Interview with CED and CSP about takeover in Spain

7/29/2011

Interview Rafael Orfila and Julio Lozana
Director of CED in Spain and Chief Executive Officer of CSP in Madrid.

“We want to be a leading player in Europe in Loss Adjustment and Claims Management”

Question - When did CED set in motion its purchase of CSP?
Rafael Orfila.- The first contacts were made in late 2010. After obtaining market leadership in the Benelux, CED has at the start of 2011 aimed its arrows at Spain as third home market. Having studied in depth the claims adjustment market in Spain it was evident to us from the outset that we wanted to work with CSP.

Julio Lozano.- Yes, that’s right, contacts were initiated at the end of 2010, and CSP’s strategic plan likewise provided for the internationalisation of the company. The CED range of products and services enables us to open up new horizons in a group that is already operating practically throughout Europe.

Question - What was the most complicated aspect of the negotiations?
Rafael Orfila.- Negotiations like these are complex and even more so when the companies are of this size. Even so, they progressed at a good pace and in an atmosphere of frank collaboration and transparency.
Julio Lozano.- For our management team the only complexity was adding to our usual workload the burden involved in negotiations, that of due diligence,…. But, just think, it went so well that the whole process was completed in less than six months!

Question - What synergies will the deal bring to each of you?
Rafael Orfila.- I would like to stress that we have been part of the same corporate group since 30 June: CED. We have started a journey on which all the companies in the group will help and collaborate with one another, making the most of each one. The international dimension of our operation is also opening up a considerable range of possibilities.

Julio Lozano.- From now on CSP can furnish its customers not only with the services of insurance surveying and motor claims adjustment, accident reconstruction, risk assessment and analytical processing, its services also extend to: the management of Green Card and 4th motor Directive, medical adjustment reports (assessment of bodily injury), the processing of accidents, Cross border claims and, of course, international loss adjustment services.

Question - What was the reasoning behind the decision for CSP to carry on operating in Spain under its trade name?
Rafael Orfila.- It was very evident to us from the start that the CSP trade name is an asset for CED and that is why it will continue operating in Spain.

Julio Lozano.- By now and after so much time the CSP trade name has gained the good reputation it has in the market and it is a very important asset. That is what our new shareholders have also recognised in the international market. The continuity of the trade name is guaranteed.

Question - Is Julio Lozano’s appointment as CEO after the retirement of Enrique Marfany in keeping with that process of continuity?
Rafael Orfila.- In CED we were convinced from the outset that the agreement with CSP would entail Julio Lozano carrying on. From the very beginning of our talks no other possibility was considered than his appointment as Chief Executive Officer.

Julio Lozano.- Replacing my colleague and friend Enrique Marfany as CEO is a challenge, as he is a great professional. However, since the foundation we three partners have worked together very closely, reaching every corporate decision by consensus. That is why I believe we are prepared for facing up to this challenge.

Question - What are the aims the ‘new’ CSP has set itself?
Rafael Orfila.- CED’s aims are ambitious. We want to be a leader in the European market in the short term. It will be vital to achieve strong growth in Spain. We are convinced that by incorporating CSP we will be able to achieve our targets. With Interiura, CSP and GTP the group has established a very important positioning in the Spanish insurance market. By combining the networks, products and services, the expertise and the customers of the companies in our holding group we are convinced we can achieve the aims, no matter how ambitious they may be.

Julio Lozano.- At CSP we have always had very ambitious objectives, which we have accomplished. At the moment, and with the potential of CED, the growth targets will multiply exponentially: we have a larger loss adjustment network, greater specialisation, a larger product range, a national medical network and, obviously, an international dimension to our services.

Question - What are the differential criteria of CED? Is its aim to be a leader in loss adjustment and claims management in Europe?
Rafael Orfila/Julio Lozano.- The CED philosophy is based on 3 strategic spearheads: professionalism, innovation and internationalisation. We want to be a leader in Europe in loss adjustment and claims management. Our mission is and will be to provide the best service in the insurance market. Besides Spain we have ambitious plans for growth in Portugal, Italy, France, Germany and Great Britain.

Question -  With the purchase of CSP, are you ruling out other acquisitions? What are the key facts and figures of your 3 companies in Spain?
Rafael Orfila/Julio Lozano.- We want to continue growing and expand our range of products and services in the Spanish market. We do not rule out studying other possible acquisitions if they can add value or help us achieve the strategic aims of CED. After 30 June CED now has 110 employees in Spain, offices in Barcelona and Madrid, more than 370 insurance and motor surveyors and a national medical network of more than 150 doctors specialising in bodily injury.

Question - What is your view of the insurance market in Spain? And on the European level? What professional aspects give you most concern?
Rafael Orfila.- The insurance market is becoming more and more concentrated, creating greater demands: IT developments, investments, high standards of service quality, demand for new products, etc. It will only be possible to face these challenges from the strong position of belonging to a big group of companies with investment capacity and the ability to respond to these demands. This change is also taking place on the international level. Only companies that are part of a multinational group will be able to meet these challenges.

Julio Lozano.- And, of course, all this calls for a high level of specialisation and professionalism in the loss adjustment networks: having systems available that enable the loss adjustment work to be streamlined, to facilitate the technical work, invest time and money in plans for training and specialisation, etc. All these requirements can be tackled more easily when you are part of a large group.

Question - Are the crisis and the decrease in business forcing loss adjustment offices to “go mad” with their professional rates?
Rafael Orfila.- It is true that our sector has not been unaffected by the economic crisis we are going through. There is no question that the sector’s own economic crisis and competition are exerting pressure on rates. All the same, we are a group of companies that focuses primarily on quality of service and our customers’ needs.

Julio Lozano.- We are worried about the insurers’ cost-cutting policy which obviously affects the loss adjustment sector. However, it is only with offices equipped with powerful enough tools that we can show the sector the importance of our work, the “real” saving of costs and the obvious need for the loss adjuster in the insurance world. We have never joined in a price war to offer our services, and we have no intention to, especially now when we will have to demonstrate market profitability to our new shareholders.