Count battles rising PI costs
By Ben Abbott
CountFinancialhas been forced to make a provision of $400,000 for the half-year to December 31, 2003, due to an outstanding legal action against it for alleged poor advice given by one of its authorised representatives.
Count managing director Barry Lambert says the authorised representative’s case is an old one, with the group already having budgeted for $100,000 — or the excess on its professional indemnity (PI) policy — in its 2002-03 financial year accounts, bringing the total provision for the case to $500,000.
However, the provision for the possible liability in the 2003 half-year figures, due to Count’s insurer not having granted an indemnity to date, brings the total PI-related provisions to almost $1 million for the six month period.
Aside from the abnormal PI cost, Lambert says Count would have spent close to $1 million on PI charges in the 2003-04 financial year, with around $500,000 being spent on normal premiums in the second half of 2003.
Lambert says Count’s regular PI premium expenses have been doubling every year, and if the trend continues, the group will be paying $2 million next financial year.
The group reported an after-tax profit of $3.42 million for the half-year period to the end of December, up 37 per cent on the first half of the 2002-03 calendar year, with an operating profit of $4.02 million, up 4 per cent.
The group says its operating profit in the first quarter of 2004 is disappointing, partly due to PI and compliance costs out of its control, but it expects an operating profit in line with its previous guidance of $10 million for the 2003-04 financial year.
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