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Vertafore is set to be acquired due to its revenue-generating model and value-added solutions

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  • Vertafore is set to be acquired by tech company Roper Technologies for $5.35 billion.
  • And we expect investors’ demand in specialized software providers to continue.
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry with the Fintech Briefing. You can learn more about subscribing here.

US-based Vertafore, a Software-as-a-Service (SaaS) provider to the property and casualty (P&C) insurance industry, is set to be acquired by tech company Roper Technologies for $5.35 billion in Q3, Reuters reports.

Vertafore is set to be acquired due to its revenue-generating model and value-added solutions.

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Although it’ll be part of the Roper family of acquired software companies, Vertafore will continue to be run by the existing management team. The price tag is almost twice the insurtech’s value when it was last acquired in 2016 by Bain Capital Private Equity and Vista Equity Partners for $2.7 billion.

The acquisition meets Roper’s overarching strategy to invest in revenue-generating software businesses that provide value-added solutions to critical customer processes.

  • Vertafore runs a proven sustainable business model. The insurtech has served the insurance industry for over 50 years, including over 20,000 agencies and 1,000 carriers. Since its last acquisition in 2016, Vertafore has added more than 500 employees and improved its customer Net Promoter Score by 200%. Roper aims to capitalize on this growth trajectory and expects Vertafore to contribute about $590 million of revenue in 2021.
  • Its insurtech cloud-based solutions specifically target incumbents’ digital capabilities across the value chain. Vertafore’s software provides agency management, compliance, workflow, and data solutions to automate the P&C insurance life cycle. These applications are increasingly in demand among incumbents: Fearing the risk of losing customers to more tech-savvy competitors, many insurers are turning to software providers to improve their digital offerings. Vertafore’s client-focused digital tools, for example, can help incumbents offer a seamless customer experience, such as 24/7 client self-service and two-way document sharing, comparable to large P&C insurtechs.

As insurers increasingly look to digitize, we expect an uptick in M&A and IPO activity among specialized software providers. Cloud-powered Majesco, for example, was recently acquired for $729 million due to its high-profile client base and range of services tailored to P&C operations as well as life and annuity (L&A). Duck Creek, meanwhile, is eyeing a $3 billion valuation in an upcoming IPO, following its $230 million funding raise in Q2.

These recent stories are likely due to prospective investors turning to business opportunities that target needs that have gained relevance amid the pandemic. Beyond competitive pressures from insurtechs, insurers also have to contend with their customers calling for better digital contact channels to avoid face-to-face interactions — increasing demand for software providers.

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