Abbey Protection H1 profit up 11%

Legal and professional fees insurance provider Abbey Protection has announced an 11% increase in H1 pre-tax profits to £4.7m with revenue in its core trading divisions, Abbey Legal Protection and Abbey Tax Protection, up 11% to £8.2m.

H1 financial highlights (2009 in brackets)

• Revenue £17.3m (£16.4m)
• EBITDA £5.1m (£4.6m)
• Profit before tax £4.7m (£4.3m)
• Profit after tax £3.4m (£3.1m)

Tax protection

Colin Davison, chief executive, said: “Revenue from Abbey Tax Protection ("ATP") was up 14% to £3.5m, with significant contributions from recently introduced products such as our embedded capital allowances surveying service and also from specialist tax planning insurance.

“Sales of our traditional core product of fee protection insurance held up very well in an extremely competitive market and over the first part of 2010 we have consolidated our position as market leader in this sector.

“HMRC enquiries, which declined in 2009, have started to increase again in 2010 which should stabilise the aggressive pricing models of some competitors. Overall, pre-tax profits, inclusive of allocated central costs, increased by 11% to £1.3m.

Legal protection

“There was solid growth in the revenue from the legal protection divisions, Abbey Legal Protection/Services ("ALP/ALS"), up 8% to £4.7m, with new business sales exceeding £0.5m and fee income from litigation and consultancy services increasing to £1m.

“Overall the profit contribution from ALP/ALS, inclusive of allocated central costs, increased by 28% to £1m, helped in part by the call volumes being handled by the call centre returning to pre-recession levels and enabling us to control our operational costs.

Reinsurance

“The claims ratio at our reinsurance subsidiary, Ibex, improved to 63.3% (2009:67.7%), benefiting from some early year reserve releases. The underlying loss ratios remain stable, with a marginal increase in employment claims in 2009 being off-set by reduced numbers of tax claims in the year. “Despite the continued low investment yields, Ibex increased its profit by 11% to £2.1m in the first half of 2010. This profit contribution derives almost entirely from premium written by the core divisions of ALP and ATP.

ATE revenue down

“Although overall revenue from the After the Event ("ATE") division reduced to £0.7m (2009: £0.9m), this was the result of all material income from our managed run-off contracts having reached a natural conclusion.

“Sales of our injury compensation product, Accident Line, were up 16% and particularly pleasingly, our new commercial after the event insurance produced sales in excess of expectations.

Accountants

“Sales revenue from the specialist accountancy services unit at Accountax ("ACX") has overall remained flat compared with 2009. However, the consulting arm has enjoyed a 17% increase in revenue to £0.9m whereas the marketing division has suffered an equivalent reduction due to lower levels of conversions by its accountancy clients.

“Pre-tax profit for ACX, after amortisation and central costs, has risen by 22% to £0.2m.

Human resources

“Abbey HR ("AHR"), which sells packaged employee relations and health and safety services directly to businesses, had a difficult start to the year but in the second quarter, business has significantly improved.

“Consequently revenue has increased by 11% to £0.3m, although the division still hovers at the break even point. If the recent improvement in sales continues, then we expect a small profit by the end of 2010.

Investment

Investment income has remained depressed with little expectation of increased yields materialising until 2011. We remain committed to our low risk strategy of investing in short term deposits and certificates of deposit with a maximum duration of two years.

“On the positive side, when yields pick up, our results will receive a further boost.