Guidewire: Tech Niche in Insurance

10/04/2016 8:00 am EST


Rob DeFrancesco

Founder, Tech-Stock Prospector

This recommended tech company does not get much attention, mainly because it’s in a very specific market niche providing a comprehensive operations platform for the property & casualty (P&C) insurance industry, explains Rob DeFrancesco, editor Tech-Stock Prospector.

Founded in 2001, is Guidewire Software (GWRE) now serves 260 customers worldwide. Management has executed well over the past few years, steadily expanding the company’s penetration of Tier-1 insurance carriers ($5 billion+ in premiums).

Guidewire is disrupting the staid P&C insurance sector, replacing inefficient core systems infrastructure that often dates back to the early 1990s or even ‘80s.

Those older systems are clunky and costly to maintain. The claims and adjustment process represents 60% to 70% of costs for insurers.

With core solutions from Guidewire—covering policy administration, underwriting, pricing, claims management and billing— insurance companies can improve operating efficiencies, reduce claims costs and boost the bottom line.

Guidewire’s DataHub solution is an insurance-specific data store that unifies internal systems with external sources, while InfoCenter is a business intelligence data warehouse.

Predictive Analytics helps users make better business decisions because it deploys machine-learning technology specifically optimized for P&C underwriting and claims.

Digital Portals enables customers to share all of the insurance data sitting on the Guidewire platform with the outside world. It’s the basis for self-serve systems for policyholders, agents and vendors.

In the June quarter, a few of Guidewire’s largest investors added to their positions, including #1 holder T. Rowe Price picking up 353,063 shares, taking its stake up to 5.86 million shares.

The #2 holder, William Blair, raised its holdings by 4% to 5.13 million shares. Artisan Partners became the #3 holder, with 5.09 million shares, after increasing its position by 5%.

The biggest Q2 buyer (and 6th largest holder) was Wellington Management, which added 733,486 shares, boosting its position to 4.99 million shares.

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