BUSINESS: FCL provides a software service that is essential to the daily functioning for insurance companies. Errors in core claims processing software can lead to sever regulatory breaches and in some cases bankruptcy for an insurer. This critical function enables FCL to charge recurring revenues for their software and this fee is typically increased each year. Further, due to the deeply integrated nature of FCLs software, they experience very little customer churn, as highlighted by their top five customers having been with them for >8yrs. In addition, 50% of FCLs annual revenues are recurring
GROWTH: The industry is still processing the majority of their claims through legacy systems that are > 30yrs old. These systems are now becoming increasingly costly to maintain. In addition, consumer lead demands for an ability to interact digitally, we believe, will see a number of insurers start to outsource their systems to providers, such as FCL. We expect this conversation process will see FCL on average, double their revenues per customer over a five-year period.
MANAGEMENT: Founder, Michael Kelly is FLCs largest shareholder holding 60% of the business. Further, we also believe that Michael has instilled a high-quality culture at FCL, with 88% of FCLs senior executives having been in the business for > 15yrs
FCL Price at posting:
$4.30 Sentiment: Buy Disclosure: Held
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