ITC 2017 slides. UK insurers take new fintech stakes. This week in insurance tech.
On Friday, Guidewire made its first acquisition of 2017 when it announced its intention to acquire cyber risk modeling startup Cyence for $275M.
This was an interesting deal for a number of reasons. Here are some notes:
Price: Guidewire paid somewhere between 25 to 30X Cyence’s forward-looking subscription revenue for 2018. The acquisition comes just over a year after Cyence launched out of stealth with $40M from NEA, IVP, and Dowling Capital Partners.
Market: Large cyber policy writers are moving from packaged to standalone policies. In 2016, total direct written premium for cyber in 2016 was $1.3B according to A.M. Best. While cyber coverage is projected to increase to $20B by 2020, perspectives are mixed on whether the growth will materialize. Swiss Re CEO Christian Mumenthaler recently said he remains “extremely skeptical about cyber.”
Value proposition: For Guidewire, one theme that stands out from the transaction is how Cyence differs in its approach to selling into insurers both from a personnel and budget standpoint. Today, Guidewire has over 300 P&C insurance customers, but bringing on new customers is typically a lengthly sales cycle that involves the entire organization including IT support. Meanwhile, Cyence CEO Arvind Parthasarathi said the primary sponsor within insurers for its solution is typically the chief risk or chief underwriting officer.
As Guidewire CEO Marcus Ryu said on an analyst call, “(In our diligence process, most Cyence customers) described it having very modest or no IT involvement involved in the selection and contracting process, but that the business case development followed a somewhat different channel that what has been Guidewire’s experience historically. We see that as an intriguing go-to-market motion that could complement our general need to build institutional consensus including IT before a company moves forward with us.”
CoverWallet raises new round
Earlier this week, our trackers picked up a new filing from New York-based small business insurance startup CoverWallet for what looks to be a $18.5M Series B round. Foundation Capital’s Charles Moldow is listed as a new investor on the filing. The investment brings CoverWallet’s total disclosed funding to $28.3M.
In September, CoverWallet hired former OnDeck Capital chief sales officer Paul Rosen as COO and took on a strategic investment from Starr Companies in July.
UK insurers take new fintech stakes
We saw a couple transactions this week involving UK insurers taking stakes in fintech companies outside of the insurance realm:
Aviva took a majority stake in robo-investment startup Wealthify as “part of its strategy to build customer loyalty.”
Legal & General made a $47M investment into SalaryFinance, an online lender whose loans are repaid from employee salaries
Meanwhile, LSE-listed insurance comparison firm GoCompare Group invested in UAE-based financial comparison startup Souqalmal, its first investment outside of the UK.
ITC 2017 presentation
Here is our presentation from this week’s ITC 2017 conference, meant to be a high-level look at the growth of distribution startups across different areas of P&C and life and how incumbents are responding. Some of the relevant partnerships and news arising out of the conference are included below in our weekly roundup of news.