This is Laurie Shotton. On 3 April 2017, Keylane, a life and property and casualty vendor based in the Netherlands added to their core system portfolio with the acquisition of Schantz. The acquisition is expected to be finalized by end April 2017. The financials of which are undisclosed.
The deal is essentially about providing Keylane with a footprint in the Nordics region (namely Denmark), adding to their system portfolio and solving a technology decision for replacing their Group Pension offering Maia. The acquisition brings together two of the more innovative and capable vendors in the European policy administration market (see our Magic Quadrant for Life Insurance Policy Administration Systems, Europe). This continues the trend of mergers and acquisitions that has been widespread over the last 5 years.
Keylane will in fact gain access to Schantz’s portfolio of 11 policy administration clients and in total over 100 Danish financial institutions who use their range of solutions. Keylane’s solution portfolio will be extended to include Schantz’s offerings namely Schantz Life, Schantz Valuation and Schantz Advice. This is good news for Keylane clients in terms of providing access to Schantz Valuation for risk calculations including support for Solvency II and Schantz Advice for case management and financial planning. Likewise it provides Schantz customers with access to a core system for their property and casualty business and in Keylane a vendor that is well versed in offering SaaS based solutions to its client portfolio. Both sets of clients will benefit from an increased development base, increasing their combined development teams to in excess of 750 staff.
However the acquisition of the Schantz Life policy administration system creates a significant overlap with Keylane’s portfolio of solutions. Keylane have been clear on their intentions, for some time they have been contemplating the future of their Maia policy administration system. The development code base of Maia is in Progress and Keylane were contemplating rebuilding a java based application or acquiring a new future proof solution. In acquiring Schantz they will position Schantz life for Group and Individual Pensions in both Denmark and the Netherlands and other target markets.
As you can imagine Keylane are facing a real challenge in bringing the combined solution architectures together, but they have done this before with their solutions. In addition Schantz Life capabilities will need to be extended before Maia can be decommissioned. Keylane will also seek to integrate Schantz Life with their portfolio of supporting solutions including their portal, workflow and analytics capabilities. So all in all a lot work. Maia customers will also face a risky and potentially expensive undertaking to move their portfolio across to the Schantz Life solution, although this is probably no less risky than going back to market to find an alternative vendor solution. Leanapps customers will continue to be supported for their portfolio of products but Leanapps will no longer be positioned for future individual pension’s clients. Schantz life customers will also continue to be supported for product sets beyond pensions. For new customers leanapps life will continue to be marketed as a policy administration system for individual life and Schantz Life marketed from individual and Group pensions. Where an insurer is looking for a solution across Group and Individual life and pensions Keylane are clear that they will position the Schantz life solution.
So what do we think? On the whole Schantz life customers will benefit from the deal that will see greater development capabilities from a significantly larger vendor with a range of additional solutions that they can contemplate using? In the short to medium term they should seek assurances that enough resources will be made available to support change programs whilst resources are utilized to integrate Schantz Life into the Keylane portfolio of components. Keylane customers will face more upheaval, although the Schantz Life solution may well be welcomed by clients using the Maia solution the risk and cost of moving to the new policy administration system should not be underestimated (see our research Projecting the Full Costs of Replacing Life Insurance Policy Administration Systems) . Maia clients should evaluate the current capabilities of Schantz Life and pay close attention to the progress of any enhanced capabilities. Leanapps clients will need to engage regularly with the vendor to gauge the longevity of the solution. Prospects should insist on a clear roadmap for the future and ensure a full proof of concept stage is adopted (see our research Proofs of Concept Are Critical to Successful Insurance Core System Implementations) with the vendor before selecting them paying close attention to the integration and joint delivery capabilities of Keylane.