Software Solutions Company Mastek is all set to acquire US-based Systems Task Group (STG) International Ltd for $29 million. Point to be noted here is that Systems Task Group (STG) International Ltd is an IP-based enterprise solutions provider to the North American property and casualty (P&C) insurance industry. According to sources, the buyout is being funded through internal accruals and bank borrowings with 85 per cent of the total consideration payable instantly.
Consequent to the buyout, STG would be known as STGMastek. Initial signs are that the integration process of STGMastek with Mastek's existing operation would be over by June 2008 and STG's contribution would be reflected in Masteks consolidated performance partly in FY'07-08 and fully in FY'08-09.
In my opinion, this acquisition is another important step in furthering Mastek strategy to expand presence in both the life and non-life segments of the high opportunity US insurance market. This acquisition is the second such initiative by Mastek during the current financial year, and follows the acquisition of another insurance-focused IT Company Vector Insurance Services in July 2007.
Systems Task has headquarter in New York with a fully integrated offshore competency centre in Mumbai. It leverages the enterprise applications Renaissance suite and Paradigm ASP to provide the full spectrum of solutions and services to customers in the North American property and casualty insurance industry in the areas of policy and billing administration, claims processing, and point-of-sales administration. The company has 350 employees with significant property and casualty insurance domain expertise.
A strong IP backed by an integrated offshore competency centre located in Mumbai enable Systems Task to deliver end-to-end solutions and services to customers. Its offerings for the P&C segment enjoy positive ratings in the marketplace by leading industry research groups such as Celent on many parameters such as technical flexibility, depth of client services, and breadth of functionality. It has high potential market, with IT spending by P&C insurers expected to cross $20 billion by 2010 from $16 billion in 2007 (as per Celent estimates).