No alarm at Towergate as £140m debts due

Towergate has £140m debts falling due within the next 18 months, but the insurance giant said it was “very comfortable with its numbers”.

Total debts now stand at £646.6m, compared with £546.4m in 2008, the consolidator’s 2009 accounts show. Interest payments on debt increased from £45m to £52.9m.

A spokesman said the company could comfortably service its debts, while pointing out that financial performance had been resilient despite the downturn.

Earnings before interest, tax, depreciation and amortisation increased from £112.4m in 2008 to £117.7m last year.

Towergate says this is a fairer reflection of the business fundamentals, rather than the consolidated profit and loss account, which showed losses increased from £18.8m in 2008 to £28m last year.

Fees and commissions increased from £318.1m to £323.3m. Group operating profit declined from £42.2m to £35m.

A spokesman said: “As ever, given we have grown by acquisition, we are very comfortable with our numbers as amortisation, depreciation, etc, is not money going out of the till, and the cheque we write for the taxman equates to a taxable profit of well over £40m.

“Obviously 2009 saw muck and bullets for all intermediaries, but we are pleased with the way we performed and we wouldn’t wish to swap places with anyone else right now.

“Our investment in people, for example, training, qualifications and sales is working for us. Our first-quarter trading met our expectations.”

Towergate has put on ice the possibility of a £646m bond refinancing, as the markets remain nervous about the wider economic situation. The refinancing could help Towergate pay down some debt, while paving the way for more favourable interest repayments.

The spokesman said: “The bond is a ‘nice to have’, and great foundations have been laid for when the market will benefit us most.

“In the meantime, it is simply business as usual and our bank arrangements are fine – we have years before there is any real need to change.”