25 Jul 2005

Capita Insurance Services, part of The Capita Group Plc (Capita), announced today that it is to acquire BDML Connect Ltd from the insurance group BDML.

Subject to final Financial Services Authority approval, Capita Insurance Services will acquire BDML Connect for an initial cash consideration of £26 million and deferred consideration of up to £9 million, dependent on future business performance over the 30 months to 31 December 2007.

BDML Connect delivers personal lines insurance products on behalf of major affinity brands such as Norwich Union, Admiral Insurance and RAC, providing a solution to a broad range of insurance risks for its partners’ customers through a panel of insurers including motor, household, personal accident and travel insurance.

Included in the acquisition is Thornside, a business division within BDML Connect, which is an intermediary specialising in pet insurance sales and administration for major brands in the pet insurance market including Argos and Homebase. It was recently appointed to handle pet insurance for HBOS.

BDML Insurance Solutions, a newly formed subsidiary company of BDML Connect specialising in niche distribution channels and product lines, is also included. This business will focus on the insurance opportunities in the Local Authority and Travel/Leisure sectors as well as to support the Home Computer Initiative in the UK.

BDML Connect Ltd’s audited accounts, including Thornside, for the 12 months to 31 December 2004 report an operating profit before tax of £2.2m on turnover of £11.9m. Net assets on transfer will be approximately £2.9m.

The acquisition of these operations adds significantly to Capita’s current insurance capabilities and enhances Capita’s proposition to the affinity market with a comprehensive end-to-end capability that can provide sales and service, policy management and claims handling across a broad range of personal lines products. It will also enable Capita to provide distribution opportunities for underwriters via the BDML panel.

BDML Connect’s 430 staff will transfer to Capita and will continue to work from their existing Portsmouth location. Sandy Dunn, Chairman and CEO of BDML Connect, and his existing senior management team will move to Capita and remain with the business.

Dermot Joyce, Executive Director, Capita Insurance Services commented:

“This acquisition is an important step. It complements and enhances the already substantial expertise and capabilities of our team at Capita Insurance Services. The BDML Connect businesses and management team have an excellent reputation, operational capability and brand. The strategic relationships with insurers and clients of BDML Connect will directly contribute to the growth and sales pipeline of Capita Insurance Services, whilst also enhancing our end-to-end insurance utility offering. This acquisition together with Capita Insurance Services’ existing capabilities provides the entire infrastructure to support and connect affinity brands and their customers with insurers’ products as well as providing access to wider underwriting capital.

We welcome the new team to Capita and look forward to developing our capabilities together to address the opportunities in this growing marketplace.

Sandy Dunn, Chairman and CEO of BDML Connect, commented:

“I am delighted that we will be joining The Capita Group. Capita is an excellent parent for the business and will add value, not only to our business partners, but also to the management and staff in the company who have helped achieve its successful growth to date. I would also like to acknowledge the support of the BDML Group team who have helped our company attain its good reputation and high standing in a highly competitive, growing market. The acquisition will offer us much greater scope to grow the business and meet the needs of all our partners.”