Towergate Q1 profit dips 2% as network woes persist

Broking group Towergate reported operating profit of £33.8m in the first quarter of 2013, down 2% on the £34.6m it made in the same period last year.

The group-wide drop coincided with a 50% fall in operating profit at Towergate’s network division to £1.3m (£2.6m). The company said the decline reflects ”the continuing impact of changes in partner insurer relationships.”

The network division, which comprises Broker Network and Countrywide, suffered a blow in 2012 when Aviva ceased to be a partner insurer of Broker Network. The loss of Aviva contributed to the network division’s 24% profit drop in 2012.

Towergate said the main reason for the dip in group operating profit to “timing differences in expense recognition”.

Retail rises

Despite the continuing network woes, the rest of Towergate performed well in the first quarter of 2013. Group revenues increased 3% to £107.8% (Q1 2012: £104.4m), and the gross written premium placed by the group grew by 2%to £757m (Q1 2012: £743m).

Towergate’s core retail division was the best-performing area of the business in the first quarter. Operating profit increased 6% to £15.2m (Q1 2012: £14.3m) and revenue also increased 6% to £61m (£57.5m).

The underwriting division also had a good quarter. Operating profit increased 4% to £9m (Q1 2012: £8.7m) and revenue was up by 5% to £21.9m (Q1 2012: £20.8m).

‘Good start’

Towergate chief executive Mark Hodges said: “We have made a good start to 2013 continuing to build on the momentum created in 2012, growing group income by 3%.

“We saw an encouraging performance during the quarter across both the Retail and Underwriting divisions. With eight deals already completed in 2013, our acquisition activity and pipeline remains healthy.

“We were delighted by our recent successful refinancing, post period end. The strongly positive market reaction to the offering has enabled us to secure a much more flexible debt structure.”