Broker seeing more competition from direct insurers but enjoys turnover growth from new business and renewals
“Significant” investment in technology and a bid to win new customers pushed Simply Business’s operating profit down by 9% in 2013.
The operating profit before exceptional items for Xbridge Limited, which trades as Simply Business, fell to £1.8m in 2013 from £1.9m in 2012.
In this period cost of sales doubled to £3.4m from £1.6m.
The broking group’s pre-tax profit rose by 23% to £2.7m (2012: £2.2m), but this was boosted by a one-off profit of £954,000 from the sale of its lending business.
Chief operating officer Chris Slater told Insurance Times the market had become more competitive as insurers stepped up their attempts to win more direct SME customers.
But he added that Simply Business, which received private equity backing last year for a management buy-out, was going to continue with its aggressive approach of winning new customers online.
He said: “Last year was very much a transitional year, bringing Anacap into the business and really setting a long term plan for us that has been very much about EBITDA [earnings before interest, tax, depreciation and amortisation] maximisation.
“We will continue to invest so we will probably see the EBITDA relatively flat going into this year. We still see this market as a huge opportunity so we are not just going to cream money of the top.”
On a positive note, turnover increased by 10% to £25m from £23m helped by a “solid performance” within new business sales and a growing renewals book.
Slater expects customer numbers to grow to 300,000 by the end of 2014 from 250,000 last year.
“We have invested pretty significantly in the infrastructure of the business, in terms of people, data, finance systems and technology,” Slater added.
“And while we expect organic growth to continue, we are also trying to put ourselves in the position of forcing that a little bit more aggressively.”
A redesign of Simply’s IT platform has cut the time it takes for an insurer product to be offered on its website to one month from up to six months previously, while the broker has also increased its insurer panel to 15 and the range of products it offers, Slater added.
But Slater stressed the broker was focused on the customer; by providing a good claims service and an integrated service, that also allowed customers to interact with them offline.