Quindell Portfolio’s ambitions continue unabated following recent big wins in the UK (see here and here). It is now eying opportunities across the pond with the acquisition of Canadian property and casualty (P&C) SaaS player Iter8 Inc.
Quindell is paying the equivalent of £20.8m in cash and shares over the next three years to acquire Toronto-based Iter8, dependant on the company achieving run rate profit after tax of c£3m by the end of 2013.
Iter8 apparently has a high penetration in the Canadian P&C market where it provides its SaaS-based technology to the direct insurance and broker channels, and has 40 major implementations for clients ranging from large multinational carriers including Aviva, Allstate, Allianz, Chubb, RSA, Wawanesa Insurance and Zurich to smaller niche players. Iter8's product lines include personal auto and property and commercial business owners, general liability, commercial packages, farm and specialty lines.
Apparently, Quindell and Iter8 have been working together for the past four months on a joint distribution agreement, following which they concluded that their technologies were ‘highly compatible’. Iter8 had previously worked closely with P&C SaaS leader Guidewire on a number of implementations.
Quindell's move is clear attempt to grab some of the growth that the likes of Guidewire is seeing in the US market. Guidewire’s Q2 revenue (ended Jan 13) grew 31% to $72.2m, and net profits were up almost 50% to $5.5m. In fact Xchanging recently launched its Xuber insurance claims system into the US market to also get a slice of the action. Quindell said it is confident that it will be able to replicate its UK growth rate in insurance technology sales in North America as a result of this deal.
While the strategy seems to make sense, we continue to be concerned by Quindell’s rapid growth across multiple fronts. Indeed it was only in January that Quindell said it would now be focusing on organic growth (see here). Iter8 is now its third acquisition since that admission.