SSP reveals battleplan to grow business and help its brokers & insurers

SSP has revealed its five-year battle plan to grow the business and roll out superior customer products.

Latest filed accounts show the software house’s earnings before interest, taxation, depreciation and amortisation (EBITDA) declined 6.7% in the year ending March 2018 to £22.5m (2017: £24.2m).

This was mainly caused by revenue fall following the departure of Swinton as a customer. But chief executive Stephen Lathrope said the firm’s private equity owners were supportive and backed plans to grow profits strongly.

Although 2019 profits and revenue will see a fall in absolute figures, management then expects to continue to grow profits strongly up until 2023 (see graph) on the back of the significant investment it is making.

The key part of their growth plans is finishing the software implementations and moving to higher margin business of recurring revenues from licences and transactions.

Brokers will enjoy the benefits of SSP’s Amazon-hosted cloud services, moving from current third-party hosted databases. This will be an attraction in generating new broker business.

With the investment coming, management are happy to withstand the short-term cost of falling into negative cashflow for the second year running at -£2.34m in 2018 and -£1.8m in 2017.

Lathrope said: “We are on a bit of a journey. Our intent is to invest in this business so we are able to provide broker customers, insurer customers in the UK and internationally with the best software and service available in the market sectors we serve.”

SSP customer plans

SSP offers software services to brokers, insurers, MGAs and financial advisers. Brokers make up the largest part of the revenue mix, followed by insurers.

The company has invested heavily in its broking platform and brokers will gradually be moved over to the much more powerful Amazon Cloud.

“We are continuing investment in the SSP Broking Platform. That’s been two years in development so far,” said Lathrope.

“We expect to implement that and start to migrate our first UK broker customer in Q1 2019, so we are getting very close to the whole of that platform, namely the Amazon-hosted version of that platform, being live at the beginning of next year.”

SSP has a range of products for insurers including a core policy and claims solution, a fraud solution against data manipulators, a real-time quote hub, analytics and intelligence, and a workflow management solution.

UK customers such as Hollard and LV= are currently using the products. International growth will help SSP gain new insurer customers. SSP landed a big win in Australia with roadside assistance and insurance specialist RACQ, which has praised the platform’s ability to disrupt, innovate and launch new products.

Financial performance 

SSP’s EBITDA of £22.5m excludes capital expenditure investments, debt interest and non-cash items resulting in a different figure to the pre-tax loss of £38m.

The pre-tax loss was chiefly caused by a £25.8m goodwill impairment charge, a non-cash item. There is £20m in charge on debt interest; half of that was shareholder loan notes which are paid off at the owners’ discretion.

SSP’s pre-tax loss figure takes account for the previous years’ investment in research, products and offices.

Lathrope said: “Following the data centre issue, way back in 2016, we have invested quite a lot in the managed service team that look after our services and our applications.

”We have made that investment and it is paying dividends.

“All of that describes the context. We are a business focusing on the medium- and longer-term results. We are not a private equity-owned business that is rushing to just grind out the best possible numbers in the year.”

He added: “We are focused more on doing the right things to raise the bar on service and focus on innovations so that we have a sustainable business for the future. It’s a really positive approach for our company, supported by our board and stakeholders.”