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December 2013  Volume 5, Issue 1 |
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For more information about our services or to learn how we can help you explore your strategic alternatives, please contact us:
F. Laughton Sherman
Managing Director & CEO
(212) 897-9444
Pamela B. Carico, CPA
Managing Director & CFO
(704) 943-2671
Ronald J. Fry
Senior Vice President
(704) 943-2672
Elizabeth Reinhardt Golden
Vice President
(212) 897-9442
Sam L. Kramer
Vice President
(212) 897-9441
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Highlight on Insurance
Data and Analytics
The insurance industry has been data driven for a long time now as evidenced by ISO's claim on its website, "Since 1971, ISO has been a leading source of information about property/casualty insurance risk." So, why now, all the fuss about Big Data?
In efforts to improve underwriting profitability, insurance companies have voiced strong demand for gathering new data as well as better utilizing existing data. With low investment yields and industry combined ratios exceeding 100 since 2008, insurers are seeking immediate benefit from information that helps risk selection and pricing at the onset of underwriting a policy. Mitigating fraudulent or exaggerated claims is also of increasing importance due to lackluster industry profitability.
Data providers are looking to expand the quantity and quality of information provided to the insurance industry. They are able to disburse additional information without a significant increase in infrastructure cost whereas insurers have found building proprietary models to be an expensive, time consuming, and risky proposition. Furthermore, insurers are increasingly comfortable with granting data providers access to their proprietary data thus making the market for data a gradually more efficient market today.
In addition to data assets, third-party vendors that offer analytic capabilities are also of great importance to carriers. These solutions present external and internal data using intuitive platforms that display comprehensive views of details surrounding each risk and aggregates of risk. Sophisticated technologies are now available that consolidate data from underwriting and claims systems to be displayed and analyzed concurrently. Even with legacy systems, new technologies can pull data from multiple new and old systems.
Although there are many different solutions being offered to address the heightened demand for more data, all large data providers are striving for the same goal, which is to enable insurers to capture data and get it to the right people at the right time. As a result, M&A activity has accelerated and valuations have been notable. Sherman & Company has found strategics to be quite eager to acquire companies with proprietary data/analytics capabilities serving large and mid-sized insurers, as evidenced by our roles in serving Mapflow and CDS Business Mapping/RiskMeter on their sales and in observing the M&A market.
Below are specific overviews of highlighted data and analytics deals followed by a chart containing the insurance technology deals that have been announced in 2013.
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LexisNexis® Risk Solutions Acquires Mapflow Limited
LexisNexis® Risk Solutions, a provider of essential information that helps customers across industries and government predict, assess, and manage risk, acquired Mapflow Limited, a provider of location and risk intelligence solutions to the global insurance industry. The acquisition of Mapflow allows LexisNexis® to offer a more comprehensive risk assessment and underwriting solution, enabling insurers to make more timely and informed decisions. The financial terms of the deal were not disclosed. Sherman & Company acted as the exclusive advisor for Mapflow.
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CoreLogic Acquires MSB and DataQuick
CoreLogic (NYSE: CLGX), a residential property information, analytics, and services provider, acquired Marshall & Swift/Boeckh - a provider of residential and commercial property valuation solutions to the P&C industry, DataQuick Information Systems - a property data and analytics information company, and the credit and flood services operations of DataQuick Lender Solutions from the Decision Insight Information Group. The total transaction price was $661.0 million and CoreLogic expects to realize cash tax benefits with an estimated present value of approximately $115.0 million as a result of the transaction. The acquisition of MSB and DataQuick adds unique and complementary data assets and analytical capabilities and more than doubles CoreLogic's property and casualty insurance revenue.
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Guidewire Software Acquires Millbrook, Inc.
Guidewire Software, Inc. (NYSE: GWRE), a provider of software products for property and casualty insurers, acquired Millbrook, Inc., a provider of data management and business intelligence solutions for property and casualty insurers. This acquisition enables Guidewire customers to accelerate the replacement of their legacy core systems and to improve management of operational data in their policy, billing, and claims functions. The total consideration for the deal was $18.4 million, comprised of $14.7 million in cash and the remainder of the consideration delivered through restricted stock units.
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TIBCO Acquires Maporama Solutions
TIBCO Software, Inc. (NASDAQ: TIBX), a provider of infrastructure software that allows customers to capture the right information at the right time, has acquired Maporama Solutions, a cloud-based provider of location intelligence and geospatial analytics solutions. The addition of Maporama's digital mapping and geospatial capabilities complements TIBCO's analytics and data discovery platform, Spotfire, in providing customers with solving location-based business problems. The total consideration paid for Maporama was $6.9 million.
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CoreLogic Acquires CDS Business Mapping LLC
CoreLogic (NYSE: CLGX), a residential property information, analytics, and services provider, acquired CDS Business Mapping, LLC (dba RiskMeter Online), a Middletown, Connecticut-based provider of critical underwriting information to over 700 insurance carriers, agents, and brokers nationwide through real-time reports that identify property-specific geographic hazards. CoreLogic will use the acquisition to enhance its position within the geo-spatial property data and analytics industry. The transaction consideration was $78.0 million. Sherman & Company acted as the exclusive advisor to CDS Business Mapping.
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Eagleview Merges with Pictometry
Pictometry® International, a portfolio company of Spectrum Equity and a provider of geo-referenced aerial image capture and visual-centric data analytics, merged with Eagleview® Technologies, a provider of automated 3D measurement technologies and analysis solutions. The combined entity will provide unparalleled geo-referenced aerial imagery and analytical software solutions servicing both government and commercial customers. The 2012 pro forma revenues following the merger are over $100.0 million.
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Insurance Technology M&A Announcements
(Having trouble viewing chart? Click on chart for downloadable version.)
1) Sherman & Company acted as the financial advisor for this transaction. 2) Estimated deal value reported by Reuters.com. 3) The acquisition also included the credit and flood services operations of DataQuick Lender Solutions. 4) Former Qatarlyst shareholders retain the right to an earn-out payment, in addition to the $5.0 million up-front consideration, dependent upon future revenue of Qatarlyst. 5) An equity investment; not apparent if investors gained controlling interest. 6) Stock-for-stock merger-of-equals transaction. All other deal values sourced from press releases and/or SEC filings.
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Recent Transactions
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Sherman & Company Holdings is a boutique investment banking firm focused solely on the insurance industry. Our services include: Mergers & Acquisitions, Capital Raising, Strategic Advisory & Fairness Opinions, and Regulatory Advisory.
6302 Fairview Road, Suite 320
Charlotte, NC 28210
(704) 943-2600
200 Park Avenue, 17th Floor
New York, NY 10166
(212) 897-9444
www.Sherman-Company.com
Investment banking for the insurance industry is not just part of our business.
It is our only business.
Securities transactions are offered through Sherman & Company LLC, member FINRA/SIPC.
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