Innovation Group profits rise on insurance outsourcing growth
LONDON, UNITED KINGDOM — Innovation Group Plc reported a 17% hike in its first-half pretax profit and beat its expectations as the company’s core insurance outsourcing business grew significantly.
Strong performance in insurance services
The British company that processes 3 million claims every year for 170 of its customers worldwide reported revenues of £48.4 million (US$62.49 million) for the first six months ending March 31, with pre-tax profit coming in at £6.1 million (US$7.88 million).
The outsourcing division that offers services to insurance clients, such as handling claims for vehicle repairs after accidents, grew by 41 percent in the first half. This division still accounts for the majority of the company’s revenue.
CEO Hassan Sadiq is confident that the company will meet its full-year targets following an improvement in the company’s earnings visibility.
He said: “Recurring revenue now represents 76 percent of the group’s turnover and therefore the visibility into future years is very, very strong.”
Management changes amid growth
It was rather surprising that the company informed shareholders that Finance Director John Sidwell had resigned after just six weeks in post. Once again, Paul Hemsley has come back to fill the interim Finance Director’s position, which he has served in since December. Sadiq explained that the management change was due to cultural fit issues.
He explained, “We knew very early on that the relationship (between Sidwell and us) did not actually fit into The Innovation Group on the long-term basis, and for everyone’s sake we thought it was best to terminate it.”
The market had a positive reaction to the company’s performance, and the price of Innovation Group shares increased by 2.3 percent to 33.5 pence, giving the company a value of approximately £215.2 million (US$277.86 million).
The company’s growth can be attributed to the increasing popularity of insurers who outsource their claims processing and customer service functions to providers like The Innovation Group to enable them to concentrate on their core underwriting functions while enhancing efficiency and the customer experience.
