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SAS (Cary, N.C.), the global AI and analytics solutions provider, has acquired Honolulu-based Kamakura Corporation. Privately held Kamakura provides specialized software, data and consulting that helps financial organizations—including insurers, banks, asset managers, pension funds and others—manage a variety of financial risks.
SAS reports that its investment decision comes as post-pandemic optimism is shadowed by war, unyielding supply chain disruption, and the end of many pandemic-era financial and social safety-net programs. The firm notes that rising inflation and recession rumblings have emerged as dark clouds on the global economic horizon, signaling potential turbulence ahead, which means a time for financial services organizations large and small to closely examine liquidity risk and other risks in their portfolios.
In acquiring Kamakura, SAS says it aims to deliver an unparalleled suite of integrated risk solutions, particularly around asset liability management (ALM), and serve additional facets of the financial services industry.
Greater than the Sum of Its Parts
“This acquisition is an extension of tremendous investments already made in SAS’ cloud-ready risk managementplatform and integrated solutions,” comments Jim Goodnight, co-founder and CEO, SAS. “It signals our intent to advance market-changing risk solutions to solve the most pressing challenges our financial services customers face. We foresee that the resulting strength of SAS technology, paired with Kamakura’s risk analytics and credit models, will prove far greater than the sum of its parts.”
The synergistic value in the melding of two highly complementary risk technology portfolios is undeniable to anyone familiar with SAS and Kamakura, insists Sidhartha Dash, Research Director, Chartis. “It’s like joining matching puzzle pieces,” he says. “Merging Kamakura’s strengths—robust ALM and interest rate risk capabilities, proprietary and sophisticated credit models, and risk data—with SAS’ award-winning capabilities in credit risk management and risk and finance integration on SAS Viya is a powerful combination for solutions across the entire balance sheet.”
Kamakura built a reputation for pioneering vision and quantitative rigor. For over three decades, the company has specialized in software and risk management data for the banking and insurance sectors, currently delivered through two offerings:
Kamakura Risk Manager (KRM). According to the vendor’s description, KRM is among the most advanced, fully integrated risk management systems for ALM on the market. The software offers transaction-level valuation, simulation, stress testing and cashflow analysis.
Kamakura Risk Information Services (KRIS). This cloud-based software as a service (SaaS) offering is a subscription data service that provides credit risk data and analytics that help companies and countries forecast credit spreads and calculate default probabilities based on proprietary models, according to Kamakura.
SAS says the acquisition will bring these solutions’ capabilities into its fold, along with Kamakura’s executives, leadership team, employees and contractors, which SAS describes as a noteworthy accumulation of specialized quantitative risk expertise that would take years to assemble in today’s market.
Close Cultural Alignment
Kamakura specifically chose SAS over other potential acquisition suitors based on alignment in the companies’ data-driven, research-oriented cultures and their mutual excellence in modeling and analytics, according to Kamakura Chairman and CEO Don van Deventer, who founded the company in 1990. “SAS and Kamakura share the same philosophy: that successfully managing financial risk, while optimizing returns and meeting regulatory requirements, demands industry-leading research, sound analytics, fully integrated applications, flawless execution, and quantifiable results,” van Deventer elaborates.
“Joining the SAS family represents an exciting new chapter in Kamakura’s 32-year history,” van Deventer adds. “In combination, our like cultures will produce synergies that fuel customer and marketplace innovation. More concretely, adding SAS’ cloud-native Viya technology, risk domain capabilities and intuitive, user-friendly interfaces to Kamakura’s IP will spawn a top-tier, market-changing ALM offering.”
Kamakura’s executive leadership team includes Research Director Robert Jarrow, renowned in the quantitative risk field for co-creating two prominent risk modeling frameworks: the Heath-Jarrow-Morton interest rate model and the Jarrow-Turnbull reduced-form credit risk model. Both van Deventer and Jarrow, along with Kamakura COO Martin Zorn, will join SAS to help facilitate the transition and lead the development of ALM and integrated balance sheet offerings and other risk solution advances.
“The fragmented and siloed ways financial organizations have traditionally done asset liability and balance sheet management are becoming cost-prohibitive and unsustainable,” says Troy Haines, SVP, Head of Risk Research and Quantitative Solutions SAS. “Augmenting and combining SAS’ decades-long expertise in risk management and finance solutions with Kamakura’s advanced capabilities in ALM will better support the industry’s computationally heavy regulatory risk burdens and promote data-driven decisioning.”