Bluefin Business Partner Services profit contribution fell 46.6% to £0.8m in 2011

Stuart Reid

Bluefin boss Stuart Reid believes he is ahead of the game in overhauling his network division ahead of rivals.

Profit contribution from Bluefin Business Partner Services (BBPS), a network of 60 brokers across the UK, fell 46.6% to £0.8m in 2011. Revenues dropped 12.8% to £3.6m, and expenses grew 6.5% to £2.8m.

Bluefin Insurance Group chief executive Stuart Reid said the decline was caused by an overhaul of BBPS, which included a revamp of the underwriting portion of the offering.

He said: “It had to change. Networks have to do more than simply offer higher commission [to members]. There has to be added value for the members and the insurers for whom they are selling products.”

Reid said the changes were bearing fruit already in 2012.

“The amount of backwards movement in 2011 has been more than compensated by forward movements this year so far,” he said, while pointing out that 2012 was not yet over.

He said the changes to BPPS were in keeping with what other broker networks were going through, but he added: “We realised it a year before most other people.

“The BPPS downturn came in an otherwise strong year for Bluefin in 2011. The AXA-owned broker’s earnings before interest, tax, depreciation and amortisation (EBITDA) increased 17.2% to £17.8m (2010: £15.2m).

BPPS was the only Bluefin division to shrink its contribution in 2011. It is also the smallest division, contributing just 2.4% of the £33.3m total divisional contributions.

The improved EBITDA was mainly the result of cost cutting. Operating expenses fell 2.2% to £85.3m (2010: £87.2m). Net operating revenue growth of 0.7% to £103.1m (2010: £102.4m) also contributed to the improvement. Reid said about 25% of the EBITDA could be attributed to revenue growth, and the remaining 75% to cost control.

On a statutory basis, which includes depreciation, amortisation and restructuring costs, Bluefin made a loss of £11.4m (2010: loss of £12.8m), but this includes an £11.5m dividend paid to AXA Insurance.

Bluefin's divisions

Talking points …

  • Will Bluefin and other brokers be able to maintain cost-cutting long enough to ride out this period of low revenue growth?
  • How much edge will AXA ownership and lack of debt give Bluefin over its rivals?