Technology outsourcing and consulting major Accenture plc (ACN) recently extended its footprint in the insurance vertical. Last week, it signed an agreement to acquire the property and casualty (P&C) insurance solutions provider Duck Creek Technologies, for an undisclosed amount. The acquisition is expected to close by mid August.
Founded in 2000, Missouri-based Duck Creek has evolved as a prominent P&C policy administration solutions provider in North America and the U.K. The company’s services include the processing of all commercial, personal and specialty lines of businesses.
Post completion, Accenture will combine Duck Creek’s intellectual property with its P&C software product portfolio. Both companies’ technologies are based on Microsoft Corp.’s (MSFT) .NET (dot net) platform, which should make integration fast and easy. The combined force will help Accenture offer more comprehensive software solutions and facilitate customers with hassle-free processing of P&C claims.
Accenture has been serving the insurance vertical for years. It has won a series of insurance deals in the past few months, which underscore the efficacy and popularity of its services.
To maintain the growth trend, Accenture enhanced its life insurance software platform in May. The advanced platform will help life and annuity insurers to innovate products easily and speed-up process efficiency, thereby reducing overall operating costs. The company expects the advanced platform to attract more clients from both domestic and international markets, thus expanding its global footprint.
The Duck Creek acquisition will help Accenture to further enhance its insurance platform. This would in turn aid insurers in adapting to changing market conditions and gauging future requirements, enabling them to run high-performance businesses.
We find Accenture’s third quarter results encouraging, as both top and bottom lines strongly beat the Zacks Consensus Estimates. Based on improving business momentum and market share gains, Accenture raised its revenue and earnings guidance for fiscal 2011. Moreover, we are encouraged by the steady flow of new businesses and believe that the trend will continue.
Apart from this, we remain optimistic about Accenture’s deal wins from various industry verticals. We also think Accenture’s recent acquisitions will enrich its product portfolio. However, increasing competition from International Business Machines Inc. (IBM) may temper growth prospects to some extent.
Currently, Accenture has a short-term Buy recommendation, denoted by the Zacks #2 Rank.
