First American Acquires Proxix Solutions

By Nora Parker

_Today First American announced that it will acquire Proxix Solutions. First American is a very large company ($8.5 billion in annual sales) that estimates it touches "over 90% of all property transactions that occur in the US every year." The company is probably best known for its title insurance-related services, but it also has business divisions that provide specialty insurance, mortgage information, property information and risk mitigation products. First American has been in business for more than 100 years.

In May of this year, Hal Reid reported on ParcelPoint, a product that First American had recently released. ParcelPoint is a geocoding database that includes a latitude/longitude pair at the point of entry into a parcel (usually a driveway) paired with address and Assessor's Parcel Number (APN). First American originally developed the database for its internal application needs, but transitioned it into a commercial product targeted primarily at first responder organizations such as police and fire departments.

_Proxix Solutions has been in existence since the spring of 2003, though its staff has many more years of GIS experience. Most of the principals of Proxix Solutions (President Paul Wray, Chief GIS Scientist Beach Clow, Vice President of Product Development George Rebhan, and Executive Vice Presidents Dr. Howard Botts and Dr. Brady Foust) have spent the majority of their careers in the "business geographics" arena in various companies and roles.

Proxix Solutions is known for a variety of products such as PxPoint, a geocoding engine, and CATUM, an on-line insurance underwriting information system. The company also develops and sells data including insurance hazard risk databases and parcel boundary databases. It also consults, and develops custom solutions using the tools it sells. (An article describing PxPoint, entitled "The Evolution of Geocoding: Moving Away from Conflation Confliction to Best Match," appeared in Directions Magazine this summer.) Proxix employs about 40 employees in Florida, Colorado and Wisconsin.

Last Friday, First American's Scott Little and Proxix's Paul Wray provided me with an overview of the acquisition. Little will serve as executive vice president of the newly formed First American Spatial Solutions division. The new division brings together groups of employees doing geospatial work from within First American and Proxix. According to Little, there are about 100 First American employees, spread out between the company's headquarters in Austin, TX, Washington, D.C. and in a location in India, who are doing geospatial work. Little said they expect to grow the division's employee headcount very quickly. He added, "We've worked together [with Proxix] for over a year, and I can't say how excited I am about joining forces and helping Proxix achieve their goals, and also building this division within First American."

Little explained that First American, while not a "household name" in geospatial data and analysis, is well-positioned to play a major role in the industry for two reasons: 1) The company has a wealth of geographic data which it has been collecting for over 100 years; 2) As an internal user of geospatial technology, "we know what we are doing." Regarding data, Little said, "We can go into a client, determine their needs and then work internally and figure out what data we can provide." The company has a wealth of information about properties and the structures on them, including date of construction and specific characteristics. Additionally, the company's potential for success lies in the obvious fact that it has the resources to be an 800 pound gorilla in an environment primarily inhabited by much smaller animals.

My take
I have several reactions to this news, all of them positive. First, the synergies between the companies are very obvious. Both companies offer a variety of products and services, but the key focus for each is insurance services. Little pointed out that Hurricane Katrina "changed the world and the insurance market … but we can model data and predict risk very accurately. We can provide the detailed information needed to minimize risk." Both companies have been addressing risk assessment from slightly different angles but the overall emphasis has been the same. Combining First American's wealth of data and internal experience with Proxix's analytical know-how should generate better results. When I asked if there was still room in the insurance industry for better risk assessment tools, and whether there were still companies that didn't have tools, Little responded that "specific to certain types of risk, some companies' [ability to perform analysis] is very limited."

On a personal level, I'm very pleased for the Proxix staff involved; I've known many of them for some time. Financial details were not disclosed but Wray admitted, "We're pleased." Wray and Little both agreed that the structure of the new organization creates a positive environment for the entire Proxix management team. Wray was quick to point out that Proxix was in a position of strength going into the deal, with "doubling revenues every." Proxix did not need to change its business plan or find an acquisition partner in order to continue its success, but Wray said, "There's a lot of comfort in the company," and it seems like a good fit. Wray's new title will be president of First American-Proxix Solutions.

I suspect First American will effectively leverage its position as a major and deep-pocketed player in the insurance marketplace to raise the overall awareness of the importance of geospatial tools, especially those developed by Proxix. Little explained, "As the saying goes, ‘you can't go wrong choosing IBM.' Proxix … has developed the best product, but they're still viewed as a small company. The First American name puts them in a different category … much more trusted."




Published Monday, October 1st, 2007

Written by Nora Parker



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