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Towergate Insurance2012 Annual Results

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Clear, Differentiated Business

• Leading UK independently owned general insurance intermediary

• Focus on specialist personal lines and SMEs

• Unique business model combining scale distribution and risk pricing capabilities

• Our model has no insurance capital risk and therefore limited capital requirements

• Significant market headroom for continued growth

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● EBITDA growth 4%● Group income growth 3% ( 3% retail in 2H2012 yoy)● Retention focus (Retail: 80%, Underwriting 73%)● Sales force effectiveness● New single-tie agreements in Paymentshield

● £250m capacity renewed in year (>£500m over two years)● 31% penetration (vs 30% in 2011)

● Expense ratio reduced 0.7 pts● Headcount reduction● CCV integration● Sale of Powerplace

● 27 new deals completed ● Target ROI of 38% and cost of £30m

Organic Growth

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Enhance Value Chain Position

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Drive Efficiencies

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Targeted Market Share Capture

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2012 Clear Delivery of Strategy

4Notes: (1) Figures presented on a pro forma basis for the acquisition of CCV and disposal of PowerPlace. 2011 PBT is presented on a pro forma basis to include the effect of the Group refinancing completed on 11 February 2011 as if it had occurred prior to 1 January 2011; (2) Management view of operating cash flow before exceptional costs

2012 2011 Change

GWP (£bn) 3.1 3.0 5%

Income 436.5 425.7 3%

Expenses (272.9) (269.0) 1%

Adjusted EBITDA 163.6 156.7 4%

PBT (50.7) (42.1) n.m.

Other KPIs:      

Expense Ratio 62.5% 63.2% (0.7)pts

Operating Margin 37.5% 36.8% 0.7pts

Operating Cash Flow (2) 96.7

£ millions, unless otherwise stated (1)

• Income and profit growth across our largest three divisions despite challenging economic conditions

• BaU change program delivering revenue and cost benefits

• Continued momentum in acquisition strategy with 27 deals complete

• Cost and efficiency programmes in place to support margin growth

• Cash flow strong• Impacted by £20m of non-

recurring tax and working capital outflows

Towergate Holdings II Financial Highlights Building platform for further growth

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Commentary

• Retail top-line stabilisation and efficiency gains

• Strong growth in underwriting top and bottom line with long term capacity secured

• Robust top and bottom line growth in Paymentshield with new distribution channels and new propositions

• New Network leadership driving revitalised strategy

• Investment in group functions

Adjusted EBITDA (£m)

EBITDA By Business UnitStrong growth across the business

4.4%

9.3%

16.3%

9.9%

(24.2)%

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73.1

80.3

£50m

£60m

£70m

£80m

£90m

2011 2012

255.5 256.8

£200m

£220m

£240m

£260m

£280m

2011 2012

• Strong second half performance reversed H1 decline

• Won and renewed key affinity deals (e.g. RAC and FSB)

• Strong retention at c.80%

• Completed 25 acquisitions

• Integrated CCV and increased retention

• BaU change program delivering efficiencies highlighted in cost:income ratio

0.5%

Retail Top line stabilisation achieved

Margin:

Income (£m)

Operating Earnings (£m)

9.9%29% 31%

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• Strong top and bottom line growth

• Share of Retail’s GWP up from 30%

to 31%

• Attractive CORs evidenced by recent

renewal of another £200m of capacity

• Eight new products launched

• New third-party distribution partnerships

won (e.g. Saga, Tesco, Virgin Money)

• Total GWP £615m (+8%)

• Retention maintained at 73%

Underwriting Continued strong growth

36.4

42.4

£20m

£30m

£40m

£50m

2011 2012

76.9

87.2

£50m

£60m

£70m

£80m

£90m

£100m

2011 2012

13.4%

Margin:

Income (£m)

Operating Earnings (£m)

16.3%47% 49%

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• Continued robust growth against a challenging market

• New exclusive single-tie agreements with major IFA networks (Openwork and Sesame), reinforcing leading position in the broking channel

• New panel proposition driving economic and customer benefits

• New distribution channels continue to diversify business

• Strongly positioned for expected growth in mortgage originations

• Award wins for excellence and best practice

Paymentshield Robust top and bottom line growth

50.655.3

£30m

£40m

£50m

£60m

£70m

2011 2012

67.572.2

£40m

£50m

£60m

£70m

£80m

2011 2012

7.0%

Margin:

Income (£m)

Operating Earnings (£m)

9.3%

75% 77%

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• Pressure from insurer strategies

• New insurer partners (QBE, Hiscox and Markel) joined underwriting panel

• New members up – 44 new members and 9 members upgraded

• High calibre new CEO recruited – strategy under development

• Cost actions implemented to reduce FTEs by 18%

• Launched new specialist lines product with new partners

Network New leadership driving revitalised strategy

13.210.0

£0m

£5m

£10m

£15m

£20m

2011 2012

20.416.6

£5m

£10m

£15m

£20m

£25m

£30m

2011 2012

(19.0)%

Margin:

Income (£m)

Operating Earnings (£m)

65% 60%

(24.2)%

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• Improved efficiency

• Like for like headcount reduced across the group

• Cost focus delivering significant benefits

• Reinvesting in Group functions

• Exceptional costs of £17m as a result of investment in Strategic Change Programme

Operating Expense Control (£m)

Expense ManagementRationalisation and investment

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Leverage Development (1) • Against a challenging operating economical environment, management successfully achieved EBITDA growth and robust delevering

• CCV contributed to the Group by shareholders thus increasing EBITDA / cashflow generation

• CCV was acquired on a debt for debt basis with an EBITDA contribution of £18.8m(2) and net debt of £54.8m (2.9x leverage)

• 2012 leverage figure does not include full-year benefit of completed acquisitions

LeverageDeleveraging momentum

(1) Adjusted net total borrowings to adjusted EBITDA; 2012 leverage is pro forma for CCV acquisition(2) 2011