Mastek acquires Vector Insurance Services

MUMBAI, INDIA: Mastek Ltd has announced the acquisition of Vector Insurance Services LLC (Vector), a technology solutions provider and third party administrator that focuses on the North American life and annuity insurance industry.

Under the terms of the agreement, the company's wholly owned US subsidiary MajescoMastek will hold 90 per cent equity stake in Vector in an all-cash transaction for $4.5 million payable at closing and a similar amount payable over the next two years as earn-out based on business performance. The acquisition is being funded through internal accruals.

Vector provides policy acquisition, administration, and processing solutions to customers in the North American life insurance industry. Among its customers are two of America's largest insurance carriers that have chosen Vector as their service provider of choice. The company had revenues of $4.2 million in its financial year ended December 31, 2006. The company has 26 employees, with significant domain expertise in the insurance space. Following this transaction, Vector will operate as VectorMastek.

Commenting on the acquisition, William McCarter, president of the company's US operations said: "This acquisition reinforces our solutions-driven offerings in the high opportunity US insurance market, adding a SaaS capability to our existing competencies. Vector fits very well with our overall strategy to be a leader in providing end-to-end IT solutions within the insurance vertical. Our Companies share many synergies in domain expertise, delivery capabilities, and processes that were desirable to US."

This acquisition will enable the Mastek to offer a more complete solution for insurance carriers including new business, underwriting, and policy administration processing and products by adding "software as a service" (SaaS) capabilities to its existing end-to-end enterprise software solution offerings.

Analyst firm Gartner predicts that by 2010, 30 per cent of new software purchases will be delivered via an application utility or an SaaS model. These offerings will be available through a combination of three different models, traditional software licensing, applications services, and critical process outsourcing.

The integration of VectorMastek with the company's existing operations is expected to be completed in about 30 days, and its contribution will be reflected in the company's consolidated performance this year onwards.