Guidewire to Acquire UK's hyperexponential for $2.1 Billion

Guidewire, a cloud software provider for insurance companies, has agreed to acquire UK-based underwriting technology company hyperexponential in a deal valued at up to $2.1 billion. Guidewire will pay $1.7 billion in adjustable cash, plus up to $400 million in earnout consideration tied to annual recurring revenue targets.

The company intends to fund the transaction through a new $1 billion term loan from Bank of America and Citibank, in addition to its cash reserves. The transaction is expected to close in the second quarter of Guidewire's fiscal year 2027, according to the company statement.

The deal aims to bolster Guidewire's position in AI agent-assisted underwriting, where AI agents work alongside underwriters and actuaries to evaluate risk, calculate pricing, and support underwriting decisions. Guidewire serves more than 570 property and casualty insurers worldwide.

Founded in London in 2017, hyperexponential provides an AI-driven pricing and underwriting platform that has been used to price over $75 billion in annual commercial premiums. Its clients include Aviva, Allianz, Sompo, Beazley, and Markel, and the company is backed by Andreessen Horowitz and Battery Ventures.

What do these terms mean?

Earnout consideration: A portion of the transaction price paid later if the acquired company achieves agreed-upon targets, such as a specific revenue level.

Annual Recurring Revenue (ARR): A metric measuring the revenue a software company generates from recurring customer subscriptions over a year, used to measure its business growth.

Underwriting: The process of evaluating risk, determining insurance pricing, and accepting customer coverage, performed by insurance companies before issuing a policy.