Software provider to Property and Casualty (P&C) insurers, Guidewire Software, has entered into an agreement to acquire Cyence, a software provider that uses data science and risk analytics to expand P&C insurers’ underwriting capabilities to include previously uninsured risks.
Cyence offers a data listening and risk analytics solution that combines curation of external data with sophisticated machine learning and risk modelling.
The software supports P&C insurers in underwriting and risk management of emerging risks such as cyber, reputation and new business interruption risk, where carriers have often struggled with a lack of historical data to inform accurate underwriting.
“Cyence is an exceptional technology company that, like Guidewire, focuses on serving the strategic needs of the P&C industry,” said Marcus Ryu, co-founder and Chief Executive Officer (CEO), Guidewire Software.
“While Guidewire has focused on core operations, data management, and digital engagement, Cyence applies expertise in data science and machine learning to the modelling needs of insurance product design, pricing, and underwriting for 21st century risks.
“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.”
The total consideration for the acquisition is approximately $275 million, or $265 million net of $10 million cash on hand, subject to customary transaction adjustments.
Consideration provided at closing will consist of about $140 million net cash and 1.6 million shares of newly issued Guidewire common stock.
Approximately 260,000 of those shares are in the form of deferred equity consideration, which are subject to the achievement of certain retention and operating milestones.
Arvind Parthasarathi, co-founder and CEO, Cyence, said; “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.
“We look forward to joining Guidewire and continuing our mission to enable insurers to enter new markets by insuring emerging risks like cyber.
“We are excited by the opportunity to power our approach with operational data and policy lifecycle support from Guidewire’s core systems and to join forces with the technology leader serving the P&C insurance industry.”