Hodges insists Paymentshield ‘not for sale’

Towergate chief executive Mark Hodges has insisted the Paymentshield mortgage protection insurance business is not up for sale despite persistent rumours to the contrary.

Speaking to Insurance Times following the release of Towergate’s third-quarter results this morning, he also said he was “comfortable” with the division’s management team despite the recent departure of Paymentshield chief operating officer Paul Jarman.

Hodges said “There is a lot of noise and speculation. It is not coming from us. All I can say is that the business has not been for sale and is not for sale.”

He added: “If people don’t believe me, there’s not much I can do.”

Commenting on Paymentshield’s management team, Hodges noted that the division had hired ex-Willis UK president Brendan McCafferty as commercial director in June. He added that the company would make a senior appointment over the next few days – though this would not be a direct replacement for the departed Jarman.

He said: “I am very comfortable there is a strong management team in Paymentshield.”

‘Not disruptive’

At group level, Towergate has suffered several senior departures. Most recently, it lost retail director Paul Williams to Brightside, where he will become chief executive officer. In September, Towergate’s sales and service head Simon Trott resigned.

However, Hodges insisted that the apparent revolving door at Towergate is not a concern. He said: “If you go back over the past 18–24 months a number of people have moved on from the group for a variety of reasons, but we have had a fantastic record of attracting talent to the group.

“I am very confident that through the acquisitions we are doing and internal promotions that the talent pool in Towergate is improving over time.”

He added: “I don’t think it is disruptive because this group is big and broad.

“Although when you add the numbers up it might look like a lot, in individual teams and businesses there is a good mix of consistency and new talent that is able to freshen things up.”

Underwriting slump

A particularly negative feature of Towergate’s third quarter results was the 5% drop in earnings before interest, tax, depreciation and amortisation (EBITDA) at Towergate Underwriting – previously a solid performer for the group.

This was despite a 2% increase in revenue and 10% growth in gross written premium.

The profit drop was caused by increased costs, both of processing the increased new business and paying higher commissions to win new business because of the competitive environment.

However, Hodges put a positive spin on Towergate Underwriting’s performance and said the costs could be lowered. He said: “I’m pleased with the income growth in both [gross written] premium and income. Income growth is hard to come by in the insurance market.

“That has come at a cost – increased commissions to secure the business and also the increased volume have resulted in increased processing costs, which is a something that over time, having fought hard to win that income, we can do something about.”