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EnvironmentalSocial & Governance(ESG) Report20201
TABLE OF CONTENTSA Message from Sapiens President & CEO . 3Sapiens at a Glance . 5Our Impact . 6Sapiens Management Approach to Sustainability . 8Our Main Topics and Impact on Sustainable Development Goals (SDGs) . 10Impactful Products and Services . 13Our Solutions . 13Quality of our Services and Customer Satisfaction . 14Product Development with Sustainability in Mind . 16Inspiring Innovation . 18Sapiens People . 19Global Employee Experience . 20Business Continuity During the COVID-19 Pandemic . 23Wellbeing . 25Diversity and Inclusion . 26Operational Excellence . 27Corporate Governance . 27Ethical Business Conduct . 30Cyber Security and Data Protection . 33Sustainable Supply Chain . 35Environment, Health and Safety at Sapiens . 36Green Office Practices . 37Moving to the Cloud . 38Virtual Conferencing . 38Efficient Commuting . 38Health and Safety . 39COVID-19 Response . 40The New Normal Strategic Process . 40About the Report . 422
A MESSAGE FROM SAPIENSPRESIDENT & CEOI am excited to share Sapiens' 2020 ESG Report, which includesour vision of Sapiens’ global impact and future ESG-related goals.For almost 40 years, Sapiens empowers customers by providinginnovative, sustainable solutions to address their needs in theevolving insurance and financial services industry. With morethan 600 customers and approximately 4,000 employees aroundthe globe, Sapiens serves a critical role supporting people andbusinesses in close to 30 countries. Sapiens considers it aprivilege to live up to our values of integrity and partnership,and to ensure that our business operations are successful andsustainable.Sapiens offers a rich product portfolio of integrated core andcomplementary software solutions, system integration anda full digital and analytics suite to enable customers’ digitaltransformation. Sapiens has a proven commitment to helpcustomers implement our systems, meet strict industry regulationsand maximize efficiency, as customer expectations evolve, andcompetition is on the rise. We also continue to introduce newsolutions and capabilities to ensure the long-term expansion andtransformation of our customers’ businesses.“Think Global, Act Local” Sapiens operates globally with anorganizational structure that leverages local best practices,expertise, proximity to customers and keen understanding ofregional regulations and culture. Our industry experts are accessibleto Sapiens’ customers around the globe, to help establish andmaintain strong relationships and provide faster, high-qualitysupport.COVID-19 Impact It is our privilege and duty to protect andsafeguard our staff and their families while assuring the continuityof the company’s business operations.When the pandemic struck in early 2020, Sapiens immediatelydeployed a proactive approach in line with World Health Organization(WHO) recommendations and local regulations, to ensure boththe physical and mental wellbeing of its employees. We tailoredour operations and management to enable our team to connect,communicate and collaborate remotely, promoting employeewellbeing and business continuity. In regions most severely affectedby the pandemic, particularly India, Sapiens initiated in 2021, anemergency support program that provides support to employeesand the communities we operate in.Sapiens Approach to Sustainability – Delivering Value to OurStakeholders Sapiens’ management is fully devoted to leadingbusiness responsibly and delivering value for all stakeholders,including customers, employees, investors, suppliers and thecommunities in which we operate. It is in Sapiens’ DNA to createlong-lasting, trusted relationships with our stakeholders. Thisprinciple is deeply ingrained in our day-to-day decision process andmethod of operation, and we always strive to operate in a mannerthat inspires others.It’s only natural that a company named Sapiens values its employeesas the cornerstone, making us the partner of choice of our morethan 600 customers globally. We take special pride in the highpercentage of women in management and tech positions. Sapiensis constantly looking to add the brightest, diverse, trustworthyand collaborative people to our team. We strive to create a globalemployee experience that attracts top talent and supports employeedevelopment and wellbeing. Our people are our greatest asset, andwe aim to provide them with the opportunities to innovate, learnand develop their career together with us through organizationaldevelopment, training, and internal mobility opportunities.3
