Phones4u earnings hit by soaring claims

Phones4u’s earnings fell 25% this year because soaring claims hit its insurance arm, according to The Guardian.

Earnings before financial charges fell a quarter to £74.1m in the nine months to September 30, compared to the same period in 2010.

Phones4u’s wholly-owned insurance arm has made up to half the company’s profits in the past.

However, the cost of replacing smartphones combined with competition from other insurers has hit profits.

The insurer’s margins dropped from 46% of sales to 31% last year. Its earnings dropped to £56m from £65m despite turnover rising to £179m.