Capita has bought disability insurance broker Fish Administration to expand its reach in general insurance services. Capita is paying £21m in cash to private equity owner Inflexion - quite a premium of 3.6 times revenue for Fish, or almost £200k for each of its 30 staff – and on its usual cash-free, debt-free terms. In the year ended May 2011, Fish’s turnover was £5.8m (no previous year comparison available), and pro forma operating profits were £3.5m, giving Fish a very healthy 60% margin.
Fish specialises in providing insurance products on a broker basis to people with disabilities, including cover for wheelchair accessible vehicles, travel, and mobility scooters, as well as insurance products to the independent living and care sectors. It has 70,000 policyholders and also has a boutique commercial insurance arm called Fish Corporate Insurance.
Capita is far less well represented in general insurance than in the commercial sector, where it is the leading provider of life and pensions (L&P) administration. General insurance should be a natural area of opportunity to expand and broaden its scope of services. Capita also needs to continue exploiting other growth areas to mitigate increased threats in its core L&P hunting ground from newer platform-based business process services (BPS) players like TCS/Diligenta (see Diligenta wins £1.4bn Friends Life deal (update)).