Insurance growth drives up revenues and profit for the AA
AA Ireland achieved 50 per cent growth in travel insurance customers last year to more than 45,000
AA Ireland’s operating profit increased by 15 per cent to €15.1 million at the end of 2017. Photograph: Dara Mac Dónaill
Strong growth in the sale of insurance policies helped the AA accelerate its revenues and profits last year.
Latest accounts for AA Ireland Ltd show its revenues rose by 4 per cent to €58.5 million in the year to the end of 2017, while its operating profit increased by 15 per cent to €15.1 million.
The group, which specialises in providing roadside assistance to motorists but also acts as an insurance intermediary, posted a pre-tax profit of €14.5 million in the period, up from €12 million a year earlier.
AA Ireland closed the year with shareholders funds of €45.7 million, up from €33.4 million a year earlier – reflecting the boost in profits.
It increased its customer base for travel insurance by 50 per cent to more than 45,000, and its staff headcount rose by 11 per cent to 506.
Employee costs increased to €21.8 million from €20 million in 2017, while its overall operating expenses were flat at €43.4 million.
AA Ireland’s membership grew to 139,800 last year while breakdown volumes were flat, with its repair rate rising by one percentage point to 78 per cent.
A dividend of €2.2 million was made during this year but this represented a payment to its holding company to cover interest on the group’s debt.
In 2016, AA plc, a UK listed group, agreed the sale of the Irish business for €156.6 million, including cash left on balance sheet, to Carlyle Cardinal Ireland and Carlyle Global Financial Services Partners.
Commenting on last year’s results, AA Ireland chief executive Brendan Nevin told The Irish Times that it was another year of “excellent progress”.
“The fundamentals of the business remain strong as we continue to invest in the Irish market,” he said. “Travel insurance was one of the stories of the year for us with very strong performance especially for the annual travel product where customer numbers are up almost 50 per cent.”
Mr Nevin said its life insurance business also delivered “strong growth”, enabled by investment in its IT infrastructure, which “increased our capability and allow us to serve more people more efficiently”.
“We are also now installing new diagnostic technology across our Roadside fleet and have launched Europe’s first roadside charging solution for electric cars,” he said.