Burford Capital – the leading third-party funder and after-the-event (ATE) insurer – yesterday unveiled a 25% increase in profits before tax for 2013, after recording significant increases in income on both sides of the business.
The company’s £36m turnover was made up of £23m from funding (up 20%) and £13m from ATE (up 29%). Less operating expenses, profit before tax hit £26m. It has increased dividend payouts by 10%.
Burford is currently invested in 35 matters, with a commitment of £159m, having put in £37m during 2013.
Since its inception in 2009, 25 cases have concluded, generating £88m in gross investment recoveries and £30m net of invested capital – meaning a 52% net return on invested capital.
The company’s annual report said the past year saw “continued acceptance and adoption of litigation finance”.
It continued: “Burford’s annual survey showed sharp increases in lawyers’ views of litigation finance as a useful tool, along with an even more dramatic uptick in the views of corporate CFOs favouring its use. Investors are similarly enthusiastic, with hundreds of millions of dollars in new capital entering the asset class – which is a necessary part of continuing the establishment of litigation finance as a normal, mainstream part of litigation.
“Burford’s returns, high and uncorrelated, have delivered on our initial aspirations and have also served to fuel the overall growth of the market.”
The pre-Jackson ‘bubble’ in the first quarter of 2013 meant Burford wrote ATE with around £180m of exposure, more than the previous two years combined.
While the annual report said it was too soon to make any predictions for the future of ATE, “the significant tail of business written during and before 2013 in this business positions it for several years of sustained profitability while we wait for the market to stabilise”.
Chief executive Christopher Bogart said: “2013 was another year of successful progress for Burford, which saw continued significant growth in our income and profits from both the litigation investment and insurance businesses, and increased activity throughout the business. We are excited to be at the forefront of this rapidly maturing and evolving industry.”