CSC to License Billing Software - Analyst Blog

Virginia-based Computer Sciences Corp. (CSC) announced that it has signed a multi-year licensing agreement with leading insurance group, Shelter Mutual Insurance Company of Columbia. Financial terms were not disclosed.

As per the agreement, Computer Sciences will license its Exceed Billing Software to Missouri-based Shelter Mutual Insurance. The software adds new capabilities in the insurance business that make the billing process faster, more cost effective and the settlement of claims easier.

Shelter Mutual Insurance will deploy Exceed software suites for all its insurance businesses (life and personal and commercial property and casualty (P&C) insurance) as well as other businesses. By leveraging the enhanced capabilities of the software for an extended period of 11 years, the insurance company will be able to cut down costs related to billing services, particularly in the Midwestern and Southern states.

Computer Sciences' software will replace the insurance company's existing P&C legacy system. Along with the Exceed software, Shelter Mutual Insurance will also deploy Computer Sciences' multiple policy administration systems, including the CyberLife software specifically targeted at managing life insurance businesses.

In September, Computer Sciences inked a licensing and maintenance deal with a developing insurance company, to license its New Business Accelerator (nbAccelerator) and Insurance Optics Business Analytics solutions.

With the help of these solutions, the insurance carrier will be able to acquire new businesses, simplify its activities relating to submission of forms, processing of various insurance policies and assessment of customer data for analysis.

We remain encouraged by Computer Sciences' insurance deals since they are an indication of the effectiveness of its products. We look forward to a spate of similar deals, going forward.

However, Computer Sciences' unimpressive second quarter 2011 keeps us on  sidelines. The quarter's top line missed the Zacks Consensus Estimate, although the bottom line was a penny ahead. Both  revenues and earnings per share were down from the year-ago quarter.

Despite the quarter's disappointment, we remain optimistic about the company's outlook for fiscal 2011, based on its strong new business bookings, enhanced product portfolio, growing customer base and the economic recovery. However, contract delays are expected to keep a lid on earnings for the next quarter's earnings.

Currently, Computer Sciences has a short-term Hold recommendation, as is indicated by the Zacks #3 Rank.