Earlier today, we announced that Ventiv has acquired DAVID Corporation, a leading provider of claims, policy, and risk management solutions for the property & casualty insurance marketplace. The press release has a lot of useful information, but there’s much more to the story. In this blog post, I’ll go into more depth about why Ventiv has made this acquisition and why we’re confident it will be a successful one.
It’s beyond the scope of one blog post to describe thoroughly the rationale for an acquisition like this one; however, I do think I can explain in broad terms why we’re making this move and why we’re confident it will deliver strong value to all stakeholders.
Any discussion of bringing DAVID into Ventiv must start with how we’re gaining a policy-administration solution. Since I joined Ventiv in January 2017, I’ve been exploring ways to pair a best-in-class policy administration product with our market-leading claims administration solution. Indeed, many of Ventiv’s claims-administration system clients have expressed to me over the last nearly two years their hope that Ventiv would have its own policy solution.
With DAVID’s policy administration product, we have found a partner who meets all our critical criteria:
About half of DAVID’s policy customers also use DAVID’s claims-administration solution (more on that product in a moment); the other half use a claims solution from a different vendor. We’ll continue to offer the DAVID policy platform as both a standalone and an integrated-with-DAVID-claims solution. Of course, we’ll also offer it as an integrated-with-Ventiv-claims solution.
The key point is, by acquiring the ideal policy platform for our needs, Ventiv can now offer the two critical solutions that claims organizations often want to get from the same vendor: claims and policy. In doing this, we’re expanding the markets in which we can successfully compete with this important new policy platform.
There’s another important point to make with regard to DAVID policy and Ventiv’s claims solutions. I mentioned above that the DAVID policy tool has been recently rebuilt using the latest technology. Similarly, a completely rebuilt Ventiv claims solution was released in 2017, also built on the latest technology. Sharing new technology platforms will dramatically accelerate the successful integration of the DAVID policy and Ventiv claims products.
When we looked at the DAVID customer base, we saw that their strengths—small to mid-sized carriers (especially, risk-retention groups) and the healthcare market—matched up perfectly with the most important opportunities the Ventiv leadership team and I had identified. From that perspective, I don’t think there is another vendor we could have acquired that would have been such a good fit. To put it another way, this acquisition will help Ventiv address the strategic goals we’ve been pursuing since I joined the company.
The carrier market
When it comes to claims and policy solutions, the P&C insurance carrier market is large and varied. We think of risk-retention groups—risk pools and captives—as a segment of the P&C carrier market, even though they’re not always labeled as such. That’s because risk-retention groups are, effectively speaking, insuring risk: They’re administering claims as well as underwriting, billing for premiums, and performing the other services that carriers do.
Another important market that DAVID serves well, and that we plan to expand in even further, is healthcare. DAVID’s customer base includes many healthcare clients. DAVID products and the DAVID team speak the language of the healthcare industry fluently, and they have a solid record of providing successful solutions in that industry. In healthcare, perhaps more than any other industry, it’s critically important to demonstrate to the market your ability to perform well. In DAVID, we have now added that domain expertise and will invest more resources in it with the goal of expanding our presence in healthcare even further.
In terms of their respective sizes, both Webrisk and DAVID were considerably smaller than Ventiv, which means supporting their products, engineering budgets, and product-delivery teams will not be an undue burden on Ventiv’s operating budget. Ventiv can absorb those costs without putting a strain on development and delivery of existing Ventiv products. Even more important, by integrating DAVID into Ventiv, we expect to grow our R&D and product development budgets and spread that spend across our entire product lineup.
Ventiv has enjoyed phenomenal growth over the last two years: almost 60 percent year-over-year growth in sales in 2017, and we expect to come in at 30 percent year-over-year sales growth in 2018. Ultimately, growth benefits our customers because we can continue to invest in our people, our products, and our services and deliver the best possible technology solutions.
Growth doesn’t just happen, however. To keep growing at double digits year over year, a technology company like Ventiv simply must expand the markets in which we can compete. We did that with Webrisk, which has been and continues to be an unqualified success based on just about every imaginable metric. With our acquisition of DAVID, we are likewise expanding the markets we can address, as detailed above.
In acquiring DAVID, we’re adding nearly 50 very talented people to our existing base of more than 400 colleagues. We add 80 customers as well. In fairly short order, Ventiv will comprise nearly 500 employees and we’ll have about 650 customers globally.
Becoming a bigger organization and serving more customers is important; however, the fact that the acquisition of DAVID furthers our strategic objectives—objectives that have been in place since I joined Ventiv nearly two years ago—is what makes this deal so exciting. It makes Ventiv not only bigger, but also stronger, and it sets the stage for future growth by enhancing our human capital, intellectual property, and the breadth and depth of markets in which we can successfully compete.
Bill Diaz is Chief Executive Officer of Ventiv Technology. Click here to connect with Bill on LinkedIn.
Dec 5, 2018