Community outreach is an essential part of the Sapiens culture, withongoing activities focusing mainly on youth and the less fortunatepopulations.To support local businesses and economies and maximize ourpositive impact by spreading sustainability practices into oursupply chain, we work mostly with vendors in the countries we areoperating in.Industry Recognition Sapiens is dedicated to maintaining itsindustry leadership position around the world through its leading,innovative solutions and longstanding InsurTech partnerships.Sapiens is the recipient of many prominent industry recognitions,including from leading industry analysts, which validates ourstrategy and reinforces our commitment to help our customersmanage their business administration with leading edge technology.Goals for the Future Sapiens is committed to helping ourcustomers around the globe digitize and transition their operationsas they move to the cloud. Among our goals for the next year, weplan to maximize our sustainable business opportunities andoperate in a more environmentally friendly way, to further advancethe technology of our offerings. Our solutions and services help tomodernize, digitalize, move to the cloud and automate insurancecarriers’ processes to create greater organizational efficiency,reduce costs, manage risks and provide a better end-userexperience. We also intend to continue to engage with and supportthe communities we operate in – through employee volunteeringand other contributions. Recognizing the need for change in today’sworld, we also intend to practice a greener business – with a focuson office space usage and energy consumption and employee rideshares, with an eye on further reducing our carbon footprint.Sincerely,Roni Al-DorPresident & CEO, Sapiens4
SAPIENS AT A GLANCE2020 Sustainability HighlightsSapiens International Corporation, a publicly traded company onNASDAQ and the Tel Aviv Stock Exchange (NASDAQ and TASE:SPNS) drives its customers’ success as they seek new solutionsto address their needs in the evolving insurance industry. Our goalis to be the partner of choice for insurance carriers that aim todigitally transform their business for the next generation. Sapiensoffers its more than 600 customers spanning close to 30 countriesaround the world a rich product portfolio of integrated core andcomplementary software solutions, system integration, and a fulldigital suite. Sapiens has the ability to satisfy customers' needs forclose to 40 years. Sapiens’ approximately 4,000 employees, spreadacross five continents, ensure that our business operations aresuccessful and sustainable.Grew number ofemployees by21%year-over-yearReduced employeeturnover by2%Year-over-YearSummary Results for Full Years 2019 and 202035%33%Women employeesWomenin Tech positions50%Women in theCompany ExecutiveManagement(USD in millions, except per share data)%ChangeGAAP20192020Revenue 325.7 382.9Gross Profit 129.5GrossMarginNON-GAAP(1)%Change2019202017.6% 325.7 384.518.1% 156.020.4% 143.0 172.920.9%39.8%40.7%90 bps43.9%45.0%110 bpsOperatingIncome 37.9 45.018.8% 52.2 67.930.1%OperatingMargin11.6%11.8%20 bps16.0%17.7%170 bpsNet Income* 26.2 33.828.7% 38.9 52.033.6%Diluted EPS 0.52 0.6525.0% 0.77 1.0029.9%Helped accelerate thevaccination process7,000ofpeople daily inHamburg, GermanyProvidedmentorship toINSURTECHStartups64officeswith greencertificationUKofficeoperates fullyon renewableenergy* Attributable to Sapiens’ shareholders5
Our ImpactSapiens caters to customers globally,focusing primarily on the insuranceindustry. Sapiens customers also includegovernmental bodies, banks, financialservices groups and others.Insurersare constantly seeking new solutions toaddress the growing demand for digitaltransformation, as customer expectationsevolve, and competition is on the rise.Sapiens’“one-hand-to-shake”modeloffers an industry-unique combinationof a rich product portfolio with cuttingedge technologies and system integrationservices which enable customers to receiveadvanced online service, providing a safer,friendlier and more accessible ecosystem.We will continue to work closely with ourcustomers to help them to implementSapiens’ systems, meet regulations andmaximize efficiency. We will also continueto introduce new capabilities to enablethe expansion and transformation of