BUSINESS DESCRIPTION

A-Plan is a UK-based distributor of motor and household insurance policies to SMEs and individuals. It also specialises in a number of high net worth and commercial niches, and in providing policies for foreign language speaking customers. It has a broad base of over 30 underwriters.

The business currently operates over 80 high street branches nationwide, focusing on high levels of customer service and more complex cases than online brokers, serving over 600,000 policyholders.

WHY DID WE INVEST?

The Services Team identified the insurance broking sub-sector as attractive for potential investment in 2011, as it is characterised by businesses with high levels of recurring revenues, providing a non-discretionary purchase for customers, with strong cash generation and opportunities for bolt-on M&A. A-Plan was identified as part of this market mapping exercise, and had been tracked by the Services Team for three years, prior to our investment in the business.

A-Plan has a personal, service-oriented approach leading to best-in-class levels of customer satisfaction, driving high retention rates and low customer acquisition costs, due to a high referral rate.

HOW DO WE INTEND TO CREATE VALUE?

HgCapital intends to support A-Plan’s experienced management through organic growth of its current business volumes in the existing branches and assisting with the roll-out of new branches. Additionally, there are potential opportunities for further growth, through selective M&A and new product lines.

WHAT HAS BEEN ACHIEVED?

HgCapital is supporting A-Plan with ongoing and future projects, including: sales and marketing initiatives, such as direct mail campaigns and the contracting of a search engine optimisation agency; recruitment of senior executives; support on M&A development; and an upgrade of the legacy broking administration system.

HOW IS IT PERFORMING?

A-Plan is performing well and is ahead of our original investment case on both a revenue and EBITDA basis with growth over 2016 of 12% and 7% respectively. The company’s principal KPIs stand at: 15% new policies growth; 78% retention rate; and revenue per policy of £120.

New business policies are benefiting from the continued branch roll-outs (ten since HgCapital initially invested in the company) and marketing initiatives driving new business at existing branches.

Continued growth in equity value from consistent underlying trading growth has added to the Company’s valuation of its interest in A-Plan by £3.4 million over the year.

HOW WILL WE CRYSTALLISE VALUE?

A-Plan appeals to many buyer groups, including a trade or financial buyer. The company could also be of interest to yield investors or, when it reaches critical size, an IPO might be feasible.

 

 

Sector Location Date of Investment Residual cost £’000 Unrealised Value £’000
Services UK April 2015 14,573
22,461