ATE insurance market 'has a future'

The ATE insurance market “has a future” after Jackson, Ross Clark, chief investment officer of Burford, has said.

However he warned that some of the losers could be small businesses, who, unlike individuals, will not be able to benefit from QOCS and might not want to take the risk of pursuing relatively “low value” claims.

The other group of claims he identified as less likely to proceed after Jackson were environmental actions, which were “quite complex, but offer no real financial rewards”.

Clark’s comments followed a trading update from Burford, the US-based litigation funder which acquired ATE specialist FirstAssist Legal Expenses in February last year.

Burford said FirstAssist had performed above budget, generating more than $11m in EBITDA in the ten months following its acquisition, and that its earnings for the whole of 2012 were 35 per cent ahead of the previous year.

“We’re not a typical ATE business in that we don’t do much low value RTA work,” Clark said. “We specialise in catastrophic clinical negligence, high value commercial cases and group actions.
 

“The areas that will be hardest hit by Jackson, such as low value personal injury, are things we are not so much involved in.”

He said there was “a lot of enthusiasm” for contingency fees, and Burford was already talking to UK law firms about funding arrangements.

Clark added that Firstassist’s profits related to cases insured in 2010 and it had a book of cases under the existing rules which would fuel its results for the next two years.

In a separate development, Bristol-based law firm Lyons Davidson denied press reports that it is discussing acquisition by Cardiff-based insurer Admiral.

The firm, which became an ABS last year, said it was not being acquired by any insurer and or involved in any discussions relating to its acquisition.