How Insurity’s Acquisition of Valen Could Create a Virtuous Analytics Circle

How Insurity’s Acquisition of Valen Could Create a Virtuous Analytics Circle
It’s open season on insurance technology acquisitions in general, and for Insurity in particular. Today’s announcement of Insurity’s acquisition of Valen Analytics is now Insurity’s fourth acquisition in a multi-year string: Oceanwide, Tropics, and in rapid succession Systema and Valen.   The potential for crossing selling among the five customer bases is obvious.   Less obvious, but of potentially even greater value, is Insurity’s ability to invite all of its insurer and other customers to use its Enterprise Data Solutions IEV solution as the gateway to Valen’s contributory database and Valen’s InsureRight analytic platform.   Insurity now has the scale and the means to create a virtuous analytics circle: individual customers contributing a lot of data through IEV to Valens and receiving back analytic insights to feed into their pricing, underwriting, and claims operations.   Good move.

Guidewire makes blockbuster acquisition of ISCS

Guidewire makes blockbuster acquisition of ISCS
Long sought after by Private Equity firms, other insurers, and the occasional investment banker looking for a transaction, privately held ISCS has chosen to join Guidewire (NYSE:GWRE).   ISCS adds its SurePower Innovation end-to-end suite to Guidewire’s existing InsuranceSuite end-to-end suite. This is a decided change of acquisition strategy for Guidewire. Up to now, all its acquisitions have fit into—or added a single new element—to InsuranceSuite.   Why?   Well, if you are a publicly held company growth is good. ISCS immediately brings more revenue and more importantly brings good market momentum with a solid sales pipeline.   ISCS’ focus on small and midsize insurers brings a few other intriguing possibilities. One is that Guidewire and its SI alliance partners will now aim at the large and very large insurer market, leaving the small and midsize market to ISCS. A second is that ISCS will become a vehicle for small insurer growth outside of the US. The third is that ISCS’ more extensive cloud experience, especially with AWS, will step up Guidewire’s movement to the cloud.   For now Guidewire shareholders have a heckuva gift under their Christmas trees.  

A consolidation wave is reshaping the EMEA PAS vendor landscape

A consolidation wave is reshaping the EMEA PAS vendor landscape
At Celent, we have been writing reports profiling policy administration system (PAS) vendors for a long time. In the European, Middle East and African region (EMEA) we have covered up to 50 vendors in some of our bi-annual reports and we know there were approximately twice more active in this region of the world.  The most recent report focused on life PAS in EMEA can be found here. Since our first look at the PAS market in the EMEA region in 2007 we have predicted that its fragmentation and its heterogeneity would lead to a consolidation. It is fair to say that we have been wrong with our prediction or without less humility we can say we have been right but our timing was bad. Indeed, it seems that the consolidation phase we predicted has started to materialize a few year ago but certainly not as early as we thought. In other words we have observed a surge in mergers & acquisitions over the past few years and we think it will still accelerate in the coming months. The most recent acquisition that validates our view is the acquisition of the Danish vendor Edlund by  KMD Group that has been announced this week. Overall we see various kinds of acquisitions:
  • Software integrators-driven acquisitions: large software integrators are trying to diversify their service offering through the acquisition of insurance system IP. The best example of this type of strategic move is for instance the acquisition of Wyde by MphasiS a few years ago.
  • The Private Equity (PE) firms-driven acquisitions: there is a growing interest to invest in the insurance core system space for PE firms. The best examples of this type of acquisitions are the contribution of Riverside in the merger between Charles Taylor and Fadata or Waterland Private Equity investment in Keylane that now combines activities of various PAS vendors including formerly branded LeanApps, Quinity, Mantcore and more recently the German vendor called Geneva-ID.
  • The core system vendor-driven acquisitions: PAS vendors understand they can grow quicker if they merge with a competitor. Sapiens acquisition of FIS Software and IDIT or Prima Solutions acquisition of Albiran a few years ago are good examples.
As already mentioned we expect more M&A to come and we are glad to help our insurance clients to navigate this changing market.  

CCC acquires a telematics platform: the story behind the story

CCC acquires a telematics platform: the story behind the story
Today CCC announced the acquisition of DriveFactor which provides a device independent platform for telematics data and analysis. Why is an auto physical damage estimation and analytics firm acquiring a telematics platform provider? Well, you could say that telematics is hot, and all personal and commercial insurers writing auto insurance are scrambling to build market share. That is true enough. You could also say that telematics data is going to be increasingly valuable in determining causation and relative responsibility for auto accidents: how fast was each car driving around a corner, who braked first, and how hard, etc.? That is also true. But that is not the whole story. The year is 2018. I am driving a new car, and I am in an accident. My car knows it is damaged. It also knows which systems and parts were damaged and need repair or replacement. And it knows the fastest, best, and least expensive way for that to happen. It might even know about the probability of personal injuries among my car’s occupants. This is all pretty valuable information. Who is my car going to give this information to?
  • Its manufacturer? My insurance company?  Emergency responders? Towing companies? Auto repair facilities? Or software companies that estimate the cost of repairs?
And what is the value of such data from tens or hundreds of thousands of accidents? A telematics platform that can order the flow of this information suddenly starts looking quite valuable.

Is there a concentration wave going on?

Is there a concentration wave going on?
As part of our research, Celent has been covering a large variety of vendors active in the insurance space. Over the past 6 months we have published a few reports profiling specific core insurance system vendors in different application domains such as policy administration, claims, underwriting and quote and illustration. Based on our continuous screening of the market we have a pretty good understanding of this market: Vendors_covered In Europe, the Middle East, and Africa we have noticed that the market is highly fragmented and we think that a concentration phase will decrease the number of market participants over the next decade. Mergers and acquisitions activities have already started with some interesting strategic moves that happened over the past 5 years such as the acquisition of Duck Creek by Accenture, IDIT and FIS Software by Sapiens and the merger between FJA and COR AG. More recently we have seen software integrators or more generally what Celent calls IT services vendors getting more active on the M&A front with for instance MphasiS purchasing Wyde a few years ago. As we are about to kick off the update of our IT Services vendor reports from 2010 (for more information about these reports you can click on the following links: IT Services Vendors Solutions Spectrum: North American Version, 2010 and IT Services Vendors Solutions Spectrum: EMEA Version, 2010), we already have noticed that some IT services firms are getting very aggressive on the market. A good example is without any doubts Sopra who has had an acquisition fever over the past 3 years with the recent acquisition of Steria announced this week. We find the recent M&A developments in the core insurance system vendor area as well as the IT services vendor industry interesting. We think it demonstrates that IT in financial services and more specifically in insurance attracts interests from investors, being existing players or new ones. In this fast changing environment, we are looking forward to get a deep dive in the IT services vendor landscape in order to provide the latest about this market to our insurance subscription clients. Stay tuned!