Towergate manages turnaround in 2016
Insurance intermediary Towergate has managed the turnaround in 2016 while restructuring continues.
Towergate reported earnings before interest, taxes, depreciation (EBITDA) of £34.5 million for the full year of 2016 compared to a negative £38.1 million in 2015.
Income declined by 4.4 percent over the period to £324.6 million. Staff related expenses fell to £166.3 million from £190.7 million over the period.
The company said that it made significant progress on planned efficiency initiatives enabling Towergate to deliver £21 million of annualised savings in 2016, with further savings identified in the period.
“Today is a milestone moment for Towergate as we close off a hugely significant year for the company,” said CEO David Ross “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.
Adjusted EBITDA was £84.2 million in 2016 compared to £75.2 million in 2015.
In insurance broking, adjusted EBITDA grew 33.7 percent over the period to £38.1 million. The unit continues to make substantial progress, the company said. Advisory reported a strong performance with retention levels rising and good organic growth returning in the final quarter of 2016, the company added. Solid underlying performance in retail, although income impacted by complex legacy SME (small and medium-sized corporations) integration, provides a stronger platform for the business in 2017 and beyond, according to a statement.
In the underwriting operations, adjusted EBITDA declined 5.7 percent to £16.6 million. Here, Towergate has seen significant challenges due to tough market conditions, which impacted the first half, according to the statement. However, a high level of remedial activity was undertaken in 2016 and income recovery is now being seen, the company said.
At Paymentshield, which provides housing insurance and mortgage payment protection insurance, adjusted EBITDA dropped 1.1 percent to £32.1 million. Paymentshield had a strong performance in 2016, driven by revised profit shares, improved retention and continued growth in new business, Towergate said. The number of household policies grew for the first time in over six years, increasing by around 20 percent in 2016.
“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,” Ross said.
However, Towergate has recently said that it plans to restructure a number of central finance processing teams resulting in 133 employees being placed at risk of redundancy.
Towergate has 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.
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