Zacks_Analysts' Blog : New Insurance Offerings from CSC - Analyst Blog

Computer Sciences Corp. (CSC) recently introduced a new business process service targeted at insurance carriers, enabling them to process workers’ compensation insurance easily.

Workers' compensation insurance provides wages and medical benefits to employees when injured in the course of employment. This insurance is mandatory in almost all the states.

Computer Sciences’ new cloud-based business process service takes its traditional outsourcing services a step ahead. The service, known as Workers’ Compensation as a service, is based on pre-developed formats as well as Web-based consoles, much like a Web page that accepts user input such as a command, executes that command on a remote Web server, and shows command output in a browser. Through these Web-consoles such as POINT IN, Agency Link, Document Management and Media Management software, insurers can access the ongoing bureau rules, rates and forms, and business settings.

Easy to deploy, this cloud-based service reduces costs and improves efficiency. Since workers’ compensation is a mandatory affair for employers and one that is regularly handled by insurers, we believe that the cost advantages of the Computer Sciences product will appeal to insurers.

Computer Sciences has witnessed a series of insurance deals in the past few months, indicating the efficacy and popularity of its products. We think the new service will attract more deals from the insurance sector.

Despite a revival in IT spending across the globe, healthy PC shipments and a robust business model, we remain somewhat concerned due to management’s recent commentary regarding the lowering of FY11 guidance. The lowering of guidance is based on concerns regarding a pending NHS contract, which is expected to impact Computer Sciences' income recognition.

Competition from companies such as Accenture plc (ACN) and Hewlett-Packard Company (HPQ) and the continued slow pace of contract awards in the U.S. federal space are concerns.

Currently, CSC has a Zacks #3 Rank, implying a short-term Hold rating on the stock.