IT services provider CGI Group Inc plans to pay CAD 53m ($34m) in cash for an insurance underwriting firm in a deal that underlines the increasing convergence of business processing and technology outsourcing services.
Quebec City, Canada-based CGI currently runs the IT systems of several major insurance companies in Canada and the US including Sun Life, Allianz and Premier Insurance, and said the deal will enable it to extend its reach into handling its clients other back-office functions.
The target company, Underwriters Adjustment Bureau Inc, provides claims management, underwiting and actuarial services to the property and casualty insurance sector. It has annualized revenue of approximately CAD 100m ($63.5m), employs some 1,300 staff, and is headquartered in Toronto. CGI said that it already provides IT services to UAB’s top 10 clients, and now plans to sell UAB’s services to its insurance client base.
CGI also announced yesterday that it has signed an agreement for two unsecured credit facilities with a banking syndicate. CGI secured a CAD 265m ($168m), three-year term revolving credit facility for the financing of acquisitions and outsourcing contracts, and also agreed a CAD 150m ($95.2m) revolving credit facility for operating costs and working capital.