BGL’s has reported flat profits of £88m for the year ending in June.
Chief executive Matthew Donaldson said there was heavy investment flowing into the business and he was confident the broking giant will hit its target to double profits within five years.
Donaldson, who took the helm at BGL in July, said the group had heavily invested in improving its aggregator comparethemarket.com as well as international expansion and the acquisition of Minster Law. He said: “Our first objective required us to invest heavily in the first couple of years in those new businesses, particularly comparethemarket.
“We don’t really chase short-term profit results. We have made our investments and are now concentrating on growth. Turnover grew 7% from £423m to £448m, while comparethemarket.com grew its market share by 8% to around 40%. In this same period BGL customer numbers grew to 6.6m from 4.6m.
Donaldson predicted BGL’s profits would grow in 2015 and 2017: “We should see growth in year three and five. Our aspirations are to double our profits by the end of 2017.”
Last year BGL set out a five-year strategy: to double its profits over a five-year period, increase its community Corporate Social Responsibility (CSR) monetary targets, improve its number of customer recommendation scores via the net promoters score system and to develop its staff programme. BGL has a long-term borrowing facility with the Lloyds Banking Group that has remained at around £174m and funds the group’s working capital. Donaldson said: “We are not highly geared at all as an organisation. We have a low borrowings ratio to revenue.
“We intend to stay privately owned, which is a big source of advantage for us. We are well funded and can invest in the long term.”
SME and Comparethemarket
The most significant growth has come from its price comparison site through the development of mobile optimisation and the SME commercial lines. “Over 30% of our traffic comes via Comparethemarket and mobile devices,” Donaldson added. “Fundamentally if you use any desktop, laptop, smartphone, you will find our customer journey is so much easier than our competitors, through a simplified question set and refined customer journey that is easy to use and populate.”
BGL offers SME products for shops and offices via Comparethemarket, but there are no immediate plans to introduce more complex commercial risks to the business.
Donaldson said: “It is not our chosen market – not because it is complex, should we choose that market. “The market we have chosen is where our intellectual property sits. We have a high degree of expertise and it is where we choose to compete effectively.”
The Competition Commission is shortly expected to publish its report into the private insurance market, which will look at a wide range of areas including insurers, aggregators and add-on products, while the FCA recently announced the launch of its thematic review into price comparison sites.
Donaldson would not be drawn into what the findings could hold, but said he remained confident that BGL’s “focus on the customer” keeps it broadly in alignment with regulators. He added: “We welcome any review and are happy to engage with any regulator on it. “Fundamentally, price comparison sites and Comparethemarket are there to act within the best interest of the customer and we don’t see any conflict.”
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