Whiplash reforms parked
​Fairpoint Group provides a range of consumer targeted professional services. The group’s core business is a consumer legal operation (76% of H116 revenues), supported by legacy debt solutions services.
Press coverage this morning states that a previous source of concern over group earnings may have gone away. This related to changes, proposed by George Osborne in his Autumn statement last year, to reform the UK’s compensation culture around minor motor accident injuries, specifically the operation of whiplash claims.
According to press reports this morning these reforms have been set aside by the government, indeed the insurance industry has concluded that they will never happen.
The Ministry of Justice confirmed that the whiplash changes are not a priority but claims reforms are 'not off the agenda'.
We recently adjusted our forecasts for Fairpoint in the light of their strategic decision to focus on the growth and margin opportunities in Legal Services. On those new forecasts the prospective yield on the shares is a remarkable 10% and the PER just 5.0x …and that is for the current year to Dec 2016.
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