Barclays Private Equity backs £147 million MBO of R&SA Healthcare & Assistance businesses

Barclays Private Equity, the leading mid-market private equity house with a financial services sector focus, has backed the management buy-out of the healthcare insurance and related assistance operations of Royal & SunAlliance Insurance Group PLC (R&SA). The total consideration paid was £147million, excluding the insurance capital allocated to the business by R&SA. Barclays Private Equity has invested £87million for a 90 per cent stake in the business.  

Founded in 1997, the business has rapidly become one of the market leaders in the provision of private medical insurance, personal accident and other specialist insurance lines – in a market that is currently estimated to be worth £4.9billion. With well-established distribution relationships with financial services businesses, affinity groups and healthcare intermediaries, the business has grown strongly to total income of around £300million in 2002. The new venture is ideally positioned to harness the developing wellbeing and healthcare insurance markets.  

Owen Clarke, who led the deal for Barclays Private Equity, said: "With our experience as a leader in the financial services sector, backing companies including Admiral Insurance, Preferred Mortgages and Clydesdale Financial Services, we recognised the potential of this business. It has strong positions in a number of markets, focusing on growing and profitable market segments. Product innovation is key within this market, particularly in the SME arena, and we believe the company is more flexible to individual needs than the larger players."  

Tim Ablett, who is leaving his current role as MD of Groupama Insurances to become CEO, commented: "We are delighted to have secured Barclays Private Equity's backing to help us grow a profitable and unique business-to-business company, and to capitalise on the potential of an excellent business in a growing sector.  

"We aim to challenge traditional approaches by being much more customer-focused, providing a range of services that cater to the changing health and well-being needs of businesses – large and small – and of individuals throughout their life stages. This is also good news for healthcare and financial services intermediaries as we have extensive plans to exploit and broaden our product range. We believe that this will create valuable opportunities for their businesses, as well as for ours.”  

The MBO also includes the assistance services business FirstAssist Group Ltd., which will be fully integrated and expanded within the new operation. Management has taken a minority stake in the business and a leading reinsurer is providing reinsurance support to the group.