Since its inception in December 2000, Rubicon Corporation, the insurance outsourcing specialist, has been on an acquisitive rampage. In just over two years the company has completed a series of astute acquisitions, including leading healthcare third party administrator Executive HealthCare, underwriting agency and service company Link Insurance, telemarketing company Principal Dynamics, Miller Fisher assets and Misys Claims Management.
Rubicon was launched by Bradley Brandon-Cross and Max Carruthers, formerly the managing director of GE Financial Insurance and chief executive of Eastgate Assistance respectively. The company opened its first office in Colchester in July 2001 with just five people; today it employs 525 staff, who are spread across seven locations.
In October 2001 the company secured £10m of extra development capital from private equity house Penta Capital and thus completed its first acquisition. It bought a 70 per cent stake in Folkestone-based Executive HealthCare (now renamed Rubicon Health) from GE Frankona Re for an undisclosed sum.
So when Jonathan Beak, Rubicon’s director of corporate and legal affairs, joined the corporation from GE Capital last May, it is hardly surprising that he was thrown in at the deep end. In less than a year he has already helped Rubicon with two further acquisitions and the Rubicon Connect joint venture with Principal Dynamics’ incumbent management team.
Beak seems to have taken these new responsibilities in his stride. “The role I’ve moved to is absolutely fantastic and frankly far more interesting and challenging than undertaking a corporate role in a big plc,” he says.
In December 2002, Rubicon purchased Solihull-based Misys Claims Management (formerly CWA Claims) from Misys plc, a Worcestershire software group, for an undisclosed sum. The claims management company was set up by Misys in 1997 to provide administrative outsourcing solutions to the general insurance industry. The purpose of the acquisition was to enhance Rubicon’s existing motor claims operations.
Earlier that same year, shortly after Beak’s arrival, Rubicon purchased certain businesses of the Miller Fisher Group from its receivers. The acquisition comprised the business solutions division, including the Waltham Cross Call Centre, and the motor vehicle inspection business. This earlier acquisition bolstered Rubicon’s existing capabilities in creditor and travel insurance while adding the ability to process warranty contracts.
Rubicon has also grown organically by winning new clients such as Barclays and the personal lending arm of Barclays Firstplus, Folgate, UK-authorised general insurer Axa and Nestlé. In Beak’s view, the company will continue to concentrate on organic growth in 2003 and consolidate its position.
“Acquisitions were how people envisaged we’d grow in the first year. But I think this year will be different for Rubicon,” says Beak. “Having got all the pieces of the platform together, getting the people we need and all the systems we need, this year is really one for consolidation and making sure all those acquisitions work nicely together.”
Beak’s brief was not only to manage a string of deals, but also to build the legal department from scratch. The biggest challenge Beak faces is to achieve this on a “not too substantial” budget, the size of which he declines to disclose (although he will say that it is a quarter of what was spent last year, excluding the amount spent on acquisitions).
Despite the limited budget, Beak appointed Donna Birthwright as the new group head of legal last December. However, he is not planning on recruiting any more lawyers at the moment – despite the size of Rubicon’s legal department, he prefers to do most of the work in-house.
“Outsourcing day-to-day bread and butter work doesn’t really work,” he says. “That’s the whole point of being in-house – you understand what’s going on better and you can ask, perhaps, better questions. That’s not to say a law firm will do a bad job, but they’re not exactly in pole position from the outset to produce the right product.”
Nevertheless, Beak does outsource some employment and complicated IT/intellectual property work. He also says that deal work will go to external lawyers without hesitation.
Traditionally, DLA was the only firm that Rubicon instructed, but even though Beak is happy with the quality of DLA’s work, he is gradually farming out instructions to other firms such as Dechert, Guildford-based Hart Brown, Kemp Little and Pinsent Curtis Biddle. Beak insists, though, that Rubicon is not on a scale to warrant a formal legal panel.
“During the first seven months I was here, I didn’t really fix my attention on the question of, ‘should we only be using one firm?’,” says Beak. “I suppose inherently I always thought it wasn’t quite the right thing to do, but certainly one of my jobs for this year is to move away from dependence on one law firm and look for the right firm for the right job.”
Beak has recently been talking to Kemp Little and Pinsents and says he would consider giving deal work to both firms.
Given Beak’s limited legal spend, he believes it is not always necessary to instruct a London-based firm. Kemp Little is on Beak’s radar because he believes that the niche practice is not only a great deal cheaper than other City firms, but it is also a good fit with Rubicon. “They’re pretty entrepreneurial as a business, and with a company like ours, which is also entrepreneurial, that makes a good fit,” he says.
Beak prefers to give Rubicon’s compliance work to the regulatory team at Ernst & Young, as he takes the view that lawyers are not the best people on a practical level to do this.
To cut Rubicon’s legal spend further, Beak says he intends to instruct an Indian firm to draft some standard commercial agreements. “I know it sounds a bit bizarre, but in fact the Indian legal system is actually not that different to the UK system,” he says. “If is was a job that needed in-depth knowledge of the UK legal system, then clearly it wouldn’t be appropriate to give it to them.”
He has not yet a chosen an Indian firm to undertake this work, but is talking to a number that have been personally recommended to him. He says he is hoping to launch a pilot scheme within the next month.
Director of corporate and legal affairs
|Director of corporate and legal affairs||Jonathan Beak|
|Reporting to||Joint chief executives Bradley Brandon-Cross and Max Carruthers|
|Main law firms||Brachers (property), Dechert (employment), DLA (principal external legal adviser), Hart Brown (property), Kemp Little (intellectual property) and Pinsent Curtis Biddle (regulatory)|