Claims Management Group (CMGL)

CMGL was a £50m turnover leading provider of outsourced claims and insurance management services that were offered to FTSE quoted companies, general insurers, Lloyd’s underwriters and London Market insurer companies.

CMGL was a widely recognised brand with a strong reputation for its operational practices and quality of service. It had an international network of 11 offices and managed over 165,000 claims worldwide representing US$5b in gross liabilities and over $1b reinsurance recoverables. In addition, CMGL administered eight Lloyd’s syndicates.

CMGL was acquired by Sovereign Capital through a buy-out from Zurich Financial Services. After only months into the investment which had a 14 year history of growth and profitability, the business fell into a significant loss making position. The business was running short of cash and had fallen outside of its banking covenants.

Sovereign Capital decided to seek outside help and brought Mike Tait in as executive chairman. His brief was to very quickly get to understand the business, its services and markets – all of which were new to him, and then to propose and implement whatever was needed to recover the business and return it to profitability.

The key tasks were to reduce costs straight away by reducing staff from 650 people to 600 people, exit from unprofitable deals, and secure a number of new deals in pipe-line. The company was very quickly returned to a profitable footing.

Michael Tait and his investors saw an exit opportunity to exit through the sale of the company to Capita plc. The company was sold to Capita Plc for £32m generating Sovereign Capital an IRR of 260% and 3.3x money.