Turnover leaps 20% but carriers fail to raise prices enough
Specialist broker THB Group has announced a 20% half-year increase in turnover and 29% growth in its UK operation but a drop in pre-tax profits.
Financial highlights (2008 in brackets):
- Fees and commissions £23.3m (£19.4m)
- Underlying profit before tax, £2.4m (£3.1m)
- Operating profit £1.3m (£1.5m)
- Underlying fully diluted earnings per share were 5.16p (6.78p).
- Underlying operating profit and profit before tax down 14% and 21%
Group CEO Frank Murphy said some carriers were holding back the hard market by under-pricing to maintain market share.
The increase in turnover was in part due to a strong performance by divisions within the Lloyd's broker Thompson Heath & Bond including teams from the PWS International business acquired in January last year. THB UK, the group's non-broking operation, also contributed to the uplift in turnover, driven particularly by progress in its risk management business.
Murphy said: "We are very pleased with the progress made by THB UK and the strong contribution from the PWS acquisition. However the slowdown in global economic activity plus the series of interest rate cuts by US and UK central banks in response to the economic crisis have had a material effect on operating profit in the period.
"We are not immune to the impact of the global recession and indeed the continued decline in insurance markets was forecast in our Annual Report. As such, we continue to focus on making the right decisions, including cost control, to ensure we remain in a strong position when rates harden. Undoubtedly THB has been held back by external factors in the short term but overall is in very good shape going forward."
