16 April 2003: Two well-known names in the medical insurance industry have linked up to buy the as-yet-unnamed UK healthcare & assistance business from Royal & SunAlliance.
Tim Ablett – previously managing director of Groupama – and MD of R&SA’s healthcare & assistance business Steve Wood have joined in partnership as investor directors of the new business.
The healthcare & assistance arm of R&SA’s business, which includes First Assist and R&SA Healthcare Administration, has been up for sale since the end of last year and the new owners, Tim Ablett, now chief executive and Steve Wood, the new MD, were planning, at the time of writing, for a launch at the beginning of May.
The company plans to develop its rehabilitation services and take on the likes of Bupa in the health insurance market.
The £147m management buyout is backed by Barclays Private Equity, which is investing £90m and taking bank debt for a 90% stake, and Bank of Scotland Corporate Banking, which provided senior debt.
Ablett, who has resigned as managing director of Groupama and who founded R&SA’s health and accident unit three years ago, has apparently been involved in talks with R&SA for the last six months. He and eight managers from the unit, including present managing director Steve Wood, have a 10% shareholding, representing an investment of £750,000.
The business currently includes a range of services such as an employee assistance programme, a hospital cash plan, medical insurance, personal accident, travel insurance, creditor and legal expenses insurances as well as a range of related assistance services.
Royal & SunAlliance will continue to underwrite the business transacted by the new company under transitional arrangements that will continue for up to 18 months following the completion of the transaction. Munich Re will provide reinsurance for the existing liabilities and future underwriting of the risk of Healthcare and Assistance after the transaction has been completed.
Ablett said that the new venture was a great opportunity for this “undeveloped sector” (namely, the medical insurance sector) and went on to explain that while most people have car or home insurance, only 10% of the population has medical insurance.
Larry Bulmer, chairman of the Association of Medical Insurance Intermediaries (AMII), said: “I am pleased that it is a management buy-out. If another provider had bought the business that would have taken a name out of the marketplace and this would not have been good for the consumer. It is a positive message to the marketplace that healthcare and assistance is an important sector and venture capitalists do not back companies in market sectors if they have no confidence in them.”