Computer Sciences Corporation (CSC) recently secured the National Flood Insurance Program (NFIP) Direct Servicing Agent (DSA) contract. This 5-year contract was conferred by the U.S. Federal Emergency Management Agency (FEMA). Financial details of the deal were not divulged.
The NFIP program has been designed to provide an insurance alternative to disaster assistance. The program will insure properties against damages caused by floods, and extend funds for consequent repair work.
Under the terms of the deal, Computer Sciences will extend its business process support to beneficiaries on behalf of FEMA. With the help of its integrated flood insurance processing software — FloodConnect — Computer Sciences will be able to provide support toward Account Management, Underwriting, Claims Management and Financial and Statistical reporting. Moreover, FloodConnect will allow beneficiaries to access policy information and reports in real time.
Computer Sciences has years of experience in handling flood insurance. It has also been providing support to FEMA since 2004. The company’s flood processing business now manages over $1.0 billion of flood insurances, a significant share of the market.
Computer Sciences has witnessed a series of insurance deals in the past few months, indicating the efficacy and popularity of its products. Last month, the company introduced a new cloud-based business process service. We think the new service will attract more deals from the insurance sector.
However, Computer Sciences’ fourth quarter 2011 results were mediocre, due to delay in NHS contract. We are also concerned about the intense competition in the IT and cloud computing space from both small and big players such as Accenture plc (ACN) and Hewlett-Packard Company (HPQ). Moreover, delays in NHS contracts and fewer government deals due to regulatory spending cuts are making matters worse for Computer Sciences.
Currently, Computer Sciences has a Zacks #5 Rank, implying a short-term Strong Sell rating.
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