Cobra revenues up, profits fall

Broker and broker network company Cobra Holdings has announced half-year results to the end of September showing premium income up 263%, revenues up 55% but profit slashed by 66% from £801,000 to £274,000.

The company said the key points were

• Acquisition of five businesses comprising three insurance brokers, an underwriting agency and an IFA.
• Acquisitions in the period have added approximately £17.5m annualised gross written premium ('GWP') to the group.
• Underwriting GWP increased by 263%.
• Revenues increased by 55% to £11.8m.
• Underlying EBITDA increased by 19% to £1.4m.
• Profit before tax down by 66% to £0.27m due to increased amortisation of acquired intangibles and finance charges resulting from acquisitions
• Financing costs of £0.57m include non-cash fair value charges of £0.24m on interest free deferred consideration for acquisitions and loan notes
• COBRA Network signed up its 140th new member during the period and recruiting an average of two new members per month.

The firm said: “Generally premium rates remain weak in the UK but are now expected to rise in 2009 across all lines. However, the group continues to re-evaluate its operating costs to improve margins where possible.

Cobra says it benefits from advantageous financing terms from two major insurers and estimates it will earn enhanced commissions of £0.7m over the remaining course of these financing arrangements.

Cobra said: “The outlook for most of the financial services sector over the next twelve months is problematic and the best expectation is that the insurance broking industry will encounter its share of challenges in the coming months. Whilst it is possible that general over-riding commissions in the network will come under increasing scrutiny the board expects to mitigate this by actively managing the placement of business with insurers. The board believes that the group is well placed to weather the worst of the current uncertainty.”