Sapiens International Corp. has agreed to snatch up Adaptik, a rival insurance software company focused on policy administration and billing. The move is expected to help the Israeli company boost its North American insurance market share.
Sapiens said it would pay an aggregate cash consideration for Adaptik of between $19.5 million and $22 million, depending on retention and performance. The deal is expected to be completed in March, after which Adaptik would become a wholly owned subsidiary of Sapiens.
Adaptik, based in Pennsylvania, sells P/C insurers policy administration and billing software, with a focus on commercial, personal, specialty and workers compensation lines of business. Its expected non-GAAP full year 2017 revenues reached $12 million, and Sapiens said it would add to revenues starting in 2019. Sapiens added the acquisition will help boost its competitiveness and market share among insurers in North America, helping it to provide customers in the region enhanced technology and services.
Sapiens President and CEO Roni Al-Dor said that Sapiens’ planned acquisition of Adaptik is a synergistic one.
“It will enable us to offer a truly modern, comprehensive property and casualty digital insurance platform,” Al-Dor said in prepared remarks. He added that the revised platform will combine Adaptik Policy (used by agents, underwriters and customers to quote, issue and administer policies), Adaptik Billing (billing automation) and Stone River Stream Claims (streamlines claims processing for personal/commercial lines) with Sapiens’ own platform offerings for data analytics, digital engagement and distribution and cloud operation.
Underscoring Sapiens push to expand in North America, Al-Dor noted that the region is a key market for its planned expansion into servicing lower-tier insurance carriers. Sapiens acquired Maximum Processing and its Stingray system and then StoneRiver in early 2017 for $102 million, both to service mid- to upper-tier insurers.
Adaptik co-founder and CEO John Pettit said that joining Sapiens allows the company and its clients to go global in terms of resources and relationships.
Rival Guidewire Software Inc. has also sought to grow through acquisitions along with organic expansion. Toward that end, it agreed to pay $275 million in October 2017 to acquire Cyence, a software startup that uses data science and risk analytics to help P/C insurers address emerging risks such as cyber, reputation and new forms of business interruption. In February 2017, Guidewire concluded a $160 million acquisition of ISCS, a cloud-computing technology company focused on areas such as policy administration, underwriting, claims, billing, business intelligence, reinsurance and mobile products.