Broking group expects to return to profit after first 15 months marred by exceptional costs
Broking group Cobra is moving more into specialist insurance areas to fuel growth, according to chief executive Steve Burrows.
Speaking to Insurance Times following the release of Cobra’s results for its first 15 months as a private firm, Burrows said: “We have started to go more into niche markets, which has been great for us. It has kept us growing.”
For example, the broker has started offering insurance to green energy companies, and warranty cover for manufacturers of resin joints for roads.
The shifts have helped Cobra stave off the effects of the soft market and current tough economic climate, which has cut premiums and broker commissions. Burrows expects the tough times to continue.
He said: “We are not seeing any great signs of the soft market changing.
“There are very small sections where you are seeing increases, but overall the market is still soft.”
Despite this, he estimates that Cobra’s retail broking operations in Essex and Manchester each turned in organic growth of around 5% in the 15 months ended 31 March 2013.
Burrows took the formerly AIM-listed Cobra private in July 2012 in a management buy-out. He set up a new holding company, Alto, to purchase the group, which includes a retail broker, a wholesale Lloyd’s broker, a broker network and an underwriting agency.
In its inaugural set of results, which cover the 15 months to 31 March 2013, Alto reported a loss of £578,543, despite bringing in revenue of £9.8m.
However, Burrows pointed out that the result included £2.2m of exceptional costs relating to buying the Cobra businesses and taking the group private.
He said: “Given extraordinary costs of £2.2m we did pretty well to only record a loss of £578,543.”
He added that he was expecting an improvement in the next set of results, which would be for the 12 months to 31 March 2014.
He said: “As you would expect, we recognised a lot of the restructuring costs into last year’s figures. We didn’t want to carry anything forward. We are now a much cleaner company. We are six months into our year already and I would hope we are showing considerable improvement over past years.”
However, he added: “Anything could be thrown at us in the next six months, but at the moment we are on target to make a very good profit.”