Jelf makes plans to expand after 49% profit increase

Consolidator Jelf plans to snap up bolt-on acquisitions and increase its sales force further in a bid to fight the headwinds of the soft market and underperforming economy.

The firm increased operating profits by 49% to £1.5m over the six months to March, compared with the same period last year. However, revenues remained steady at £35m (2010: £34.9m).

Chief executive Alex Alway said he was satisfied with the firm’s performance, but added that Jelf would take on another 20 account executives this year and also add bolt-on acquisitions.

Alway said the improvements in operating profit were down to investments in IT, such as the Acturis software system, and a number of new propositions in specialist areas such as haulage and recruitment.

“It’s a good, strong set of results,” he said. “Turnover was flat, but pre-tax profit was £800,000 and operating profit was up – whichever way you measure it, it was good.”

Alway also noted that discontent with other networks was helping the company’s own network, Purple, grow. Membership increased from 40 to 53, meaning that the network now controls £100m in gross written premium. “We are finding some dissatisfaction out there with other networks,” he said. “People are moving over from existing networks because they like Purple, believing it is the right way forward.”

Earnings before interest, taxes, depreciation and amortisation (EBITDA) at the firm increased 2% to £4.2m (2010: £4.1m). Jelf paid back £1.5m of debt early.

In April last year, Jelf received £19m of fresh investment from US private equity firm Capital Z and institutional investors. Asked if Capital Z was still onboard, Alway said: “It loves what we are doing and will be around for a long time.”

Insurance revenues improved marginally to £22.3m as competition grew and economic conditions remained depressed in the mid-to-large commercial insurance market.

Jelf believes personal lines could generate extra revenue next year. Jelf Insurance Brokers appointed Antony Summers as managing director of personal lines in February, with a remit to grow the book.

In other segments, employee benefits, which accounts for a quarter of Jelf’s revenues, grew 6.9%. It won several new corporate accounts and was helped by hardening rates in private medical insurance. In financial planning, revenues dropped 11% to £3.9m. The group has £500m in third-party funds.