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Parent Problems Put AnnuityNet in Play

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AnnuityNet — a company that helped move about $98 billion in annuity premium payments in 2022 — could soon have a new home.

Ebix, AnnuityNet’s Johns Creek, Georgia-based parent, has filed for Chapter 11 bankruptcy  protection because of problems with gift card operations in India.

Ebix has set up a process to sell AnnuityNet and other North American life and annuity distribution system businesses to raise some of the $650 million it owes secured creditors.

Zinnia, a financial technology company with backing from Eldridge Industries, has offered to pay at least $400 million for the Ebix distribution tech businesses, to set a price floor.

What it means: Higher interest rates have brought excitement back to the U.S. annuity market.

Now the AnnuityNet sale process could increase investor interest in the annuity distribution tech market.

The history: AnnuityNet came to life in 1997. Originally, it was owned by a consortium that included GE, Lincoln Financial and Conning Capital Partners.

It reported in 2002 that it had supported $2.1 billion in annuity transactions.

Ebix acquired it in 2006, then acquired the gift card business in India in 2017.

Critics seem to have focused on concerns about Ebix businesses in India, not the North American life and annuity distribution tech operations.

The businesses: In addition to AnnuityNet, the Ebix North American life and annuity assets include LifeSpeed, a life insurance distribution tech business; WinFlex, a product performance illustration tool; TPP, an insurance policy underwriting system; and SmartOffice, a customer relationship management system for agents and advisors.

AnnuityNet helps 57 insurers distribute 2,400 products, and LifeSpeed helps about 100 insurers take in 1.3 million applications per year and process $50 billion in life insurance premium payments, according to a document filed with the U.S. Bankruptcy Court for the North District of Texas.

The market: AnnuityNet and LifeSpeed compete with Roper Technologies’ iPipeline system and Hexure’s Firelight system.

The three companies must connect with complicated, highly secure, highly regulated entities such as the Depository Trust & Clearing Corp.’s Insurance and Retirement Services system.

Roper Technologies acquired iPipeline in 2019 from a private equity firm for $1.6 billion, at a time when iPipeline had $200 million in revenue.

Robin Raina, Ebix’s CEO, told securities analysts during a conference call that he believed that AnnuityNet’s revenue had a higher value because AnnuityNet gets more of its revenue in the form of recurring payments, rather than onetime payments.

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