CCC Information Services Group Inc.

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World Trade Center Chicago
444 Merchandise Mart
Chicago, Illinois 60654-1005

Telephone: (312) 222-4636
Toll Free: (800) 621-8070
Fax: (312) 527-2298
Web site:

Public Company
1980 as Certified Collateral Corporation
Employees: 1,120
Sales: $198.7 million (2004)
Stock Exchanges: NASDAQ
Ticker Symbol: CCCG
NAIC: 518111 Internet Service Providers

CCC Information Services Group Inc. is the publicly traded holding company for CCC Information Services Inc., a Chicago-based provider of software and services to help insurance companies, collision repair shops, and independent appraisers evaluate and settle automobile claims. The company's EZNet claims network of 350 insurance companies and 15,000 collision repair shops processes more than one million transactions each business day. CCC's signature product is 20-year-old CCC Valuescope, a system that determines the local market value of a vehicle. Additional products include CCC Pathways, a collision estimating tool used by insurers and repair shops; ClaimScope Navigator, a Web-based system that builds reports to help insurers compare their performance against competitors; and CCC Autoverse, providing insurers with data from appraisers to help them better manage the claim lifecycle.

Lawyer Founds Company in the 1970s

CCC was founded by Howard Allen Tullman, who was born in St. Louis in 1946. After earning his undergraduate degree from Northwestern University in 1967, he enrolled at North-western's School of Law, graduating in 1970. Following his admittance to the Illinois Bar, Tullman joined the Chicago law firm of Levy And Erens, where for the next ten years he specialized in Federal litigation. He became involved in some large class-action law cases which required him to maintain communications with thousands of people and led to the use of computerized databases. Out of this experience grew the idea to apply computer technology to the automobile claims process. In 1980, Tullman founded Certified Collateral Corporation, a partnership launched with a $300,000 investment, to provide car-valuation information to auto insurers, which used the data to set the value of losses on stolen vehicles or those involved in accidents. For decades, auto values were determined by the "blue book" and "red book" published guides. They were maintained manually, requiring adjustors to fill out spec sheets and mail them in, and the material then had to be assembled and printed. As a result, the information was far from timely. To keep its valuation system current, CCC created a massive database of car dealers' new and used inventories. Because the system, which was introduced in 1983, could be updated every few days and reflected the actual prices car dealers asked for used cars, insurance companies began to adopt the service. Moreover, many states did not allow insurance companies to share information, providing an opening for an independent database company like CCC.

In late 1983, Tullman took CCC public, raising $5 million to expand the business. Within two years, the company signed eight of the top U.S. auto insurers as customers and spread its operations to 20 states. CCC was used in 50,000 insurance claims in its first year, 100,000 in 1984, and well over 200,000 in 1985. In short order, all of the top 50 insurers in the United States became subscribers, and CCC's service was used to settle more than 80 percent of total loss claims. The Chicago Sun-Times in a 1985 company profile described the nature of the system: "Certified gets its blue book price information directly from dealers. In return, people who had had their cars stolen or destroyed and are looking for a certain type of used car, are referred to the dealers by Certified. Insurance companies tap into regional car price information through an automated telecommunications system. 'We constructed a circle that said we will help those insured [people] shop for a new car and we'll steer them back to the dealers. In the meantime, the dealers will give us the price information that helps the insurance companies,' Tullman said."

CCC also added the ability to check vehicles' 17-digit identification number (VIN), which insurance companies could use in the effort to eliminate fraud. At the time, it was estimated that about 10 percent of car insurance premiums were the result of claims filed on "paper cars," vehicles reported as wrecked or stolen but which in reality did not exist. As described by the Chicago Sun-Times, "In a typical fraud scheme, a person obtains a VIN number, perhaps from a junked car, and takes out policies with several companies. He later reports the car stolen and collects thousands of dollars from each insurer. 'Think about it,' Tullman said. 'How do most people buy car insurance? They pick up the phone and call their agent and he asks them for the VIN number. The agent never sees the car.' "

Rapid Growth in the Mid-1980s

CCC grew at a rapid clip during its first few years, in 1986 reaching $13.8 million in sales, an 89.6 percent increase over 1985, and posting $2.2 million in net income, 26 percent better than the previous year. Tullman, who had other entrepreneurial interests, attempted to sell the company in 1986. Comp-U-Card International, a telephone marketer of legal services and merchandise, negotiated a $93.3 million stock transaction to acquire CCC, but the deal was eventually abandoned, reportedly due to differences in corporate cultures. The company now attempted to broaden its business and become a national clearinghouse of automobile information that not only served insurance companies but also banks, auto dealers, and possibly consumers. In keeping with this plan, the company changed its name to CCC Information Services Inc. It then completed a secondary offering of stock, underwritten by Morgan Stanley & Co., raising $15 million, the proceeds of which were earmarked to upgrade the company's infrastructure and to fund possible acquisitions.

