Cox Insurance

Business at time of investment

Cox Insurance was one of the largest UK motor and household insurance companies operating in the Lloyd’s of London insurance market, writing over £500 million of premiums annually.

Investment rationale

Cox’s solid core business with the potential of industry consolidation, cost reduction opportunities and being with the insurance market on the verge of an upward trend in the cycle would enable the business to grow significantly.

Value creation

• Led reconstruction plan after 9/11 exposure resulted in write off of the entirety of Cox’s book equity, including developing a unique “ring-fence” of commercial insurance activity into a run-off vehicle.
• Refocused company: Solely on the company’s highly successful UK motor and household underwriting business.
• Strengthened leadership: new Executive Chairman, CFO and CEO.
• Operational enhancements: Divested non-core businesses, secured new long-term financing, reducing annual financing costs; and rationalised IT operations.

Result

Having completely rescued the company from bankruptcy resulting from an exposure to the 9/11 attacks, in 2005 Palamon sold its holding in Cox to a private equity consortium generating a full sterling return on invested capital.