LSL Property Services has reported a 2% fall in protection sales during the first six months of 2022 but said it believes the firm has increased its market share as the overall market dropped much more sharply.
The property business which owns the Primis advice network and TMA mortgage club said delays to property completions in the first half of the year had notably affected its mortgage and protection sales levels.
LSL reported that on an annual premium equivalent (APE) basis its protection business fell by 2% from £32.5m to £31.8m for the first half of the year.
According to data from reinsurer GenRe, the UK protection market dropped by 10.2% in the first quarter of 2022 with new business falling to £185m APE from £206m in the same period last year.
The firm told Health & Protection that the GenRe data suggested a bigger market fall than 2%, hence LSL estimated it has increased its share.
The firm added that despite the falling protection and mortgage markets its financial services network saw a 10% increase in revenue to £20.5m from January to June, along with growing adviser numbers.
Commenting on the market, it noted there was a general shift away from house purchase to re-mortgage business, as consumers sought to secure their payments in the light of increased economic uncertainty and rising interest rates.
“This was reflected in lower protection sales, but we estimate that LSL advisers increased their protection market share further, building on past success we have had in increasing the focus on this area,” the firm said.
It added that results would have been stronger “had the mortgage and protection cases relating to delayed residential sales exchanges been reflected in the half year”.
Adviser numbers keep rising
The firm’s financial services division revenue remained broadly an equal split between mortgage and insurance, with insurance fees contributing 42% of revenue, down from 45% in the same period a year earlier, and mortgage fees steady at 39%. Other fees rose from 16% to 19% of revenue.
“The division’s revenue mix by product continues to highlight the significance of our insurance business and its success in arranging insurance products both on a standalone basis as well as when needed at the time of a mortgage being arranged,” LSL said.
And the number of advisers in its network grew to 2,930 from 2,858 at the end of 2021, continuing the long-term growth from 2,321 three years earlier.
LSL said there was a “strong pipeline in place for further growth during the rest of the year”.
It added that the Pivotal Growth joint venture with Pollen Street Capital, having announced four advice firm acquisitions already had “a strong deal pipeline in place and we remain excited about its potential”.
Advisers from Pivotal Growth were not yet included in the increase in adviser numbers.
Mortgage lending share up
The firm arranged £15.2bn of mortgage purchase and re-mortgage completions during the period which was 11% up on the same period last year despite the mortgage market dropping from £168.5bn to £151.4bn.
“This represents our highest-ever market share of 10.1%, up from 9.0% last year,” LSL said.
It added: “Small, independent mortgage brokers typically perform well in more difficult market conditions, and this can be seen in the strong performance of our Financial Services Network business.”
Estate agency completion delays hit profits
As a result the financial services division saw its operating profit up 24% to £4.9m from £3.9m in the first six months of 2021.
However, LSL’s profit before tax of £7.4m was 71% down from the £25.5m a year earlier.
This was weighed down by the estate agency business where market-wide delays in completing agreed sales meant good trading had yet to be reflected in income, LSL said.
Group chief executive David Stewart said: “These results show that our strategy is on track and that LSL continues to trade strongly.
“Our surveying and valuation and financial services businesses delivered record revenues and our estate agency division retained the market share gains made in 2021, in doing so building a strong residential sales pipeline as significant profits were delayed by the continuing slow speed of exchange experienced across the market.
“We are well placed to deliver a strong performance in the second half of the year and to grow in 2023 as we increasingly reap the benefits of our financial services-led growth strategy.”