An in-line update from insurance business process services (BPS) provider The Innovation Group, shows it is on course to meet its revenue growth and EBITDA/cash generation targets for FY12. Consensus estimates put FY12 revenue growth just shy of 14% (vs. 8.5% in FY11), of which we suspect at least half will be organic, thanks in large part to its largest win to date announced in August, a £11-13m per annum deal with RBS Insurance (see TIG signs £40m BPS deal with RBS Insurance).
TIG also completed the acquisition of Australian motor and property claims outsourcer Claims Services Australia (CSA) for £13m in cash (see here). CSA made revenue of £13.2m in its most recent year and a pre-tax margin of 16%. So it should be nicely margin enhancing in FY12, although the flat price sales ratio suggests growth was in question. Nonetheless TIG says opportunities for ‘cross selling [its] BPO and technology services are already very apparent.’
TIG has a clearly defined strategy to deliver the underlying insurance technology platform and wrap around administration services for the fleet, motor and property claims sectors. Subscribers to TechMarketViews' BusinessProcessViews service can read the secrets to its current success in Innovation Group boosted by platform strategy.