Oval optimistic despite £3.5m pre-tax loss

Oval is showing signs of emerging from the recession after recording growth for the first time in nearly two years, according to chief executive Phillip Hodson.

Oval posted a pre-tax loss of £3.5m in its full-year results to 31 May 2010, although earnings before interest, tax, depreciation, amortisation and exceptional items were £16.5m, compared with £18.7m the previous financial year.

Speaking to Insurance Times, Hodson said that, in the third quarter of 2010, the company recorded a 4% rise in gross written premium, currently £450m annually.

He said: “We are seeing slight growth, the first time in seven quarters we have seen gross written premium start to move up, which would suggest we are perhaps towards the end of the downsizing. We are a little bit more optimistic.”

Hodson also did not rule out merging his business with a similar sized competitor, such as Heath Lambert. However, he said that the company was not for sale and that a flotation remained unlikely in the next three to five years.

Hodson added that the business will remain cautious, saying that a full recovery could take four or five years.

Oval’s 2009/10 pre-tax £3.5m loss included £9.4m for goodwill and other amortisation, and £3.7m of exceptional restructuring costs. Group revenue dropped by 8% from £104.6m to £96m, largely a reflection of the impact of the recession on its clients, according to Hodson.

Retention was around 96% on corporate and commercial business, he said.

Oval made £5.5m cost savings during the past year, reducing headcount by 100 staff to 1,200. It repaid £15m of bank debt during the year and senior net debt fell by £11.2m to £43.2m.