Cover-All has struck a deal through its wholly owned subsidiary, Cover-All Systems Inc., to acquire substantially all of Moore Stephens Business Systems’ (MSBS) assets (excluding working capital) for an aggregate purchase price of approximately $2.4 million, with no assumed indebtedness. Approximately 96% of the purchase price consists of cash and a promissory note, and the remaining approximately 4% consists of Cover-All’s common stock.
MSBS currently serves the insurance industry exclusively, providing business intelligence and advanced analytics solutions. Leveraging their Insurance Analytic Framework (IAF), which delivers accurate, available and actionable key metrics and dimensions specific to the insurance industry, MSBS has established a dominant presence in an otherwise underserved market. With the integration of these capabilities into the Cover-All portfolio, the combined company will be well positioned to deliver additional value to the existing customers of both companies, as well as benefit from an unrivaled and unique competitive advantage in its combined offerings.
While delivering three consecutive years of record revenues and profits, Cover-All says it also has been focused on building an insurance information platform (My Insurance Center) utilizing leading-edge technologies and an information-centric architecture. The acquisition of MSBS represents an additional pillar of Cover-All’s broader growth strategy as it looks to expand its customer base by offering additional, leading-edge capabilities. The company’s strategy includes continued focus on identifying immediately accretive opportunities that fit within its strategic vision.
Taking into account that on a trailing 12 months basis, MSBS generated more than $6 million in revenue, the acquired business is expected to be immediately accretive to Cover-All’s 2010 earnings with an operating margin comparable with Cover-All’s historic operating margin.
The combined organization will total more than 55 customers, all of which are part of the same target market.
The acquisition creates a new opportunity for existing, as well as potential customers of both companies to leverage the power of an integrated solution that merges highly-focused Insurance Business Analytics with My Insurance Center, Cover-All’s Policy Life-Cycle Management solution set. Additionally, the combined entity will look to leverage Cover-All’s business model of generating recurring revenue with a flexible cost structure, to drive further improvements to MSBS’s margins.
Cover-All continues to expand its reputation as a leader in developing innovative solutions for the insurance industry by focusing on the value of information. Following a philosophy of information-centric technology, Cover-All’s My Insurance Center has been built around the notion of leveraging the availability of data to drive business value. Similarly, MSBS has established an equally dominant position in their niche, focusing on a likeminded philosophy, developing the tools and know-how to assimilate data into powerful business intelligence. Further, both Cover-All and MSBS have established meaningful relationships within a similar market segment (but without any overlap), which will give rise to cross-selling opportunities.
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