PPT template Towergate Group blue presentation sized€¦ · Introduction 2. Business Segment Highlights ... insurance and reinsurance group alongside Arch Insurance

Private and Confidential © 2016 Towergate Insurance Limited

Towergate Insurance 2016 Investor Day

& Full Year 2015 Results

23rd March 2016

Private and Confidential © 2016 Towergate Insurance Limited 2

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Disclaimer

This document and the presentation to which it relates (“Presentation”) do not constitute or form part of, and should not be construed as, an offer to sell or an issue for

sale or subscription of, or solicitation of any offer or invitation to subscribe for, underwrite or otherwise acquire or dispose of, any securities of Towergate Group

(“Towergate”) in the United States or any state or any jurisdiction in which such offer, sale or solicitation would be unlawful nor should they or any part of them form the

basis of, or be relied on in connection with, any contract or commitment whatsoever which may at any time be entered into by the recipient or any other person, nor do

they constitute an invitation or inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000 (“FSMA”). This document

and the Presentation do not constitute an invitation to effect any transaction with Towergate or to make use of any services provided by Towergate.

By accepting this document and the Presentation you agree and acknowledge that this document and its contents may contain proprietary information belonging to

Towergate.

This document and the Presentation may contain forward looking statements in relation to certain of Towergate’s plans and current goals and expectations, in particular

but not limited to its future financial condition, performance and results. These forward looking statements can be identified by the use of forward looking terminology,

including the words “aims”, “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will”, “plans”, “predicts”, “assumes”, “shall”, “continue” or “should” or, in

each case, their negative or other variations or comparable terminology or by discussions of strategies, plans, objectives, targets, goals, future events or intentions. By

their very nature, all forward looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Towergate’s

control, including but not limited to insurance pricing, interest and exchange rates, inflation, competition and market structure, acquisitions and disposals, and regulation,

tax and other legislative changes in those jurisdictions in which Towergate, its subsidiaries and affiliates operate. As a result, Towergate’s actual future financial

condition, performance and results may differ materially from the plans, goals and expectations set out in any forward looking statement made by Towergate. Towergate

has no obligation to update any forward looking statement contained in this document or the Presentation or any other document or any other forward looking statement

Towergate may make. All subsequent written or oral forward looking statements attributable to Towergate or to persons acting on its behalf should be interpreted as

being qualified by the cautionary statements included herein. As a result, undue reliance on these forward looking statements should not be placed.

Past performance cannot be relied upon as a guide to future performance.

No representation or warranty, express or implied, is or will be made in relation to the accuracy, fairness or completeness of the information or opinions made in this

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directly or indirectly, from any use of this document or its contents or attendance at the Presentation.

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Janice Deakin Insurance Broking Chief Executive Officer

Presenters

David Ross Chief Executive Officer

Mark Mugge Chief Financial Officer

Adrian Brown Chief Operating Officer &

Underwriting Chief Executive Officer

Steve Wood Paymentshield Chief Executive Officer


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Agenda

1. Introduction

2. Business Segment Highlights

Paymentshield

Underwriting

Insurance Broking

3. Central Segment & Transformation

4. Financial Results

5. Q & A

6. Conclusions

Appendix


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Key Highlights

Last remaining independent UK SME broker of scale focused on specialised product niches with high barriers to entry

Highly profitable, resilient business model affected by legacy issues arising from lack of integration in support functions and poorly executed SBU strategy

Very achievable transformation plan well underway and focused on middle and back office cost savings

Unrelenting focus on driving a people-oriented culture to support best-in-class engagement and retention

Industry leading management team with deep experience in business transformation joined over the last three quarters

Complete alignment between management and core stakeholders


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Industry Leading Management Team

Proven management team with relevant transformation and integration experience

Leading Heath Lambert, Oval, Giles and Noraxis acquisition and integration efforts. Transformed a sub scale London Specialty International Division into a leading UK Broker/MGA


25

Centralisation of global accounting and IT at Arthur J. Gallagher including setting up and running India off-shore operations


20

Adrian Brown Chief Operating Officer,

Underwriting CEO

26

Nearly doubled GWP at Aviva broker’s private clients business, brought it from loss making to profitable by implementing new trading platform and consolidating operations from small teams across 40 locations to 500 people in two major sites

Janice Deakin Insurance Broking

Chief Executive Officer

15

Name & Title Transformation Experience Years in Industry

Legal entity rationalisation, elimination and associated asset transfers – including client assets. 12 month project at FSA transforming regulatory approach to insurance supervision

Reshaped specialist general insurance business at Ecclesiastical Insurance. Separated FirstAssist from parent into own company; grew healthcare book at RSA by 40% in 3 years

Steve Wood Paymentshield

Chief Executive Officer

34

Integration of Minster Law into BGL’s general insurance group. Large scale centralisation at Barclaycard Europe; integration of Abbey National into Santander

Catherine Lynch HR Director

12

Led the Lloyds-HBOS integration for Lloyds Corporate Bank; led the restructuring of a Retail Bank Lending book to address consumer credit act

Gordon Walters Chief Information Officer

25

Advised on over a hundred corporate transactions (incl. P2P, M&A, IPOs). Lead counsel on >20 M&A transactions in insurance broking including AJG’s acquisitions of Health Lambert, Giles and Oval

Geoff Gouriet General Counsel

18

Sarah Dalgarno Strategic Risk Director

28

In RSA, led £150m cost reduction program with 1,200 FTE reduction and c.£85m IT infrastructure and application outsourcing. Established and led the successful direct business MORE TH>N


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Supportive Shareholder Base

Sponsorship of experienced capital providers with significant experience in insurance sector

(60% ownership)

Founded in 2007

>90 investment professionals globally

$27bn asset under management

Joint owner of Watford Re, global insurance and reinsurance group alongside Arch Insurance

Majority owner of Price Forbes, highly respected, long standing London Market broker

(12% ownership)

Founded in 1976



Strong prior knowledge of the insurance sector having previously invested in Willis Group and Alliant Insurance Services

(6% ownership)

Founded in 1998



Significant experience in the insurance sector including previous investments in many US mid-market insurance brokers


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Business Highlights

Highly Diversified Business Model and

Deep Product Expertise

Fully Aligned Stakeholder Group

Business Transformation Well Underway

Industry Leading, Proven Management

Team

Attractive Broking Industry Fundamentals

Market Leader in UK SME Insurance

Distribution

Unparalleled Local Footprint

Established End-to-End Insurance Distribution

Platform


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Established Insurance Distribution Platform

Advisory Retail

Market Position Market leading in commercial lines

Market leading in personal specialty lines

Full service MGA, market leading in agriculture and non-standard household

Market leading share of mortgage broking

channel

Market leading provider of outsourced services

Product Focus Speciality, commercial

and personal lines Micro SME and specialist

personal lines

Agriculture, commercial and personal insurance

products

Household insurance

Support and services for independent brokers

Distribution Model

Affiliated and independent insurance

brokers Mortgage brokers

Independent insurance brokers

Direct to client: Face to face (84%) Telephone (15%)

