Some good results from UK broker Brightside this morning, here’s the press info;
“Looking ahead, Brightside will focus investment on its core broking business, where executing our scale, niche and digital retail strategy is key to our success as a specialist commercial and personal lines broker during the next decade.” Brendan McCafferty, Group CEO
Policy sales at Brightside’s broking business BISL grew by 26% to just over 231,000 in 2019, with Van, Car and Bike all delivering double digit growth.
CEO Brendan McCafferty said that while headline Group EBITDA fell marginally to £5.0m, however, Broking EBITDA without IQED improved slightly to £3.9m and the 24% growth in the policy book signposted an uplift in the future value of the group and underlined the benefits accruing from continued investment in pricing, data science and analytics, to transform Brightside into a digital broker.
Mr McCafferty said: “Our scale, niche and digital strategy has driven two years of material investment in our core operating platform, supported by strengthening relationships with our capacity providers and working closely with our distribution partners across our specialist product set.
He added: “Our underlying growth, coupled with a month on month improvement in our customer KPIs, proves the value of that investment, but we still have plenty of headroom for further growth.
He added: “Brightside’s heritage is that of a standard personal line broker, but we have moved a long way from our roots. Our customer profile is balanced by sole traders, small limited companies needing business insurance and customers requiring niche and specialist cover in all our segments, including SME, home and motor.”
He confirmed that commercial GWP was steady in 2019 at £53m and the commercial business (which includes One Insurance Solution) is now well over 40% of overall group GWP, which grew 18% to £125m (2018: £106m).
“We have a different profile from our peers, which makes us an attractive partner for insurers. We haven’t shouted loud enough about our commercial business, but our year on year growth has been impressive and we are now one of the UK’s leading providers of niche SME, via deals with blue chip insurers.
Kitsune closure
Mr McCafferty also announced that the Board has agreed to close the Group’s MGA, Kitsune, to new business and go into run-off. He commented: “This was a tough decision but one we feel is right for the Group, as the run-off of Kitsune will allow us to fully focus our resources on our core broking business and its specialist and niche strategy, where we believe we can deliver faster returns for our partners and investor.”
2019 Report and Accounts
Mr McCafferty was speaking after the South West based broker filed its report and accounts for the financial year ending December 2019.
Adjusted EBITDA was £5.0m (2018: £5.57m). Without IQED EBITDA grew to £3.9m (2018: £3.8m). Policy sales for car were up 66%, van up 21% and bike 11%. Group loss before tax was £9.25m [2018: £10.3m], reflecting exceptional costs including depreciation and amortisation (£3.94m), Kitsune (£3.0m), strategic investment (£1.6m) and restructuring (£2.3m).
Total revenue for the year was £35.7m [2018: £36.1m] a marginal fall as a result of winding down IQED, the medical reporting business. Excluding IQED, revenues were £32.4m, up 16% [2018: £27.9m]. Revenue comprised £24.5m from insurance broking activities (2018: £21.5m) £3.3m from medical reporting (2019: £8.2m), and £0.8m of other ancillary revenues (2018: £0.7m).
The £19m increase in GWP to £125m was largely derived from improvements to the panel for private car insurance, under the Brightside Car brand.
Mr McCafferty said: “The key message from our results is our book growth, which accelerated through the whole of last year. New business acquisition costs don’t help our profits for 2019, but we expect to benefit in future years as the book growth flows through following investment in technology and people.”
Response to Covid-19
Mr McCafferty said: “The pandemic has accelerated plans for transforming the Group that were already on our agenda. We have the ability now to work entirely more flexibly, to the benefit of customers, staff and the business.”
“It was always our intention to move to a model like this – where we can be flexible for our customers, our people and our partners, and we have dramatically accelerated that now. Throughout the crisis our people have been absolutely fantastic – this is reflected in our TrustPilot scores – which have steadily increased over the past year to 4.48 out of 5. I am hugely proud of our people’s determination to continue to look after our customers during remote working and the challenges that brings.”
He noted that policy volumes have continued to grow during 2020 and trading continues to be robust despite the effects of Covid.
Outlook
Mr McCafferty said he was wary of making predictions, as “it is clear we are still some way of the new normal, following the pandemic,” but he said the crisis had underlined the importance of “sticking to our strategy, which has given us a clear sense of purpose in challenging and ever changing market conditions.”
“When I became Group CEO in 2018, I said that Brightside’s focus will be on building our niche proposition, investment to scale up, and investing in digital in order to reinvent Brightside as a model 2020s broker, and we remain firmly on track to achieve our aim.”
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