Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
Robert Regis Hyle | December 20, 2016
In what is the largest ever purchase of an insurance software company, Guidewire Software announces it has entered into a definitive agreement to acquire ISCS. The acquisition will enhance Guidewire’s ability to serve those P&C insurers that prefer a cloud-based, all-in-one system supporting the insurance lifecycle, according to the news release issued by Guidewire.
“Like Guidewire, ISCS is a software company focused exclusively on serving P&C insurers,” says Marcus Ryu, CEO of Guidewire. “Their technology and expertise will enable us to provide a new option to our customers and augment our progress in delivering cloud-based products. We are excited by the opportunity to welcome the ISCS team and customers to our community.”
“We look forward to joining Guidewire and continuing our mission of serving P&C insurers,” says Andy Scurto, CEO and founder, ISCS. “The breadth of Guidewire’s offerings and the scale of its organization will enable us to provide additional value to our customers. We also appreciate the strong affinity between the companies in terms of focus and culture.”
According to Celent analyst Donald Light, this is a change in Guidewire’s acquisition strategy. Up to now, all (Guidewire’s) acquisitions have fit into—or added a single new element—to Guidewire’s InsuranceCenter Suite. ISCS has its own end-to-end suite in SurePower Innovation.
The privately held ISCS immediately brings more revenue and good market momentum with a solid sales pipeline to the publicly traded Guidewire, adds Light.
“ISCS’s 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,” says Light. “A second is that ISCS will become a vehicle for small insurer growth outside of the U.S. The third is that ISCS' more extensive cloud experience, especially with Amazon Web Services, will step up Guidewire's movement to the cloud.”
Karen Furtado, partner with Strategy Meets Action, believes the work ISCS has done with AWS in the cloud will benefit Guidewire.
“Guidewire and ISCS have been both dominant companies in their respective tiers of the market,” she says. “As insurers are turning more and more to cloud-based solutions in all tiers of the market, the ISCS platform will provide Guidewire full end-to-end cloud based capabilities. It will be interesting to see how the integration of these two companies will play out as one was a pure software company and the other was a full service offering.”
Jeffrey Goldberg, vice president of Novarica, points out the Guidewire/ISCS deal is part of a multi-year trend towards consolidation in the P&C core system space. Much of the M&A activity in the past has involved standalone components being bought by suite vendors—a response to insurers’ desire to work with a single third-party across all of their core system needs.
As with this deal, Goldberg points out the marketplace has seen smaller vendors snapped up by larger vendors, where, such as the case with Guidewire, the larger vendor is public company or a vendor with a very large private equity backing.
“Insurers are a risk-adverse group when it comes to technology licensing, and even when a smaller vendor has a better functional fit for a company there can be trepidation about weak balance sheets and a shorter runway,” says Goldberg. “Few insurers want to license a system that might be on life support due to lack of funds. When a larger company acquires a smaller or more niche vendor, it can mean the best of both worlds for the insurer.”
Guidewire has continued to show strong sales numbers in the large and mid-size insurer marketplace, but Goldberg points out that for continued growth they need to make sure they have an offering that appeals to a broader base of smaller insurers as well.
“Whether deserved or not, Guidewire has a reputation among smaller insurers for high cost and long implementation times, and recently Guidewire has been working hard to position their solutions for rapid deployment,” says Goldberg.
Some other large vendors have recently acquired solution vendors aimed at the small scale of the insurance marketplace, so it’s no surprise that Guidewire has made a similar move, explains Goldberg. This is a way to quickly establish themselves as a vendor that also caters to more clients of varying sizes.
“It’s likely Duck Creek Technologies is considering a similar acquisition, much the same way Guidewire’s FirstBest announcement followed quickly on the heels of Duck Creek’s acquisition of Agencyport,” said Goldberg.
“Looks like 2017 will be an even bigger year for acquisition integration within the core system space as well as continued consolidation opportunities from an ownership perspective on the horizon,” says Furtado.
No terms of the deal were announced. Guidewire anticipates it will close the transaction in approximately 60 days.
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- Canadian Insurer Deploys Guidewire Solutions for U.S. Customers
- AmeriLife Partners with FAST to Administer Annuities
- Amica Deploys Guidewire’s Billing Solution
- ManchesterStory Selects O’Halleran to Lead Advisory Board
- SPLICE Releases Data-Driven Voice Apps for Alexa Skills
- EIS Introduces CoreVelocity Approach to Accelerate Delivery
- Finys Announces Release of Business Intelligence Solution
- Brunson Named President, CEO of Gulfstream and Catawba
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA is pleased to present the 2014 Webinar Series. We have many topics for you to choose from and attendance is open to all ITA members. The webinar topics are current and exciting — ranging from predictive analytics to telematics and will focus on the direction insurance carriers need to follow for the future. All webinars are presented by insurance IT professionals along with some of the leading analysts and consultants in the field. There is no cost to attend an ITA webinar. For more information and to register for the webinar, click the “title” of the webinar below.
BLOGS AND COLUMNS
Robert Regis Hyle
As many insurance technology professionals prepare to travel to Orlando for next week’s IASA annual conference they will be happy to know the program... READ MORE
Bryant G. Tow
Managed service providers are new targets and the cost of rescuing the data is exorbitant... READ MORE
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE