Broker Network, the network of independent community insurance brokers, has cheered investors with premium interim figures to October.

Grant Ellis, chief executive, reported record profits for the half – pre-tax profits adding back goodwill rose 84% to £1.65m – on turnover lifted 56% to £5.85m. Operating margins clipped up to 25.7% (20.4%).

‘BNL’, which focuses on personal and commercial general insurance, is a consolidation play with great growth prospects. It provides small local insurers, run as ‘lifestyle’ businesses, and insurance brokers, with support services such as IT and marketing. As well as providing a natural exit for aged ‘principals’, small brokers join for better bulk buying power with insurers, to gain access to more insurance markets, as well as BNL's enhanced regulatory compliance services.

Harrogate-based BNL joined AIM at 71p in 2004 and has completed 16 acquisitions to date for £7.4m, acquired five brokers during the half for £4.2m. It apparently has a spate of prospects in the pipeline to add to its 145 strong network. ‘We are a retirement proposition and the penny seems to have dropped,’ explained Ellis. ‘Vendors now see us as a good source of retirement funding.’

In terms of trading, he flagged up falling insurance premium rates for ‘bigger ticket business’, but explained the impact on members would be softened as they generally write smaller ticket business.

BNL boasts solid balance sheet credentials – a £1.4m first half net inflow meant the group finished the half with over £2.1m cash. For the full year, analysts suggest a jump in pre-tax profits from £1.8m to £2.7m – upgraded from £2.65m – on £11.6m sales, giving earnings of 13.5p and a prospective p/e of 8.6. Strong buy.

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