Guidewire boss Marcus Ryu says Cyence acquisition is ‘next generation’ technology that will help insurers

Guidewire is to help insurers manage cyber and reputation-type risks that have gone underinsured after buying a data-leading risks firm Cyence. 

Guidewire has bought Cyence for $275m.

Cyence uses data and risk analytics to help insurers grow by underwriting “21st century risks” that have gone underinsured or uninsured.

Guidewire believes insurers are struggling to fulfil their potential in underwriting these emerging risks — including cyber, reputation, and new forms of business interruption risk.

That’s because there is little claims history for insurers to base their underwriting, actuarial analysis and pricing on. 

But Cyence mines data from resources across the internet and organisations, and then refines the vast oceans of information into a useful property and casualty analysis of the risk.

Product, actuarial, underwriting, pricing and risk management staff across insurers can use Cyence tools to manage these new emerging risks.

Guidewire founder and boss Marcus Ryu (pictured) said the firm was ‘an exceptional technology company’.

As traditional actuarial approaches struggle to address the unique characteristics of emerging risks like cyber, Cyence’s next-generation approach will enable insurers to broaden the scope and value of the products their policyholders need.”

Total consideration for the acquisition is approximately $275 million, or $265 million net of $10 million cash on hand, subject to customary transaction adjustments.

Consideration provided at closing will consist of net cash of approximately $140 million and approximately 1.6 million shares of newly issued Guidewire common stock.

Of those shares, approximately 260,000 are in the form of deferred equity consideration, which are subject to the achievement of certain retention and operating milestones.

The transaction is expected to close early in Guidewire’s second fiscal quarter.

Click here to read an interview with Marcus Ryu and how his work on a consultancy claims project that nobody wanted to touch sparked the idea for Guidewire.