Buyout Investments

Cornhill France

Activity

Cornhill France is a niche insurance company specialising in 5 classes of business:

• cover for HGV vehicle own damage: Cornhill France is the no. 1 independent insurer on the market and covers all risks of accidental damage to HGV vehicles, light commercial vehicles, coaches and buses, excluding third party risks. Its insurance products are distributed via brokers and agents or through finance companies;
• cover for unpaid rent: Cornhill France is leader on the French market. The risks covered include the non-payment of rent, deterioration of property, periods of non-rental, etc. Cornhill France deals exclusively with property managers through the intermediary of brokers and agents;
• insurance for mechanical breakdown: this covers cost of parts and labour as a result of unforeseen breakdown of private cars;
• insurance for financial losses incurred by a landlord or reservation agent for holiday lettings in the event of cancellation or early cessation of the letting. These products are distributed through the major networks for tourist lettings and through real estate agents;
• legal protection: the company covers legal costs and expenses in the event of legal procedures involving the insured and a third party.

Context

Cornhill France had been owned since 1986 by Cornhill Insurance Plc (a wholly-owned subsidiary of the Allianz group). As a result of a direct approach, the AXA Private Equity Fund II team were able to convince i) the Cornhill France management to mount an LMBO and ii) the historical shareholder to divest itself of its subsidiary on a mutually agreed basis.

Strategy

The Group objective is to achieve double digit annual growth rates whilst improving its claims ratio. Business development will be centred essentially around cover for pecuniary loss (unpaid rent and seasonal lettings) and stronger growth in HGV own damage. In parallel, the group’s development model could be transposed to other European countries particularly Spain.
AXA Private Equity has contributed to the creation of value by assisting the management team in its development policy.

Divestment

The stake held by AXA Private Equity was purchased by the MACIF group on 9 July 2004. This takeover was realised with the participation of the incumbent management team who kept a stake alongside MACIF. Of all the candidates for acquiring Cornhill France, the MACIF group proposed the best project for the divesting shareholders, the managers and for Cornhill France staff. The MACIF group offers all the advantages that would be likely to help Cornhill France in the pursuit and even acceleration of its business development. Following this acquisition, Cornhill France will retain its own identity, know-how and business locations.