Skywire Software has dramatically expanded its presence in the insurance industry with its acquisition of Dallas-based document automation and customer communications solution provider Docucorp International for $127 million. The closing of the deal followed Docucorp's board of directors' rejection of an unsolicited offer of $140 million from Atlanta-based Ebix. The company resulting from the Skywire/Docucorp merger will operate as a privately held subsidiary of Hall Financial Group and market a comprehensive range of insurance information technology products under the Skywire name.
Prior to the deal Frisco, Texas-based Skywire counted about 350 customers worldwide, the majority in the insurance industry. Docucorp's customer base brings the vendor an additional approximately 1,250 customers and brings its total number of insurance customers to 1,000.
"I think the clear value of Docucorp to Skywire was that the former has such a huge footprint in the insurance industry," comments Craig Weber, a San Antonio-based analyst with Celent.
Gartner senior research analyst Kimberly Harris-Ferrante notes Docucorp's contribution to Skywire's already extensive menu of core insurance solutions. "Skywire has been growing through acquisition and this just continues to move the company along to become a larger player in the insurance solutions market."
Acknowledging Skywire's explicit ambitions in that direction, the company's CEO Patrick Brandt notes the merger's potential to provide more integrated insurance IT solutions. "Just to be in the market you have to integrate with Docucorp, so we already had a number of products integrated with Docucorp," he says. "Now it's theoretically a more integrated offering. The closer you can mold together our core insurance products, the better it is for the industry."
Beyond the ways the two companies complement each other across any two particular solutions, the addition of Docucorp helps to complete Skywire's comprehensive suite of core insurance products, Brandt asserts. "Whether it's rate, quote, bind and issue, or exchanging data between agents and carriers or warehousing and reporting on data, we feel we're involved in the complete lifecycle of insurance information," he says.
Skywire's decision to retire the Docucorp brand is consistent with past acquisition activity according to Gartner research director Toby Bell. Whether it's such a good idea is another matter. "It will be interesting to see the consequences of Skywire burying that brand," Bell says. "Docucorp is a very well-known brand and is considered incredibly stable. This may send a bad signal to a very conservative install base that things are going to change."
Skywire's Brandt says that the brand decision was the subject of considerable soul-searching between the leadership of both companies who each saw the value of the other brand. In the end, they reached a conclusion that the Skywire name was more suitable to project the image of a provider of a broader range of solutions. "Even before Docucorp was merged with Skywire, it did a lot more than just document automation, but that's how people often pigeon-holed it," he says. "We offer such a broad range of software and services today, so [branding under the Skywire name] allows us to let the products speak for themselves."
Brandt insists that if he were a Docucorp customer he would be focused on the potential impact of the merger as well. As reassurance he notes that the deal was not a typical purchase to consolidate a customer base and reduce the cost structure. "We believe we have a good foundation to grow a company to be a leader in this industry and branch off into complementary industries, such as healthcare and financial services," he says. In order to succeed, Brandt believes Skywire needs to be "committed to being the best in customer service," to continually improve and innovate products, and to focus on hiring and retaining top industry talent." Hopefully when we look up in a year, the customers are going to say, 'I really saw an improvement in those three areas: services, products and people," Brandt says.
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