Capita’s outsourcing success prompts hunt for acquisitions

Capita Insurance Services is on the hunt for acquisitions and outsourcing deals, according to managing director Richard Holland.

Holland said Capita, which posted an 18% increase in underlying profits for the first six months of this year, had made acquisitions at the right time in the past – such as personal lines intermediaries Hero for £15m in February and Lancaster in March last year – and was on the lookout for fresh buys.

Capita took in £117.3m revenue from its insurance services arm for the first six months of this year, about the same amount as for the same period last year. The group’s total six-month revenue was £1.31bn and underlying profit before tax was up 18% to £141.7m, it revealed last Thursday.

Holland said Capita would remain selective about acquisitions. “The money is there,” he said. “It is about finding the right deals and making sure the right criteria are met.”

He said winning the contract to outsource 600 staff from Marsh, a deal completed in June last year for about £187m, was “ground-breaking”. He added that its success was important in persuading the industry about the value of outsourcing. “Getting that right is extremely important to the future development of the business.”

Kate Roy, London market and Marsh contract managing director, said Capita was in the early stages of discussions with other companies over outsourcing.

“There are a number of drivers within the insurance industry that are accelerating these discussions,” she explained.

“It is becoming more of a burning platform to look at change within the business. Some may result in large BPO (business process outsourcing) and others in transformational change.”

Group chief executive Paul Pindar said: “Demand for outsourcing across our chosen markets continues to be buoyant, generating an encouraging volume of opportunities.”