Online (1%)

Direct to client: Online (59%)

Telephone (41%)

37%

24%

14%

4%

21%

% of 2015A Towergate Revenue

High quality, diversified distribution combined with insurer-like underwriting and claims capability

~2.5m customers serviced by our broking and MGA divisions

~£1.1bn GWP distributed through advised, in person sales (~£0.7bn GWP) & online / telephony channels (~£0.4bn GWP)

~£0.6bn underwritten, fully serviced GWP of which >60% from 3rd parties

~£1.8bn GWP distributed by members of Broker Network

(1) Excludes Broker Network

(1)


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End-to-End Insurance Distribution Capabilities

Towergate has a strong presence in all the key segments of the insurance value chain

Insurance Buyer / Policy Holder

Wholesale Broker Retail &

Direct Broker

MGA / MGU

Insurer & Risk Bearing Platforms (Underwriters, Lloyds Syndicates, Insurance Captive)

Reinsurance Broker

Reinsurance Providers (Reinsurance Underwriters, Alternative Capacity Providers)

Brokers play a vital role in the insurance value chain by providing choice and advice to customers

Towergate operates across all the “channels” between customers and insurers

Towergate Presence


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£0

£300

£600

£900

Market Leader in UK SME Insurance Distribution

(1) Insurance Times – Top 50 Brokers 2015. (2) Approximated based Towergate data, external analysis. (3) Towergate analysis.

UK’s largest SME focused insurance broker and top 10 broker overall (1)

(£ in millions)

Towergate is the UK’s largest independent insurance broking platform

Insurance Broking

UK’s largest SME focused broker distributing 3rd party and own branded insurance products

Underwriting

UK’s largest MGA with approximately 15% market share (2)

Paymentshield

UK’s largest provider of property related insurance products via mortgage brokers (3)

Broker Network

UK’s largest provider of support, service and member benefits for independent brokers (3)

Gro

ss W

ritt

en P

rem

ium

s

UK Insurance Broker Rankings by Revenue (1)

UK’s Largest MGA with 15% Market Share (2)

International Broker

Domestic Broker

£0

£200

£400

£600

£800

TWG 2 3 4 5 6 7 8 9 10


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NY008GXJ_774151

Advisory: 81 local offices across the country serving local clients

Underwriting: 14 local offices serving local brokers

Retail: 7 national contact centres each with a product focus online and on the phone

Paymentshield: delivers online and on the phone from one contact centre

Broker Network: supports its independent Brokers from one support centre

National Platform with Unparalleled Local Footprint

Over 4,500(1) staff, based in approximately 100 offices in every corner of the UK

Division

Group

Advisory

Retail

Underwriting

Broker Network

Paymentshield

Ireland

United

Kingdom

(1) Excludes 100 FTEs in India


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1

2

3 4

5 6

7

8 9

Other 19%

16%

12% 8%

7%

4% 4%

2%

1%

27%

Highly diversified business across producer, business line, carrier and region

Highly Diversified Business Model…

Revenue by Producer Gross Written Premiums by Business Line (1)

Gross Written Premiums by 3rd Party Carrier (1) Gross Written Premiums by Region (1,2)

(1) Excludes Broker Network (2) Excludes Paymentshield

Advisory Underwriting

Top 10 Brokers

Top 11-50 Brokers

Other Brokers

11%

10%

79%

Top 10 Top 11-50

Other

4% 12%

84%

Comm'l Property &

Liability

Comm'l Transport

Motor

Comm'l Package

Property Owners

Other Comm'l

Agriculture

Aviation

PI

Motor Trade

Private Home

Private Motor

Other Personal

22%

17%

2% 2%

14%

2% 1%

2%

1%

15%

16%

5%

Commercial Total 64%

Personal Total 36%

South

North

Midlands

London

East

Scotland & Northern Ireland

26%

20%

20%

16%

13%

5%


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Longstanding leadership in high margin specialisms

…and Deep Product Expertise

Selected Examples of Product Specialisms Longevity

SME

Volume & contracted hauliers Est. 2002

Professional risks Est. 1988

Care homes Est. 1982

Therapists and allied professionals Est. 1907

Driving instructors Est. 1964

Photography & video Est. 1991

Spec

ialis

t Pe

rso

nal

Lin

es Military kit Est. 1947

Classic Car Est. 1983

Caravan Est. 1972

Marine Est. 1972

Higher barriers to entry: expertise, specialist knowledge, partnerships

Higher retention: strong customer relationships, stickiness of specialist products

Higher margin: lower competition, specialist products not available from major insurance companies

Specialism Insurance Broking (product & distribution) drives c.60% of Towergate’s GWP


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Attractive Broking Industry Fundamentals

(1) Marketline: Insurance Brokers in the United Kingdom, December 2015.

(£ billions)

P&C products are necessary purchases for companies and individuals alike

Strong recurring revenue base with high retention rates for more specialised products

Highly cash generative due to limited working capital absorption and capital expenditure requirements

Significant leverage over carriers thanks to close proximity to end customers

Compelling consolidation opportunity for larger broking and MGA platforms

Resilient growth profile with UK commercial brokerage revenue expected to continue growing at 2-3% per annum

UK Commercial Brokerage Revenue (1)

Favourable Risk Characteristics Supportive Brokerage Industry Dynamics

£6.4

£7.5 £7.8 £7.9

£8.2 £8.3 £8.5

£5.0

£6.0

£7.0

£8.0

£9.0

£10.0

2012A 2013A 2014A 2015F 2016E 2017E 2018E


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5%

10%

15%

20%

25%

30%

Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16

Extensive site visits by the entire Group Executive, with >80% of staff met over the last 6 months

Open, engaging leadership culture endorsed by staff survey results

Staff turnover has been declining significantly since arrival of the new management team

Turnover largely concentrated in support functions

Much more stable frontline, particularly in Advisory, improving further in H2 2015 when it decreased from circa 14% in H1 to <7% in H2 2015

Unrelenting Focus on Staff Engagement and Retention

New leadership focus on engaging and retaining staff has resulted in circa 50% improvement in turnover

Annualised Voluntary Staff Turnover

Change in Leadership


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Focus on Core: Sale of Majority Stake in Broker Network

Disposal of non strategic and legacy assets allows management to focus time and resources on core broking and MGA operations

Sale of majority stake in Broker Network Limited and Countrywide Limited to Highbridge for consideration of up to £46 million (including earn-out)

No Towergate involvement in day to day management of the business

Minority stake (19.9%) and call option construct provides for potential future upside

Key commercial terms agreed in principle, closing and funding expected in Q2 2016 pending regulatory and other customary approvals

Proceeds will be deployed to accelerate highly accretive strategic investments as part of our transformation plan


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Transformation strategy in place designed to drive efficiencies and support income growth