Despite his ambitious plans for CCC, in the summer of 1987 Tullman again attempted to sell the company, this time to Fort Lauderdale-based SafeCard Services Inc., provider of credit card protection services, in a stock exchange valued at $99 million. However, this sale also fell through after American Express Co. announced that it would allow its contract with SafeCard to expire at year's end. As a result, SafeCard's stock plunged, and in a five-day span the company lost 40 percent of its market value. Because of the pending stock swap, CCC was pulled down as well, dropping approximately 30 percent in value. The acquisition was called off in October 1987 and CCC's stock began to rebound. By that time, the landscape for the company had changed in another way: for the first time in its history, CCC had to contend with serious competition in the form of AutoInfo Inc., a New York-based company that maintained a database of junkyard auto parts for insurance companies. AutoInfo aligned itself with Kelley Blue Book Co., an auto valuation publisher since 1929, to create a toll-free telephone service that provided an instant fair market valuation of a car to insurance appraisers and adjusters. Moreover, it charged about half of CCC's $29 transaction fee. In its favor, CCC was a well entrenched market leader, and AutoInfo proved in the long run to be a minor nuisance.

Tullman finally found a buyer in 1989, when David M. Phillips put together a group of investors to acquire CCC in a $60-million leveraged buyout. Phillips then took over as chairman and CEO of the company. Prior to CCC, Phillips had spent ten years at Citibank, where he ultimately served as a senior vice-president responsible for Latin American consumers businesses, including banks, life insurance companies, finance companies, and credit card firms. For his part, Tullman became involved in other startups and eventually became president of Chicago's Kendall College.

Under Phillips, CCC developed several new products during the 1990s. The company introduced EZEst in 1990, the first estimating tool in the auto industry that worked on a personal computer rather than a mainframe. Two years later, the company offered EZNet, the first system that connected insurers with repair shops. In this way, consumers would now find their claim data available to the repair shop as soon as they arrived. To continue to develop new products that would keep CCC in the forefront, Phillips needed more funding and in 1994 sold a 52-percent controlling interest to a White Plains, New York investment firm, White River Ventures Inc.

Phillips stayed on to run the now privately owned CCC, which in 1996 introduced Pathways, a suite of workflow-management products that dealt with the entire auto claims process. To raise funds for further product development, CCC was taken public once again in August 1996, raising $72 million. White River retained a significant stake, which Harvard University would inherit two years later when the school acquired the fund. For the year 1996, the company generated sales of $131 million, resulting in a net profit of $14.8 million. The next major product launch came in 1998 with the Pathways Image Library. It relied on the Internet to store and retrieve digital photos of cars used in the claims process. In this way, a mechanic in a repair shop could photograph a car and quickly send the image online to an insurer's claims office.

Company Perspectives:

CCC has one overriding goal: to put people back into their cars faster.

While CCC was building a solid reputation in the 1990s, especially with insurers, the company was not without its share of critics. Its Total Loss Valuation product was cited in a number of lawsuits filed against insurance companies by unhappy policyholders, who contended that insurers undervalued "totaled" vehicles. Plaintiff attorneys argued that the reason CCC was so popular with insurers was its proclivity for giving the lowest price possible for a total loss evaluation. CCC primarily based its valuation on the "take price" for a vehicle comparable to the one that was lost. Take Prices, according to the attorneys, excluded sales commissions and represented the lowest amount a dealer would sell a vehicle to a cash customer that day. Because CCC did not determine the settlement amount, it was not a party in the litigation. Furthermore, since insurance companies were its major customers, CCC suffered no adverse impact from the controversy.

