The Ardonagh Group has agreed to sell Direct Group’s claims businesses to loss adjuster Davies for up to £36m.
The moves comes days after Davies CEO Dan Saulter, pictured, told Post it doesn’t have “limits to its ambition” over acquisitions, but declined to comment on links with Direct Group adding: “We don’t comment on market speculation. What I would say about Direct Group is that it has an excellent reputation and some fantastic clients, and a great management team in Russell Crewe.”
Under the deal, Direct Group’s 360-strong claims team, led by managing director Crewe, will come under new ownership with immediate effect, including two dedicated claims centres in Elland and Preston.
Direct Group’s claims business will join with Davies’ Claims Solutions business, creating an end-to-end claims solutions provider, which will continue to be led by executive chairman Darren Coombes and chief operating officer Kath Mainon. Crewe will join Davies’ executive leadership team, reporting directly to Kath Mainon. On other staff moves Saulter told Post: “We see there being opportunities for the Davies staff and the Direct group staff to grow in their roles and as we grow the business overall, because we do have pretty ambitious growth targets.”
But he did admit some roles would need to be ‘disentangled’ from Ardonagh: “If you look across at how you disentangle Direct Group from Ardonagh there are some shared services and as it customary with this kind of transaction there is a transitional service agreement and there are some back office roles that are delivered to Ardonagh and that is for Ardonagh to unpick over the next year or so.”
About getting the deal off the ground Saulter said: “We’ve had aspirations to bring Direct Group into Davies for some time and when the business was sold by Ryan Speciality to Ardonagh we were interested in doing it then but it was the wrong time for business as far as Direct Group was concerned. We stayed in touch and had quite a close relationship with Russell in terms of being a client and we were able to time it right and convince [the CEO of the Ardonagh Group] David Ross and others around Ardonagh that it was a good time for the claims side to be carved out. There is a better opportunity for the claims business - now it is outside of what is a distribution business - for us to grow Direct Group inside Davies.”
On what made the business attractive he said: “It has a fantastic pedigree and a great reputation in the market – it has a long standing client base and we were attracted by the validation platform and adding those capacities to the wider the Davies team. It has a great leadership team and we always felt it was a quality asset with a quality team.”
Saulter explained the deal wouldn’t be rushed as both Davies and Direct Group have clients that could be exposed to property claims through winter: “As we get into the middle of next year we’ll make some changes to literature and brands and wider things and re-position to our clients. We haven’t finalised what will happen to all the brands - in lhe longer term some of those that relate to digital assets will be kept, and some of them won’t be.”
Alongside the acquisition, Davies and Ardonagh have agreed a six-year claims management deal that will see Davies continue to support Ardonagh’s underwriting and broking businesses in claims handling, loss adjusting and fulfilment.
This is Davies’ third deal this year, after acquiring JMD, Requiem and Quest in January, and more recently Ember, a customer experience consulting and digital solutions business. And Saulter refused to rule out more acquisition activity this year: “You never know do you. My corporate development team, led by Matt Button, are pretty tired but always actively looking for opportunities to add capability and breadth to Davies. I wouldn’t hold your breath but over the next six to nine months you will see us coming back out into the market and also growing organically, which is central.”
Ross commented: “Under the ownership of Davies, Direct Group’s claims operation will be completely at home within one of the leading claims and insurance service providers, and will undoubtedly benefit from the combined expertise, investment and ambition that Davies has in this specialist market.
“We’re incredibly proud of the value the team have delivered as part of the Ardonagh Group and we look forward to continuing our strong relationship with the team, and further building our relationship with the wider Davies business.”
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