acquisitions propel xuber into the top rank of software vendors

Acquisitions propel Xuber into the top rank of software vendors

Publication Date: 24 Jul 2014 | Product code: IT0004-000410

Charles Juniper


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SummaryEarlier this month, Xuber, the insurance software division of Xchanging, announced the acquisition of

two insurance software vendors amounting to a total investment of nearly £85m ($144m).

The first announcement concerned the acquisition of reinsurance and London market software

specialist, Total Objects, followed a day later by news of the purchase of general and health insurance

software vendor, Agencyport Europe.

In terms of development staff, combined client base, and product portfolio, these acquisitions propel

Xuber into the premier league of insurance software vendors with a much strengthened market

position in the global commercial and London market sectors in particular.

In addition to enhancing its existing product set, the acquisition of Agencyport will provide Xuber with

the opportunity to enter the European health insurance sector – a new market for the company and

one that will see strong growth over the next five years.

In the same week as Xuber announced the acquisitions, it also revealed the appointment of a new

managing director and expanded its senior management ranks.

The UK insurance business, both software and BPO, has been a consistently strong performer within

the wider Xchanging group. It was partly the UK insurance business that sustained Xchanging through

its disastrous acquisition and eventual disposal of most of the US-based Cambridge Solution business

between 2008 and 2011. These latest investments underline the continuing importance of insurance

within Xchanging.

Agencyport offers Xuber an entry into the health insurance sectorXuber has announced the acquisition of Agencyport Europe, all the European operations of the

US-headquartered insurance software business Agencyport Software, for a cash consideration of

£64.1m. Agencyport Europe generated revenue of £19m and an EBITDA of £5m in 2013.

While Agencyport is a US-based company, the European operations constitute the larger part of the

organization and, with the US and European elements operating in quite distinct market sectors, they

have tended to operate semi-autonomously.

Agencyport Europe is a software developer focused on the general and health insurance sectors with

a client base principally located in the UK. The Agencyport suite offers exposure modeling and risk

analysis, policy administration, billing, and claims business processing. In particular, Agencyport’s

risk-exposure modeling capability offers Xuber a new technology asset. The ability to offer this

functionality on an enterprise basis from within the existing Xuber platform will be an early and

important objective of the product set integration.

Agencyport will also bring an additional customer base of some 60 organizations which will offer

Xuber significant cross-selling opportunities. Xuber will also be able to use its multinational sales

operations to offer an extended product set to both existing and new clients.



Agencyport Europe’s client base in the health insurance sector is currently relatively small but does

include some major European health payers. The acquisition will benefit both companies as the

increased operational scale will mitigate some development resource constraints that were holding

back Agencyport’s further expansion, while a strong foothold in the health insurance sector will give

Xuber – and the wider Xchanging business (particularly within BPO) – the chance to move into a new,

high-potential sector.

The integration of Agencyport Europe will add some 160 employees based in London, Leeds, and

Cwmbran. Agencyport Europe will be rebranded as Xuber over the coming months.

Xuber and Xchanging expect to benefit from cost rationalization and combining product-development

resources. The additional development resource now available to Xuber will accelerate progress on

some projects, developing software for the US Admitted Insurance market being a likely candidate.

Total Objects gives Xuber a prominent position in the London marketXuber also announced the acquisition of Total Objects for a total consideration of £21m with nearly

half of this being payable up to 2017 and subject to achieving performance targets. Total Objects

generated revenue of £8m in 2013.

Total Objects offers a range of cloud-based processing platforms for the complex broking, outward

reinsurance, MGA, and Bordereau management sectors. Total Objects will bring approximately 120

staff to Xuber with offices in London and a development center in St. Petersburg.

The Total Object client base will include some shared customers, which is only likely to strengthen

these customer relationships, as well as new clients providing Xuber with a number of expansion

opportunities.

There are immediate integration opportunities for Total Object’s BinderCloud product to complement

Xchanging’s existing Binder 360 Services to offer clients a full end-to-end binder

process-management platform giving clients improved control over their delegated underwriting

authorities. This is likely to have strong appeal in the London market where both companies have

strong reputations. With an increased organizational scale and expanded offering, they are also likely

to gain traction beyond the London market. The integration process will be eased as both companies

products are developed on .NET technology.

The remaining product sets will also be integrated where appropriate during the course of 2014 and

2015. The work of developing a combined product roadmap will begin in earnest once the acquisition

has been formally approved by the Competition and Merger Authority (CMA) which is expected to be

completed in the next two to three months.

There are no immediate plans to bring the Total Objects name under the Xuber brand; Xuber prefers

to take advantage of Total Objects’ strong reputation and well-established position in the broker and

reinsurance sectors.

The combined development resources, domain knowledge, and extensive product set, that includes

both software and BPO services, will make the combined entity a powerful global player in the retail

and wholesale broking, outwards reinsurance, and MGA sectors.



Senior management is strengthened to support Xuber’s expansionXuber has announced that Chris Baker will be the new managing director of the Xuber division. Chris

Baker joins Xuber from Oracle where he was SVP of Worldwide ISV/OEM/Java sales and will take up

his role from early August.

Adrian Morgan, who has served as Xuber’s head to date and has been a key driver of the unit’s

formation, will now be Head of Product Development and Strategy of the enlarged company.

Key roles also go to Agencyport senior management with Phil Race, the former managing director of

Agencyport, assuming the business development director role across all of Xuber and Andy Lovett,

Agencyport’s former COO, responsible for the integration program and client delivery.

Key early tasks for the new senior management team will be to execute the integration of the

expanded Xuber and drive new business growth particularly in the US, where Xuber is a relative

newcomer, as well as initiate Xuber’s push into health insurance.

Ovum ConsultingWe hope that this analysis will help you make informed and imaginative business decisions. If you

have further requirements, Ovum’s consulting team may be able to help you. For more information

about Ovum’s consulting capabilities, please contact us directly at [email protected].

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