McCafferty spells out which areas of the business will receive investment and how he is shaping Brightside as a ‘2020s broker’
Brightside will invest between £5-10m in its broking operations over the next 18 months.
The investment will focus on three main areas - pricing and analytics; further developing the MGA Kitsune; and customer service. New technology, talent and consulting support are all set to come into the company over the next 18 months.
Chief executive Brendan McCafferty revealed that in the course of the year Brightside, owned by private equity group AnaCap, had completed a refinancing, although he declined to offer details.
The group is also set to raise cash through putting the medical reporting business IQED in run-off, which started in June.
McCafferty said the broking business will now take up the whole focus of the group.
“Already 60% of our business is conducted online, but I want to accelerate our digital offer,” he said. “This new investment will further improve profitability and service levels, both of which are key to achieving our strategy of building a successful niche, digital and scale business for the 2020s.”
Cutting costs
Although he couldn’t rule out a shrinking headcount amid changes to the company, he said there would be no cost reduction programmes.
“I have a personal philosophy that you never create a great business by cutting costs,” he said. “I want to see a one Brightside culture emerge in our business where we take advantage of the scale that we’ve got.
“The point of doing that is to give our people and our customers a better experience. Cost is not the key pillar of our strategy at all. Being effective and efficient have their place, but it’s really about the strength of the proposition.”
And while saying he was open to the possibility of an acquisition, McCafferty said the central focus will be on organic growth.
“Brightside has gone through a difficult few years,” he said. “It’s had contraction and it’s come out of that now, and we are focused on a growth agenda that’s organic first and foremost and about making sure we’re exploiting what we have invested in already and then following it through with this further investment.”
Broking performance
Releasing its 2018 results today, Brightside revealed in its broking business it grew EBITDA from £1.67m to £4.81m, and grew gross written premium from £99m to £106m.
Total revenues for the group dropped by 17% to £36.1m, but discounting the IQED business, Brightside reported income was up 4% in 2018.
It further reported 2018 policy growth of 15% in car, over 50% in van and 4% in niche motor, including minibus and taxi.
In the commercial/SME book, which accounts for around a fifth of GWP, online policy count rose by 50%.
McCafferty said: “My predescessor Mark Cliff did a good job in replatforming the business and bringing some tech dimensions to it. That’s paid off in terms of the growth we’re seeing. I’ve continued that and redoubled it. You can see it in the numbers and you’ll see it again in next year’s numbers. Our policy growth is phenomenal.”
The overall business posted a loss of £10.3m for 2018, which McCafferty largely attributed to one-off costs associated with the IQED business. With the planned investment, he said more one-off costs wouldbe reported for 2019’s results.
“Brightside’s fundamentals are good, evidenced by dramatic uplifts in policy count, but the accounting always lags performance improvements and will take time to catch up,” he said.
“We will continue to report one off costs in 2019 as a result of further investment, but we are firmly focused on 2021 when I expect our report and accounts to fully reflect the results of our transformation into a successful 2020s broker.”
Senior management overhaul
McCafferty took over Brightside in August 2018, and in the course of the year several senior management changes have been made.
Ian Sutherland left his role of chief financial officer in May this year. James Slade has taken over that role, with Derek Henry also set to join Brightside in September as new broking director after Russell Bence’s departure.
Richard Beavan joined as Brightside’s new chief operating officer in April to lead its digital strategy after a restructure in which former managing director of insurance David Sweeney left the company in December 2018.
“Richard’s appointment was a signal that re-organising operations and processes to improve service levels is a key focus for us and this area will account for the third tranche of our investment,” McCafferty said.
“With Derek joining us in September, I am confident that we have the right blend of experience and strategic nous to steer Brightside into the next decade.”
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