Broker seeks retail boost as profits slump 50%

Cox Insurance Holdings is believed to be targeting high street broker Swinton Insurance to bolster its retail arm after a disappointing set of results.

The group's interim results showed pre-tax profit halving from £28.3m for the first half of 2003 to £13.7m in 2004.

Its broking and insurance services division reported particularly poor results, with an operating loss before amortisation of £500,000 compared to a £13.2m profit in 2003.

Cox said this was largely due to a £10m non-cash write-down of HML goodwill and Brokersure IT assets. Both companies, along with Can Do finance have been off-loaded as part of the restructuring programme. Cox announced it was to close its broker guaranteeing business HML, while Premium Credit was to buy the Can Do brand.

Brokersure has also been put on the market, with Acturis tipped to buy it.

Cox group chief executive Andrew Fisher said: "We are not in the business of providing third party services.

"The impact of the three actions [selling or closing HML, Can Do and Brokersure] is that we have a more profitable business."

The results from its broker and insurance services business were balanced by increased profits from underwriting. The business recorded a 42% increase in profits from underwriting, with a £30.6m underlying operating profit on a gross written premium of £167m.

Its combined ratio was 81.4%, down from 87% in 2003, while its claims ratio dropped from 60% to 57% and expenses fell from 7% to 6.2%.

Fisher confirmed that Cox would be looking at acquisitions in core underwriting and broking sectors, but Cox declined to comment on whether it was targeting Swinton.

Swinton chief executive Patrick Smith denied talks were ongoing between the two companies regarding a potential buy-out.

He said: "There are definitely no discussions ongoing between Cox and Swinton, or Swinton's parent MMA."