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Productivity gains lift Xchanging earnings

Xchanging has posted an operating profit of £55.8 million ($110.3 million) for last year, up 21.5% compared with 2013.

The rise comes despite a 16.4% decline in revenue to £573.5 million ($1.1 billion).

The UK-based insurance outsourcing company says its result reflects management success in streamlining operations and raising productivity.

“We recognised that revenue was likely to shrink as we improved the quality of our earnings,” CEO Ken Lever said. “However, we have now completed our transformation process.”

Revenue from the insurance arm fell to £182.7 million ($361.1 million) last year from £199.8 million ($394.9 million) in 2013.

“This sector is consistently profitable and cash-generative,” Xchanging says.

However, there were setbacks, including in Australia, where the company failed to retain its contract for the NSW workers’ compensation scheme.

Xchanging invested heavily in its insurance software business last year, spending £75.6 million ($149.5 million) to acquire Agencyport Europe in July and Total Objects in December.