theirbusinesses.Our solutions support agencies andbrokerages in accelerating processes togain deeper understanding of their clientsand meet their expectations. Our positiveimpact on the insurance industry providesour clients many benefits by drivinginnovation further.Our Global FootprintSapiens operates globally, serving mainlycustomers in North America, EMEA, theUnited Kingdom (UK) and Asia Pacific. Ourorganizational approach “Think global, actlocal” means that we have positioned ourindustry experts near Sapiens’ customers,in order to establish and maintain strongrelationships and provide fast support whennecessary.Sapiens headquarters are in Israel. As ofthe end of 2020, more than one-third of ouremployees were based in India, being involvedmainly in R&D and professional services. Inaddition to the development, delivery andsupport centers in India, we also have majorR&D centers in Israel, Latvia, Poland, the UKand the United States (US).Our sales team is spread across our regionaloffices in various countries including butnot limited to Australia, Canada, France,Germany, India, Israel, the Nordics, SouthAfrica, Spain, Poland, the UK and the US.Following the 2020 acquisitions we have alsoadded regional offices in Denmark.6
2021 XCelent for P&C Claims Systems Vendors,Breadth of Functionality, EMEA2021 XCelent Customer Base Award for 2020 acquiredcompany Tia Technology, EMEA2021 XCelent for P&C Policy Administration Systems,Breadth of Functionality, EMEARecent IndustryAnalyst Awards2020 XCelent for Life, New Business & UnderwritingSystems Breadth of Functionality, North America2020 XCelent for Life Insurance Illustration Systems,Advanced Technology and Breadth of Functionality,North America2020 Gartner Magic Quadrant Leader, Non-LifeInsurance Platforms, Europe2020 Gartner Magic Quadrant Leader, Life InsurancePolicy Administration Systems, Europe2019 Gartner Magic Quadrant Leader, Non-LifeInsurance Platforms, Europe2019 XCelent for Advanced Life & Pension Technology,EMEA2019 Gartner Hype Cycle for Legal and ComplianceTechnologies, Decision Management Sample Vendor2018 Gartner Magic Quadrant Leader Non-LifeInsurance Platforms, Europe2018 XCelent for P&C Policy Administration, AdvancedTechnology, EMEASapiens Core Suite for Life and Pensions isrecognized as a leader in Gartner’s MagicQuadrant for “Critical Capabilities for LifeInsurance Policy Administration Systems,Europe”. Sapiens' CoreSuite for Life andPension supports multiple lines of businessfor both individual and group life, annuities,investments and medical products in asingle, end-to-end system. It offers a360-degree view of the customer from thepolicy administration system, across alldistribution channels and ate time to market with streamlinedand simplified business processes andopen architecture. The suite now offersone-click, cloud-native architecture forquick and easy provisioning, security andscale.Roni Al-DorPresident and CEO, Sapiens"I couldn't be prouder of Sapiens andour leadership position that we maintainaround the world. The success thatSapiens has experienced is the resultof its leading, innovative solutions andlongstanding InsurTech partnerships. Webelieve the industry acknowledgementvalidates our strategy and reinforcesour commitment to help our customersmanage their business administrationwith leading edge technology.”7
The Sapiens ManagementApproach to SustainabilitySapiens’ management is fully devotedto leading business responsibly anddelivering value for all stakeholders:the customers, employees, investors,suppliers and communities in which theyoperate.Sapiens is committed to a responsibleway of conducting business. This principleis deeply incorporated in our day-to-daydecision process and method of operation.We value the interests of our stakeholdersto provide a safe workplace, innovate andcreate solutions according to their needs,and operate in a role that inspires others.Sapiens is actively working on buildingstrong and trustful relationships with itsstakeholders. It is in our DNA to create longlasting relationships with our customerswho operate in an evolving industry.We invest time and effort to nurture ourrelationships with all our clients to providea full service that supports our client’sbusiness path.We believe that successful communicationis the key to efficiency. For that reason, weuse multiple channels for dialogue withevery stakeholder to keep them updatedand informed. Weekly meetings andmonthly roundtable