Business Transformation Underway

Q4 2015

31% total staff turnover

> 175 front end systems

> 1,400 servers

> 200 legal entities

> 550 bank accounts

< 20% total staff turnover

< 10 front end systems

Cloud-based infrastructure

< 20 legal entities

< 80 bank accounts

Phase 1: Design and Start the Transformation

Focus on critical back end fixes

Invest in middle and back office efficiencies

Stabilise income, focus on “quick wins” to boost topline growth

Phase 2: Accelerate the Transformation and Start the Build

Focus on front end growth

Accelerate income through new specialisms and distribution channels

Pursue additional growth through key producer hires and book purchases

Continuous infrastructure improvement becomes “BAU”

Phase 3: Complete the Transformation and Continue the Build

Maximise operating leverage

Finalise build-out of optimised infrastructure

Growth focus embedded at all levels

Q4

Q4

Q1

Q2

Q3

Q1

Q2

Q3

Q1

Q2

Q3

Q4 2016 2017 2018


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Clear Path to Continued Profitable Growth

Highly achievable plan to support profitable organic growth and significant improvement in cash conversion

(£ in millions)

£353

£79

2015

£360

£90

£390

£110

Medium Term Total Income Adjusted EBITDA*

Transformation Plan Underway

Disruption from SBU transition

Impact from financial restructuring

Historical lack of organic growth

No middle & back office integration pressuring EBITDA margin

2-4% organic income growth

25-28% EBITDA margin

> 85% cash conversion

Fully integrated middle and back office, providing scalable foundation

Excluding M&A and other strategic growth opportunities

(1)

(1) Adjusted EBITDA * is defined on page 70 and a reconciliation from Adjusted EBITDA* to EBITDA is on page 67, with a reconciliation to TIG Topco on page 69


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Agenda

1. Introduction


Paymentshield

Underwriting

Insurance Broking



5. Q & A

6. Conclusions

Appendix


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1

2

3

4

5 6

Others

53%

21%

5%

5% 3%

3% 10%

Household insurance (Panel and Classic):

Homeowner’s insurance (buildings and/or contents)

Landlord’s insurance (buildings and/or contents)

Creditor:

Mortgage payment protection insurance (MPPI)

Short term income protection (STIP)

Paymentshield Segment – Overview

Paymentshield is UK’s largest provider of property-related insurance products via mortgage brokers

2015 Gross Written Premiums: £146m

Highlights Business Mix - Carriers

Products

Overview

Dominant position in UK mortgage broker market

New business growth driven by strong Panel proposition (9 insurers, competitive prices, ease of use for brokers through online quote & buy)

Distribution reach, end-customer risk profile and retention rates very attractive to insurers

Retention focus maximises back-book margin

Distribution 3,000 active mortgage broker

agencies

Employees 280 employees; single office

Clients 437k Household & Creditor policies


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£0

£50

£100

£150

£200

£250

£300

2014F 2015F 2016F 2017F 2018F

60% 63%

65%

2014 2015 2016F

Paymentshield Segment – Market Position

The value of the mortgage market grew 20% in 2014 and 7% in 2015

Lending is forecast to grow at 4% per year from 2016 to 2018

Growth linked to loan/property value, rather than number of transactions

Mortgage broker channel continues to increase its dominant position

Broker growth appears resilient to online & direct channels

Household insurance penetration estimated at 25%

Paymentshield has significant share of the mortgage brokered home insurance market

Gross Mortgage Lending (£bn) Brokers Increasing Share of Total Mortgage Market (1)

1. Bank of England, Datamonitor PSL, Halifax.


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Paymentshield Segment – Core Policy Books

Covers mortgage payments if the policyholder is unable to work due to accident, sickness or unemployment

Market appetite suppressed by PPI “bad reputation“ mis-selling in the past – low volumes of new business

High retention and good loss ratios

Standard Buildings & Contents insurance

Effectively closed to new business since Q2 2014

High retention and good loss ratios

MPPI

B&C Panel

“B&C” Classic

Historical Revenue (£ in millions)

Note: Excludes profit share accrual.

Bac

k B

oo

k

Other Books

Buildings & Contents insurance

Low profile launch in 2013; insurers added to panel in 2014 and 2015

Increased focus in 2015 drove significant new business growth

Small/specialist products and acquired books

Includes other miscellaneous products £1 £2 £3

£34 £31 £25

£23 £20

£16

£7

£6

£5

£65 £59

£49

£0

£10

£20

£30

£40

£50

£60

£70

£80

2013A 2014A 2015A

B&C Panel B&C Classic MPPI Other Books

Policy Count (’000)

27 52 92

268 221 181

119 103 91

61 87

74

475 463 437

0

100

200

300

400

500

2013A 2014A 2015A

B&C Panel B&C Classic MPPI Other Books


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£44

£0

£25

£50

£75

2014 AdjustedEBITDA*

One-off items Back Book Decline Panel Uplift Other 2015 AdjustedEBITDA*

Paymentshield Segment – 2014-2015 EBITDA Bridge

(£ in millions)

1 2 3 4

74.1% Margin

2014 included £6.2m of one of accounting estimate changes relating to fee income recognition

Classic book decline of 18% reduced income by £5m. MPPI book decline of 12% and a retail price reduction in Q4 2015 reduced income by £3m, partly offset by a £2m profit share

Panel book growth of 75% and deployment of price optimisation increased income by £1.2m

Investment in specialist resource capacity and capability, including the leadership team, product development and pricing. Partly offset by operational efficiencies and back office productivity gains

Strong growth of B&C Panel offsetting controlled run-off of legacy books

66.4% Margin

1

2

3

4

Adjusted EBITDA * is defined on page 70 and a reconciliation from Adjusted EBITDA* to EBITDA is on page 67, with a reconciliation to TIG Topco on page 69


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Adjusted EBITDA* Margin

Paymentshield Segment – Looking Forward

47% NPS

score

>50% NPS

score

66% Margin

>60% Margin

End 2015 Target

3 Admin

systems

1 System

Secure single-tie deals through 2020/22

Exploit adjacent estate agents and letting agents markets

Launch refreshed Creditor proposition

Sustainable margin from Panel

Broaden capabilities/ expand distribution

Exploit new products/ new markets

Design and Start the

Transformation

Accelerate the Transformation

and Start the Build

Complete the Transformation and Continue

the Build

1

2

3

Total

book

growth

-6%

Total

book

growth

+ 3%

Drive growth in core markets

Refresh Panel proposition

Consolidate administration platforms

Panel

negative

margin

Panel

+20%

margin

Single-tie

deals to

end of

2020/22

Single-tie

deals to

end of

2017



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Agenda

1. Introduction


Paymentshield

Underwriting

Insurance Broking



5. Q & A

6. Conclusions

Appendix


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Underwriting Segment – Overview

Overview

Largest full service MGA in the UK market with a ~15% market share

Three areas of focus: Agriculture, Commercial Lines, Personal Lines

Eight main carriers represent approximately 90% of premiums

Distribution 60% of premiums sourced from

external brokers

Employees 763 employees in 14 offices

Clients >700k policies

Largest full service MGA in the UK and top 25 ‘insurer’ by Gross Written Premiums

