Brightside predicts softening motor rates as profit rises 44%

Broking group Brightside made a profit after tax of £9.4m in 2011, up 44% on the  £6.5m it made in 2010.

Profit before tax was up 35% to £13.6m (2010: £10.1m) while earnings before interest, tax, depreciation and amortisation (EBITDA) was up 37% to £18.5m (2010: £13.5m).

The improved profit came on the back of a 22% increase in revenues to £80.4m (2010: £66.2m). Policy sales increased 41% to 444,189 (2010: 339,916). The broker’s eCar and eBike online motor insurance products were the main growth drivers, posting a 118% and 150% growth in policy numbers respectively.

“2011 was the ninth successive record year for Brightside and has seen a 35% increase in profits before tax, 39% growth in earnings per share and 31% growth in policy numbers,” Brightside chief executive Arron banks said in a statement.

“We have made great strides towards our goal of becoming a become a major distributor in the UK insurance market with further development of the eCar panel, continued growth in our ancillary businesses and the acquisition of eSystems and eDevelopment which further add to the suite of broking assets held by the group to create a fully integrated specialist insurance broking model,” Banks said.

He added: “The Board of Brightside views the prospects for 2012 with confidence.”

The eCar insurer panel currently includes Aviva, AXA, Groupama, Southern Rock and Ageas. Brightside said RSA and Allianz are due to go live on eCar “shortly”.

Brightside noted that the general motor market continued to harden in 2011 but added that the rate of rising premiums slowed significantly as insurers’ performance improved.

“We now anticipate a period of consolidation during 2012, prior to a softening of the market. Within the commercial sector the market remains soft with minimal premium growth being seen.”

The company added that it was well-placed to weather softening rates because its policy validation techniques have produced attractive underwriting results for its  panel of insurers.

While overall policy counts increased, personal lines policy sales dropped 24% to 41,189 (2010: 61,703). Brightside revealed in its first-half 2011 results that this drop was the result of “significant” price increases by Aviva, which underwrites Brightside’s online home insurance product, raising its prices. Brightside said Aviva’s move “ultimately rendered the product uncompetitive in its current form.”

The company added: “We are currently working with Aviva to obtain a more competitive pricing structure for the existing product, while also seeking additional underwriters to ultimately provide a panel solution for this product.”