Investment income returns Capita unit to profit

Capita Insurance Services Limited (CISL) made a profit after tax of £55.8m in 2010, compared with a loss of £6.8m in 2009.

However, the turnaround was mainly due to £60.6m in dividends that CISL received from its subsidiaries, which it recorded as investment income in its profit and loss account.

The company made an operating loss of £6.1m in 2010 (2009: £6.9m) as £38.1m of administrative expenses exceeded CISL’s £32m in turnover.

The £32m turnover was down sharply from 2009’s £72.5m. The company decided in 2009 to stop providing technical loss adjusting services.

Following 2009’s loss, CISL’s shareholders funds almost halved to £7m from £13.8m in 2008. However, 2010 shareholders’ funds had jumped to £102.9m. This was in part because of the £55.8m profit but also because thanks to a £30m cash injection from Capita Business Services Limited, CISL’s immediate parent in the Capita Group. CISL issued one ordinary share with a par value of £1 to its parent in return for the injection.

CISL is a part of the insurance and investor services division of outsourcing firm Capita. It provides support services to the insurance market including legal expenses, motor, household, employers’ liability public liability and property.

CISL does not include Capita’s insurance distribution, London market and specialist insurance services businesses.

According to Capita’s 2010 annual report, the insurance services division as a whole made an operating profit of £17.1m in 2010, down 28% from the £23.6m it made in 2009. 2010 revenues in the insurance services division were £184.9m, down 25%from £246.8m in 2009.