It’s a coincidence worth noting that these two press releases both appeared last week, and within a day of each other: Fiserv Spins Off Its Insurance Group and Jack Henry Spins Off Its Insurance Group.
Unwinding a trend begun in the mid to late 1990’s these two bank technology giants announced divestitures of their insurance technology activities. Fiserv’s divestiture was much larger, and it was only a partial divestiture at that (selling 51% to Stone Point Capital), but the message couldn’t have been clearer: insurance and banking have not mixed in the way that many people thought they would ten years ago. A decade ago, the business world was abuzz with Gramm-Leach-Bliley (The Financial Services Modernization Act), the Citigroup-Travelers merger, and all things financial services convergence. The reality turned out much differently than the prediction.
This week’s transactions are good news for the insurance technology industry because they both free up insurance technology assets from parent companies whose interests and core competencies lay in other fields. The increased focused will mean that more genuine innovation can occur. That will make life better for insurance carriers, agents, and policyholders.
Fiserv Insurance Solutions, Inc. will be piloted by its existing management team, including Fiserv veteran Mark Damico as its CEO and President. Stone Point is an established player in the insurance industry (having had its origins in Marsh Mac’s private equity activities). They will likely bring more insurance focus, more commitment, and more capital to the insurance operation. All of this is good news for customers who will benefit from a more energetic and focused technology supplier. A key determinant of success will be how much autonomy the new organization enjoys (i.e. will the 49% Fiserv ownership in any way hamstring the insurance operation from aggressively re-asserting itself with the insurance marketplace).
Insuritas, the insurance distribution arm of Jack Henry, will also be led by its existing management, including Jeff Chesky who will be the CEO. Chesky founded the organization and led it through its acquisition by Jack Henry. That he has stuck with the operation and take on this new responsibility speaks positively of the market opportunity he continues to see.
This was a good week for the insurance technology industry: new capital, experienced players, more focus. Bring it on!
