((Interior of Lloyd’s of London. Photo credit: Bon Adrien.)
For more than a decade CSC (Falls Church, Va.) was one of the most important—and most visible—vendors in the insurance technology space. Following a reorganization in recent years, the company has been quiet from a strategic marketing standpoint. However, its announcement yesterday that it has closed its acquisition of Xchanging (London) suggests that the company is positioning for a renaissance in its market positioning.
The CSC acquisition of Xchanging is another example of both the continued trend of insurance vendor consolidation and the high level of investments into insurance, observes Karen Furtado, Partner, SMA. “Historically, CSC was the market leader in software but they have been quiet on the software front over the past few years,” she says. “By acquiring Xchanging, CSC broadens the portfolio of services and technologies that will provide new opportunities for insurers in the global market. It will be fascinating to watch the combined roadmap unfold in the digital connected world.”
“With the acquisition of Xchanging, CSC will be at the heart of the insurance industry’s digital transformation,” said a CSC statement released this morning. “The acquisition is a cornerstone of the company’s strategy to lead clients on their digital journey with next-generation IT offerings. That strategy leverages partners, industry software and deep domain expertise.”
The statement further asserted that CSC and Xchanging together would create a new leader in technology and business process services for the global insurance industry, significantly expanding CSC’s market coverage and enhancing the range of services to clients of both companies. The statement noted that the acquisition was accepted overwhelmingly by Xchanging shareholders, with approval by the CSC and Xchanging Boards and regulators.
Xchanging is a provider of solutions to the global insurance and financial services, healthcare, manufacturing, and real estate industries, as well as the public sector. Xchanging is the owner of Xuber, a supplier of commercial insurance software for over 40 years. Xchanging also brings to CSC domain expertise in the London insurance market, where the company has played an important role dating back to 2001. The acquisition also brings a BPO component for the P&C and wealth management industry sectors.
“We are delighted to have the Xchanging team join CSC to create a dynamic technology leader,” comments Mike Lawrie, chairman, president and CEO, CSC. “The addition of Xchanging is another step toward our goal of becoming a leader in the key geographies and markets we serve. Xchanging’s people and offerings portfolio are a complement to CSC’s existing business, which will allow us to demonstrate our commitment to areas such as the London market and the commercial insurance industry.”
The newly integrated CSC/Xchanging organization will offer innovative, next-generation technology solutions and services to every segment of the insurance market globally according to Phil Ratcliff, VP and general manager of CSC’s global insurance industry. “Together, we will innovate, design and deliver the most challenging insurance projects for our clients, transforming their businesses and the market,” he says.
“The way insurance is being bought, sold and managed is changing rapidly,” Ratcliff continues. “Many insurers now recognize the need to take a ‘digital first’ approach in order to maintain their relevance with distributors and clients. The coming together of these two organizations provides a complementary set of technology and business process services to help insurers on their road to digital.”
Industry’s Largest Core Insurance Solutions Provider
The addition of Xchanging strengthens CSC’s insurance footprint where, according to research and advisory firm Celent, it is the largest provider of core insurance solutions globally. “For Xchanging clients, CSC brings with it a whole new set of capabilities and skills relevant to its own segment of the market, in areas such as digital transformation, cloud orchestration and broader technology services,” comments Jamie Macgregor, senior VP, global insurance, Celent.
CSC describes the combination of CSC and Xchanging as the culmination of a due diligence process that began in November 2015. On December 9, 2015, CSC’s Board of directors, along with the Board of Xchanging, agreed to terms of the recommended transaction under which CSC would acquire Xchanging at the price of £1.90 per share in cash. On January 18, 2016, CSC announced that acceptances had been received from Xchanging shareholders holding approximately 87 percent of the existing issued share capital of Xchanging.