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Brokers start to turn away from Towergate

Ryan Fowler

December 4, 2014

Last week Towergate’s insurance broker division reported an 18% drop in operating earnings for the first nine months of 2014. And Paymentshield also reported negative results with a 12% fall in income.

That was one factor that led London-based commercial brokerage Gallagher UK to issue an internal memo advising staff to avoid placing any new business with Towergate.

Towergate itself is currently inviting bondholders to pitch for control of the insurance broker and speculation about a potential restructuring has been ongoing after its latest accounts revealed it had fully drawn its revolving credit facility.

Brokers have also expressed concern about the safety of their income from Paymentshield back books (money generated from policy renewals).

One broker, who asked not to be named, said: “Paymentshield has been hanging on for sometime now by doing deals with networks.

“Intermediaries have been moving away from it after it turned off the residual income that was supposed to be guaranteed.

“The question now is how safe is our income from Paymentshield? Hopefully the issues plaguing Towergate will be cleared up soon.”

Both Towergate and Paymentshield declined to comment.

But Kevin Patterson, managing director of Source Insurance said now is not the time to make rash decisions.

He said: “There are lots of rumours going around that market at the moment and a lot of them are unsubstantiated.

“I would advise that brokers wait to see how the land lies before making any rash decisions.

“This is why having a strong and stable GI partner is so crucial.”

A spokesman for John Charcol said: “It continues to be business as usual for John Charcol.”


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