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Fiserv to buy out troubled IMSG

Bankers Insurance's 4-year-old outsourcing spinoff saw revenues fall 44 percent in 2002.

By JEFF HARRINGTON, Times Staff Writer
© St. Petersburg Times
published April 11, 2003


Insurance Management Solutions Group, the troubled spinoff of Bankers Insurance of St. Petersburg, is being bought out by one of its biggest competitors.

Fiserv Inc., a large Wisconsin provider of services to banks and insurance companies, has agreed to pay just over $40-million in cash for the insurance outsourcing company.

Leslie Muma, Fiserv president and chief executive, said IMSG would keep its St. Petersburg location and management team even as it changes its name to Fiserv and reports to his company's flood insurance outsourcing unit based in Montana.

Muma did not make any job commitments to IMSG's 180 employees in St. Petersburg, saying any consolidation between Fiserv offices would be left to managers running that part of the business.

Since its public spinoff from Bankers Insurance in 1999, IMSG has had a rough ride. The company, which handles claims processing and other administrative work for insurance companies, has struggled to enlarge its outsourcing customer base beyond parent Bankers. It sold off a sideline business mapping flood zones after deeming it a misfit. In 2002, IMSG lost $5.3-million as its revenues slumped 44 percent from $57-million to $32-million.

Last year, Bankers Insurance planned to take the company private again, buying the minority stake of IMSG it didn't already own. That plan fell through suddenly last fall when IMSG began negotiating with an undisclosed third party.

IMSG president and chief executive David Howard, who will continue running the St. Petersburg operation, welcomed becoming part of Fiserv. The larger company, he said, will offer his group advanced technology and more resources to build the business.

"I think it's the best thing, not only for our associates but our shareholders and our clients," Howard said. "It will allow us to finally start being productive and grow."

Fiserv will pay $3.26 per share to Bankers Insurance and its subsidiaries for the 8.3-million shares, or 68 percent, of IMSG that is controlled by Bankers. It will pay $3.30 per share to remaining shareholders.

Fiserv envisions one immediate return on its investment: It expects that IMSG will have about $22-million in cash in its coffers when the deal closes. Pending regulatory and shareholder approval, the buyout is expected to close by June.

For IMSG shareholders, the deal is only slightly better than the $3.08-per-share buyback offer by parent Bankers Insurance last summer.

IMSG manages about 800,000 policies and more than 20,000 claims annually, with a heavy concentration in flood insurance. Fiserv's flood insurance unit is about four times as big as IMSG, with about $125-million in annual revenues.

Based in Brookfield, Wis., Fiserv is well-known in the financial services world. It has more than 13,000 clients, including banks, broker-dealers, credit unions, insurance companies and financial planners. It reported net income of $266-million last year on revenues of $2.3-billion.

Muma, the chief executive, said in an interview Thursday that he expected IMSG would become profitable under Fiserv's wing within two quarters.

A Florida native, Muma has deep ties to the Tampa Bay area and has long known the principals at IMSG and Bankers Insurance.

Muma ran a small data processing company in Tampa called Sunshine State Systems that merged with a Milwaukee data processing firm in 1984 to create Fiserv. Today, Fiserv is in 60 countries. Muma still maintains a home in Belleair.

About 2,000 of Fiserv's 20,000 employees work in Florida, many of them in Orlando. About 60 people work in a Fiserv facility in Tampa, handling check processing and other data processing for banks.

-- Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.

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