Commercial Personal

Agriculture

54% 33%

13%

Highlights Business Mix

Products

Commercial Lines

Commercial Combined

Property Owners

Motor Trade and Fleet

Sports and Leisure

Agriculture

Farm

Motor

Personal Lines

Home and Let

Travel

Private Clients: High Net Worth (HNW) Motor and Household

2015 Gross Written Premiums: £562m


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Underwriting Segment – Insurer Base

Our scale means we are a significant distributor for our partners being in the top 5 for all 8 carriers

Diversified and high quality capacity base with minimal contract renewal exposure

Gross Written Premiums Breakdown by Insurer

1

2

3

4

5

6

7

8

Other

28%

16%

15%

14%

8%

3%

3% 2%

11%

£240m contracts renewed in the last 18 months with 60% increase in commission rates, 30% flat and the remaining 10% reduced

Big enough to matter – significant partner

Long term partners providing the ability to manage the inevitable ups and downs

Providing diversification of risk for our partners

Full insurer infrastructure means lower risk profile than vast majority of MGAs

Only 5% to renew in 2016

47% on contracts in excess of 4 years

37% due within the next 1-3 years

11% on annual contracts – majority of which are subject to long term agreements

Contract Profile

Insurance Partners Highlights


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Underwriting Segment EBITDA Bridge

(£ in millions)

Impact of closing certain businesses which did not meet required returns for the Group

Withdrawal of business from a number of brokers during the 2014-15 financial restructuring

Combination of other one off headwinds stemming from the financial restructuring

Lower costs mainly reflecting annualised savings from middle & back office cost saving initiatives

Strong EBITDA margin of 23%, income headwinds expected to unwind by mid-2016

1

2

3

4

£21

£18 (£3)

(£2) (£2)

(£1) £5

£0

£10

£20

£30

2014 Adjusted EBITDA* Closed Business Lines Withdrawal of Support Other one off items Other Annualised Savings* 2015 Adjusted EBITDA*

1 2 3 4

25.8% Margin

23.5% Margin



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• Enhance existing products and bring new products to market

• Harness our scale and look at new capacity and reinsurance (“RI”) options to enhance margins

HNW Offering

Fragmented

Integrated

HNW Offering

Traditional capacity & RI

Traditional + New

capacity & RI

End 2015 Target

69% Commercial Retention

80% Commercial Retention

29 Systems

3 Core

Platforms

• Invest in marketing and sales capability whilst engaging better with our whole employee base

• Invest in systems and pricing capabilities to protect Agriculture and Household businesses

• Focus on improving retention and New Business

• Integration of Fusion and Arista

• Managing our cost base

• Demonstrate Underwriting and claims excellence

• Use the power of pricing sophistication to grow


Transformation

1


and Start the Build

2


the Build

3

23.5% 22-27%

Underwriting Segment – Looking Forward

-8% Organic Income Decline

+2-4% Organic Income Growth



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Agenda

1. Introduction


Paymentshield

Underwriting

Insurance Broking



5. Conclusions

6. Q & A

Appendix


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Market leading broking platform focused on SME and specialty personal insurance across multiple channels

Largest UK independent insurance broker, strategically focused on high quality, sticky SME and specialty personal insurance products

The Insurance Broking Division is composed of two primary businesses:

Advisory (£650m GWP) distributes primarily SME commercial insurance through a network of >80 local offices

Retail (£232m GWP) distributes both SME and personal insurance online and over the phone

Advisory Key Themes Retail Key Themes

Advisory

Retail

74%

26%

2015A Gross Written Premiums: £882m

Insurance Broking – Segment Overview

Heavily affected by Change Programme and transition of small business policies to SBU

Revenues now stabilising thanks to resilient population of income producers

Invest in income producers and reduce non-producing staff

Previous consolidation from 18 to 7. Current focus on growing most profitable and resilient product niches

Transformation of SBU call centre already underway under new experienced leadership, with positive development showing in KPIs in early 2016

Further development of digital channel and cross-selling of new products key to future growth


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General Commercial

Commercial Motor

Commercial Property

Private Home

Private Car General Personal Marine

44%

25%

13%

6%

5% 4% 2% 1% Professional Indemnity

Advisory Division – Overview

Market leading SME insurance broker focused on achieving sustainable organic growth


Overview

Strong, diverse specialist Personal and Commercial lines

Producers close to clients in both SME and specialist personal lines

Business based on local service of advisory clients (two-thirds of clients live/work within 50 miles of their broking branch)

Distribution 84% of policies originate through

face-to-face, 15% over the phone and 1% from the internet

Employees 1,750 employees in 81 offices



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Advisory Division – Market Position

Gross Written Premiums by Carrier

1 2

3

4

5

6

7

8 9

10 All Other

5% 5%

4% 4%

3% 3% 3% 3%

3% 3%

64%

Revenue by Office

Broad geographic spread – with a mix of large and small business units across 6 regions

High quality, diversified carrier base and well distributed office footprint

1

2

3 4 5

6 7

8

9

Other 25%

11%

9%

8% 5% 3%

3% 1%

1%

34%

Ireland

United

Kingdom


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Net Commission rates are mostly affected by:

Up-front trading deals signed between 2013 and 2014

Operational complexity linked to the high number of Policy Administration Systems

We are:

Moving away from up-front deals to ensure more sustainable ongoing value

Working on leveraging market relationships

Historical trading deals and operational issues affecting commission rates despite GWP scale

Strategically Moving Away from Trading Deals…

…To Support Normalisation of Net Commission Rates

Advisory Margin Improvement Opportunities

2013 2014 2015

£7.6 £5.1 £2.5

1. Excludes wholesale specialty division.

(£ in millions)

Net

GWP Commission Rate

Retail Direct £186.2 26%

Retail SME £90.1 21%

Broker A (example) £15.2 19%

Advisory(1) £608.2 17%


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• Grow sales footprint and optimise back office

• Drive the transformation of lower performing locations

Target • Retention in place for key producer’s and invest in

recruiting high quality revenue generating staff

• Build client focused culture with sales focused leadership and mid market sales proposition

• Minimise commission erosion by reducing process complexity

• Exercise our leverage with our insurer partners

• Simplify and improve infrastructure

• Drive efficiencies across branch network through common policy admin systems

Advisory Division – Looking Forward

120 systems

65% Client

facing

Ratio

17% Net

Commission

83% Book

Retention

14% New

Business

5 systems

80% Client

facing

Ratio

19% Net

Commission

86% Book

Retention

20% New

Business

End 2015

9.1% 20-25%


Transformation

1


and Start the Build

2


the Build

3



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Professionals

Classic Car

Medical

Caravan

Non Standard Home

Marine

Military Education Photography

31%

14%

13%

13%

9%

9%

4% 3% 2% 2%

Care Homes

Retail Division – Overview


Overview

Direct-to-consumer broking business providing specialist and bespoke products for individuals and SMEs

