Claims firm Davies gunning for double-digit organic growth

Private equity-backed claims firm Davies hopes to achieve double digit organic growth in the next two to four years after reporting 9% organic growth in the year to 30 June 2017, according to chief executive Dan Saulter.

Davies has reported a jump in profit and revenue in the year to 30 June 2017, fuelled by a combination of acquisitions and organic growth.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 38% to £10.5m from £7.6m, driven by a 23% growth in revenue to £55.1m from £44.6m.

Saulter told Insurance Times that nine percentage points of the 23% revenue growth was organic, with the remainder coming from acquisitions.

Davies said it won more than 50 accounts in the reporting period from new and existing clients, and has a “strong pipeline” of business across its four core client groups: insurer, Lloyd’s and specialty, MGA and broker, and large corporate.

In addition, Davies bought credit hire evidence firm SurveyorShip, motor claims specialist Core Claims and regulatory services business Cynergie in the reporting period. Its most recent acquisitions that took place after 30 June – casualty third-party administrator Claims Management Services Limited and insurance services firm Ambant – are not included in the results.

Saulter said: “In the market context, we are delighted with 9% [organic growth].

“As we look forward to the next two to four years, the aspiration is that we would take the business to a place where we can achieve double-digit growth organically.”

Scope for growth

One key area of growth will be its acquisitions of Ambant and Cynergie, both of which have broadened Davies’s scope beyond its traditional core business of claims. The Ambant deal has thrust Davies into the insurance services market, while Cynergie has propelled the firm into complaints handling, compliance and regulatory services.

Saulter said: “We continue to invest in our claims business heavily around technology, innovation and building out our proposition, and we can see good, sustainable growth in our claims business in the UK and Ireland.

“But we also identified that we needed to think about diversifying further, which is why we have added a whole new skill-set around Ambant in insurance services, which we think is a market that has fantastic growth opportunities and is highly synergistic with our claims business. So that will support growth for the future.”

He added: “With our investment in Cynergie, again we are bringing in a bunch of new skills around compliance and regulatory and complaints handling, which we see as another growth market over and above our claims business.

We have new legs to the stool which will support our growth in the years to come.

Acquisition firepower

Davies, which has been majority-owned by US private equity house HGGC since January this year, also has firepower for future acquisitions.

In 2017 the company has access to a bank loan facility and further equity from HGGC if required alongside its own resources. It has funded its acquisitions so far from its bank facility and its own resources and has not yet had to ask its new shareholder for more money.

In 2018, those three capital facilities will remain open for use, both for acquisitions and further investment in research and development. Saulter said: “I don’t see there being any restrictions in 2018 on what we want to do because of those sources.”

International expansion

Davies’s expansion to date has been focused on its core market of the UK and Ireland, but this could change soon.

Saulter said: We have had discussions over the last months and years with our existing clients about taking our proposition outside the UK and Ireland and that’s something we’re still working on.

“It is no secret that our new investor is ambitious for us to consider international footprint as one way of growing in the future.”