Oracle Buy of AdminServer Seen Triggering Insurance Tech Mergers

May 14, 2008

Software maker Oracle said it has agreed to acquire AdminServer, a Chester, Pa.-based provider of insurance policy administration software.

The move has some analysts predicting a wave of mergers among technology firms serving the insurance market.

Oracle said AdminServer’s product offering will become a core component of Oracle’s existing insurance industry and accelerate Oracle’s investment in the insurance industry. AdminServer will be complemented by Oracle’s existing insurance products that include Oracle Billing, Siebel Claims and Siebel CRM for Insurance.

The company said AdminServer’s management and employees would form a dedicated global business unit within Oracle, which will focus on providing operational applications to the insurance industry. AdminServer’s CEO Rick Connors is expected to lead the business unit as general manager.

The transaction is expected to close in the first half of 2008. Until the deal closes, each company will continue to operate independently. Financial details of the transaction were not disclosed.

Some analysts see the deal as likely to set off a new wave of insurance software mergers and acquisitions with technology giants, private equity firms, and established solution providers reacting to Oracle’s move.

“Although there have been dozens of acquisitions in and around this space in the past few years by financial and tactical investors, this is the first time in recent years that a top global software company has purchased a focused insurance software company with the explicit goal of expanding its footprint in the vertical,” commented Matthew Josefowicz, director of the insurance practice at Novarica, and co-author of a new report, Insurance Software M&A Kicks Into High Gear: Oracle Buys AdminServer.

“This acquisition changes Oracle’s ‘permission to play’ in the insurance software space dramatically, and puts it into direct competition with the traditional providers of insurance vertical applications” said co-author Chad Hersh, a principal in Novarica’s insurance practice. “This is a whole new phase of the traditional ‘co-opetition’ model between the software giants and the portfolio players.”

Novarica said its report summarizes the positions of the major insurance software portfolio players including Oracle, Microsoft, IBM, SAP AG, Computer Sciences Corp., CGI, Accenture, Fiserv, Tata Consulting Services and others.

Sources:
Oracle
www.oracle.com
AdminServer
www.adminserver.com
Novarica
www.novarica.com

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