Chief executive Christophe Bardet (pictured) expects the broker to start growing again in 2015, after profit slump and 120 job cuts
Swinton’s desire to expand its commercial lines offering will create jobs at the broking group, according to chief executive Christophe Bardet.
Bardet also expects the broker to start growing again in 2015, both organically and through acquisition, after two years of stagnation.
His comments follow Swinton’s announcement yesterday that it is cutting 120 jobs after steep falls in revenue and profit in its 2012 financial year.
The results slump was caused by Swinton overhauling its sales process monthly add-on policies in 2012 following regulatory intervention. The FCA subsequently fined Swinton £7.4m this year for mis-selling add-ons.
Commercial growth
Fifty of the redundancies announced yesterday will be for sales managers nationwide. This is connected with the company’s plan to reduce its number of branches to 400 by the end of 2014 from the current level of about 475.
The company will also shed 60 staff from an outbound call centre in Halifax as a result of the shrinking profit from add-on sales caused by the overhaul. The remaining 10 staff cuts will fall on Manchester.
However, Bardet expects no further job losses as a result of the changes at Swinton.
He said: “There is no further plan of redundancy because our transformation is based on an ambition of growth. We believe we should be in a position to recruit more people in different areas.
“It will be more in the commercial areas where we have strong expectations and probably also in the call centres.”
He added that the push for fewer, bigger branches was also driven in part by the desire to start selling commercial products through its branch network. Bardet said: “For this, we need to have bigger branches.”
Growth by 2015
Bardet said he expects the company to start growing its profit again after reporting 2013 and 2014 profit at similar levels to 2012.
Profit for the next two years will be subdued by the £60m Swinton is spending on its transformation.
Swinton’s 2012 profit after tax was £18.9m, which Bardet said “remains very strong” despite being 48% down on 2011’s £36.1m.
He said: “My preoccupation anyway is to build up something that will be sustainable and consistent. I am not focused at all on short-term profitability that wouldn’t be sustainable for the following years.
“We will be at this level for two to three years – the time we need to transform our business, to make it more efficient and to put in place all of the ingredients that will allow us to grow.”
Acquisition opportunities
Swinton aims to grow both organically and through acquisition. On the organic side, Bardet says the broking group sees opportunities in commercial and specialist products, telematics and multi-car insurance.
Bardet also expects acquisition opportunities to arise because of the tough operating environment for UK brokers.
He said: “We believe we might have strong opportunities for acquisitions within the next few years. Swinton is quite experienced with acquisitions. We have made more than 100 acquisitions during the last few years.
“We are good at absorbing new business and we believe that new regulation and tougher competition will make it quite difficult for the smaller players and will create opportunities for the future.”
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