Majesco, a New York-based vendor of core insurance systems and services, has entered into a definitive merger agreement with Cover-All Technologies, a Morristown, N.J.-based insurance software vendor, in a 100 percent stock-for-stock transaction, pursuant to which Cover-All’s stockholders and the holders of its options and restricted stock units, in the aggregate, will, upon the closing of the merger, receive 16.5 percent of the outstanding shares of common stock of the combined company, on a fully diluted basis, according to a Majesco statement which affirms that the combined entity will retain the Majesco brand globally.
Majesco characterizes the merger as the latest step in the execution of an aggressive growth strategy to consolidate its global insurance business under a single and separate entity. Recent moves by the vendor include the acquisition of Columbus-based consulting firm Agile Technologies’ insurance business and the hiring of former Novarica analyst Chad Hersh to lead its life and annuities and group benefits business.
The merger creates a potentially market-leading company well-positioned to compete in the insurance software and services market, opines Manish Shah, President and CEO, Cover-All. “Cover-All and Majesco have highly complementary core strengths, including a broad product portfolio, passionate people committed to world-class software and impactful customer services exclusively focused on insurance industry,” Shah comments. “Majesco will be poised to be a formidable player with its assets of deeply integrated core processing suite, disruptive business intelligence technologies and IT & consulting services that cover the entire spectrum of the insurance value chain.”
Donald Light, Director of Celent’s Americas P&C Insurance practice describes Majesco as “bulking-up fast” with its recent moves, producing an entity that will have revenue greater than $100 million, and more than 150 insurance customers globally.
“Scale has always been a plus in the insurance software business,” Light comments. “It speaks to a demonstrated ability to create and maintain insurer relationships. Technology firms with more customers have broader and deeper IP; and more resources to invest in getting better. That said, size alone is no guarantee of success. Smarts and agility and foresight are not correlated with size.”
Majesco has moved quickly to create a big player with impressive resources, Light affirms. “Now comes the harder, but necessary, work of integration, vision, and creating value for current and future customers,” he adds.
Expanded Capabilities, Scale
“We are particularly excited because, as a larger company, we will have better resources including expanded scale to meet the needs of any insurer regardless of size or location, and improved financial strength to invest in innovative and new products,” Shah continues. “We believe that this merger will significantly enhance shareholder value by allowing Cover-All shareholders the ability to participate in the growth of the combined company. We also believe that our customers and employees will greatly benefit from broad capabilities and increased opportunities in the combined company.”
Majesco’s statement on the merger says that the combined entity is expected to have:
· Innovative and proven core software suite serving all tiers in each of our operating markets: the Americas, Europe and Asia-Pacific
· Customer-centric collaborative culture focusing on customer value enhancements through innovative technologies and dedicated customer-oriented services
· Modern, mature, and integrated insurance core software solution suite covering all tiers and all lines of business of Property and Casualty including personal, commercial, specialty, and workers compensation business.
· Life Insurance, Annuity, and Group Benefits product offerings
· Consulting practice covering broad needs of insurers
· Comprehensive bureau content services offering with extensive knowledge of ISO and NCCI
· Business Intelligence and data analytics solution with customer-focused consulting and services practice
· Robust cloud solution for core insurance systems already deployed to over 30 customers
Following standard closing procedures, including regulatory approval, the transaction is expected to close in the second quarter of 2015. Both companies will continue to operate as independent entities until then, according to the Majesco statement.