meetings with theboard and management are helping us todevelop strong internal communication andenhance trust.Our Sustainability LeadersRoni GiladiAlex ZukermanChief Financial OfficerChief Strategy OfficerIn 2020, the Company grew its nonGAAP revenues by 18%, we mergedadditional companies into Sapiens,further improved our profitability, andraised capital. Those successes wereachieved despite the global pandemic.The integration of sustainability intoour business strategy demonstratesSapiens’ resilience and strongpresence even during challengingtimes.We listen, identify and acknowledgeour customers’ needs. I believe thatthe integration of sustainable thinkinginto our product development andstriving to innovate and developproducts that have a positive socioeconomic and environmental impactsupports our dedication to helpinginsurers transform to digital solutionsand move to the cloud.Liana GelikasTal SharonPresident, P&C andReinsurance DivisionPresident, L&P/A and IPELSDivisionsOur comprehensive insurance offeringprovides a policy, billing, and claimsoffering for multiple P&C insurancelines. This is a very meaningful missionfor all of us at Sapiens. I am extremelyhonored to be part of a company thathelps support and protect familiesand business owners in the event ofunpredictable climate disasters andcrises worldwide.I am proudly working in an industrythat assists and supports families andbusinesses in need. The Life & Pension,especially the long-term savings industry,is seeking innovative solutions that weare proud to supply. Knowing that oursolutions have an impact on our society isan amazing experience and one of my maindrivers to innovate advanced technologicalsolutions for insurance companies.8
Noa BrummerIris Cohen-CarmelChief Human Resource OfficerGeneral Counsel and CorporateDevelopmentOur employees are our main driversto success. Constant growth alsocomplemented by mergers andacquisitions comes with greatresponsibility to uphold an inclusive,equal, and fair work environment forall. We go above and beyond to providea workplace that acknowledges theuniqueness and value of each of ouremployees, giving them room forpersonal development in line with thecompany’s growth.Being involved in multiple touch pointswith various stakeholders, I can’temphasize enough the importance ofincorporating relevant Environmental,Social and Global considerations andpolicies. Deploying applicable strategyand policies can help enhance longterm risk adjusted returns.Ofer BarhomDaphna GoldenVice President, Operations atSapiens InternationalVice President, Head of InvestorRelationsIn today’s world, ESG-related decisionsand actions taken by management andemployees clearly impact the operationalefficiency and future success of acompany. It is my responsibility to furtheradvance Sapiens’ operations of facilities,suppliers, cyber, and IT investments,while including a sustainable approach inall our practices.I am striving to communicate our ESGbusiness practices to stakeholders,as I see it as a key factor for fosteringlong-term relations with them. I takepride in being part of a companythat advocates sustainable businesspractices and integrates sustainablethinking into decision-makingprocesses.9
Our Main Topics andImpact on SDGsOur priorities split into the three pillars:In 2019 Sapiens conducted an internal ESGgap analysis to assess our sustainabilitypractices and define focus areas.When preparing the 2020 ESG report,the materials prepared were reviewed bysenior management. Advanced Sustainable Technologiesand SolutionsEnvironmentThe topics below were shortlisted based onbenchmark research, ESG methodologiesand input from various stakeholders.Social Energy Efficient Data Centers Energy Management Green IT Practices Green Office Practices Greenhouse Gas Emissions (GHG) Waste Management Community Engagement Development of Innovation Employee Attraction and Retention Employee Development and Career Growth Employee Diversity Employee Engagement and Satisfaction Employee Wellbeing and Motivation Sustainability in the Supply Chain Business Continuity Corporate Governance Customer Satisfaction and Dialogue withGovernanceCustomers Data Privacy and Cybersecurity Ethical Business Practices Intellectual Property Protection andCompetitive Behavior Managing Systematic Risks fromTechnology Disruption10
