Towergate approached by buyer despite losses

Towergate Insurance has received approaches from parties interested in potentially acquiring the group and has consequently appointed Evercore and Rothschild as joint advisers to weigh up the proposals.

The insurance group has an advisory arm Towergate Financial and in 2010 acquired mortgage broker John Charcol.

Alastair Lyons, interim executive chairman of Towergate, said the approaches are testament to the group’s strength in its primary markets.

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He said: “Whilst there can be no certainty that these approaches will result in a sale, it is our responsibility as a board to evaluate them thoroughly.”

Towergate also released its interim management statement for the nine months to 30 September, which showed that despite execution challenges, the group remained on course to deliver operational and performance benefits during 2015 to 2016.

Group income was broadly flat year on year, with acquisition-led growth in direct (7 per cent) and underwriting (6 per cent) being offset by insurance brokers (minus 2 per cent) and an anticipated reduction in the Paymentshield product (minus 12 per cent)

A reduction in earnings before interest, taxes, depreciation, and amortisation reflected organic performance driven by the impact of the group’s change programme on insurance brokers and the historic income items that benefitted last year’s results.

The loss before tax and decline in operating cashflow reflected lower operating earnings, business investment costs and impairment charges.

Mr Lyons said that implementation of changes was taking longer than expected, but should position the business for future organic growth and efficiency gains.

He said: “Given the extent of change taking place, particularly in insurance brokers, it is inevitable that there will be disruption to business as usual and a consequent downturn in trading as we transition to a new model.”