The board at its meeting held on Friday took the decision and the transaction is expected to close by March 2008, i-flex said in a communique to the Bombay Stock Exchange.

"Castek's product is proven and is being used by two large North American customers. With i-flex's wide market reach, the potential to expand is now great", i-flex Solutions' managing director and CEO N R K Raman said.

Castek's client list includes US insurance majors and the flexibility of this suite makes it adaptable for implementation in countries across Asia, Europe and Africa.

After commencement of its relationship with i-flex, Castek has acquired TMM (Tokio Marine Management) and GAIC (Great American Insurance Co.) as customers in the US.

Earlier, in August 2005, i-flex had entered into an equity financing arrangement with Castek, becoming its largest shareholder, holding 59.9 per cent of Castek's shares.

Castek provides core insurance-business processing systems for large and mid-sized Property and Casualty (P&C) insurers.

As per a forecast by Celent, a Boston-based research firm, globally P&C insurance carriers would spend more than USD39 billion on software and services in 2008.

"Pursuant to this acquisition, we can offer insurance companies a scalable model of onsite, near shore and offshore services," Raman added.

Castek's flagship product - Insure3 is a SOA based Full Policy Lifecycle administration software. Shares in the company were last trading up 0.33 per cent at Rs 1920 at the BSE.