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What: Shares of Ebix (NASDAQ:EBIX) have climbed to a 12% gain as of 1:30 p.m. today in response to yesterday's announcement that the insurance market software specialist had been selected as London-based Placing Platform Limited's technology partner following a multi-month effort.
So what: The Placing Platform Limited (PPL) was formed in London by three globally prominent insurance underwriting associations last year to "create a common electronic platform to enhance the placing process," according to the Accenture (NYSE:ACN) press release that launched the now-concluded search for a technology partner. In 2013, London's direct commercial insurance market was worth nearly $47 billion, roughly a quarter of the $187 billion U.S. commercial insurance market's size. Building the technology platform that will sit at the heart of this market could be worth a lot to Ebix over the long run.
Now what: Ebix was obviously a good candidate to develop PPL's electronic platform, as it's built its business on similar technologies. Winning this contract gives Ebix the inside track to the entire London insurance market, which accounted for 6% of worldwide property insurance, 5% of worldwide casualty insurance, 33% of worldwide marine insurance, 48% of worldwide energy insurance, and 57% of worldwide aviation insurance premiums in 2013. That year, 32% of Ebix's revenue came from international sources, and that figure is bound to rise as it works with PPL to deploy a modern electronic insurance platform for London brokers.
Ebix has more than recovered from last year's tax debacle, and it looks set to continue its growth as it works with PPL to build London's next-gen insurance marketplace. Shares are nowhere near as attractively priced as they were late last year, but they're also no longer as risky as they then appeared, now that Ebix has put its battle with the IRS behind it.