Insurer looks on the Brightside

Insurance broker and financial services specialist Brightside Group is contemplating business acquisitions and equity funding after encouraging interim results.

The Bristol-based company is already the UK market leader in commercial van insurance, through its Commercial Vehicle Direct and eVan brands, and has stated its ambition to become number one broker in life assurance with 100,000 policies a year by 2012.  

With agencies from insurance groups Fortis, Liverpool and London and Zurich, AIM-quoted Brightside uses call centres to market and distribute policies to individual van owners, whose other insurance needs provide scope for further expansion, says chief executive officer Paul Chase-Gardener. He explains that the company wants to maximise the more lucrative commoditised parts of its business – in vans, life and other areas – by increasing the proportion done online (where costs are a fraction of conventional methods and expansion and the addition of other types of cover is simpler) from 30 per cent to 50 per cent or more.

Brightside increased first-half pre-tax profits 28 per cent to £3.2 million on turnover up 39 per cent to £22 million. Costs rose 70 per cent to £5 million and administrative expenses increased 37 per cent to £13.3 million.

With premium rates seen as still hardening, at least in non-life insurance, Brightside derives 32 per cent of its profits from its Panacea premium finance arm, which caters for its insurance customers. The company says business leads generated by its Quota Marketing division rose 63 per cent in the first half-year to 62,000.

Chase-Gardener says insurance broking continues to form the core of Brightside’s business. The company provides both personal and commercial products to customers through online and other channels.

A year ago, Brightside launched eLife, a life assurance product, from a standing start and, assures Chase-Gardener, it is now undergoing ‘its third wave of expansion’. eLife sold 1,263 policies in the first half of 2009 and made ‘a positive contribution to group earnings and cash flow’.

The company argues that eLife offers ‘significant growth potential’ and says it has therefore given it ‘challenging performance targets’. Brightside has committed itself to invest ‘additional resources’ in the division’s development ‘in order to accelerate the growth it has already shown’.

As well as pursuing its life assurance goals, Brightside wants to develop its financial services business by introducing eMoney, a ‘non-advised, execution-only’ financial services platform whose products will include not only life assurance but also pensions, annuities and mortgages. Another string to Brightside’s bow is medical reporting, an activity that plays an established role in insurance.

In June last year, the group acquired a medical reporting agency, which has since then performed ahead of budget in
a notably competitive sector. According to Chase-Gardener, Brightside sees ‘significant growth potential’ in medical reporting and will ‘continue to devote resources’ to supporting it.  

Norwich Union parent Aviva owns more than 8 per cent of Brightside, which floated on AIM two years ago, having bought a book of business from motor-linked insurer AA in 2004. This included three-year leads which paid for much of the acquisition cost, explains Chase-Gardener. He and fellow founders Arron Banks and John Gannon together own nearly 50 per cent of the company, and he argues that a timely share issue could provide much-needed stock market liquidity, as well as funding the potential purchase of a brand, book of business or company, though house broker Evolution suggests a likely target could be their own broking interests, such as eBike.

Evolution sees pre-tax profits rising 8 per cent this year to £6.4 million, with a 26 per cent increase to £8.1 million on the cards for 2010 and £10 million a possibility for the following year. Chase-Gardener says the company hopes to pay a maiden dividend in 2011 on its 2010 earnings, which only adds to the group’s investment allure.