Over 60 staff face threat of redundancy following closure by Link and Zenith parent
Guardian Holdings (GHL), parent of the Zenith and Link Insurance companies, is to close an office and scale back some product lines in a bid to tackle sliding profitability, Insurance Times has learned.
The closure of its Kings Hill, West Malling office means that over 60 staff face the threat of redundancy. This follows the loss of 90 jobs last year.
Documents seen by Insurance Times reveal that GHL was forced to revise its profit projections for 2007 from £4.5m to £3.3m in February, as result of high loss ratios and dispropor-tionate expenses.
These costs were associated with the manual servicing of motor specialist Link’s business at Kings Hill. The documents reveal that, in some cases, Link products had loss ratios “10 points worse than equivalent Zenith products” which are transacted via EDI.
GHL is also reviewing the profit-ability of Link’s product range, which could see it withdraw from the fleet market and cut its schemes business.
The closure of the Kings Hill office, due by the end of the year, will see GHL operate exclusively from its base at Haywards Heath in West Sussex.
Steve Tidd, chief executive of GHL Europe, said: “The move is part of plans to further centralise the UK business, focusing on automated trading. It is our long-term intention to move all our business through the EDI channel.”
But he insisted “it would not be fair to attribute this change to under-performance of the Link brand”.
Tidd said that a combination of increased rates and the channelling of volume through the EDI medium would allow the company to hit its revised target.
He declined to comment on whether any redundancies were imminent, but conceded that some would be inevitable. “We will do our best to accommodate the needs of our workforce,” he said.
One-to-one negotiations with staff were ongoing.
The Zenith and Link brands are to be replaced by that of GHL. The process began on 1 May with Zenith Services UK being rebranded as GHL Insurance Services UK.
In the first two months of the year, Zenith and Link posted profits of slightly more than £300,000.
GHL plans to underwrite £180m of business in 2007 – a growth of £20m year on year.