CBG yet to see cost reduction benefits
INSURANCE broker CBG Group, which today announced an 81% fall in half year profits, has said it will have to wait until the second half of the year for the company’s cost reduction programme to show real benefits.
The Manchester-based broker said it had seen its earnings declining in many lines of business, with pre-tax profits down 81% to £171,000 for the six months to the end of June, from £930,000 a year earlier. Turnover was down 14% to £4.86m compared with £5.66m a year earlier.
In January CBG consolidated three Manchester offices and moved its headquarters to Southmoor House in Wythenshawe. The company said this had allowed it to introduce a cost reduction programme and an income management strategy.
Chairman Laurie Turnbull said: “To conclude this project, as we rapidly entered a recession, clearly demonstrates that we will continue to drive the business forward, and with a willingness to take long term decisions that deliver value for the years ahead. We have only seen some of the beneficial effects of this programme on these interim results, and the full impact will only be clearly visible in the second half of 2009 and forward into 2010.”
In May CBG entered into a strategic partnership with Close Premium Finance to outsource the funding of Exius Limited, its premium finance business.The company said that this “white label solution” will reduce its working capital requirements in the second half of this year.
Mr Turnbull said: “The recent period has seen earnings decline in many lines of business and, as a result, we have put in place a significant cost reduction programme which has been focused on the reorganisation of core functions.
“The current stage of the market cycle and broker consolidation is without doubt driving systemic change in the industry. Major consolidators have capitalised on soft market conditions to fully leverage their scale. CBG remains committed to growth and we are confident that focusing management time on business processes will provide a secure platform to take advantage when market conditions change.”