Connects with customers through affinity partners, including Lloyds Bank and comparethemarket.com

Higher margin business due to specialty products

Distribution

41% of the business is originated over the phone

Significant online presence, with 59% originated online

Employees 1,000 employees in 7 offices


Highly diversified base of specialty SME and personal products with significant online presence


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SME

Specialist Personal Lines

Caring Professions

SBU

Classic Car

Property

SBU

22%

19%

19%

16%

12%

7%

5%

Retail Division – Market Position

Gross Written Premiums by Carrier Gross Written Premiums by Location

Highly specialised centers of excellence leveraging a diversified carrier base

1

2

3 4

5

6

7

8

Other

19%

17%

12% 11%

10%

5%

4%

2%


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Direct SBU Total Retail

2014 2015 Change 2014 2015 Change 2014 2015 Change

Income £65 £67 £2 £26 £18 (£8) £91 £84 (£7)

Adjusted Contribution*

£23 £23 -- £15 £1 (£14) £38 £24 (£14)

Adjusted EBITDA* £16 £19 £3 £13 (£1) (£14) £29 £17 (£12)

Top Priority: SBU Path to Profitability

SBU lost 40% (£31m) of gross written premiums between 2014 and 2015 and its adjusted contribution deteriorated 90% to £1m (excluding exceptional costs)

Losses caused by mis-managed transition of small business policies from local offices of Manchester SBU call center

Most policies transferred mid-year causing a surge in cancellations, compounded by issues with quality of data

Lack of adequately trained staff in Manchester being addressed only from mid-2015 onwards

Manchester management replaced with highly experienced leadership from Direct business

Early results are encouraging and show drastic improvement in underlying KPIs (e.g., call abandonment rate dropped from 17% to 4%, number of complaints received in any one month between November 2015 and January 2016 more than halved)

SBU transformation well underway with limited exposure to additional downside

(£ in millions)

Retail Income Statement Breakdown



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• Drive digital growth (tactical enhancements and investment in new platform)

• Simplify infrastructure & policy admin system to drive service and efficiency

• Establish new distribution partnerships

• Build new products and specialisms

Target

• Enhance capability of customer facing staff

• Optimise pricing / Top 10 products – improve sales process and conversion

• Invest in specialised product niches

• SBU retention improvement

Retail Division – Looking Forward

End 2015

16% Online

Conversion

21 Systems

38% Offline

Conversion

20% Online

Conversion

2 Systems

45% Offline

Conversion


Transformation

1


and Start the Build

2


the Build

3


19.5% 25-30%



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£(14)

£(2)

£18

£26

0

5

10

15

20

25

30

35

2014 AdjustedEBITDA

Impact of SBUtransformation

Underlyingperformance

Annualisedsavings*


Insurance Broking Segment - EBITDA Bridge

The business suffered from a number of headwinds in H1 2015 but is showing increasing signs of recovery

(£ in millions)

11.8% Margin

13.2% Margin

SBU change programme had the largest single impact on the business in terms of revenue loss and cost increase

Difficulties experienced by SBU are being offset by cost saving initiatives focused on support functions

Performance to date shows improvements in customer retention and new business, benefiting from contained direct expenses

Overall retention rates are slightly up vs. 2014 and improved by more than 2ppt in H2 2015 vs. prior year

Average net commission rate slightly increasing vs. 2014

New Business in Retail was up vs 2014 by more than 5%

Direct expenses decreased by (1.3%) vs. 2014

Further investment in new hires to support growth in specialist and niche offerings, e.g. HNW

Revenue uplift from new hires in H2 2015 in Advisory expected from mid-2016 onwards



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Agenda

1. Introduction


Paymentshield

Underwriting

Insurance Broking



5. Conclusions

6. Q & A

Appendix


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Central Segment – Division Overview

Outsized central cost base is a key area of focus in Phase 1 of Business Transformation

(£ in millions)

Highlights Gross Central Segment by Division

Key Functional Support Costs

2015A Gross Central Costs: £69m

Overview Support functions to business divisions

Expensive with sub-par service delivery

Employees >500 UK based staff plus c.100 in India

Hubs in Maidstone, Leeds and London

Transformation Initiatives

Finance cost reduction enabled by standardising & automating processes

IT infrastructure upgrade commenced with top quality partners (Accenture, BT, Microsoft)

Property savings through contract renegotiation and footprint reduction

£24 £10

£18

£53

£15

£17 £3

£34

£39

£27 £21

£87

IT Property Finance Addressable Cost Base

Central P&L Divisional P&L

Key functional support cost

IT 35%

Property 15%

Finance 27%

HR 10%

Risk & Compliance

4%

Other 9%


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Functional Run Rate Cost Savings

(£ in millions)

£39

£27

£21

£87

2015 excluding AnnualisedSavings*

Finance

Property

IT

£28

£23

£13

£64

2015 Including AnnualisedSavings*

IT

Property

Finance

% of Revenue

% of Total Cost Base

25% 18%

30% 22%

Change

(£23)

(£8)

(£4)

(£11)

Implementation of cost initiatives starting from largest support functions (30% of total costs)

Each area addressed through a combination of stand alone initiatives

IT infrastructure upgrade using top quality partners (Accenture, BT, Microsoft)

Other functional areas (HR, Legal, Compliance, etc.) to be addressed in the next stage of the transformation plan

(26%)

(38%)

(15%)

(28%)



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Highlights of Transformation Plan

Early focus on middle and back office efficiencies, implementation geared towards minimising disruption of customers and frontline staff

All key stakeholders involved in project design, implementation and monitoring

Each initiative has an Executive sponsor who is responsible for delivery and reports to Executive Committee and Board on a regular basis

IT and Finance cost reductions driven by experienced leaders who have done difficult transformations in the past

Highly experienced Change Director hired from Aviva to coordinate delivery and monitoring of core investment programs, formally reporting to the Board on progress on a monthly basis

Each initiative is articulated across a clear and detailed set of milestones, allowing for consistent monitoring of timing and cost of execution, interim results

Careful implementation of transformation initiatives leveraging considerable management experience


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Summary of Key Cost Initiatives

(£ in millions)

Annualised savings from cost reduction initiatives started in 2015 equal to £23m

Highly attractive aggregate payback time of ~1.2 years

Initiatives focused on core support functions (IT, Finance and Property)

Significant potential for further savings from initiatives to be implemented over next 12-24 months

Division Initiative Adjusted

EBITDA* Benefit Medium Term

Expected Benefit Cost To Deliver

Information Technology

• IT Infrastructure transformation (Accenture, BT, Microsoft)

£4 £14

• Rationalisation of licenses and systems £4 £5

• Staff mix change & capacity planning £2 --

Finance & Treasury

• Simplify, automate and standardise processes • Rationalisation and redeployment of resources

