Sales of Accident Line’s after-the-event (ATE) insurance products increased by 12% in the first half of 2012, Abbey Protection plc’s interim results have shown.
However, the AIM-listed company’s plans to expand its legal offering are on hold until it receives its alternative business structure (ABS) licence.
The ATE division more than doubled its profit contribution to £200,000. Overall Abbey saw a 5% increase in revenue to £19.2m and 3% rise in pre-tax profits to £5.2m, with the dividend payout up 11%.
The company’s principal trading divisions are Abbey Tax Protection, which saw strong growth, and Abbey Legal, comprising Abbey Legal Protection and Abbey Legal Services (ALS). They provide legal expenses insurance and legal advice for policyholders respectively.
Although profits for Abbey Legal were “flat” at £1.2m, chief executive Colin Davison said “this represents a robust performance as some revenue streams were impacted by a significant client going into administration at the end of 2011. Renewal rates for our existing scheme and affinity clients were strong and £750,000 of new business in the first half of the year has demonstrated that the pipeline remains healthy”.
He added: “We remain cautiously optimistic for the remainder of 2012, with our core trading divisions having demonstrated the resilience of their business models and the ability to contribute sufficient growth to counter balance the headwinds that we know the business will face during the remainder of the year.”
In March, Abbey revealed plans to become an ABS, and Mr Davison said it is still awaiting its licence from the Solicitors Regulation Authority. This will “enable us to deliver a wider range of legal services”. He said he remains hopeful that “the technical issues delaying the process will be resolved shortly”.
The company already employs around 70 solicitors and barristers in its legal advice call centre, who also provide insured employment tribunal services. Becoming an ABS will allow it to scale up this resource to provide a wider range of commercial litigation services beyond those covered by insurance.
The plan is for ALS – which currently deals with 300,000 calls a year – essentially to become another of the company’s panel firms, to which legal expenses insurance policyholders might be directed.
Further, ALS would seek to offer its wider service range through some of the affinity clients, the biggest of which is the Federation of Small Businesses. The final arm of the ABS plan is an equity investment in an identified but unnamed law firm, which would give ALS access to expertise in areas of practice which it does not initially want to resource in-house.