United Nations Sustainable Development GoalsThe United Nations Sustainable Development Goals (UN SDGs),officially adopted by 193 countries, are the blueprint to achieve abetter and more sustainable future for all by 2030.Sapiens joins the global efforts in achieving these goals byintegrating targets listed under SDGs 4, 5, 7, 8, 12, 13 into ourbusiness activities. We strive to create our business operations inaccordance with the principles of corporate responsibility and makea positive environmental and socio-economic change.UN SDG 4 – Quality EducationQuality education enables upward socioeconomic mobility and isa minimum basis for a better future. We strive to help youth andadults to have relevant skills for employment, decent jobs andentrepreneurship. In addition to the career and developmentprograms for our employees, Sapiens, together with its partners,strive to improve access to education for girls across the worldand provide school access for children from the underprivilegedfamilies.UN SDG 5 – Gender EqualityGender equality is not only a fundamental human right but also anecessary foundation for a peaceful, prosperous and sustainableworld. SDG 5 is dedicated to gender equality, opportunity, andempowerment of women and girls worldwide. We promote genderequality with our fair hiring practices that encourage women ofall backgrounds to join the STEM field workforce and develop theircareers with us.UN SDG 7 – Affordable and Clean EnergyEnergy is the dominant contributor to climate change. Increasingenergy efficiency is an ultimate goal on the way towards net zero. Weat Sapiens are focusing on upgrading our internal operations and,more significantly, on providing our clients with software solutions,such as Sapiens Digital Suite, Sapiens Ecosystem, Sapiens ChatBotand LiveChat, that reduce energy footprint of insurance companies.11
UN SDG 8 – Decent Work and Economic GrowthSustainable economic growth will require societies to create theconditions that allow people to have quality jobs. In doing so, SDG 8promotes inclusive and sustainable economic growth, employment,and decent work for all. This will drive progress and create jobswhile improving living standards. We aim to hire locally wherever weoperate so that we can promote higher levels of economic activityand productivity. We offer training and employee developmentprograms to ensure that all our employees can succeed and flourishin their career.UN SDG 12 - Responsible Consumption and ProductionA driving force of the global economy is consumption andproduction, which is why SDG 12 aims to ensure sustainableconsumption and production patterns. It focuses on decouplingeconomic growth from environmental degradation, increasingresource efficiency, and promoting sustainable lifestyles. Throughour services and products, we encourage companies, especiallylarge and transnational companies, to adopt sustainable practicessuch as moving their operations to the cloud.UN SDG 13 – Climate ActionClimate change is a global challenge that affects everyone,everywhere. We have to take urgent action to combat climatechange and its impact. For that reason, SDG 13 aims to lower CO2emission, to prevent global warming to 1.5ºC and sea-level rise.Sapiens strives to reduce greenhouse gas emissions and ourcarbon footprint by implementing various green office practicesand reducing business related travel.12
IMPACTFUL PRODUCTS AND SERVICES"Together we're stronger than the sum of our parts"Sapiens is committed to helping our customers transformtheir insurance businesses across all domains and geographies.Our solutions and services help to modernize, digitalizeand automate insurance carriers’ processes to create greaterorganizational efficiency, reduce costs, manage risks and providea better end-user experience. Our offerings not only enable ourcustomers to effectively manage their core business functions,they support insurers on their path to digital transformation.Our SolutionsProperty & Casualty (P&C)A comprehensive software platform and solution supporting abroad range of business lines, including personal, commercial,Medical Professional Liability (MPL) and specialty lines, as wellas reinsurance and workers’ compensation.Data and AnalyticsAn advanced data & analytics platform, which includes:analytics solution that drives analytics adoption across theorganization with compelling, insightful dashboards andapps; a comprehensive BI solution with pre-configuredreports, dashboards & scorecards; predictive analytics,which uses AI and Machine Learning to generate actionableinsights