£8 £5

• Cash management optimisation £1 --

Property • Contract rationalisation & footprint changes £4 £3

Total Support Functions £23 £27

Insurance Broking

• Consolidation of policy administration system and claims administration

£2 - £4 £9

• Divisional and local cost savings £4 - £7 --

• Simplification of management structure and footprint optimisation

£6 - £8 --

Underwriting • Tactical cost initiatives £1 - £2 --

Total Divisions £13 - £21 £9



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Agenda

1. Introduction


Paymentshield

Underwriting

Insurance Broking



5. Q & A

6. Conclusions

Appendix


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2015 2014 2015 2014 2015 2014

Advisory 131.5 130.8 12.0 (3.0) 9.1% (2.3%)

Retail 84.3 90.9 16.5 29.1 19.5% 31.9%

Insurance Broking 215.8 221.8 28.5 26.1 13.2% 11.8%

Underwriting 74.8 81.7 17.6 21.1 23.5% 25.8%

Paymentshield 48.9 58.9 32.4 43.7 66.4% 74.1%

Broker Network 13.1 13.7 3.5 4.7 27.0% 34.0%

Central 0.1 0.6 (3.3) (2.3) n/m n/m

Total £352.7 £376.7 £78.7 £93.2 22.3% 24.7%

Total Income Adjusted EBITDA* Adjusted EBITDA* Margin

Group Financial Results

Resilient underlying income significantly affected by SBU transition, run-off from Paymentshield back book and headwinds from financial restructuring impacting Underwriting

Decline in EBITDA driven by revenue decline, offset by reduced operating expenses from cost saving initiatives

Overall margin remains resilient, with improvement in Advisory partly offsetting impact from SBU decline and continued run off of Paymentshield legacy book



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1. Accounting adjustments include changes to trade deal income and a one off change in accounting policy for Paymentshield relating to fee income recognition

2. £9m decline in SBU revenues caused by mismanagement of the transition of policies to Manchester call center

3. Run-off of MPPI book and change in household insurance book mix (Panel vs. Classic) in Paymentshield

4. Underwriting revenue £5m down, impacted by the withdrawal of partner support through the restructure and revenue impact of business closures

£4 (£9) (£5)

(£5) (£10)

£352

£377

£250

£300

£350

£400

2014 Revenue AccountingAdjustments

Impact of SBUTransition

PSL Legacy BookRun-Off

Restructuring andBusiness Closures in

Underwriting

UnderlyingRevenue Decline

2015 Revenue

Resilient Underlying Revenue Performance

(3%) Decline

1 2 3 4

1

2

3

4

Most of income decline caused by 2014/2015 Change Program and Financial Restructuring

(£ in millions)


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Accounting adjustments include changes in treatment for trading deal income, and fee income for Paymentshield

SBU revenue decline compounded by increase in operating costs as the division failed to reach adequate scale

Underwriting impact from revenue decline

Exceptional costs recorded in operational costs in 2015

Annualised savings from projects with identifiable high conviction near term impact / realisation

2014 to 2015 Adjusted EBITDA* Bridge

(£ in millions)

£4 £14 £5

£10 £12

£23

£79

£93

£0

£25

£50

£75

£100

£125


AccountingAdjustments

Impact of SBUTransition

Restructuring andBusiness Closures in

Underwriting

Underlying EBITDADecline

Finance Exceptionals Annualised Savings 2015 AdjustedEBITDA*

1 2 3 4

22.3% Margin

24.7% Margin

1

2

3

4

Adjusted EBITDA margin >22% despite impact of legacy income and cost issues

5

5



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2015 Organic Net Commissions and Fees

Advisory was one of the divisions most impacted by the financial restructuring in H1 2015, however key regions recovered in H2 with retention rates continued to improve in Q4 2015

Within Retail, SBU was the primary reason for the income decline

Underwriting has been impacted by significant headwinds in 2015 due to the financial restructuring. This is expected to continue until mid 2016 at which point the benefits of our initiatives should be felt

Paymentshield back book decline (MPPI and Classic) in Q4 2015 partially offset by Panel growth and price optimisation, with Q4 2014 impacted by over £1m for customer remediation

Q1 Q2 Q3 Q4 FY

- - - - Advisory (8.2%) (6.3%) 1.6% 2.1% (3.1%)0.0% 0.0% 0.0% 0.0%Retail (12.0%) (9.8%) (12.3%) (23.0%) (14.0%)0.0% 0.0% 0.0% 0.0%

Insurance Broking (9.7%) (7.7%) (4.6%) (8.6%) (7.7%)0.0% 0.0% 0.0% 0.0%

Underwriting (10.1%) (6.4%) (20.7%) (15.8%) (13.3%)0.0% 0.0% 0.0% 0.0%

Paymentshield (11.4%) (15.6%) (12.5%) (3.5%) (10.8%)0.0% 0.0% 0.0% 0.0%

Network (12.9%) (4.3%) (8.6%) 5.3% (5.2%)0.0% 0.0% 0.0% 0.0%

Total (10.2%) (8.3%) (9.2%) (8.9%) (9.1%)


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2015

Adjusted EBITDA* 79.5

Annualised Savings* (23.1)

Adjusted EBITDA 56.4

Working Capital Change (One Off) (13.5)

Working Capital Change (BAU) (14.3)

Operating Cash Flow ("OCF") 28.6

Normalised OCF Conversion (%) 82.0%

Capex (6.6)

Group Restructuring Costs (68.0)

Regulatory Costs (4.3)

Other (17.6)

Total Exceptional Costs (90.0)

Tax (0.0)

Acquisitions / Deferred / Minority Buyout / Disposals (0.3)

Restricted Cash (8.4)

Net Interest Cost (35.5)

Other Financing Cash Flows 121.1

Net Cash Flow 9.0

Year End Cash Balance 57.3

Net Leverage (based on Adjusted EBITDA*) 5.3x

Interest Coverage (based on Adjusted EBITDA*) 1.7x

Figures include £8.4m Towergate Financial restricted cash

and pro forma for sale of 80% stake in Broker Network

Full Year

Group Cash Flow and Leverage

(£ in millions)

£8

£65

£57

131

Reported CashBalance 2015

TowergateFinancial

restricted cash

BN stake saleProceeds¹ & otherfunding initiatives

Proforma Cash

Proforma Cash Balance

1 Broker Network (BN) Excluding agreed earn-out



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Agenda

1. Introduction


Paymentshield

Underwriting

Insurance Broking



5. Q & A

6. Conclusions

Appendix


Q&A


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Agenda

1. Introduction


Paymentshield

Underwriting

Insurance Broking



5. Q & A

6. Conclusions

Appendix


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Pipeline Opportunities

(£ in millions)

Division Initiative Medium Term

Expected Benefit

Advisory

• Margin Rate Increases £7 - £12

• Account Executive / Development Executive Recruitment £3 - £6

Advisory / Underwriting • High Net Worth Proposition £2 - £4

Direct • Broker Product Placement Across Distribution channel £5- £10

Underwriting • Review of Capacity and Distribution Strategy £2 - £4

All • Tactical Income Opportunities £3 - £6

Total Income Initiatives £22 - £42

No benefits arising from income initiatives are included in Adjusted EBITDA*

Significant drivers of medium term income growth are already underway (e.g. margin rate optimisation)

