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The Return of Insurity: Analysts React

The acquisition of LexisNexis' insurance software business by Genstar Capital will benefit insurance carrier customers while clarifying LexisNexis' insurance-related business and delivering a cautionary message to companies ambitious to enter the insurance software market.

The Insurity brand is returning to the insurance technology market, as the result of a definitive agreement for Genstar Capital, LLC to acquire LexisNexis Insurance Software Solutions (Hartford, Conn.). A statement from the San Francisco-based private equity firm said that it expected that LexisNexis Insurance Software Solutions would rever to its original name, Insurity, Inc. Insurance technology market analysts have hailed the announcement as a positive development for the insurance industry and as a sign of economic vitality in the insurance software sector.

Genstar's acquisition of Insurity is confirmation of strong demand for P&C insurance policy administration systems throughout North America, asserts Jeff Haner, principal research analyst for Stamford, Conn.-based Gartner's Insurance Industry Advisory Services.

"With this deal, Genstar enters this market with a vendor whose solutions have some functional gaps, but one with a solid foundation and recognizable brand that continued investment may develop into a strong contender," Haner comments.

Calling Genstar Capital's acquisition of the former Insurity "a positive development," Donald Light, a San Francisco-based senior analyst with Celent notes that the deal brings a significant commercial lines policy administration customer base, especially in the mid- to large-size tiers, as well as other elements of an end-to-end solution, namely billing and claims.

"Insurity faces a challenging market for all of its solutions," Light cautions. "Genstar should be able to provide financial and strategic support to make Insurity a stronger company."

The Insurity brand had continued to be strong brand in the P&C Market even following the acquisitions by ChoicePoint and LexisNexis, asserts Karen Furtado, a partner with research and consulting firm SMA (Boston), but Genstar Capital's investment will provide Insurity the opportunity to accelerate Insurity's product strategy and services to the P&C market while leveraging the LexisNexis data that Furtado says has been a strategic addition to the product roadmap the past two years.

Insurance software customers should benefit from the divestiture because within Lexis Nexis, the Insurity software component was a small element of the entire offering, according to Furtado. "It was always challenging to balance the message and focus," she says. "LexisNexis with both the data and analytics as well as the Insurance Exchange service will still be a significant player in the Insurance landscape."

"Insurity customers should see a more focused relationship from the company, Furtado adds. "With renewed investments that will accelerate the product roadmap it should be a benefit to all Insurity customers."

The deal also clarifies LexisNexis' business, according to Gartner's Haner. "LexisNexis isn't a software company," he remarks. "This sale enables them to stay focused on their core data and analytics business."

The experience of LexisNexis should serve as an example for other ambitious companies seeking to carve out a piece of the insurance technology market pie, suggests Matthew Josefowicz, partner and managing director of New York-based research and advisory firm Novarica.

"Recent transactions like this one and the recent management-led buyout of AgencyPort underline for me the uniqueness of the insurance software business," Josefowicz comments. "In order for strategic acquisitions to have the best chance to deliver real synergies, the acquirer needs to have a heavy focus on insurance enterprise IT specifically."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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