Firm plans to diversify in anticipation of threats to ATE market

Legal expenses firm LitComp has a potential £200m war chest for expansion following a private equity takeover.

Glasgow-based Maven Capital Partners succeeded with the £5.5m bid, and has promised a £2m capital injection to help LitComp expand into professional indemnity, pet and warranty insurance.

Chief executive Jason Smart said the takeover and subsequent diversification would help offset the potential fallout from the Jackson Review, which threatens the entire after-the-event (ATE) market. Last year, LitComp wrote between £27m and £28m in ATE.

Smart commented: “The ATE market is a difficult one because of deferred premiums, and it’s also very competitive, which is having an effect on premiums.

“On the back of that, we have had the Jackson Review biting on our ankles for the past 12 months. We believe that Jackson made his decision about ATE even before the final document.”

Smart added that while LitComp had access to £200m in funds, it would first need to push forward with establishing the new lines of business.

He will continue in his role as chief executive, along with the current board, although the company is now delisted from the Alternative Investment Market (AIM).

LitComp has applied for the listing of its shares and loan notes to be cancelled from 9 February, so the last day of dealing will be 8 February.

Maven formed a new vehicle for the takeover, Torridon Capital. Maven itself was formed last year by the management buy-out of Aberdeen Asset Management’s private equity operations.