Income initiatives are primarily composed of items which are consistent with ordinary course business targets

Several additional opportunities are currently in the design phase (e.g., London Market broking and MGA opportunities)



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Conclusions

Market leading businesses in UK SME distribution and underwriting

Only privately held independent broker of scale in the UK

Specialise products with high customer loyalty and barriers to entry

Highly resilient business generating >£350m revenues and nearly £80m Adjusted EBITDA* with a >22% margin

Revenue stability underpinned by leadership across all core business segments

Integration and improvement of middle and back office well underway

Proven, industry leading management team with execution and growth experience

Over £130m pro forma cash balance supporting acceleration of strategic investments whilst transforming from legacy cost structure

Complete support from the Board, shareholders and external stakeholders



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1. Introduction


Underwriting

Insurance Broking

Paymentshield



5. Conclusions

6. Appendix

Board and Management Team

Supplemental Financial Data

Agenda


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Management Team Biographies


An INSEAD Alumnus, David has spent his entire career on the front line of Broking and Intermediary work in the Insurance industry.

David built his 25 year career at Arthur J Gallagher, having started there as a trainee

He was appointed Managing Director of the North American Division in 1997 then CEO of Global Wholesale & Retail in 2003

In 2005 David was appointed CEO of the International Division where the company underwent a defining period of growth and expansion

Transformation experience: Heath Lambert; Oval; Giles


Mark held various senior finance and audit positions at AmerUs Group Co, Grinnell Mutual Reinsurance Company and GuideOne insurance before joining Arthur J Gallagher in 2006 where he was Group Controller until 2010. He then served as the CFO of the international division at Arthur J Gallagher’s from 2011-2015

Mark is a certified internal auditor, earned his CPA at KPMG LLP and served in the United States Marine Corps

As Controller at Arthur J Gallagher, rolled out a global general ledger to over 300 locations, established a financial reporting data warehouse, centralised accounting operations into hubs in India (over 300 FTE)/Chicago (50) and implemented a number of IT and operational initiatives. As CFO , centralised UK finance operations to Scotland, saving millions and establishing a scalable foundation for growth; Oversaw IT who assisted in the consolidation of all offices to a single network, and standardised the broker management systems to core platforms


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Management Team Biographies (Cont’d)

Adrian Brown Chief Operating Officer, Underwriting Chief Executive Officer

Adrian is an industry veteran with extensive expertise having spent 25 years at RSA

He was a main board director and CEO of the UK and Western Europe for 6 years

Previously he was UK COO and established, and led, the successful direct business MORE TH>N

More recently he was executive chairman of underwriting and distribution at Arthur J Gallagher

RSA: £150m cost reduction program with 1,200 FTE reduction and c.£85m IT infrastructure and application outsourcing; New business start up

Janice Deakin Insurance Broking Chief Executive Officer

Janice had a 13 year career at AVIVA, leading the broker business as intermediary and partnerships director from December 2009 until 2013 and prior to that, corporate sales director

Janice then served as the CEO of UK Retail for Arthur J Gallagher, leading a combined business of over 2,000 people, placing in excess of £1billion of gross written premiums on behalf of more than 200,000 commercial insurance customers

Transformation experience: Nearly doubled GWP at Aviva broker’s private clients business and brought it from loss making to profitable by implementing a new trading platform as well as consolidating operations from small teams across 40 locations to 500 people in 2 major sites


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Steve Wood Paymentshield Chief Executive Officer

Catherine Lynch HR Director

Steve has worked in the insurance industry for over 30 years, including a range of senior executive roles.

Before joining Towergate he spent 8 years as UK Managing Director at Ecclesiastical Insurance Group, strengthening its core market positions and broker relationships

Prior to Ecclesiastical, Steve led the MBO of Royal SunAlliance’s healthcare division, having started his career at Royal Insurance

Transformation experience: Reshaped specialist general insurance business at Ecclesiastical Insurance; separated FirstAssist from parent into own company; grew healthcare book at RSA by 40% in 3 years

Catherine joined Towergate from BGL Group, where she was HR & Communications Director since January 2013

Prior to this she was Head of HR at Barclaycard from June 2011 to December 2012

HR Director at Santander UK for six years from June 2004 Earlier in her career, Catherine held commercial positions at

Sainsbury’s, House of Fraser and Tesco Transformation experience: Integration of Minster Law into

BGL’s general insurance group; large scale centralisation at Barclaycard Europe; integration of Abbey National into Santander


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Geoff Gouriet General Counsel

Geoff joined Towergate from City law firm Stephenson Harwood LLP where he was Partner in the corporate team

Geoff is the former Head of Corporate at Lawrence Graham LLP, a role he continued to hold in the combined Wragge Lawrence Graham & Co LLP following a merger in May 2014, leading the integration of the two legacy Corporate teams of 60+ lawyers.

Advised on over a hundred corporate transactions including public company takeovers, private company M&A and IPOs. Lead counsel on over 20 M&A transactions in the insurance broking sector including Arthur J Gallagher’s acquisitions of Health Lambert, Giles and Oval

Gordon Walters Chief Information Officer

Gordon Walters was appointed as Chief Information Officer in August 2015

Gordon’s experience spans 25 years leading transformational change across financial services both as a consulting partner in Accenture and Deloitte and as the Chief Operating Officer at Lloyds Corporate Bank where he delivered the Lloyds-HBOS Corporate Integration

Transformation experience: Led the Lloyds-HBOS integration for Lloyds Corporate Bank; led the restructuring of a Retail Bank Lending book to address consumer credit act


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Sarah Dalgarno Strategic Risk Director

Over 25 years’ industry experience, including six years at the FSA where she was latterly Supervision Manager for Insurance Intermediaries . Prior to joining Towergate, Sarah spent nine years at Arthur J Gallagher International as Chief Risk Officer .

Transformation experience: Legal entity rationalisation, elimination and associated asset transfers – including client assets; books and businesses and associated stakeholder communication. 12 month project at FSA transforming regulatory approach to insurance supervision with specific reference to people and ways of working.


