Alternative business structure Quindell Portfolio plc has started to announce the major contract wins its end-to-end personal injury service has delivered, with a deal with RAC worth potentially £500m a year first to become public.
Rob Terry, Quindell’s chairman and chief executive, said the delay had been caused by waiting for the final shape of the Jackson reforms and referral fee ban so as to ensure compliance.
Quindell has entered into a five-year contract with RAC that will see a legal expenses insurance policy bundled up with members’ breakdown cover, giving them access to the range of Quindell’s white-labelled services in the event of an accident.
The company said the signing of the contract follows an initial pilot period until early 2013, which resulted in an improvement of more than 50% on conversion rates and improved member awareness of the service and a 20% reduction in the total cost of claims. “This is achievable by addressing the total cost of claims, including the provision of a quality legal and rehabilitation service for members, rather than simply focusing on recovering and repairing members’ vehicles,” it said.
Mr Terry said the work is already worth “several tens of millions of pounds” a year, but with increased awareness among RAC’s seven million members, this could rise to £500m.
Rather than receiving payment upfront for work sent to Quindell, RAC has agreed to wait until the end, meaning that Quindell will not need to draw on the £80m of additional funding it recently procured to support the working capital requirements of this agreement. The majority of these funding lines remain available to support further organic growth, it said.
RAC is also to become a shareholder of Quindell after being granted warrants over 250m shares in the capital of Quindell, exercisable at £0.13 per share (this equates to a value of £32.5 million), or the average trading price in the 30 days prior to the move to full LSE listing if lower – Quindell plans for this to happen later this year. Mr Terry said this would enable RAC to “share in the upside of our position”.
He added that more contract wins would be announced shortly as every pilot conducted is being converted into a full relationship.
Earlier this week Quindell added leading costs firm Compass Costs to its burgeoning portfolio of businesses, which includes three law firms. While Mr Terry indicated that further law firm acquisitions in Scotland and of a clinical negligence practice were on the agenda, the “core personal injury processing” operation has sufficient capacity. Quindell Legal Services is now handling 100,000 cases a year.