(Vikaran’s new status within Patriot National will boost its status as a core insurance system vendor. Photo of New York Stock Exchange by Luigi Novi.)
Patriot National, Inc. (Fort Lauderdale, Fla.), a provider of outsourcing solutions to insurers, has acquired core system and services vendor Vikaran Solutions (Chicago). The $10 million, transaction, which includes MPCS—Vikaran’s Pune, India-based software development center—expands Patriot National’s software and services offerings and provides Vikaran with the financial strength to compete as an insurance core system vendor.
Since its IPO in Jan. 2015, Patriot National has made a total of eight 8 acquisitions representing an investment of approximately $39 million. Bringing Vikaran and MPCS within the fold will enable Patriot National to rapidly expand its software and service offerings as well as provide an outsourcing platform in India, according to Steve Mariano, CEO, Patriot National. “The team at Vikaran built our Workers’ Compensation Expert system, and together they bring extensive experience in technical consulting, design and development for the commercial and workers’ compensation insurance industry,” he says. “We will also add several new insurance companies to our growing list of clients and over 70 highly trained programmers.”
Owning Vikaran will enhance Patriot National’s workers’ compensation business process and technology services offerings. “We’re a virtual insurance company,” Mariano notes. “We can do any back office processes—claims, billing, collections, etc.—allowing carriers who have not been in workers’ comp to enter into the business. For companies already in the workers’ comp business, Vikaran is a fabulous platform.”
In fact, under the aegis of Patriot National, Vikaran is now empowered to emerge as a competitive core system vendor. “One of the major reasons Vikaran was not rapidly growing in sales was because, while they had developed an outstanding system, they never had a balance sheet—which could make them come up short when competing with major vendors during a carrier’s selection process,” Mariano comments. “A carrier who likes the system will balk at a vendor without a lot of private equity; as a publicly traded company on the New York Stock Exchange, Patriot National solves that problem for Vikaran.”
The backing of Patriot National is an important gain for Vikaran as core system vendors, given that there are so many in the market currently and that insurers are thus looking for reasons to cross potential suppliers of a long list of candidates, according to Matthew Josefowicz, CEO of research and advisory firm Novarica. “The perception of entry risk, or the fear that the provider lacks a solid financial reason is a common reason,” he comments. “This move gives Vikaran a solid answer to that potential knock-out question.”
Sandeep Mehta, Vikaran’s CEO calls the acquisition a “huge win” for both companies and their current and future companies. “Vikaran’s innovative technology, coupled with Patriot National’s deep business and operational expertise creates a unique value proposition in the insurance marketplace,” he comments. “The added credibility of a strong balance sheet and the public-company transparency will enhance our competitive position in the marketplace.”
The acquisition reinforces Patriot National’s goal to deliver innovative technology and insurance solutions unmatched by any other provider, according to Judith Haddad, president, Patriot Technology Solutions. “We have collaborated with Vikaran and MPCS for several years, and I have the highest level of respect and confidence in their technical skills, innovative thinking and ability to execute,” she comments. “With the addition of Vikaran’s core product, we offer a complete insurance value-chain solution that meets the needs of all our current and potential clients.”