Year-end 2011 results show profit of £3.6m, almost double 2010’s nine-month figures

Groupama-owned broker Lark made a profit of £3.6m in the year to 31 December 2011 amid challenging conditions for insurance brokers.

The company, likely to split from its French parent, has appointed Groupama UK’s managing director Laurent Matras and corporate services director Paul Picknett to its board.

Lark is understood to be pursuing a management buy-out.

The full-year 2011 profit is almost double the £1.8m reported for the last nine months of 2010. Lark reported only nine months for 2010 because it changed its financial year-end to 31 December from 31 March.

The picture is further distorted because Lark books the bulk of its business in the first three months of the year, excluded from the 2010 numbers. The company also acquired broking group Cadogan Hanover Park from Barbon in September 2011, at its book value of £3.1m. The acquisition added £606,610 to Lark’s total 2011 revenue of £19.5m (last nine months of 2010: £13.2m).

While the 2011 profit is down on the £4.2m Lark reported for the 12 months to 31 March 2010, comparison is difficult because of the different reporting periods. Revenue for the 12 months to 31 March was £18.8m.

Lark managing director Stephen Lark told Insurance Times that the performance was in line with expectations. “Conditions are tough, certainly on the commercial side of the business, and we’re pretty content with the performance given the continuing difficult environment.”

Lark said benefits from the Cadogan Hanover Park acquisition would start to show this year. “Certainly by the end of 2012 we will have a good picture of the impact.”

Groupama is selling its UK units, including brokers Lark, Bollington and Carole Nash, and Groupama Insurance.

Pass notes: Tough trading

Why are conditions so difficult for UK brokers?
They are all fighting for bigger slices of a shrinking pie. Tough economic conditions are cutting insurance demand and keeping premiums low. What little brokers make on investments is eroded by low interest rates.

Why is Groupama selling its UK assets when they are profitable?
The French insurance group has been hit hard by its holdings of peripheral eurozone sovereign debt. Rating agencies have downgraded the company several times: its S&P rating stands at BBB-, one notch above junk status.