(Main Street, Bethlehem, Pa. Photo credit: Tim Kiser.)
In what might could be described as Sapiens International Corporation’s next big step to solidify its presence in the North American insurance software market, the Holon, Israel-based provider of software solutions to the global insurance industry, reports that it has entered into a definitive agreement to acquire Adaptik, a Bethlehem, Pa.-based provider of core insurance software to the property/casualty industry. Adaptik markets policy administration and billing capabilities for commercial, personal, specialty and workers’ compensation lines of business.
Adaptik’s expected non-GAAP full year 2017 revenues were $12 million. Sapiens expects this transaction to be accretive to earnings starting in 2019. Sapiens says it will pay an aggregate cash consideration of between $19.5 million and $22 million, subject to retention and performance.
The transaction is expected to be completed in early March 2018. Upon completion, Adaptik will become wholly owned by Sapiens.
The Latest of Several Moves
Sapiens has been active in the North American market for many years, but it took a big step in early 2017 by acquiring StoneRiver, which gave the vendor a large North American customer base that nearly doubles its overall revenue. Sapiens had acquired Maximum Processing, also a property/casualty core system suite vendor, in 2016. Its first North American software company investment was the 2011 acquisition of FIS Software, provider of ALIS life and pensions system.
“We see this acquisition as a major step in Sapiens’ North American strategy and market positioning,” comments Karlyn Carnahan, head of the Americas, Property Casualty, Celent (Boston). “By bringing together the strengths of the Adaptik and StoneRiver products, Sapiens is able to offer a strong portfolio of solutions that is well-tuned for the North American market. The additional resources provided by Sapiens will strengthen their competitive marketplace position and allow them to continue to add key capabilities as their clients focus on expanding their digital strategies.”
The acquisition of Adaptik creates synergy with Sapiens’ strong existing capabilities, according to the firm’s CEO, Roni Al-Dor. “It will enable us to offer a truly modern, comprehensive property and casualty digital insurance platform. This platform will be formed by combining three powerful core components: Adaptik Policy, Adaptik Billing and Stream Claims, accompanied by Sapiens’ existing solutions for data and analytics, digital engagement and distribution, and cloud operation.
Al-Dor characterizes the Adaptik acquisition as part of continuing expansion in the North American insurance space, which he calls a key market for the firm’s planned growth. “To service lower-tier insurance carriers, we acquired Maximum Processing and its Stingray system, followed by the acquisition of StoneRiver in early 2017 for the mid- to upper tiers,” he says. “Now, enhanced by the Adaptik acquisition, those transactions enabled Sapiens to establish a stronger presence in the U.S., while extending our reach with capabilities that are specifically fit to market across the life and annuities (L&A) and P&C markets.”
Global Network of Relationships
As part of the Sapiens organization, the Adaptik team and clients will have access to extensive resources and a global network of relationships, according to John Pettit, Adaptik’s co-founder and CEO. “By incorporating our solutions as part of a leading software platform, our policy administration and billing capabilities will be future-proofed and fully integrated,” Pettit says. “We look forward to transitioning into the Sapiens organization as seamlessly as possible to ensure uninterrupted service for our customers.”
In addition to its product portfolio, Adaptik’s established customer base, along with its team, made the company and attractive acquisition target for Sapiens, according to Sapiens’ Al-Dor. “P&C providers seeking flexible product configuration will be well-served by our newly constituted P&C platform, offered as a single suite, or as standalone components,” he elaborates. “Carriers can also choose between a full cloud-based deployment, or the traditional on-premise option. This flexibility will enable carriers to best satisfy their specific financial and operational needs.”
With the addition of Adaptik, Sapiens characterizes the highlights of its property/casualty software platform as including:
- Pre-defined insurance products and business content
- An insurance data repository and advanced analytics solutions, with initiatives around advanced data management and predictive analytics
- A digital engagement platform, featuring portal, mobile and customer engagement tools
- An insurtech ecosystem with rapid integration capabilities, including pre-integration to leading technologies, such as personalized video, chatbots, artificial intelligence and machine learning-based services
- Open API architecture, with easy and configuration-based integration
- Cloud and software-as-a-service as an emerging and strategic deployment approach
A robust reinsurance solution
Sapiens describes Adaptik Policy as used by agents, underwriters and customers to quote, issue and administer policies. The product includes built-in integration with third-party systems and provides what Sapiens calls comprehensive policy lifecycle support for all P&C lines of business. Adaptik Billing enables P&C carriers to integrate with third-party systems and data repositories, enjoy best-in-class usability and automate processes throughout the billing lifecycle, according to Sapiens. “These offerings improve policy administration and billing for commercial, personal and specialty lines of business,” a Sapiens statement says. “StoneRiver Stream Claims is an underlying platform that prepares P&C carriers to adapt to new business requirements, while streamlining end-to-end claims processing for all personal and commercial lines.”
Execution is Key
“This acquisition opens the door for Sapiens and Adaptik to step out of the shadows and marry their strengths into a competitive platform for North America,” comments Jeff Haner, Research Director, Gartner (Stamford, Conn.). “The question that remains: is this too late? The key—as always—will be execution.”