Direct Group, the Doncaster headquartered provider of outsourced services to the insurance industry, has acquired Simple Insurance (“Simple”) from Leeds-based UK General for an undisclosed sum.
Simple, one of the market’s most recognisable brands, provides specialist insurance for landlords and caravan owners with around 55,000 live policies, as well as a direct to consumer travel insurance offering. It sells predominantly via the internet using organic search, pay per click, aggregation and telemarketing.
Direct Group, which was established in 1990, provides a range of customised ‘white label’ solutions to the insurance sector across three core business units focusing on claims, validation and distribution. Its proposition is based on the provision of low cost, high technology and service-driven solutions that enable its clients to operate more cost efficiently while providing better customer service. Its clients include most of the UK’s largest insurance brands as well as banks, affinity organisations, intermediaries and corporates, while its expertise spans property, motor, travel, protection, budget health, life and small business.
Since a management buyout of the business in 2007 backed by mid-market private equity provider LDC, the business has successfully achieved a long-term diversification strategy, broadening its product lines and services beyond its original expertise in claims management. It acquired insurance broker Millennium in 2008 to develop its capability in distribution, followed by the Evander Validation Services business in 2010.
The strategy has driven sales growth in excess of 40% since the MBO, with revenues currently around £20 million, while employees have increased 75% to 350.
This latest acquisition is Direct Group’s second this year after buying laptop and mobile inspection specialist Circuit in April.
Funding for the deal was provided as part of a £15m refinancing facility from Lloyds Bank Wholesale Banking & Markets Acquisition Finance.
Derek Coles, Direct Group CEO, said: “We provide a range of outsourced services to the industry and we are delighted to acquire the policy portfolio and servicing of the ‘Simple’ business to enhance our overall distribution business activities. This deal allows Direct Group to continue its strategy of providing insurance platforms and a range of products for its partners.”
Michael Warren, managing director of UK General, said the deal underlined UK General’s determination to focus exclusively on its intermediated business, where it is one of the leading MGA players in the UK.
He said: “UK General’s strategy is to grow profit and volume in three core divisions: schemes and commercial (under the UK General brand) and agricultural insurance through our Rural Insurance subsidiary, and we feel it is the right time to divest the book of business we have built in this channel so that we can focus our future investment in our intermediated businesses.”
Jon Pickering, Investment Director at LDC, said: “This is the fourth acquisition for Direct Group since we originally backed the MBO in 2007. Since then, Derek and his team have transformed the business into a recognised leader in outsourced solutions to the insurance sector, with a well-diversified offering, superior customer proposition and a market leading technology platform. With a newly-strengthened capital structure, the business is ideally placed to continue executing its growth strategy in the UK insurance market.”
Pinsent Mason (Gregg Davison and Andy Phillips) provided legal advice to Direct Group, while Ernst & Young (Richard Harding) provided Financial Due Diligence and Deloitte (Ian Clark and Caroline Gardner) provided Commercial Due Diligence.
ENDS 7 June 2012
Issued on behalf of LDC by Citypress.
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