Mortgage Advice Bureau (MAB) grew its protection and general insurance revenue to £37.2m in the first six months of 2022.
This was a rise of 4% from £35.8m in the same period last year, however the intermediary firm noted due to market dynamics this did not increase as much as its mortgage procuration fees.
MAB also set out more details of its takeover of protection adviser Vita Financial in July, as the firm increased its stake from 49% to 75%.
It said the move was “a strategically important step for the group” as it looked to achieve an even stronger market presence in this area.
“Vita Financial has performed exceptionally well in supporting MAB’s appointed representative (AR) firms who wish to outsource some of their protection or general insurance leads,” it said.
“As part of MAB’s wider protection strategy, we intend to extend Vita’s proposition into a wider addressable market to fully leverage its expertise.”
MAB did not comment on the possibility of ending loaded premiums for protection sales which many believe is now almost untenable under the Financial Conduct Authority’s (FCA) Consumer Duty.
However the firm believes it can use the FCA’s target of higher standards to grow business.
“With increasing expectations and even higher standards expected from the regulator, more directly authorised firms are seeking greater support from a strategic partner like MAB,” it said.
“We expect the recruitment of growth-driven firms to remain strong, supported by the continued development of our technology platform.”
Profit down 6%
Overall MAB’s pre-tax profit dipped 6% to £10.1m from £10.8m and the firm noted the slow mortgage pipeline conversion, reducing purchase activity, and increasingly cautious recruitment by some appointed representatives (ARs) was likely to bring its annual results below previous expectations.
MAB saw a lower proportion of house purchase business completed with an increase in re-financing.
“In particular, the proportion of product transfer completions, which have a lower average procuration fee and see lower protection, general insurance and client fee attachment rates, increased to 18% from 14%,” MAB said.
“Consequently, while the group’s gross mortgage completions increased by 6%, mortgage procuration fees increased by 5%, protection and general insurance commissions increased by 4% and client fees increased by 2%.”
As a result, protection and general insurance commission made up 37% of the firm’s overall £96.5m revenue for the six months to the end of June, down slightly from the 38% posted a year earlier.
Mortgage procuration fees of £44.9m accounted for 47% of revenue, with client fees of £11.8m and other income of £2.6m.
The average number of mainstream advisers during the period increased by 19% to 1,890 from 1,584 a year earlier, but average revenue per adviser dropped 13% to £51,041 from £58,451 as a consequence of the market factors.
‘Transactions taking a month longer’
Chief executive Peter Brodnicki said it was a strong set of results compared to the exceptional period last year, particularly given the increasingly difficult macro environment that developed during the period.
“The well documented congestion of property and mortgage pipelines has resulted in transactions taking a month longer to complete than in H1 2021, with the anticipated improvement still to materialise,” he said.
“A more cautious market outlook typically leads to broker firms seeking a partner that can help them optimise income and support continued business growth.
“Our pipeline of new appointed representatives and adviser recruitment remains strong, and MAB is well positioned to attract those firms focused on achieving growth in an increasingly challenging economic climate.”