Tax unit performance bolsters Abbey Protection H1 profits

Legal fees insurance provider Abbey Protection’s pre-tax profits rose 3%, to £5.2m, in the first half of 2011 (H1 2011: £5m) thanks to a 17% increase in profits at its Abbey Tax Protection (ATP) division.

Abbey said that while sales from its core fee protection product remained strong, ATP’s increase in profit to £1.8m (H1 2011: £1.6m) was mainly driven by sales of specialist consultancy and tax planning insurance products.

The profit growth at ATP offset flat profits of £1.2m at Abbey Legal, which comprises Abbey Legal Protection and Abbey Legal Services.

However, Abbey described the performance at Abbey Legal as “robust” because some revenue streams were affected by a significant client going into administration at the end of 2011.

Underwriting slump

ATP’s performance also counteracted a slump in profits at Abbey’s reinsurance underwriting division, Ibex, which provides reinsurance for the ATP and Abbey Legal Protection insurance products.

Ibex’s profit dropped 8%, to £1.97m (H1 2011: £2.15m) thanks to continued low investment yields and an increase in its aggregate claims ratio to 69.7% (H1 29011: 65.2%).

However, Abbey said: “Despite the increase in the aggregate claims ratio, we remain satisfied with the overall stability of the underwriting results and the anticipated range of ultimate loss ratios across the various underwriting years.”

Non-core divisions

First-half performance in Abbey’s other divisions was “mixed”, the company said.

The after the event (ATE) division more than doubled its profit contribution to £0.2m. Sales of the accident line product were up 12%.

Although results stabilised in the marketing arm of Abbey’s Accountax division, the overall profit contribution reduced in the first half of the year, with the consulting division concentrating on converting a number of key clients to annual retainer contracts with a short term impact on accounted revenue.

Abbey HR the business-to-business human resources consultancy, made a positive profit contribution for the first time of £0.1m.