New Leadership and Continued Growth: Late 1990s to Mid-2000s

After Phillips retired in April 1999, he was replaced by Githesh Ramamurthy, who had joined CCC as chief technology officer in 1992. Several years later, Ramamurthy won a patent for the company's claims processing software design. Having been a part of CCC major investment in new product development, he was eager to launch a new research and development push, this time to leverage the power of the Internet to increase the number of daily transactions from one million to ten million. He poured an estimate $100 million into new economy initiatives, as well as an expansion into Europe and a handful of business-to-business joint ventures, including one with partners Automatic Data Processing Inc. and Reynolds & Reynolds Co. to create a Web-based system for repair shops to help them find parts, arrange delivery, and then get their claims paid by insurers. In 2000, CCC launched DriveLogic, its integrated information system for Internet and wireless technology.

CCC's adoption of a new economy strategy was ill fated, however, as the Internet bubble burst and the stock market began to plummet in 2000. Previously debt free, CCC was now burdened with $60 million in debt and much of its cash flow was being consumed by its new ventures. Although sales increased to $184.6 million in 2000, the company lost $9.2 million. The following year, it lost another $30.6 million on sales of $187.9 million.

With the company on the verge of ruin, Ramamurthy was forced to take decisive steps. He withdrew from all of the new ventures, with the exception of DriveLogic, and slashed the company's 1,500 workforce almost in half. Ramamurthy also arranged for new financing of $35 million from New York-based Capricorn Holdings Inc. and Harvard. As a result of these steps, CCC was able to rebound in 2002, trimming its debt and returning to profitability, netting $22.7 million on sales of $191.9 million.

In 2003, CCC increased its repair shop customer base by acquiring Columbus, Ohio-based Comp-Est Estimating Solutions Inc. from Hearst Corp. In addition to adding another 4,500 customers, CCC added additional electronic estimating and other tools used by collision repair shops. CCC also improved its position in the marketplace in 2003 by rolling out upgraded versions of CCC Pathways, CCC Autoverse, and CCC Pathways Professional Advantage. Although sales grew modestly in 2003, totaling $193.4 million, net income increased solidly to $26 million. Moreover, the company was well positioned to take advantage of an anticipated increase in information technology spending by its customers. In 2004, revenues reached $198.7 million, although net income slipped to $18.6 million. Nevertheless, CCC continued to position itself for ongoing growth. During the year, it introduced the first integrated estimating system, CCC Pathways Estimating Solution, version4.2, which combined auditing, digital imaging, shop management, and frame-dimension applications in a single package, eliminating the need to refer to a separate CD-ROM for additional information or to buy a separate auditing tool. CCC looked to expand its reach beyond automobiles to the recreational vehicle and motorcycle industries, forging alliances with Duncan Systems, a leading player in the RV estimating data field, and Urban Publications, the leading provider of estimating services for motorcycles, ATVs, and scooters. For a start, CCC would resell its partners' products, but it was also launching an effort to incorporate them into other CCC systems. The company, as a result, looked to solidify its leading position in the claims marketplace.

Principal Subsidiaries

CCC Information Services Inc.

Key Dates:

Howard Tullman founds Certified Collateral Corporation.
The company is taken public.
The company's name is changed to CCC Information Services Inc.
Tullman sells the company to a group led by David M. Philips.
White Plains Ventures takes the company private.
The company is taken public again.
Phillips retires.
Comp-Est Estimating Solutions Inc. is acquired.

Principal Competitors

Applied Systems, Inc.; Automatic Data Processing, Inc.; Mitchell International, Inc.

Further Reading

Bonasia, J., "CCC Software Hits Accelerator on Auto Insurance Process," Investor's Business Daily , November 5, 2002, p. A9.

Bremner, Brian, "Cert. Collateral Expands Linkups," Crain's Chicago Business , May 18, 1987, p. 17.

——, "Potent Rival Looms as Latest Threat to CCC," Crain's Chicago Business , October 12, 1987, p. 71.

"Company Fights Used-car Crime with Computers," Chicago Sun-Times , July 25, 1985, p. 94.

Gerrie, Sharon, "Lawyers Go After Insurance Companies on Car Pricing," Las Vegas Business Press , September 13, 1999, p. 7.

Johnsson, Julie, "Surviving the Net Wreck," Crain's Chicago Business , September 2, 2002, p. 4.

Lee, Murphy H., "Big Contracts Fuel Car-repair Data Firm," Crain's Chicago Business , May 5, 1997, p. 20.

"Powering the Auto Claims Evolution," Claims , December 2001,p. A-4.

—Ed Dinger

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