgrade projects. The ongoing technology investment ensures that our people have the necessary tools with which to thrive and better serve customers
  • Annualised cost saving initiatives have steadily increased quarter on quarter to a total of £39m, including a further £3m identified in Q3 (H1 2016: £36m); 90% of these annualised savings either delivered or underway
  • Revenue decline has slowed against the backdrop of challenging market conditions supported by improvements in staff retention and engagement. Strong retention across all areas of the business, with targeted actions underway to drive new business and a number of strategic new hires made across the Group
  • Insurance Broking is making considerable headway with its turnaround plan in a number of areas, underpinned by strong support from key insurance partners. The advisory panel is now in place and agreements finalised with the top 6 insurers which make up over 50% of the premiums
  • In Underwriting, actions are underway to ensure long-term sustainability of our business, including focusing on specialist product lines. In the quarter, we successfully re-broked £150m gross written premium of insurer capacity
  • Paymentshield revenue trends are improving, with strong retention rates slowing the back books decline and over 20% new business growth in Household Panel and Covéa Insurance in place as new provider for protection products. This, combined with the RSA Household extension announced at H1, gives an improved income profile and secure capacity going forward

 

Post period end

  • Following the original disclosure on 23 March 2016 of planned funding initiatives, Towergate raised £26m in early November 2016 through a five-year facility secured by certain legacy assets of the Group that will largely be used to support Towergate’s transformation plan, including investing in substantial upgrades to its IT systems and infrastructure

 

Towergate Chief Executive Officer David Ross added:

“We have maintained our leading market position across many of our businesses despite tough market conditions and have achieved our first quarter of year-on-year growth in underlying profitability. These results demonstrate the strength of our business, our specialist knowledge, local footprint and strong customer relationships, all of which set Towergate apart.

“Our steadfast focus on our people is reflected by a further improvement in employee retention as we strive to make Towergate a better place to work and join up our culture and business strategy. We continue to recruit top talent to expand our market expertise and drive sustainable new business. This is exemplified by the launch of our new London market proposition, Bishopsgate, at the beginning of the month.

“Earlier this month I was delighted to announce that Madison Dearborn Partners had become our second largest shareholder following the success of their public tender offer. With MDP now on board alongside HPS and our other long term shareholders, Towergate has an ever more potent combination of corporate power and entrepreneurial spirit, which leaves us all very excited by the future that lies ahead.”

 

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 initiated during the current and/or preceding reporting periods

** 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.

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.
 

Investor Relations Contacts

Lois Hutchings - Group FP&A and Investor Relations Analyst

Towergate Insurance Limited

Email: Investor.Relations@towergate.co.uk

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