Jack Henry & Associates (NASDAQ:JKHY), a leading provider of integrated technology solutions and data processing services for financial institutions, today announced that its insurance agency outsourcing solution has been bought by the business line's management team and a private equity group.
Terms of the transaction were not disclosed.
Banc Insurance Services, Inc. (BIS) was founded in 1999 to provide a turnkey outsourcing solution that enables financial institutions to own an insurance agency without the capital investments required to build or buy an agency, or the inherent operational risks. BIS was acquired by Jack Henry & Associates in 2004 and was assimilated into its ProfitStars(R) brand in 2006. The company will now be re-branded as Insuritas, Inc. with its founder, Jeffrey Chesky, serving as president and CEO, and the existing employees joining the independent company.
Kevin Williams, CFO of Jack Henry & Associates, reported, "We have a disciplined acquisition strategy and establish revenue contribution and margin expectations for every acquisition we make. Despite our best efforts, this business line did not generate the financial performance we expected. We thoroughly evaluated our options and determined divesting this business line was in the best interest of our company and our shareholders.
Divesting this business line will generate a modest improvement in our margins and eliminate the negative impact it had on cash flow. We also determined that selling this business line to its highly specialized management team is in the best interest of our joint clients because it will provide a consistent service experience and ongoing access to quality insurance products. We have established a strategic business alliance with Insuritas and will actively refer current and prospective customers interested in offering commercial and personal lines of insurance to them.
We believe the opportunity to once again operate as a private company focused exclusively on insurance distribution provides the best near- and long-term outlook for this business."
According to Chesky, "As a part of Jack Henry & Associates, we were able to upgrade our master agency platform and build a more technology-rich infrastructurture. While we enjoyed great support within Jack Henry, we believe our business can grow more rapidly operating as an independent company. We are excited about the opportunity to leverage our success and continue designing, implementing, and managing successful insurance agency aisles in the stores of financial institutions nationwide."
Jack Henry & Associates' ProfitStars division encompasses the remaining 16 acquisitions that were made to assemble more than 50 products and services that improve the performance of financial institutions of all asset sizes and charters, and diverse corporate entities. These solutions complement virtually any core information processing platform and facilitate revenue and growth, risk mitigation and control, and cost control.