Breakdown recovery firm and insurance broker posts 28% rise in profit despite motor troubles
Breakdown recovery firm and insurance broker NCI Vehicle Rescue has vowed to reduce its reliance on motor insurance income after a “challenging period”.
However, motor troubles did not dampen the company’s pre-tax profit, which increased by 28% in the year to 31 March 2014 to £1.25m (2013: £974,486).
Commissions and fees increased 25.3% to £8.3m (2013: £6.6m), and gross group sales were up 31% to £22.2m (2013: £16.9m).
The company said in a statement accompanying the results: “Directors have identified the current volatility in the motor insurance market as a potential risk to future growth and have proactively instigated measures to reduce this risk.
“In short, we will progressively seek to re-balance the business to reduce the reliance on motor insurance and insulate against the potential difficulties.”
To achieve the balance it wants, NCI plans to grow its breakdown and pet lines of business and, as planned, add household insurance to the portfolio in October2014.
The company added that it is planning to make a further acquisition in the current financial year.
NCI said that average motor premiums were down 15% and that claims savings predicted by insurers following the introduction of the legal reforms have “in large, failed to materialise”.
It said: “Lower rates and static claims volumes have meant many of our insurance partners have suffered losses and this subsequently puts pressure on client selection and permitted volumes.”
The company said it is still growing volume in niche areas but that growth is subject to insurer appetite.
NCI has a motor scheme in the pipeline which will be launched in January 2015, adding to the two schemes it already has. But it added: Our ambition of launching a motor scheme every six months has proven difficult due to market conditions worsening since our results last year. We have reassessed this and it is more likely that we will be launching a new motor scheme every twelve months.”
On a positive note, NCI said its pet insurance business continued to see “healthy growth”, which had been bolstered by its acquisition of the pet books from AXA and Switfcover.
NCI said: “This brought some initial administrative expenses in this period but the associated revenues will begin to flow from September 2014.
“The main cost of the purchase will be realised in the first six months of 2014/2015.”