Guidewire Software, Inc.’s planned acquisition of Cyence Inc. will ensure Guidewire clients can access a cloud-based data listening and risk analytics solution to help them manage emerging risks for which long claims histories may not be available.
California-based Guidewire Software, which provides software products to p&c insurers, and software firm Cyence have entered into a definitive agreement for the former to acquire the latter, notes a joint press release last week.
Expected to close early in Guidewire’s second fiscal quarter, the companies say total consideration for the acquisition is about US$275 million, or US$265 million net of US$10 million cash on hand, subject to customary transaction adjustments.
“Consideration provided at closing will consist of net cash of approximately US$140 million and approximately 1.6 million shares of newly issued Guidewire common stock. Of those shares, approximately 260,000 are in the form of deferred equity consideration, which are subject to the achievement of certain retention and operating milestones,” the statement explains.
Cyence applies data science and risk analytics – the solution combines Internet-scale collection and curation of external data with machine-learning and risk modelling – to enable p&c insurers to grow by underwriting “21st-century risks” that have gone underinsured or uninsured.
Posing unique challenges for insurers, emerging risks such as cyber, reputation and new forms of business interruption risk are evolving rapidly, it states.
Since such risks typically lack extensive claims history to inform insurers’ underwriting and pricing determinations, “their complexity and non-obvious patterns of risk linkage and risk accumulation require more diverse and dynamic data sets to be modelled effectively,” the statement adds.
“As traditional actuarial approaches struggle to address the unique characteristics of emerging risks like cyber, Cyence’s next-generation approach will enable insurers to broaden the scope and value of the products their policyholders need,” suggests Marcus Ryu, co-founder and CEO of Guidewire Software.
“Cyence started applying our data science engine to cyber risk given the significant demand from the insurance industry on what is an existential threat for their insureds,” comments Arvind Parthasarathi, co-founder and CEO of Cyence.
“We look forward to joining Guidewire and continuing our mission to enable insurers to enter new markets by insuring emerging risks like cyber,” Parthasarathi adds.