Speculation continues over possible sale of the broker to Fortis
Kwik-Fit Insurance Services, the broking arm of car repair firm Kwik-Fit, made a profit of £9.9m for the year to 31 December 2009, up 12.7% from £8.8m in 2008. But it is still unclear when and to whom the broker will be sold.
Turnover for last year was £66.9m, up 4% on 2008’s £64.2m, despite competitive market conditions. The company said that the sales performance, coupled with efficiency initiatives aimed at cutting the cost base, contributed to the increase in profit.
The results were aided by the fact that interest payable and similar charges almost halved to £2.4m in 2009, from £4.5m in 2010. This helped offset the fact that sales costs increased to £53.9m from £52m, interest receivable was down to £372,946 from £1.1m, and tax on profit was up to £1m from £47,363.
Debt payments due within one year also almost halved to £22.7m in 2009 from £43m in 2008. Shareholders’ funds increased 28% to £45m from £35.1m.
Kwik-Fit’s motor book shrank by 1%, which the firm said outperformed a contracting market in which insurers implemented rate increases throughout the year. It attributed its success to an 11% year-on-year increase in new business and progress in reducing cancellation rates.
The broker’s household book grew 27% thanks to the greater penetration of aggregator sites, resulting in a 25% (£1.7m) increase in revenue. The firm added that it continued to see strong growth in sales of additional products, supported by its cross-selling capabilities. As a result, the proportion of revenue generated by non-motor policies was 45% in 2009, up from 39% in 2008.
Despite the overall positive results, Kwik-Fit reported that the 2009 results of subsidiary Express Insurance were below expectations. It said that although revenues grew by more than 10%, driven by an increase in policy count of over 28%, reduced margins caused profit before tax at the unit to fall by £1m, or 27%, from its 2008 level. But revenues at fellow subsidiary The Green Insurance Company increased 62% and profit before tax almost doubled to £700,000.
News reports suggest that Fortis, one of the insurers on Kwik-Fit’s panel, is in the running to buy the firm. Fortis and Kwik-Fit Insurance Services both declined to comment.