Southern Rock ‘significantly’ cuts Brightside eCar capacity

Gibraltar-based insurer Southern Rock has “significantly” reduced the capacity it provides to broking group Brightside’s eCar online motor product in the first half of 2013.

In a trading update released this morning, Brightside said that the reduction in Southern Rock capacity had “partially offset” the new eCar capacity it received from Ageas and Markerstudy in 2012.

Brightside is currently facing a takeover approach from Markerstudy.

The update said: “The capacity received from Southern Rock has reduced significantly in H1 2013, which has had an adverse impact on revenue but has accelerated our strategy to become less dependent on their capacity with time.”

Falling rates

Brightside’s motor business was also hit by falling rates. The company said: “The softer market has brought lower broker commissions as premiums have fallen, making the attraction of new customers more challenging.”

The combination of the lower capacity and softening rates “accounted for the fall in eVan sales and growth in eCar and affinities during the period being slower than expected”.

eVan policy sales fell 78% to 2,624 (H1 2012: 11,859).

Brightside’s eBike online motorcycle insurance product also suffered in the first half of 2013. Policy sales dropped 24% 17,804 (H1 2012: 23,279).

Brightside said: “eBike is currently underwritten by Groupama, and again policy sales in this area were adversely affected by pricing decisions made by Groupama, which rendered the product less competitive.”

Business growth

Despite the tough conditions, Brightside’s overall policy sales increased by 14% in the first half of 2013 to 260,396 (H1 2012: 227,610).

Annual policy sales increased 20% to 234,237 (H1 2012: 194,808).

However, Brightside warned that the increase in annual policy sales was mainly driven by growth in its affinity products, which attract lower profits.

It said: “The impact on profitability will be lower than for more established channels. This is due to lower income per policy and higher acquisition costs associated with the affinity products.”