Capacity problems with Banks-led Southern Rock Insurance Company Limited ‘particularly acute’
Brightside has slashed its expected profit for 2013 by 20% as capacity restrictions continue to dog its online business.
This resulted in a decline in the number of online policies sold compared to Q3 2013, but the broker said it had been able to increase capacity for 2014.
The broker said the capacity issue was ‘particularly acute’ with Southern Rock Insurance Company Limited, currently led by Brightside co-founder Arron Banks.
Banks previously held the position of chief executive in Brightside until his resignation in June 2012. Following his departure he declared his interest in launching a bid for the broker he founded, but a deal never materialised and he has since decreased his shareholding in the company.
In a trading update published today, Brightside said it would not be entering into any capacity deals with Southern Rock next year: “The expected total for 2014 does not include any capacity from Southern Rock or any capacity from sources without current clear visibility. To supplement this, the directors continue to work to achieve a position where the group is not overly reliant on any single insurer.”
However, Brightside is anticipating an improvement in the situation with online capacity of approximately £145m for 2014, compared with an estimated total of £115m for 2013.
In its statement, Brightside said: “The main challenge to the group’s profitability is confined to a combination of specific circumstances restricting the available capacity to support the online businesses
“We are, however, pleased to announce substantial increases in capacity available to our online offerings for 2014, from a range of sources including mainstream carriers and specialist underwriters.”
Southern Rock previously provided 30% of Brightside’s capacity, but now underwrites policies for Banks’ new broker, Go Skippy.
“I think it’s another step along the way of going separate ways. It made sense for us both,” Brightside interim chief executive Paul Chase-Gardener told Insurance Times.
Brightside’s panel now comprises Markerstudy, Ageas, Aviva, AXA and Groupama, with further insurers expected to be confirmed soon.