Sedgwick CMS, one of the nation’s larger property and casualty TPAs, is getting even bigger. The company will be acquiring Comp Management Inc. (CMI) for just under $200 million.
This marks the first expansion of Sedgwick since its sale to Fidelity National earlier in the year. Sedgwick acquired California-based disability management and administration firm VPA in May. Prior to that deal, Sedgwick had primarily grown organically; the new owners look to be very interested in gaining size and competencies as quickly as possible.
CMI had been on an expansion trajectory of its own, branching out into medical malpractice administration with the acquisition of Octagon in 2003, a deal that also significantly expanded CMI’s west coast presence. CMI was owned by investment firm Security Capital Corp. of Greenwich Ct.
Broadspire is another TPA acquired by an investment firm. This deal, which transferred the somewhat-damaged Kemper National Services TPA to Platinum Equity, was the first of a series of acquisitions that have propelled the combined entity into the top tier of TPAs in terms of market size. RSKCO and Cunningham Lindsey were added to the portfolio in 2004. Since that deal, Broadspire has been selling off assets that appear to be tangential to its core claims adjudication business; the disability management operation went to Aetna and Bureau Veritas picked up the loss control/safety division earlier this year.
These deals are not the only sign of interest on the part of the investment community in the P&C world. The level and amount of interest in TPAs has grown exponentially over the past year; my sense is the industry is perceived to be ripe for consolidation; backward in terms of technology, business process streamlining, and operational excellence; and significantly less profitable than it could be.
I agree.
Jun
16
