Integration of Swinton is said to be nearly complete, with another £11m planned to be invested in the process through the second half of 2019
Ardonagh has closed all Swinton retail branches, according to its half year financial report for 2019.
In its Q1 results, the group had stated as of the end of March there were 20 Swinton branches operational. There were 11 branches operational as of the end of June, with all of these closed by the end of July.
Ardonagh invested £9m in Swinton during the first half of 2019, with another £11m planned for the second half as integration is completed and sites decommissioned.
Compared to the half year point in 2018, Swinton’s admin cost per policy written has fallen from £99 to £90 and the IT cost per policy written has fallen from £13 to £11.
Its customer retention has also improved from 69.3% to 70.8% and the adjusted EBITDA is now 30.6% compared to 28.8% at H1 2018.
On announcing the £165m deal to acquire Swinton last year, Ardonagh chief executive David Ross said Swinton would become unrecognisable from the business it was, and at the half way point of the year the group reported it to be performing above plan.
Swinton impact on growth
The acquisition has seen income in Ardonagh’s retail business shoot up by 169.8% in the half year results to £110.4m from £40.9m in 2018. Its new business policies written in retail grew by 8.7% for the quarter, with Ardonagh saying these were predominantly through digital channels. The segment now has 1.7m policies under management.
The completion of transformation programmes in insurance broking was said to have helped the division produce income growth of 7.4% (3% organic) to £106.3m for the half year, although income was down 4.2% at Paymentshield to £20.2m.
Ardonagh said organic growth in Q2 2019 was highest in its specialty division, where it said “transformational hires” in Price Forbes and Bishopsgate had driven 9.5% organic growth. Ardonagh reported income of £51.4m in the division for the half year point and said there was potentially another £15-£20m of additional annual income to be acheived through these hires.
The MGA business reported organic growth of 2.2%, although income for the first half was down 26.3% from £61.0m to £44.6m after selling its commercial lines underwriting business to Arch.
Results
Including the Swinton acquisition, which completed at the start of this year, Ardonagh reported income growth of 25% for the quarter rising to £179.9m from £143.9m at 2018 Q2.
EBITDA for the quarter was £57.1m, compared to £38.5m at 2018 Q2.
Pro forma for all acquisitions and disposals, income grew by 0.5% from £179m at Q2 2018 and EBITDA grew 7.7% from £53m at Q2 2018.
For the first six months of the year as a whole, income was up 24.1% from £271.8m to £337.4m, and EBITDA was up 50.2% from £65.4m to £98.3m.
Ross said: “The insurance broking transformation project coming to an end is amoment we have long looked forward to. The Group is now ideally placed at a time where our industry is consolidating around distribution and specialisms.
“Comprised of a unique portfolio of leading platforms, Ardonagh has emerged as a true leader in the market with unparalleled breadth and scale.
“People across The Ardonagh Group deserve enormous recognition for what we have collectively achieved.”
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