Broking earnings decline in the tough trading conditions

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Towergate’s losses on ordinary activities increased from £13.6m in the first six months of 2010 to £21.3m in the same period this year, as the consolidator battled the headwinds of a stalling UK economy, cold winter and soft market conditions.

The consolidator paid £43.3m debt interest payments and similar charges in six months of this year, recently released accounts reveal.

Adjusted EBITDA, the consolidator’s preferred metric, fell 11.9%  to £66.7m. The was largely due to the retail broking division which had earnings drop from £36m to £31.3m.

Towergate broking managing director Dave Partington left the consolidator last week, as revealed by Insurance Times.

Group turnover fell marginally from £191m to £189.5m.

A company statement in the accounts said: “The reduced turnover in 2011 is caused by the soft market premium rate conditions of recent years which have squeezed profitability in the UK insurance market.

“The extreme weather conditions in the UK in December 2010 also affected the profits reported by UK insurance companies which impacts the group’s profit commissions in 2011.”

In a bright spot for the firm, the underwriting division performed strongly, increasing adjusted EBITDA from £16.2m to £17.2m under the stewardship of chief executive Clive Nathan.