Quindell Portfolio is making yet another acquisition, and its fourth since January (see here and work back). This time it is taking on Crusader Assistance Group Holdings Ltd (Crusader), a claims management company (CMC) that provides services for a number of the UK's leading auto insurance brokers.
Although still subject to FSA approval, Quindell is paying Crusader the equivalent of £9m in shares and cash over the next two years, with the expectation that it will deliver at least £1.5m post tax profit and operating cash flow of £1.5m in FY13 and FY14. The business makes c£6m in revenue, but Quindell expects Crusader to drive some £15m in new outsourcing revenue for Quindell by 2014. CE Rob Terry told us that Crusader's claims managers can be deployed into its existing outsourcing business, where it now has 2,000 people handling claims. It also has a further 300 people being trained to support new business growth.
Crusader apparently manages over 1m policies annually for its broker customers, so this will provide a significant amount of additional policy management for Quindell. It followsrival The Innovation Group’s acquisition earlier this month of another claims management company (see Innovation Group buys UK motor claims handler). We see both deals being driven by the introduction of LASPO (Legal Aid and Sentencing and Prevention of Offenders Act) on 1 April, 2013, which bans referral fees being paid between lawyers and their partners (see our BusinessProcessViews report General insurance BPS opportunities in a rapidly changing market). Terry sees plenty of opportunities for Quindell to take on more outsourcing work from CMCs as a result, although he stressed he is keen to 'push back' on this.
Certainly Quindell isn't short of opportunities right now. It also announced a further new deal with ‘one of the UK's largest insurers’ to provide its SaaS technology and outsourced medical reporting and rehabilitation, credit hire and deployment of repair services. These initial contracts, for up to three years, are expected to generate c£20m of revenue.
We will have plenty more to say when Quindell releases its full year results in the next few weeks.