Quindell – Canadian Telematics win put into context

Quindell announcing a contract win with a Major Top 3 Canadian insurance company is more significant than first appears.

The majority of Canadian car insurance is sold through brokers (c70%). This contract provides access to 3m customers via 1700 brokers.

Comments and Observations

1) Quindell have stated that they will not issue an RNS for contracts that are valued less than £100m. We therefore know this contract is worth more than £100m.

We also know that the recurring revenues per telematics user is between $5 and $15 per month.

If 20% of the customer base adopts telematics this over 5 years would generate $36m revenue. 30% adoption equates to $160m.

It is also worth noting that this is a high margin business and the revenue from this contract is not factored into current forecasts.

2) Negative publicity has not had an impact on Quindell’s ability to secure large contracts.

3) This is an exclusive contract. This means the ‘Major top three’ insurance company has to use Quindell. It doesn’t mean Quindell are prevented from securing other contracts.

4) Aviva Canada is the second largest Property & Casualty Insurer in Canada with a market share of 8.7% and Gross Written Premium (GWP) of $3.155B. This is a FACT.

5) Canadian telematics will dwarf that of Europe. Is this a reason why Quindell might consider a North American market listing? Is it just a coincidence that Rob Terry has a home in Canada?

6) This is a great foundation for the rest of the Quindell business streams to target North America for growth.

Conclusion

On its own this is a significant contract win for the telematics business. The longterm impact could also be significant for the wider Quindell Group.

We already know that to meet market expectations Quindell didn’t need to secure any more customers. This news will therefore have a significant impact on revenues and profits.

What will happen to the business when they land the other three pilots they are progressing in North America? Presentation dated 21st August stated progressing pilots with 4 of the top 20 insurers.

Quindell have never failed to convert a pilot into a contract.

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