The buyout shop joins Great Hill Partners in investing in the payments company serving insurers
European buyout shop Nordic Capital is investing in insurance payments company One Inc, betting on the future of cashless transactions in a centuries-old industry that has historically relied on a patchwork of systems and paper forms to process and settle claims.
Nordic Partner Fredrik Näslund describes the disparate methods as “technology spaghetti.” Ian Drysdale, chief executive of One Inc, said the mishmash comes with the territory, with insurers typically using three separate systems for writing policies, handling bills and processing claims.
Also backed by Great Hill Partners, Folsom, Calif.-based One Inc works across a client company’s various systems to create a more seamless experience for customers, giving policyholders the option to pay premiums and receive claims payments through digital systems such as Venmo or PayPal. “And if they absolutely insist, we can send a check” to settle claims, Drysdale said.
Stockholm-based Nordic’s investment exceeded €300 million in cash, or more than about $328.5 million, according to a person familiar with the deal. It let Boston-based Great Hill partially cash out its majority stake, which will drop to match Nordic’s interest. Great Hill first backed One Inc in 2020. One Inc’s managers remain minority shareholders.
The One Inc investment represents Nordic’s third technology deal in North America in as many months. As with data analytics software maker ActiveViam and Canadian banking software maker Zafin, Nordic backed One Inc through its main €9 billion buyout fund.
Nordic entered the payments sector in 2004, buying Point International and a smaller company that merged with it. Nordic sold the business to VeriFone Systems, which was later acquired by a Francisco Partners-led group.
Founded in 2012, One Inc works exclusively with insurers, offering technology to process claims and settlement payments. Huge losses from wildfires, floods and other natural disasters have battered the property and casualty segment in recent years, driving up losses, pressuring policy prices and leading some U.S. carriers to abandon high-risk markets such as Florida and California.
In some cases, insurers have paid out more than they have collected in rate-regulated premiums, Drysdale said. Cost pressures have also increased in segments such as automotive, where the infusion of digital electronics, the shift to electric vehicles and shop labor shortages, have magnified prices for accident repairs.
Those factors can make speedier claims processing and settlements more appealing to insurers trying to rein in expenses.
“If we can pay an auto-body shop in seconds, that means that an insurance company doesn’t have to pay for a rental car for five to seven days waiting for a check, or three to five days waiting for an ACH” electronic fund transfer to a bank account, Drysdale said, referring to the Automated Clearing House network used by financial institutions. “So we create massive savings for everybody involved.”
One Inc handles some $70 billion in payments a year for carriers such as Amica Mutual Insurance and its revenue has risen significantly, including a 65% gain last year, according to Drysdale and Great Hill Managing Director Nick Cayer.
The volume of payments flowing through One Inc systems is more than 13 times greater than when Great Hill first backed the company.
With the co-investment from Nordic, Great Hill can “reset our time frame” and return some cash to its fund investors while helping One Inc expand, Cayer said.
One Inc plans to focus on its North American business with an eye to preparing for international expansion down the road, Nordic’s Näslund said. “That’s a very … ambitious vision to become [a] global leader. But for sure, there’s plenty to do in North America to start with,” he said.
Appeared in the March 15, 2024, print edition as 'Nordic Capital Invests in Insurance Payments Firm'.