based on various models across the insurancevalue chain.Workers’ CompensationFull end-to-end solutions to handle comprehensiveworkers’ compensation policy/billing and claims needs.ReinsuranceA market-leading complete reinsurance software solutionfor full financial control and auditing support.Financial & ComplianceFinancial & Compliance solutions comprised of both annualstatements and insurance accounting software.Decision ManagementA comprehensive, cloud-based, digital software platform,suite and complementary solutions for the management ofa diversified range of products for life, pension & annuities.Sapiens DECISION is an enterprise-scale platform thatenables institutions and “citizen developers” acrossverticals to centrally author, store and manage allorganizational business logic to track, verify and ensurethat every decision is based on the most up-to-date rulesand policies.DigitalTechnology-BasedLife, Pension, and Annuities (L&A)Sapiens cloud-based DigitalSuite enables insurers toincorporate a fully digital experience for customers, agentsand employers, enhancing insurers’ engagement withcustomers and their end-consumers’ experience andfostering rapid time to market for new digital initiatives.Tailor-made solutions (serving multiple markets andverticals, not necessarily insurance or financial servicesmarket) based on our Sapiens eMerge platform, whichprovides end-to-end, modular business solutions, ensuringrapid time to market.13
Quality of our Services andCustomer SatisfactionExpanding our next-generation insurance solution offering is keyto Sapiens, as it enables us to grow, upsell and cross-sell intoour existing customers and attract new ones. Sapiens developscutting-edge software used at the core of our customer'soperations, while providing an outstanding integration servicebased on the "one-hand-to-shake" concept. With one point ofcontact for all product-related and delivery processes, we offeraccountability across all aspects of a project.At Sapiens we invest heavily in order to bring our solutions andservices up to the latest client expectations for what a “greatPolicy Administration and Servicing (PAS) solution” needs to be.Karen BolinderCOO, SUNZ Insurance"The team treated us like we were their only customer. Our peoplesay the solution is much more efficient very easy to work throughand to get their jobs accomplished."Geri Powell,CEO, FBAlliance Insurance“We chose the Sapiens Property & Casualty CoreSuiteas a major pillar of our technology roadmap, to speed upour growth strategy. We found that Sapiens CoreSuite’sproduct configuration architecture removes the usuallimitations of a policy administration system and willenable us to offer creative products, excellent time tomarket and an enhanced customer experience. It willprovide us with the flexibility we need to support our FarmBureau partners, agents and policyholders.”14
Engaging Customers in Long-Term PartnershipsUnderstanding and addressing our customers' needs is one of our top priorities. We valueour deep and long-lasting relations with our customers and partners, and thereforeinvest time and effort in building and nurturing them. We take pride in the fact that ourcustomers benefit from our vast knowledge-base, from our broad product portfolio, andfrom the comprehensive set of professional services provided by Sapiens, helping themwith project implementation, as well as, with long term activities such as support, cloudbased managed services, transformation, change management, etc.Sapiens provides a comprehensive digital & analytics suite, which is pre-integrated withour core solutions, across P&C; L&A, and Workers’ Compensation business. Our offeringis also available as stand-alone to insurers whether they utilize our core solutions or donot. Our DigitalSuite provides robust customer engagement and experience capabilitiesthrough a wide range of advanced tools such as:API Layer forintegrationfacilitationOmni-channellive chatsPortals (agent,customer,employer, etc.)AI-basedchatbotsLow-code/no-codedigital business processes builders,allowing e-business users to create newdigital business processes extremely fastTim Baum,Harfor
A MESSAGE FROM SAPIENS PRESIDENT & CEO I am excited to share Sapiens' 2020 ESG Report, which includes our vision of Sapiens’ global impact and future ESG-related goals. For almost 40 years, Sapiens empowers customers by providing innovative, sustainable solutions to address their needs i