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Board of Directors

* Pending FCA and Shareholder approval

Director Position

Executive Directors



Investor Directors

Scot French Highbridge, Partner

Oliver Feix Highbridge, Managing Director

Daniel Pietrzac KKR, Managing Director

Independent Non-Executive Directors

John Tiner Chairman of the Board

Christine Dandridge* Director

Patrick Butler Director

Philip Moore Director

Teresa Robson-Capps Director


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1. Introduction


Underwriting

Insurance Broking

Paymentshield



5. Conclusions

6. Appendix

Board and Management Team

Supplemental Financial Data

Agenda


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Segmental Summary by Quarter

(£ in millions)

Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY

Advisory 34.9 37.9 31.1 27.0 130.8 32.6 36.1 32.2 30.6 131.5

Retail 21.9 28.9 26.0 14.0 90.9 19.8 25.0 22.2 17.4 84.3

Insurance Broking 56.8 66.8 57.1 41.0 221.8 52.4 61.0 54.4 48.0 215.8

Underwriting 18.3 23.0 21.7 18.8 81.7 18.9 21.4 17.5 17.0 74.8

Paymentshield 12.9 16.0 15.2 14.9 58.9 11.1 12.3 12.8 12.6 48.9

Broker Network 3.6 3.8 3.1 3.3 13.7 3.1 3.6 2.8 3.5 13.1

Central 1.0 0.9 0.1 (1.4) 0.6 0.0 0.1 0.2 (0.2) 0.1

Total Income £92.5 £110.5 £97.2 £76.5 £376.7 £85.5 £98.4 £87.7 £81.0 £352.7

% Core Commission & Fees Growth (Excl PSL back book) (5.6%) (5.7%) (8.6%) (8.8%)

Advisory 0.4 5.7 (1.6) (7.5) (3.0) 3.0 7.1 2.3 (0.4) 12.0

Retail 6.9 14.3 10.5 (2.6) 29.1 3.7 9.5 4.9 (1.7) 16.5

Insurance Broking 7.3 20.0 8.9 (10.1) 26.1 6.7 16.6 7.2 (2.0) 28.5

Underwriting 4.8 8.2 5.8 2.3 21.1 4.0 6.7 2.8 4.1 17.6

Paymentshield 8.9 12.5 11.5 10.8 43.7 7.3 8.4 8.9 7.8 32.4

Broker Network 1.4 1.7 0.7 0.9 4.7 0.9 1.2 0.5 0.9 3.5

Central 0.3 0.2 (0.7) (2.1) (2.3) (0.8) (0.4) (0.5) (1.5) (3.3)

Adjusted EBITDA* £22.8 £42.6 £26.1 £1.7 £93.2 £18.1 £32.5 £18.9 £9.3 £78.7

Advisory 1.1% 15.1% (5.0%) (27.8%) (2.3%) 9.3% 19.7% 7.0% (1.1%) 9.1%

Retail 31.6% 49.4% 40.2% (18.7%) 31.9% 18.5% 38.2% 22.3% (9.6%) 19.5%

Insurance Broking 12.9% 29.9% 15.6% (24.7%) 11.8% 12.8% 27.2% 13.2% (4.2%) 13.2%

Underwriting 26.5% 35.5% 26.6% 12.1% 25.8% 21.0% 31.3% 15.8% 24.3% 23.5%

Paymentshield 69.4% 77.8% 75.6% 72.8% 74.1% 65.8% 68.4% 69.6% 61.6% 66.4%

Broker Network 39.5% 44.5% 23.2% 26.0% 34.0% 28.9% 33.3% 18.9% 25.4% 27.0%

Adjusted EBITDA Margin* 24.7% 38.5% 26.9% 2.2% 24.7% 21.1% 33.0% 21.5% 11.5% 22.3%

2014 2015



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(£ in millions)

EBITDA Walkthrough

2015 2014

Core Commission & Fees 335.5 371.6

Trade Deal & Other 16.3 4.3

Interest 0.9 0.8

Total Income 352.7 376.7

Staff Related Expenses (197.3) (198.3)

Operating Expenses (76.6) (85.3)

Total Costs (273.9) (283.5)

Adjusted EBITDA* 78.7 93.2

Adjusted EBITDA* Margin 22.3% 24.7%

Annualised Savings* (23.1) -

55.6 93.2

Group Financial Restructuring (41.2) (10.3)

Group Reorganisation (19.7) (42.9)

Regulatory (29.2) (7.1)

Exceptional Costs (90.2) (60.4)

EBITDA (34.6) 32.9

Staff Related Expenses % Income 56.0% 52.6%

Operating Expenses % Income 21.7% 22.6%

Full Year



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Topco Q1 Board Costs

Annualised

Savings*

Excl from EBITDA

In Investor Day

Presentation

Investor Day /

Press Release

Adjusted EBITDA* 56.4 (0.8) 23.1 - 78.7

Annualised Savings* - - (23.1) - (23.1)

Total Exceptionals (99.4) - - 9.3 (90.2)

Loss on disposal of business (0.3) - - 0.3 -

Reduction in value of contingent consideration 1.5 - - (1.5) -

Asset writedowns (0.3) - - 0.3 -

Acquisitions cost (0.0) - - 0.0 -

Other Items 0.8 - - (0.8) -

EBITDA (42.2) (0.8) - 8.4 (34.6)

FY 2015

Topco Reconciliation – 2015

(£ in millions)

1. Pco Board Costs for Q1 2015

2. Includes Gallagher settlement costs £9.3m

1 2

2

1



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Topco Reconciliation – 2015 By Quarter

(£ in millions)

Q1 YTD Q2 YTD Q3 YTD Q4 FY

Topco Adjusted EBITDA as previously published 13.1 39.8 52.9 56.4

Q1 Board costs (Pco) (0.8) (0.8) (0.8) (0.8)

Annualised Savings* 5.8 11.6 17.3 23.1

Adjusted EBITDA* 18.1 50.6 69.4 78.7

2015



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Presentation of Financial and Other Information

These financial results include certain financial measures and ratios, including EBITDA, Adjusted EBITDA*, Adjusted EBITDA* margin and certain other ratios that are not presented in accordance with IFRS. EBITDA In these financial results, references to EBITDA are to profit / (loss) on ordinary activities before interest payable and similar charges, tax, depreciation and amortisation of intangibles. Accordingly, EBITDA can be extracted from the consolidated financial statements of Finco, Topco and TIL by taking profit / (loss) on ordinary activities and adding back interest payable and similar charges, tax, depreciation and amortisation of intangibles. Adjusted EBITDA References to Adjusted EBITDA* represent EBITDA as adjusted for group exceptional costs (financial restructuring costs, group reorganisation costs and regulatory costs) plus annualised savings from cost saving initiatives initiated during the reporting period EBITDA-based measures EBITDA-based measures are not presented as measures of the results of operations. EBITDA-based measures have important limitations as an analytical tool, and should not be considered in isolation or as substitutes for analysis of the Group’s results of operations. Management believes that the presentation of EBITDA-based measures is helpful to investors as a measure of the operating performance and ability to service debt. EBITDA-based measures may not be comparable to similarly titled measures used by other companies. EBITDA, Adjusted ABITDA* and Adjusted EBITDA* margin and certain other ratios are not measurements of financial performance under IFRS and should not be considered as alternatives to other indicators of the Group’s operating performance, cash flows or any other measure of performance derived in accordance with IFRS.


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PPT template Towergate Group blue presentation sized€¦ · Introduction 2. Business Segment Highlights ... insurance and reinsurance group alongside Arch Insurance