Y2K Predators and Prey
from Winter 1998
by Evan Simonoff
Businesses that saw the threat of computer chaos in the year 2000 and got their own houses in order can now turn predator and move in on those that were asleep at the wheel. Some are positioning themselves as outsourcers for their myopic competitors, while others are poised to take over less technologically savvy rivals. “Once you’ve made the investment to solve the Y2K problem,” says William Ruckle, global managing director of Y2K issues at Ernst & Young in Detroit, “there are ways to get returns on what you spent.”
Opportunity is especially rich among insurance companies. Historically, they have lagged the rest of the financial services sector—banks, mutual fund companies, and brokerage houses—in technological sophistication. As a result, the ranks of insurers include a few nimble acquirers and many more plump targets—companies that won’t make the 1998 cutoff set by the SEC for Y2K compliance. Many of these laggards have already been grabbed by the likes of GE Capital and Conseco, a fast-growing Indianapolis insurer.
In Cleveland, Medical Mutual is getting the best of two worlds. Way ahead of many competitors to recognize and tame the Y2K tiger, the sizable Midwest insurance company set up Antares, a subsidiary that sells consulting services specifically related to the millenium. Antares CEO Ed Hartzell says the company has five clients, including Central Reserve Life Insurance of Cleveland and Blue Cross/Blue Shield of West Virginia. Meanwhile, Kent Clapp, chairman and CEO of Medical Mutual, notes that the SEC compliance rule “could force some companies to sell out or merge.” And he adds with some glee, “they won’t necessarily get a good price.” In other words, Clapp is trolling for bargains.
