Quindell wins five-year telematics deal with Canadian insurer - UPDATE

AIM-listed Quindell has won a five-year contract with a major Canadian insurer to provide its customers with its telematics technology solution and associated services.

The insurer, which is strongly rumoured to be existing customer Aviva Canada, represents more than 3m customers, 1,700 brokers and has a "significant" market shares of the Canadian automobile insurance market.

Analysts said they understood that regulatory approval for the service has been received and will be offered through several distribution channels.

Quindell expects the average revenue per customer to be $8-9 per month with high margins.

The technology will be used for the insurer's personal and commercial lines to help it reach its target of becoming a strong market leader in the development and delivery of telematics-based insurance solutions. Its goal is to reach a total of 120,000 telematics customers.

Quindell chairman Robert Terry said: "This additional new contract with an existing major insurer client provides us with our largest Canadian telematics client to-date. Their commitment to develop multiple telematics based products and services, offered through several distribution channels, positions them for overall market leadership."

The company's telematics proposition has been adding 10,000-15,000 new subscribers per month, primarily from the US, and the company reiterated that it anticipated this run-rate would reach 20,000 subscribers per month in 2015.

In early September, Quindell also bought out partner RAC's 49% share of a telematics joint venture, Connected Car Solutions (CCS), for £3.5m.

Analysts at house broker Canaccord said: "We assume this major insurer is Aviva Canada as it is a top three insurer in Canada and it was previously announced as the lead underwriter for ingenie Canada... is also an existing customer and employs iter8 solutions."

"Importantly, we understand that regulatory approval for the service has been received."

The broker said that in the event that Aviva Canada hits its goal of 120,000 customers, Quindell can generate $12m-$13m of annual recurring revenues, if 20% of Aviva Canada’s 3m customers eventually take up telematics, Quindell can generate $58m-$65m of annual recurring revenues.

"Clearly, realisation of these potential revenues is dependent in equal measure on execution and consumer acceptance of telematics."

Late on Thursday, a major holder of a short position in Quindell, US-based vehicle Roble SL, covered around 10% of their short, cutting it from around 5% to nearer 4.5%.